HELMER F RIEDMAN LLP 2012 Annual Conferenc… · HELMER F RIEDMAN LLP ... 20 . ,

2012 CELA Annual Employment Law Update – Los Angeles, California Copyright ©2012 Helmer Friedman LLP (with the exception of case summaries marked ***)

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discrimination law. Order it at http://www.jamespublishing.com/books/led.htm

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION ___________________________

25th ANNUAL EMPLOYMENT LAW CONFERENCE – ANNUAL UPDATE

___________________________

October 5 – 6, 2012 Hilton Orange County, Costa Mesa

3050 Bristol Street Costa Mesa, CA 92626

By: Andrew H. Friedman 1 Helmer Friedman LLP

1 These materials contain summaries (some brief and some not so brief) of recent court decisions and

some statutory/regulatory developments (since our last CELA Annual Conference) which I consider to be of particular interest to plaintiff employment attorneys. These materials are designed to be used in conjunction with Friedman, Litigating Employment Discrimination Cases (James Publishing 2012) which can be purchased at www.jamespublishing.com/books/led.htm. I would like to thank Anthony J. Oncidi of Proskauer Rose LLP for his permission to reprint summaries of some of these cases, denoted by ***, from his newsletter, California Employment Law Notes, which is available to the general public at http://www.proskauer.com/publications/Publications.aspx?Name=oncidi

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mailto:[email protected]

http://www.helmerfriedman.com/

http://www.jamespublishing.com/books/led.htm

http://www.jamespublishing.com/books/led.htm

http://www.proskauer.com/publications/Publications.aspx?Name=oncidi

ii

2012 CELA Annual Employment Law Update – Los Angeles, California Copyright ©2012 Helmer Friedman LLP (except as to cases denoted ***)

Table of Contents

I. Cases Pending For Review And/Or Upcoming Oral Arguments.............................. 1

U.S. Supreme Court .......................................................................................................................... 1 California Supreme Court............................................................................................................... 2

II. Statutory & Regulatory Developments ................................................................................. 6

FEHA Amended To Add Religious Clothing And Hairstyle As Protected

Classifications (AB 1964) .............................................................................................................. 6 Posting Jury Fees (SB 1021) ......................................................................................................... 7 Limitations On The Use Of Consumer Credit Reports In Employment (AB 22) . 7 Additional Pregnancy Disability Leave Protections (AB 592) ...................................... 7 Additional Pregnancy Disability Leave Protections (SB 299) ....................................... 7

Gender Identity And Expression (AB 887) ............................................................................ 8 Pushing Back On E-Verify: The Employment Acceleration Act (AB 1236) .......... 8 Written Commission Agreements (Labor Code Section 2751) ..................................... 8 EEOC Issues Final Regulations on Reasonable Factors Other Than Age (29

C.F.R. Sec. 1625.7) ........................................................................................................................... 9 EEOC Issues Enforcement Guidance On Employers' Use Of Arrest And

Conviction Records ........................................................................................................................ 11 DOL Issues New Regulatory Guidance Providing That Mandatory Tip Pooling

With Back-Of-The-House Employees Is Prohibited Under The Fair Labor

Standards Act (February 29, 2012 Field Assistance Bulletin No. 2012-2) ........... 12 FINRA Proposes to Amend Rule 13204 to Preclude Collective Actions from

Being Arbitrated .............................................................................................................................. 13

"Wage Theft" Notice ..................................................................................................................... 14 Organ And Bone Marrow Donor Leave (SB 272 & SB 1304) ................................... 15 Discrimination Based On “Genetic Information” (SB 559) ......................................... 16 Medical Debts Exempt From Wage Garnishment (AB 1388) .................................... 16 Coverage Of California Domestic Partners Under Health Insurance Plans Issued

To Out-Of-State Employers (SB 757) ................................................................................... 16 Minors In The Entertainment Industry (AB 1401) ........................................................... 16 Seven Hour Depositions (AB 1875) ....................................................................................... 16 Civil Procedure Amendments Affecting California Trial Practice (AB 1403) .... 17 Misclassification Of Independent Contractors (SB 459) ............................................... 18 Elimination Of The Fair Employment And Housing Commission (SB 1038) .... 18

III. Age Discrimination ................................................................................................................. 19

IV. Arbitration (Excluding Class Action Waivers) ............................................................... 24

V. Attorneys' Fees ......................................................................................................................... 37

VI. Class Action (Arbitration Waivers) .................................................................................... 38

VII. Class Action (Non-Arbitration Waivers) .......................................................................... 39

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VIII. Computer Fraud and Abuse Act ........................................................................................... 42

IX. Disability Discrimination ....................................................................................................... 46

X. Discrimination & Harassment (Generic Issues) ............................................................... 54

XI. Ethics ............................................................................................................................................ 74

XII. False Claims Act ....................................................................................................................... 75

XIII. Family And Medical Leave Act ........................................................................................... 76

XIV. Independent Contractor Issues .............................................................................................. 82

XV. Non-Competition Agreements .............................................................................................. 83

XVI. NLRA ........................................................................................................................................... 84

XVII. PAGA ........................................................................................................................................... 88

XVIII. Pregnancy Discrimination ...................................................................................................... 89

XIX. Procedure .................................................................................................................................... 91

XX. Punitive Damages ................................................................................................................... 102

XXI. Retaliation ................................................................................................................................. 103

XXII. Section 1981 ............................................................................................................................. 113

XXIII. Section 1983 ............................................................................................................................. 114

XXIV. Sex Discrimination ................................................................................................................. 115

XXV. Trade Secret Litigation .......................................................................................................... 115

XXVI. Unemployment ........................................................................................................................ 116

XXVII. Wage & Hour (Non-Class Action) ................................................................................. 117

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Table of Authorities

Cases

Ajamian v. CantorCO2e, L.P., 203 Cal. App. 4th 771(2012) ........................................... 25

Aleksick v. 7-Eleven, Inc., 205 Cal.App.4th 1176 (2012) ............................................... 127

Apsley v. Boeing Co., 2012 WL 3642800 (10th Cir., 2012) ............................................. 69

Arias v. Kardoulias, 2012 WL 3039170 (2012) .............................................................. 123

Baker v. Mulholland Sec. & Patrol, Inc., 204 Cal. App. 4th 776 (2012) .......................... 92

Baker v. Mulholland Sec. and Patrol, Inc., 2012 WL 1021445 (2012) ............................ 66

Bankhead v. ArvinMeritor, Inc., 2012 WL 1354522 (2012) ........................................... 102

Banner Health System d/b/a Banner Estrella Medical Center, 358 NLRB No. 93 (2012)

...................................................................................................................................... 102

Bell v. H.F. Cox, Inc., 2012 WL 3846827 (2012) ........................................................... 131

Boitnott v. Corning Inc., 669 F.3d 172 (4th Cir. 2012) ..................................................... 49

Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012)............................ 118

Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012).............................. 40

Brown v. Ralphs Grocery Company, 197 Cal.App.4th 489 (2011)................................... 38

Buzenes v. Nuvell Financial Services, (S200376) ............................................................... 5

Cash v. Winn, 205 Cal. App. 4th 1285 (2012) ................................................................ 127

Chattman v. Toho Tenax Am., Inc., 2012 WL 2866296 (6th Cir. 2012) ........................... 66

Christopher v. SmithKline Beecham Corp., -- U.S. --, -- S.Ct. – (2012) ........................ 117

Coito v. Superior Court, 54 Cal. 4th 480 (2012) ............................................................... 91

Cumbie v. Woody Woo, Inc., 596 F.3d 577 (9th

Cir. 2010) ............................................... 12

Deleon v. Verizon Wireless, LLC, 207 Cal. App. 4th 800 (2012) ................................... 126

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Dennis v. Kellogg Co., --- F.3d ----, ---- WL ------- (9th Cir. 2012) ................................. 45

Dresser-Rand Company, 358 NLRB No. 34 (April 19, 2012) .......................................... 84

Duran v. U.S. Bank National Assn., (S200923) .................................................................. 2

Duran v. U.S. Bank Nat'l Ass'n, 203 Cal.App.4th 212 (2012) .......................................... 39

E.E.O.C. v. United Airlines, Inc., 2012 WL 3871503 (7th Cir. 2012) .............................. 48

Fillpoint, LLC v. Maas, 2012 WL 3631266 (2012) .......................................................... 83

Fitzsimons v. California Emergency Physicians Med. Group, 205 Cal. App. 4th 1423

(2012) ........................................................................................................................... 111

Frye v. Baptist Mem'l Hosp., Inc., 2012 WL 3570657 (6th Cir. 2012) ........................... 128

Fuentes v. AutoZone, Inc., 200 Cal. App. 4th 1221 (2011) ............................................... 65

Gonzalez v. Heritage Pac. Fin., LLC, 2012 WL 3263749 (C.D. Cal. 2012) .................... 98

Grey v. Am. Mgmt. Services, 204 Cal. App. 4th 803 (2012) ............................................ 29

Harris v. City of Santa Monica, (S181004) ......................................................................... 3

Harris v. Superior Court, 207 Cal. App. 4th 1225 (2012) ................................................ 40

Headley v. Church of Scientology Int’l, 687 F.3d 1173 (9th

Cir. 2012) .......................... 129

Henry M. Lee Law Corp. v. Superior Court, 2012 WL 1255306 (2012) .......................... 37

Hernandez v. Chipotle Mexican Grill, Inc., 2012 WL 3579567 (Cal. Ct. App. 2012) ... 130

Holland v. Gee, --- F.3d ----, 2012 WL 1292342 (11th

Cir. 2012) .................................... 89

Hooper v. Lockheed Martin Corp., 2012 WL 3124970 (9th

Cir. 2012) ............................ 75

Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, 132 S.Ct. 694

(2012) ............................................................................................................................. 54

In re Garcia on Admission, (S202512) ................................................................................ 5

Joaquin v. City of Los Angeles, 202 Cal.App.4th 1207 (2012) ....................................... 103

Johnson v. Nextel Communications, Inc., 660 F.3d 131 (2d Cir. 2011) ........................... 74

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Kallail v. Alliant Energy Corporate Services, Inc., 2012 WL 3792609 (8th Cir. 2012) .. 50

Kinecta Alternative Fin. Solutions, Inc. v. Superior Court, 205 Cal. App. 4th 506 (2012)

........................................................................................................................................ 32

Kirby v. Immoos Fire Protection, Inc., 2012 WL 1470313 (2012) ................................. 122

Knepper v. Rite Aid Corp., 675 F.3d 249 (3d Cir. 2012) .................................................. 41

Kroll v. White Lake Ambulance Auth., 2012 WL 3590284 (6th Cir. 2012) ...................... 53

Levin v. Madigan, 2012 WL 3538659 (7th Cir. 2012) .................................................... 114

Lichtenstein v. Univ. of Pittsburgh Med. Ctr., 2012 WL 3140350 (3d Cir. 2012) ........... 80

Macy v. Holder, Appeal No. 0120120821 (EEOC Dec., Apr. 20, 2012) ........................ 115

Magnus v. St. Mark United Methodist Church, 688 F.3d 331 (7th Cir. 2012) ................. 53

Martinez v. Brownco Construction Co., Inc., (S200944) .................................................... 6

Mayers v. Volt Management Corp., (S200709) ................................................................... 5

Medley v. County of Montgomery, 2012 WL 2912307 (E.D. Pa. 2012) ........................... 81

Mize-Kurzman v. Marin Cmty. Coll. Dist., 202 Cal. App. 4th 832 (2012) ..................... 132

Mize-Kurzman v. Marin Community College Dist., 202 Cal.App.4th 832 (2012) .......... 106

Nelsen v. Legacy Partners Residential, Inc., 207 Cal. App. 4th 1115 (2012) .................. 27

Noel v. New York State Office of Mental Health Cent. New York Psychiatric Ctr., 2012

WL 3764527 (2nd

Cir. 2012) ........................................................................................ 101

O'Sullivan v. AMN Services, Inc., 2012 WL 2912061 (2012) ........................................... 99

Pagel v. TIN Inc., 2012 WL 3217623 (7th Cir. 2012) ...................................................... 79

Paratransit, Inc. v. CUIAB, 206 Cal. App. 4th

1319 (2012) ........................................... 116

Patterson v. Domino's Pizza, LLC, 207 Cal. App. 4th 385 (2012) ................................... 72

Peabody v. Time Warner Cable, Inc., 2012 WL 3538753 (9th

Cir. 2012) ...................... 130

Peleg v. Neiman Marcus Group, Inc., 204 Cal. App. 4th 1425, (2012) .......................... 100

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People ex rel. Harris v. Pac Anchor Transp., Inc., (S194388) ........................................... 5

Pulli v. Pony Int'l, LLC, 206 Cal. App. 4th 1507, 1510-11 (2012) ................................... 96

Ralphs Grocery Co. v. United Food & Commercial Workers Union Local 8, (S185544) . 4

Rehmani v. Superior Court, 2012 WL 1034533 (2012) .................................................... 61

Reyes v. Liberman Broad., Inc., 2012 WL 3775879 (2012) ............................................. 35

Rickards v. United Parcel Serv., Inc., 206 Cal. App. 4th 1523 (2012) ............................. 93

Robles v. Employment Dev. Dep’t, 207 Cal. App. 4th

1029 (2012) ................................. 117

Ruiz v. Affinity Logistics Corp., 2012 WL 388171 (9th Cir. 2012)................................... 82

Salas v. Sierra Chemical Co., (S196568) ............................................................................ 4

Samaniego v. Empire Today LLC, 205 Cal. App. 4th 1138 (2012) .................................. 26

Samper v. Providence St. Vincent Medical Center, 2012 WL 1194141 (9th

Cir. 2012) ... 46

Sanchez v. Valencia Holding Co. LLC, (S199119) ............................................................. 3

SASCO v. Rosendin Elec., Inc., 143 Cal.Rptr.3d 828 (2012) .......................................... 115

Schechner v. KPIX-TV, 686 F.3d 1018 (9th Cir. 2012) ..................................................... 67

Sciborski v. Pac. Bell Directory, 205 Cal. App. 4th 1152 (2012) ................................... 124

Seeger v. Cincinnati Bell Tel. Co., LLC, 681 F.3d 274 (6th Cir. 2012) ............................ 76

Shelley v. Geren, 666 F.3d 599 (9th

Cir. 2012) ............................................................ 19, 63

Sheppard v. David Evans & Assoc., 2012 WL 3983909 (9th Cir. 2012) .......................... 20

Smith v. Bray, 681 F.3d 888 (7th Cir. 2012) ................................................................... 113

Sonic-Calabasas A, Inc. v. Moreno, (S174475) .................................................................. 4

The Standard Fire Insurance Co. v. Knowles, (11-1450) ................................................... 2

Thurman v. Bayshore Transit Mgmt., Inc., 2012 WL 604037 (2012)............................... 88

Touchstone Television Prods. v. Superior Court, 208 Cal. App. 4th

676 (2012) ............ 133

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Townsend v. Benjamin Enterprises, 2012 WL 1605758 (2nd

Cir. 2012) ........................... 56

Truly Nolen of Am. v. Superior Court, 2012 WL 3222211 (2012) ................................... 28

U.S. Airways v. McCutchen, (11-1285) ............................................................................... 1

U.S. v. Nosal, --- F.3d ----, 2012 WL 1176119 (9th

Cir. 2012) ......................................... 42

United States v. USDC - Northern Mariana Is., 2012 WL -------- (9th Cir. 2012) .......... 97

Vance v. Ball State Univ., (11-556) ..................................................................................... 1

WEC Carolina Energy Solutions LLC v. Miller, 687 F.3d 199 (4th Cir. 2012) ................ 44

Wisdom v. Accentcare, Inc., (S200128) .............................................................................. 3

Wisdom v. AccentCare, Inc., 202 Cal.App.4th 591 (2012) ............................................... 24

Yeager v. Bowlin, --- F.3d ----, 2012 WL 3892903 (9th

Cir. 2012) ................................... 93

Statutes

"Wage Theft" Notice .......................................................................................................... 14

Additional Pregnancy Disability Leave Protections (AB 592) ........................................... 7

Civil Procedure Amendments Affecting California Trial Practice (AB 1403) .................. 17

Coverage Of California Domestic Partners Under Health Insurance Plans Issued To

Out-Of-State Employers (SB 757) .................................................................................. 16

Discrimination Based On “Genetic Information” (SB 559) ............................................. 16

Elimination Of The Fair Employment And Housing Commission (SB 1038) ................... 18

FEHA Amended To Add Religious Clothing And Hairstyle As Protected Classifications

(AB 1964) ......................................................................................................................... 6

Gender Identity And Expression (AB 887) .......................................................................... 8

Limitations On The Use Of Consumer Credit Reports In Employment (AB 22) ................. 7

Medical Debts Exempt From Wage Garnishment (AB 1388) ........................................... 16

Minors In The Entertainment Industry (AB 1401) ............................................................ 16

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Misclassification Of Independent Contractors (SB 459) .................................................. 18

Organ And Bone Marrow Donor Leave (SB 272 & SB 1304) .......................................... 15

Posting Jury Fees (SB 1021) ............................................................................................... 7

Prohibition On Employers Forcing Employees And Prospective Employees From

Revealing Their Social Media Usernames And Passwords (AB 1844) ......................... 17

Public Disclosure Of Efforts To Eradicate Slavery And Human Trafficking (SB 657) ..... 8

Pushing Back On E-Verify: The Employment Acceleration Act (AB 1236) ........................ 8

Seven Hour Depositions (AB 1875) ................................................................................... 16

Written Commission Agreements (Labor Code Section 2751) ............................................ 8

Regulations

DOL Issues New Regulatory Guidance Providing That Mandatory Tip Pooling With

Back-Of-The-House Employees Is Prohibited Under The Fair Labor Standards Act

(February 29, 2012 Field Assistance Bulletin No. 2012-2) ........................................... 12

EEOC Issues Enforcement Guidance On Employers' Use Of Arrest And Conviction

Records ........................................................................................................................... 11

EEOC Issues Final Regulations on Reasonable Factors Other Than Age (29 C.F.R. Sec.

1625.7).............................................................................................................................. 9

FINRA Proposes to Amend Rule 13204 to Preclude Collective Actions from Being

Arbitrated ....................................................................................................................... 13

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2012 CELA Annual Employment Law Update – Los Angeles, California Copyright ©2012 Helmer Friedman LLP ((except as to cases denoted ***)

I. Cases Pending For Review And/Or Upcoming Oral Arguments

U.S. Supreme Court

Vance v. Ball State Univ., (11-556) In Faragher v. City of Boca Raton, 524 U.S. 775 (1998), and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998), this Court held that under Title VII, an employer is vicariously liable for severe or pervasive workplace harassment by a supervisor of the victim. If the harasser was the victim’s co-employee, however, the employer is not liable absent proof of negligence. In the decision below, the Seventh Circuit held that actionable harassment by a person whom the employer deemed a “supervisor” and who had the authority to direct and oversee the victim’s daily work could not give rise to vicarious liability because the harasser did not also have the power to take formal employment actions against her. The question presented is: Whether, as the Second, Fourth, and Ninth Circuits have held, the Faragher and Ellerth “supervisor” liability rule (i) applies to harassment by those whom the employer vests with authority to direct and oversee their victim’s daily work, or, as the First, Seventh, and Eighth Circuits have held (ii) is limited to those harassers who have the power to “hire, fire, demote, promote, transfer, or discipline” their victim.

This case is not (yet) set for argument. U.S. Airways v. McCutchen, (11-1285) Whether the Third Circuit correctly held -- in conflict with the Fifth, Seventh, Eighth, Eleventh, and D.C. Circuits -- that Section 502(a)(3) of the Employee Retirement Income Security Act (ERISA) authorizes courts to use equitable principles to rewrite contractual language and refuse to order participants to reimburse their plan for benefits paid, even where the plan’s terms give it an absolute right to full reimbursement.

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This case is not (yet) set for argument. The Standard Fire Insurance Co. v. Knowles, (11-1450) Whether, after Smith v. Bayer Corp., 131 S. Ct. 2368 (2011), when a named plaintiff attempts to defeat a defendant’s right of removal under the Class Action Fairness Act of 2005 by filing with a class action complaint a “stipulation” that attempts to limit the damages he “seeks” for the absent putative class members to less than the $5 million threshold for federal jurisdiction, and the defendant establishes that the actual amount in controversy, absent the “stipulation,” exceeds $5 million, the “stipulation” is binding on absent class members so as to destroy federal jurisdiction.

This case is not (yet) set for argument.

California Supreme Court

Duran v. U.S. Bank National Assn., (S200923) Petition for review after the Court of Appeal reversed the judgment in a civil action. This case presents the following issues for review: 1. In a wage and hour misclassification class action, does the defendant have a due process right to assert its affirmative defense against every class member? 2. Can a plaintiff satisfy the requirements for class certification if a defendant has a due process right to assert its affirmative defense against every class member? Can statistical sampling, surveys and other forms of representative evidence be used to prove classwide liability in a wage and ' hour misclassification case? 4. When an appellate court reviews a class action judgment and an order denying class decertification, does the appellate court prejudicially err by (a) applying newly-announced legal standards to the facts and then reversing the judgment and the class order without providing for a new trial and/or (b) reweighing the evidence instead of reviewing the judgment and order under the substantial evidence standard of review?

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Harris v. City of Santa Monica, (S181004) Petition for review after the Court of Appeal reversed the judgment in a civil action. This case presents the following issue: Does the “mixed-motive” defense apply to employment discrimination claims under the Fair Employment and Housing Act (Gov. Code, § 12900 et seq.)? Sanchez v. Valencia Holding Co. LLC, (S199119) Petition for review after the Court of Appeal affirmed an order denying a petition to compel arbitration. This case includes the following issue: Does the Federal Arbitration Act (9 U.S.C. § 2), as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U. S. __, 131 S.Ct. 1740, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable? Wisdom v. Accentcare, Inc., (S200128) Petition for review after the Court of Appeal affirmed an order denying a motion to compel arbitration. This case presents the following issues: 1. Whether - in light of California's strong public policy favoring arbitration as well as the rule of contract interpretation requiring that a contract be interpreted in a manner that renders it legal rather than void - an arbitration clause in an employment application confirming the applicant's agreement to submit "all disputes" arising out of the applicant's employment to binding arbitration should be interpreted to create a mutual obligation on both employer and the employee to arbitrate all such disputes? 2. Whether one presenting a contract with an arbitration provision to another has an affirmative duty to explain what "arbitration" means and its implications on the other party's right to a jury trial? \\\ \\\

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Sonic-Calabasas A, Inc. v. Moreno, (S174475) On remand from the United States Supreme Court, the court directed the parties to brief the significance of AT&T Mobility LLC. v. Concepcion, 563 U.S. __, 131 S.Ct. 1740(2011), to the issues in this case. Salas v. Sierra Chemical Co., (S196568) Petition for review after the Court of Appeal affirmed the judgment in a civil action. This case presents the following issues: Did the trial court err in dismissing plaintiff’s claims under the Fair Employment and Housing Act (Gov. Code, § 12900 et seq.) on grounds of after-acquired evidence and unclean hands, based on plaintiff’s use of false documentation to obtain employment in the first instance? Did Senate Bill No. 1818 (2001–2002 Reg. Session) preclude application of those doctrines in this case? (See Civ. Code, § 3339; Gov. Code, § 7285; Health & Saf. Code, § 24000; Lab. Code, § 1171.5.) Ralphs Grocery Co. v. United Food & Commercial Workers Union Local 8, (S185544) Petition for review after the Court of Appeal reversed an order denying a preliminary injunction in a civil action. This case presents the following issues: (1) Did the Court of Appeal err in concluding that the parking area and walkway in front of the entrance to plaintiff’s retail store, which is part of a larger shopping center, do not constitute a public forum under Robins v. Pruneyard Shopping Center (1979) 23 Cal.3d 899 and its progeny? (2) Do the Moscone Act (Code Civ. Proc. § 527.3) and Labor Code section 1138.1, which limit the availability of injunctive relief in labor disputes, violate the First and Fourteenth Amendments of the United States Constitution because they afford preferential treatment to speech concerning labor disputes over speech about other issues? \\\ \\\

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Mayers v. Volt Management Corp., (S200709) Petition for review granted. Further action deferred pending consideration and disposition of a related issue in Sanchez v. Valencia Holding Co., S199119 Buzenes v. Nuvell Financial Services, (S200376) Petition for review granted. Further action deferred pending consideration and disposition of a related issue in Sanchez v. Valencia Holding Co., S199119 People ex rel. Harris v. Pac Anchor Transp., Inc., (S194388) Petition for review after the Court of Appeal reversed the judgment in a civil action. This case presents the following issue: Is an action under the Unfair Competition Law (Bus. & Prof. Code, ? 17200 et seq.) that is based on a trucking company's alleged violation of state labor and insurance laws "related to the price, route, or service" of the company and, therefore, preempted by the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. ? 14501)? In re Garcia on Admission, (S202512) The Committee of Bar Examiners of the State Bar of California is ordered to show cause why its motion for admission of Sergio C. Garcia to the State Bar of California should be granted. Among the issues that may be addressed: 1. Does 8 U.S.C. section 1621, subdivision (c) apply and preclude this court's admission of an undocumented immigrant to the State Bar of California? Does any other statute, regulation, or authority preclude the admission? 2. Is there any state legislation that provides - as specifically authorized by 8 U.S.C. section 1621, subdivision (d) - that undocumented immigrants are eligible for professional licenses in fields such as law, medicine, or other professions, and, if not, what significance, if any, should be given to the absence of such legislation? 3. Does the issuance of a license to practice law impliedly represent that the licensee may be legally employed as an attorney? 4. If licensed, what

6


are the legal and public policy limitations, if any, on an undocumented immigrant's ability to practice law? 5. What, if any, other public policy concerns arise with a grant of this application? Martinez v. Brownco Construction Co., Inc., (S200944) This case presents the following issue: When a party elects to serve a series of offers to compromise under Code of Civil Procedure Section 998, does each successive offer extinguish the preceding offer such that offer made last in time is the operative offer for purposes of the cost-shifting provisions of Section 998(c)?

II. Statutory & Regulatory Developments

FEHA Amended To Add Religious Clothing And Hairstyle As Protected Classifications (AB 1964)

AB 1964 clarifies that a religious dress practice or a religious grooming practice is covered by FEHA’s protections against religious discrimination. The law provides that “religious dress practice” shall be construed broadly to include the wearing or carrying of religious clothing, head or face coverings, jewelry, artifacts, and any other item that is part of the observance by an individual of his or her religious creed. Similarly, “religious grooming practice” shall be construed broadly to include all forms of head, facial, and body hair that are part of the observance by an individual of his or her religious creed. AB 1964 specifies that an accommodation of an individual’s religious dress practice or religious grooming practice that would require that person to be segregated from the public or other employees is not a reasonable accommodation. \\\ \\\

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Posting Jury Fees (SB 1021)

Effective June 27, 2012, the advance jury fee, fixed at $150, is no longer refundable, and must be deposited earlier than previously required. The fee is due on or before the date scheduled for the initial case management conference in the action; if no case management conference is scheduled, no later than 365 calendar days after the filing of the initial complaint; if the party has not appeared before the initial case management conference or has appeared more than 365 days after the filing of the initial complaint, at least 25 calendar days before the date initially set for trial; or if the action is for unlawful detainer action, at least 5 days before the date set for trial.

Limitations On The Use Of Consumer Credit Reports In Employment (AB 22)

Prohibits employers and prospective employers (except certain financial institutions) from obtaining or relying on consumer credit reports for employees or job applicants, unless the job position falls within narrow exceptions:

a “managerial” position; or

a position requiring regular access to specified personal information

Additional Pregnancy Disability Leave Protections (AB 592)

Clarifies that it is an unlawful employment practice for an employer to “interfere with,” restrain, or deny the exercise of any right provided under the CFRA, or due to disability by pregnancy, childbirth, or related medical conditions

Additional Pregnancy Disability Leave Protections (SB 299)

Requires employers with five or more employees to maintain and pay for health coverage under a group health plan for any eligible female

8


employee who takes up to four months of leave due to pregnancy, childbirth or a related medical condition in a 12-month period

Gender Identity And Expression (AB 887)

Amends FEHA to define “gender” to include both gender identity and “gender expression”

Public Disclosure Of Efforts To Eradicate Slavery And Human Trafficking (SB 657) Requires retail sellers and manufacturers that do business in California and that have over $100 million in annual worldwide gross receipts to publicly disclose their efforts to eradicate slavery and human trafficking.

Pushing Back On E-Verify: The Employment Acceleration Act (AB 1236)

Prohibits the state, a city, or a county from requiring employers to use an electronic employment verification system to verify that the employees they hire are authorized to work in the United States as a condition of receiving a government contract or of obtaining a business license

Written Commission Agreements (Labor Code Section 2751)

Effective January 1, 2013, Labor Code Section 2751 will go into effect (repealing Labor Code Section 2752) and requiring all employers entering into a contract of employment involving commissions as a method of payment must: • Put the contract in writing; • Set forth the method by which the commissions shall be computed and paid; and

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• Give a signed copy of the contract to every employee who is a party thereto and obtain a signed receipt for the contract from each employee. Labor Code Section 2751 also provides that in the case of a contract that expires and where the parties nevertheless continue to work under the terms of the expired contract, the contract terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party. The term "commissions" does not include short-term productivity bonuses such as are paid to retail clerks; and it does not include bonus and profit-sharing plans, unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed.

EEOC Issues Final Regulations on Reasonable Factors Other Than Age (29 C.F.R. Sec. 1625.7)

On April 30, 2012 the EEOC's final regulations on reasonable factors other than age went into effect. The EEOC's new regulation (29 C.F.R. Sec. 1625.7) states that "any employment practice that adversely affects individuals within the protected age group on the basis of older age is discriminatory unless the practice is justified by a reasonable factor other than age.'" The rule goes on to state that employers raising an RFOA defense bear the burdens of both production and persuasion to prove the defense. It is worth noting that the language of the regulation creates a presumption that any employment practice that negatively impacts older workers more than younger workers (whether intentional or not) is discriminatory, unless the employer can prove otherwise. Per the new regulations, whether a particular employment practice is based on a reasonable factor other than age turns on the facts and circumstances of each particular situation. A reasonable factor other than age, says the EEOC, is "a non-age factor that is objectively reasonable when viewed from the position of a prudent employer

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mindful of its responsibilities under the ADEA under like circumstances." To establish the RFOA defense, an employer must show that the employment practice was both reasonably designed to further or achieve a legitimate business purpose and was administered in a way that reasonably achieves that purpose in light of the facts and circumstances that were known, or should have been known, to the employer. The new regulations contain a non-exhaustive list of "considerations" that will be examined to determine whether a practice is based on a reasonable factor other than age. What other factors courts will consider remains an open question. The EEOC has made clear that no specific consideration or combination of considerations need be present to establish the RFOA defense, nor does the presence of one of these considerations automatically establish the defense. The enumerated "considerations" are: (i) The extent to which the factor is related to the employer's stated

business purpose; (ii) The extent to which the employer defined the factor accurately

and applied the factor fairly and accurately, including the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination;

(iii) The extent to which the employer limited supervisors'

discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to negative age-based stereotypes;

(iv) The extent to which the employer assessed the adverse impact

of its employment practice on older workers; and (v) The degree of the harm to individuals within the protected age

group, in terms of both the extent of injury and the numbers of

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people adversely affected, and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.

EEOC Issues Enforcement Guidance On Employers' Use Of Arrest And Conviction Records

On April 25, 2012, the EEOC issued an updated Enforcement Guidance on employer use of arrest and conviction records in employment decisions under Title VII. Among other things, the Enforcement Guidance discusses how an employer’s use of an individual’s criminal history in making employment decisions could violate the prohibition against employment discrimination under Title VII:

A violation may occur when an employer treats criminal history information differently for different applicants or employees, based on their race or national origin (disparate treatment liability). An employer’s neutral policy (e.g., excluding applicants from employment based on certain criminal conduct) may disproportionately impact some individuals protected under Title VII, and may violate the law if not job related and consistent with business necessity (disparate impact liability).

The guidance can be accessed at http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm The EEOC also issued Questions and Answers About the new Enforcement Guidance which can be accessed at http://www.eeoc.gov/laws/guidance/qa_arrest_conviction.cfm \\\ \\\

http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm

http://www.eeoc.gov/laws/guidance/qa_arrest_conviction.cfm

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DOL Issues New Regulatory Guidance Providing That Mandatory Tip Pooling With Back-Of-The-House Employees Is Prohibited Under The Fair Labor Standards Act (February 29, 2012 Field Assistance Bulletin No. 2012-2)

In Cumbie v. Woody Woo, Inc., 596 F.3d 577 (9th Cir. 2010), the Ninth Circuit held that a restaurant's tip pooling arrangement, which included in its tip pool members of kitchen staff who were not customarily and regularly tipped employees, did not violate a provision of the Fair Labor Standards Act of 1938, § 3(m), 29 U.S.C.A. § 203(m), which required that employers taking tip credits allow an employee to keep all tips except when participating in tip pool with other customarily tipped employees. The Ninth Circuit based its decision on the fact that the restaurant did not take a tip credit. In 2011, the DOL issued a regulation to 2011 amending its regulations regarding tips to clarify that mandatory tip pooling with back-of-the-house employees is prohibited regardless of whether the employer takes a tip credit or not. Those regulations state in pertinent part:

Tips are the property of the employee whether or not the employer has taken a tip credit under section 3(m) of the FLSA. The employer is prohibited from using an employee's tips, whether or not it has taken a tip credit, for any reason other than that which is statutorily permitted in section 3(m): As a credit against its minimum wage obligations to the employee, or in furtherance of a valid tip pool.

29 C.F.R. 531.52. On February 29, 2012, the DOL issued Field Assistance Bulletin No. 2012-2 (available at http://www.dwt.com/files/Uploads/Documents/Advisories/2-29-12%20dol%20field%20assistance%20bulletin.pdf) to clarify that "a tip is the sole property of the tipped employee regardless of whether the employer takes a tip credit, and that the employer is prohibited from using an employee's tips, whether or not it has taken a tip credit,

http://www.dwt.com/files/Uploads/Documents/Advisories/2-29-12%20dol%20field%20assistance%20bulletin.pdf

http://www.dwt.com/files/Uploads/Documents/Advisories/2-29-12%20dol%20field%20assistance%20bulletin.pdf

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except as a credit against its minimum wage obligations to the employee, or in furtherance of a valid tip pool." The DOL further clarified that a valid tip pooling arrangement was limited to one in which tips were shared among employees who customarily and regularly receive tips – i.e., back-of-the-house employees.

FINRA Proposes to Amend Rule 13204 to Preclude Collective Actions from Being Arbitrated

On March 28, 2012, the Financial Industry Regulatory Authority, Inc. ("FINRA") issue notice of proposed rule change to amend Rule 13204 of the Code of Arbitration Procedure for Industry Disputes ("Industry Code") to preclude collective action claims under the Fair Labor Standards Act ("FLSA"), the Age Discrimination in Employment Act ("ADEA"), or the Equal Pay Act of 1963 ("EPA") from being arbitrated under the Industry Code. Although the current version Rule 13204 already bars class actions, FINRA decided the amendment was necessary because some district courts had held that Rule 13204 does not bar FLSA collective actions (thus compelling FLSA collective actions to FINRA arbitration) because Industry Rule 13204 refers specifically to the opt-out procedures in traditional Rule 23 class actions and does not mention opt-in collective actions. If it becomes effective, the amendment will mean that parties will no longer be able to compel FLSA, ADEA, or EPA collective actions to FINRA arbitration, nor will employers be able to compel an employee’s individual wage and hour, age discrimination, or equal pay claim to FINRA when the employee prefers to pursue the claim as part of an asserted court action. The comment period on the proposed rule change will be open until May 4, 2012; the amendment will take effect thirty days following publication of the Regulatory Notice announcing Commission approval. \\\ \\\

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"Wage Theft" Notice

The Wage Theft Protection Act of 2011 (AB 469) become effective January 1, 2012. This Act added Labor Code section 2810.5 which requires that all employers must provide each employee at the time of hire with a written notice that contains specified information and must be provided in the language the employer normally uses to communicate employment-related information to the employee. The Act also required that the Labor Commissioner make available a template that complies with the requirements of the notice. The Act exempts from the notice requirement:

• An employee directly employed by the state or any political subdivision thereof, including any city, county, city and county, or special district.

• An employee who is exempt from the payment of

overtime wages by statute or the Wage Orders of the Industrial Welfare Commission.

• An employee who is covered by a valid collective

bargaining agreement (CBA) if the CBA "expressly provides for:"

wages; hours of work; working conditions of the employee; premium wage rates for all overtime hours worked;

and a regular hourly rate of pay for those employees of

not less than 30 percent more than the state's minimum wage.

Among other thing, the Act requires employers to provide notice of:

• The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime, as applicable.

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• Allowances, if any, claimed as part of the minimum wage,

including meal or lodging allowances. • The regular payday designated by the employer in

accordance with the requirements of the Labor Code. • The name of the employer, including any "doing business

as" ("dba") names used by the employer. • The physical address of the employer's main office or

principal place of business, and a mailing address, if different.

• The telephone number of the employer. • The name, address, and telephone number of the

employer's workers' compensation insurance carrier. • Any other information the Labor Commissioner deems

material and necessary. On May 4, 2012, the Labor Commissioner issued a new template in multiple languages that can be accessed at http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html

Organ And Bone Marrow Donor Leave (SB 272 & SB 1304)

Allows employees to take paid leaves of absence for bone marrow and organ donation. Employees may take leaves for organ donation of up to 30 business days and for bone marrow donation of up to five business days in a one-year period, measured from the date the employee’s leave begins. \\\

http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html

http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html

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Discrimination Based On “Genetic Information” (SB 559)

Expands the prohibited bases of discrimination under the Unruh Civil Rights Act and FEHA to include genetic information.

Medical Debts Exempt From Wage Garnishment (AB 1388)

Adds an exemption from wage garnishment for debt that is incurred "for the common necessaries of life furnished to the judgment debtor" or his or her family, including, e.g., hospital services and other medical debts.

Coverage Of California Domestic Partners Under Health Insurance Plans Issued To Out-Of-State Employers (SB 757)

Expands the reach of the California Insurance Equality Act such that every group health insurance policy provided to a California resident, regardless of the situs of the contract, must offer equal coverage for spouses and registered domestic partners.

Minors In The Entertainment Industry (AB 1401)

Creates a program to be administered by the Labor Commissioner that allows the parent or guardian of a minor performer to obtain a temporary permit for the minor’s employment under certain circumstances

Seven Hour Depositions (AB 1875)

AB1875 restricts depositions in most cases to 7 hours. Unfortunately, it creates an exception for any case brought by an employee or applicant for employment against an employer for acts or omissions arising out of or relating to the employment relationship. \\\ \\\

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Civil Procedure Amendments Affecting California Trial Practice (AB 1403)

• Amends California statute governing additur and remittitur by setting deadline for parties to accept/reject a judge’s proposed modified award of damages. • Default deadline to respond is 30 days from the date the order is served by the court’s clerk. Failure to timely respond is deemed a rejection triggering a new trial on the issue of damages

• Amends California statute governing additur and remittitur by setting deadline for parties to accept/reject a judge’s proposed modified award of damages. • Default deadline to respond is 30 days from the date the order is served by the court’s clerk. Failure to timely respond is deemed a rejection triggering a new trial on the issue of damages Prohibition On Employers Forcing Employees And Prospective Employees From Revealing Their Social Media Usernames And Passwords (AB 1844) At the time these materials went to press, the California State Legislature had passed AB 1844 and commentators have suggested that Governor Brown would likely sign it. If so, the bill would prohibit employers from forcing employees and prospective workers to turn over usernames and passwords for their social media accounts and also would ban employers from discharging, disciplining or threatening to retaliate against employees or job applicants who did not comply with such requests. According to Littler Mendelsohn, "California employers also should note that the California law, like the Illinois and Maryland laws, appears to have an unintended and unsupportable consequence in the context of litigation. These statutes impose no restriction on an employer’s ability to request in civil discovery that a former employee produce personal social media, log-in credentials; however, all three

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statutes bar such requests in litigation with a current employee. Obtaining log-in credentials can be important in employment litigation so that employers’ counsel can confirm that the current or former employee has produced all discoverable information posted on his or her restricted-access social media page." See http://privacyblog.littler.com/2012/09/articles/state-privacy-legislation/california-surprisingly-becomes-first-state-to-take-a-more-balanced-approach-to-social-media-password-protection-laws/#page=1

Misclassification Of Independent Contractors (SB 459)

Prohibits the “willful misclassification” of individuals as independent contractors. Provides for civil penalties in the range of $5,000 to $15,000 for each violation and, for individuals found guilty of a “repeated pattern or practice” of such violations, the penalty may increase to between $10,000 and $25,000 per violation

Elimination Of The Fair Employment And Housing Commission (SB 1038)

SB 1038 eliminates the Fair Employment and Housing Commission and ends administrative adjudication. It creates a Fair Employment and Housing Council under the Department of Fair Employment and Housing, to promulgate regulations, and authorizes the Department to bring civil actions directly in court effective January 1, 2013. Persons interested in a gubernatorial appointment to the Fair Employment and Housing Council can apply by submitting an application online or by mail using the form on the Governor’s Website and reference Fair Employment & Housing Council in the narrative. \\\ \\\

http://privacyblog.littler.com/2012/09/articles/state-privacy-legislation/california-surprisingly-becomes-first-state-to-take-a-more-balanced-approach-to-social-media-password-protection-laws/#page=1




https://ex2010.myhostedservice.com/owa/redir.aspx?C=2489e97a63324a74bf811b788ec454de&URL=http%3a%2f%2fwww.leginfo.ca.gov%2fpub%2f11-12%2fbill%2fsen%2fsb_1001-1050%2fsb_1038_bill_20120627_chaptered.pdf

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III. Age Discrimination

Shelley v. Geren, 666 F.3d 599 (9th Cir. 2012)(McDonnell Douglas Burden-Shifting Test Should Be Used On Summary Judgment for Age Discrimination Claims) The United States Army Corps of Engineers (the "Corps") sought to fill a Chief of Contracting position. The Corps pursued a two-step hiring process, in which it advertised an opening for a 120–day temporary Chief of Contracting position, and then announced a formal process to hire a permanent Chief of Contracting. Devon Scott Shelley applied for the 120-day temporary position. At the time of his application, he was 54. The Corps. selected Vince Marsh, a 42 year old, with arguably less experience, for the 120-day temporary position. The Corps. then reviewed the applications of 33 individuals (including Shelley and Marsh) for the permanent Chief of Contracting position. The Corps. selected six individuals to interview for the position. Shelley was not one of the six. Marsh was, at forty-two years old, the youngest interviewee. The oldest interviewee was fifty-five years old, one year older than Shelley. The other interviewees were forty-six (two of them), fifty, and fifty-three years old. Ultimately, the Corps. selected Marsh. Shelley sued the Corps for violating the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., by failing to interview him and rejecting his applications for the two promotions. The district court granted summary judgment in favor of the Corps. The court declined to analyze the motion in accordance with McDonnell Douglas Corporation v. Green, 411 U.S. 792 (1973), finding it inapplicable to ADEA cases after the Supreme Court's decision in Gross v. FBL Financial Services, Inc., 557 U.S. 167 (2009). Relying on Gross, the district court held that Shelley put forth insufficient facts that his age was the “but-for” cause of his non-selection for the 120–day position and for an interview for and promotion to the permanent position. Shelley appealed.

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Preliminarily, the Ninth Circuit held that the district court erred by failing to utilize the McDonnell Douglas burden-shifting test in considering the Corps' motion for summary judgment:

Since the decision in Gross, several sister circuits have continued to utilize the McDonnell Douglas framework to decide motions for summary judgment in ADEA cases. We join them and hold that nothing in Gross overruled our cases utilizing this framework to decide summary judgment motions in ADEA cases. The McDonnell Douglas test is used on summary judgment, not at trial . . . Because the continued use of McDonnell Douglas in summary judgment motions on ADEA claims is not inconsistent with Gross, we cannot overrule our prior precedent because of Gross.

666 F.3d at 607-08 (citations and footnote omitted). The Ninth Circuit then applied the McDonnell-Douglas burden shifting test and found that Shelley made out of prima facie case of age discrimination and that the Corps stated a legitimate non-discriminatory reason for the decisions not to promote Shelley. The Court then turned to whether Shelley could demonstrate pretext. The Ninth Circuit then reversed the grant of summary judgment concluding that Shelley could establish pretext through both indirect and direct evidence. See § __ Discrimination for more detailed information about the Ninth Circuit's finding of pretext. Sheppard v. David Evans & Assoc., 2012 WL 3983909 (9th Cir. 2012)(Brief ADEA Complaint Satisfies Rule 8(a)(2)'s Pleading Standard) Ever since the U.S. Supreme Court issued its decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U .S. 662 (2009), defendants have become much more aggressive about challenging the sufficiency of the plaintiff’s complaint. In Sheppard, the Ninth Circuit rejected an argument that the plaintiff’s age discrimination claim under the ADEA was insufficient.

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The plaintiff’s complaint contained the following allegations:

1. Plaintiff, (Sheppard) is an adult female citizen in the federally protected age group under the ADEA, 29 USC 621 et seq. She is over the age of forty.

2. Defendant, (Evans) is an Oregon corporation that

does business in Portland, Oregon. 3. Sheppard worked for Evans as an Executive

Administrative Assistant from 11/28/05 to 2/2/09. 4. Sheppard was involuntarily terminated from her

position by Evans. 5. At all material times her performance was

satisfactory or better. She received consistently good performance reviews.

6. At the time of her termination there were five

comparators employed by Evans in Oregon of which Sheppard was the oldest.

7. [Sheppard's] younger comparators kept their jobs. 8. Age was a determining factor in the decision to

terminate Shepard. 9. Prior to her termination, Sheppard requested Family

Medical Leave for a serious illness. She qualified for both Oregon Family Medical Leave and federal Family Medical Leave.

10. In so doing Shepard was [pursuing] a right of public

importance that belonged to her as an employee.

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11. Sheppard was terminated immediately after she scheduled the surgery for which she requested Family Medical Leave.

12. [Sheppard's] attempt to use Family Medical Leave

was a substantial motivating factor for her termination.

13. Sheppard was terminated because she pursued a right

of public importance, Family Medical Leave, that belonged to her as an employee.

14. Sheppard's termination was therefore a wrongful act

in violation of public policy under Oregon law. 15. [Sheppard] has met all administrative exhaustion

requirements under the Age Discrimination in Employment Act, and this complaint is timely filed.

16. As a result of her termination Sheppard lost and

continues to lose wages and benefits. 17. As a result of her termination Sheppard suffered and

continues to suffer emotional pain and a sense of degradation.

The district court dismissed Sheppard's complaint with prejudice concluding she had “failed to plead any cause of action with sufficient factual detail to state a claim,” and therefore failed to satisfy the pleading requirements of Federal Rule of Civil Procedure 8(a)(2). Sheppard appealed the district court's ruling and the Ninth Circuit reversed:

Here, Sheppard's amended complaint alleges a “plausible” prima facie case of age discrimination. Her complaint alleges that: (1) she was at least forty years old; (2) “her performance was satisfactory or better” and that “she received consistently good performance reviews”; (3) she

23


was discharged; and (4) her five younger comparators kept their jobs. Sheppard's allegation that her five younger comparators kept their jobs gives rise to an “inference of age discrimination” because it plausibly suggests that Evans “had a continuing need for [Sheppard's] skills and services[because her] various duties were still being performed.” It also plausibly suggests that employees outside her protected class “were treated more favorably” than Sheppard. Although Sheppard's complaint is brief, her allegations are sufficient to state a prima facie case of discrimination. As the Seventh Circuit has explained:

[I]n many straightforward cases, it will not be any more difficult today for a plaintiff to meet [ ] burden than it was before the [Supreme] Court's recent decisions [in Iqbal and Twombly ]. A plaintiff who believes that she has been passed over for a promotion because of her sex will be able to plead that she was employed by Company X, that a promotion was offered, that she applied and was qualified for it, and that the job went to someone else. That is an entirely plausible scenario, whether or not it describes what ‘really’ went on in [the] plaintiff's case.

Swanson v. Citibank, N.A., 614 F.3d 400, 404–05 (7th Cir.2010). Like the Seventh Circuit's hypothetical, Sheppard's complaint puts forward a “straightforward” case of discrimination. She alleges that she was over forty and “received consistently good performance reviews,” but was nevertheless terminated from employment while younger workers in the same position kept their jobs. This

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is an “entirely plausible scenario” of employment discrimination.

--- F.3d at ----, 2012 WL 3983909, * 3 (internal citations omitted).

IV. Arbitration (Excluding Class Action Waivers)

Wisdom v. AccentCare, Inc., 202 Cal.App.4th 591 (2012)(California Supreme Court Grants Petition For Review) Defendant AccentCare employed plaintiffs as on-call staffing coordinators. Part of plaintiffs' duties included ensuring that all cases remained staffed during off hours. Plaintiffs filed a complaint alleging they were not paid for all of the overtime and time they spent handling off-hour calls. Defendants brought a motion to compel arbitration based on an arbitration clause that provided:

I hereby agree to submit to binding arbitration all disputes and claims arising out of the submission of this application. I further agree, in the event that I am hired by AccentCare, that all disputes that cannot be resolved by informal internal resolution which might arise out of my employment with AccentCare, whether during or after that employment, will be submitted to binding arbitration. I agree that such arbitration shall be conducted under the rules then in effect of the American Arbitration Association.

The trial court denied the motion. It found the agreements were procedurally and substantively unconscionable. The court found the agreements procedurally unconscionable because: (1) defendant did not inform plaintiffs that signing the agreement was optional, and the heading of the agreement indicated that signing was mandatory; (2) there was unequal bargaining power between the parties and no possibility to negotiate a meaningful choice by the job seeker; (3) the arbitration agreement was located in the middle of five uniform, single-spaced paragraphs, and was not distinguished in any manner;

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(4) defendant did not explain the meaning of the agreement to plaintiffs; and (5) plaintiffs did not know what binding arbitration meant. The trial court found the agreements were substantively unconscionable due to lack of mutuality – that is, there was no language in the agreement indicating that AccentCare agreed to submit to arbitration. The Court of Appeal affirmed. On March 29, 2012, the California Supreme Court granted the employer's petition for review on the following issue:

Is an arbitration clause in an employment application that provides "I agree to submit to binding arbitration all disputes and claims arising out of the submission of this application" unenforceable as substantively unconscionable for lack of mutuality, or does the language create a mutual agreement to arbitrate all such disputes? (See Roman v. Superior Court (2009) 172 Cal.App.4th 1462.)

Ajamian v. CantorCO2e, L.P., 203 Cal. App. 4th 771, 137 Cal. Rptr. 3d 773 (2012)(Arbitration Provision In Employment Agreement Did Not Provide Unmistakable Evidence That Parties Intended For Arbitrator To Decide Arbitrability) Lena Ajamian sued her former employer for sexual discrimination, sexual harassment, retaliation, failure to pay overtime, failure to provide rest breaks and meal breaks, failure to keep accurate records or to provide required paystubs, failure to pay all amounts due upon termination, and violation of Unfair Competition Law. Her former employer petitioned to compel arbitration. The Superior Court denied the petition. The Former employer appealed contending: (1) the arbitration panel, rather than the court, should have decided whether the arbitration provision in respondent's employment agreement was unconscionable; (2) Ajamian failed to establish that the arbitration provision was unconscionable, and any unconscionable portion of the

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provision should have been severed to permit the arbitration to proceed; and (3) alternatively, arbitration should have been compelled under the terms of an employee handbook. The Court of Appeal held although the arbitration provision was broadly worded and indicated that arbitration might be conducted under the rules of an arbitration service that gives arbitrators the power to decide the validity of arbitration agreements, it did not provide clear and unmistakable evidence that the parties intended to delegate authority to the arbitrator, rather than to the court, to decide the threshold issue of whether the arbitration provision itself was unconscionable. Accordingly, the unconscionability issue was therefore for the court to decide. Furthermore, the provision was procedurally unconscionable and substantively unconscionable in more than one respect, such that the court did not abuse its discretion in concluding that the provision could not be saved by severing the offending terms. In addition, the former employer failed to establish that arbitration should have been compelled under the employee handbook. Samaniego v. Empire Today LLC, 205 Cal. App. 4th 1138 (2012)(Rejecting Argument That Concepcion overruled Armendariz And Refusing To Compel Arbitration) In Samaniego, the Court of Appeal (First Appellate District, Division Three) refused to enforce an arbitration clause, finding it unconscionable under Armendariz, and resoundingly rejected the defendant's argument that Concepcion overruled Armendariz:

Concepcion addresses whether the FAA preempts the Discover Bank rule. The United States Supreme Court held that it does, because "[r]equiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA." But at the same time as the Court repudiated the categorical rule in Discover Bank, it explicitly reaffirmed that the FAA "permits agreements to arbitrate to be invalidated by `generally applicable

27


contract defenses, such as fraud, duress, or unconscionability,' [although] not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." In short, arbitration agreements remain subject, post-Concepcion, to the unconscionability analysis employed by the trial court in this case.

205 Cal. App. 4th at 1150. The Court of Appeal found procedural unconscionability from the facts that: (1) it was presented to the plaintiffs only in English, though some had only a rudimentary grasp of the language and others could not read English at all; (2) the agreements were offered on a non-negotiable, take it or leave it basis, with little or no time for review; and (3) the agreements were 11 single-spaced pages of small-font print riddled with complex legal terminology. The Court of Appeal found substantive unconscionability based on the facts that the agreement: (1) shortened the statute of limitations to sue under the contract from one year to six months; (2) contained a unilateral fee-shifting provision which required employees to pay Empire's attorneys' fees; and (3) provided that claims to enforce non-compete agreements - which, as a practical matter, are only brought by employers - were excluded from the arbitration clause's ambit. Nelsen v. Legacy Partners Residential, Inc., 207 Cal. App. 4th 1115 (2012)(Court Of Appeal Holds That An Employee Must Arbitrate Her Individual Wage Hour Claims Rejecting NLRB D.R. Horton, Inc., Opinion) Lorena Nelsen filed a putative class action lawsuit against her former employer, Legacy Partners Residential, Inc., alleging multiple violations of the California Labor Code. Based on an arbitration agreement she signed, Legacy moved to compel Nelsen to submit her individual claims to arbitration. The trial court granted the motion and Nelsen purported to appeal.

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Although Nelsen fails to meet her burden to show the trial court's order is appealable, the Court of Appeal exercised its discretion to treat the appeal as a petition for writ of mandate. The Court of Appeal held: (1) the arbitration agreement was not unconscionable; and (2) notwithstanding that the agreement precludes class arbitration by its own terms, Nelsen failed to show that compelling her to individual arbitration violates state or federal law or public policy. Accordingly, the Court of Appeal denied Nelsen's petition and affirmed the correctness of the trial court's order. In reaching its decision, the Court of Appeal expressly declined to follow D.R. Horton, Inc., 357 NLRB No. 184 (2012). Truly Nolen of Am. v. Superior Court, 2012 WL 3222211 (2012)(Court Of Appeal Addresses The Impact Of Concepcion And Stolt-Neilsen On Gentry) Alvaro Miranda and Danny Luna filed a class action complaint against Truly Nolen of America alleging violations of California's wage and hour laws. Truly Nolen moved to compel arbitration of the claims under arbitration agreements signed by the parties and requested that the court order plaintiffs to arbitrate on an individual and not a class basis. The arbitration agreements did not contain a specific provision pertaining to the availability or unavailability of classwide arbitration. The court granted the motion to compel arbitration, but rejected Truly Nolen's request that the court order individual arbitration, relying on Gentry v. Superior Court, 42 Cal.4th 443 (2007). Truly Nolen filed a writ of mandate petition challenging the court's refusal to order individual arbitration. The Court of Appeal issued an order to show cause and provided the parties the opportunity to submit supplemental briefing. In its briefs, Truly Nolen contended the trial court erred in relying on Gentry because Gentry has been overruled by the United States Supreme Court in AT & T Mobility LLC v. Concepcion, ––– U.S. ––––, 131 S.Ct. 1740 (2011), and, even if Gentry remains viable, the factual record did not support the application of the Gentry factors in this case.

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The Court of Appeal came close to holding that Concepcion overruled Gentry but ultimately backed away from that conclusion:

Although Concepcion 's reasoning strongly suggests that Gentry's holding is preempted by federal law, the United States Supreme Court did not directly rule on the class arbitration issue in the context of unwaivable statutory rights and the California Supreme Court has not yet revisited Gentry. Thus, we continue to be bound by Gentry under California's stare decisis principles.

2012 WL 3222211 at * 1. However, the Court of Appeal found that the trial court's application of the Gentry elements was unsupported on the factual record before it. Accordingly, the Court of Appeal granted Truly Nolen's petition and ordered the trial court to (1) vacate the portion of the order denying Truly Nolen's motion to order individual arbitration; and (2) provide the parties the opportunity to submit additional evidence and/or argument on the issue of whether the arbitration contract reflects a mutual intent to permit classwide arbitration. Grey v. Am. Mgmt. Services, 204 Cal. App. 4th 803 (2012)(Employer Botches Arbitration Agreement And Employee Gets Second Bite At The Apple) Brandon Grey applied to work as an investment manager for American Management Services (“AMS”). AMS provided Grey with an application packet which contained an Issue Resolution Agreement (“IRA”), which AMS required all applicants to sign as a condition to having their application considered by AMS. The IRA provided that the applicant had to arbitrate any claims that might later arise between the applicant and AMS. Grey signed the IRA. Subsequently, Grey accepted employment with AMS. At that time, AMS required Grey to sign an employment contract. In the “Remedies” section, the contract provided that Grey had to arbitrate

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any dispute arising out of the alleged breach of any provision of this Agreement. A subsequent provision further stated:

This Agreement is the entire agreement between the parties in connection with Employee's employment with [AMS], and supersedes all prior and contemporaneous discussions and understandings.

In the next paragraph, the contract provided:

Employee acknowledges that this Agreement is supplemented by such general employment policies and procedures as [AMS] may implement from time to time. Employee agrees that it is his sole responsibility to remain informed about all applicable general employment policies and guidelines of [AMS] that may be contained in the Employee Handbook or posted on [AMS's] Intranet site.

The IRA and the attached issue resolution rules were posted on AMS's intranet. Grey filed a complaint in superior court against AMS and its then executive Scott Mencaccy. Grey alleged that Mencaccy harassed and ultimately discharged Grey on the basis of his sexual orientation. AMS and Mencaccy petitioned the court to compel Grey to arbitrate his claims under the terms of the IRA. Grey opposed this petition, contending that (1) the contract supersedes the IRA, and (2) the IRA is unconscionable. The court granted the petition and ordered Grey to arbitrate his claims. Grey petitioned the Court of Appeal for a writ of mandate. The Court of Appeal denied the petition. The parties proceeded with binding arbitration. The arbitrator found in favor of AMS and awarded AMS its costs. Grey moved to vacate the award. The trial court confirmed the award.

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Grey appealed contending that the contract superseded the IRA and that because the contract has a narrower scope of arbitrable claims than the IRA, the contract does not compel arbitration for his claims against AMS. The Court of Appeal agreed:

AMS argues the parties did not intend the contract to be final or to supersede the IRA. It contends the plain meaning of the phrase “discussions and understandings” does not apply to written agreements, but only oral ones. Construing the clause as a whole, we interpret it to mean the contract is the final expression of the parties' agreement with respect to Grey's employment and it supersedes the IRA . . . AMS contends in the alternative that the IRA is not an “agreement” but an “employment procedure” that supplements the employment contract . . . The IRA, or Internal Resolution Agreement, does not say it is an employment procedure, but that it is an agreement . . . More fundamentally, a party is not obligated to arbitrate unless he or she has expressly agreed to do so by entering into a valid and enforceable written contract with the party who seeks arbitration. Thus, in order for the IRA to be enforceable on the issue of arbitration, it must be a written contract. Since the IRA predates the employment contract, it was superseded by that contract's integration clause. AMS's final contention is that the language of the IRA shows the parties intended it to apply despite the integration clause in the contract. Appellant argues the IRA is inadmissible parol evidence on the issue of whether the contract was intended to be the final, exclusive agreement between the parties. As we have discussed, the parol evidence rule generally prohibits the introduction of extrinsic evidence—oral or written—to vary or contradict the terms of an integrated written instrument. Parol

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evidence to show that the parties did not intend the writing to constitute the sole agreement will be excluded. While extrinsic evidence can be admitted to explain an ambiguity in a contract, AMS does not argue that the employment contract is ambiguous. Thus, the employment contract supersedes the IRA. AMS cannot use the IRA as extrinsic evidence that the parties did not intend the employment contract to be the sole agreement because it contradicts the plain terms of the contract's integration clause.

204 Cal. App. 4th at 808-09 (internal citations, quotations and footnotes omitted). Kinecta Alternative Fin. Solutions, Inc. v. Superior Court, 205 Cal. App. 4th 506 (2012)(Another Court Of Appeal Addresses The Impact Of Concepcion And Stolt-Neilsen On Gentry) As usual, the brilliant Steven G. Pearl (author of The California Employment Law Blog) had the following incisive comments about the Kinecta case:

Kinecta Alternative Financial Solutions, Inc. v. Superior Court (4/25/12) --- Cal.App.4th ---, presents another interesting angle in the Arbitration Wars. Defendant Kinecta employed plaintiff Malone. Malone signed an employment agreement that included an arbitration clause, but not a class arbitration waiver. Malone filed a putative class action against Kinecta for wage and hour violations. Kinecta moved to compel individual arbitration and to dismiss Malone's class allegations. The trial court (Los Angeles Superior, Judge Abraham Khan) denied the motion to strike class allegations and ordered the parties to arbitrate the entire dispute. Kinecta petitioned for a writ of mandate. The Court of Appeal granted the writ. Reviewing the

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decisions in Discover Bank v. Superior Court (2005) 36 Cal.4th 148, Gentry v. Superior Court (2007) 42 Cal.4th 443, and AT&T Mobility LLC v. Concepcion (2011) __ U.S. __, 131 S.Ct. 1740 (discussed here), the Court noted in particular that Gentry holds:

[W]hen it is alleged that an employer has systematically denied proper overtime pay to a class of employees and a class action is requested notwithstanding an arbitration agreement that contains a class arbitration waiver, the trial court must consider . . . the modest size of the potential individual recovery, the potential for retaliation against members of the class, the fact that absent members of the class may be ill informed about their rights, and other real world obstacles to the vindication of class members' rights to overtime pay through individual arbitration. If it concludes, based on these factors, that a class arbitration is likely to be a significantly more effective practical means of vindicating the rights of the affected employees than individual litigation or arbitration, and finds that the disallowance of the class action will likely lead to a less comprehensive enforcement of overtime laws for the employees alleged to be affected by the employer's violations, it must invalidate the class arbitration waiver to ensure that these employees can "vindicate [their] unwaivable rights in an arbitration forum."

Gentry, 42 Cal.4th at 463. The Court declined to rule on whether Concepcion overrules Gentry, but held instead that, assuming that Gentry is still good law, Malone had not met her burden under Gentry:

http://cawageandhourlaw.blogspot.com/2011/04/at-v-concepcion-supreme-court-holds.html

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Even if Gentry has not been overruled ... Malone had to provide evidence of the four Gentry factors. Plaintiff has the burden of establishing that the arbitration provision (here, limiting arbitration to bilateral arbitration) is invalid by making a factual showing of the four Gentry factors. (Brown v. Ralphs Grocery Co., supra, 197 Cal.App.4th at p. 497.) The record shows that Malone provided no evidence as to any of the four Gentry factors required to support a trial court's determination that the arbitration should proceed as a class action arbitration. Thus there is no evidence, and no substantial evidence, that plaintiff had established a factual basis that would require a declaration that the arbitration agreement was unenforceable. (Ibid.)

Slip op. at 11. The Court then considered whether classwide arbitration was authorized under Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758, 1775–1776 (2010) (discussed here):

By denying Kinecta's motion to dismiss class allegations from Malone's complaint, the order compelling arbitration imposed class arbitration even though the arbitration provision was limited to the arbitration of disputes between Malone and Kinecta. Malone cites no evidence that despite the language of the arbitration provision, the parties agreed to arbitrate disputes of classes of other employees, employee groups, or employee members of classes identified in the complaint. The parties' arbitration agreement

http://cawageandhourlaw.blogspot.com/2010/04/united-states-supreme-court-issues.html

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authorizes arbitration only of “any claim, dispute, and/or controversy that either I may have against the Credit Union (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) or the Credit Union may have against me, arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Credit Union[.]” (Italics added.) We conclude that the parties did not agree to authorize class arbitration in their arbitration agreement. (Stolt-Nielsen, supra, 130 S.Ct. at p. 1776.) Therefore the order denying Kinecta's motion to dismiss class claims without prejudice must be reversed.

Slip op. at 13. The Court did not consider Malone's arguments that the arbitration was unenforceable for a number of reasons because Malone did not seek review of the trial court's order compelling arbitration.

Mr. Pearl’s blog can be accessed at http://cawageandhourlaw.blogspot.com/ Reyes v. Liberman Broad., Inc., 2012 WL 3775879 (2012)(Compelling Arbitration And Finding That D.R. Horton Was Unpersuasive) On May 27, 2010, Jesus Reyes filed a complaint on behalf of a class asserting seven causes of action arising out of alleged wage and hour violations, citing among other statutes Labor Code section 1194. The parties began litigating the case shortly thereafter.

http://cawageandhourlaw.blogspot.com/

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The U.S. Supreme Court decided AT&T Mobility LLC v. Concepcion, -- U.S. –, 131 S. Ct. 1740 (2011), on April 27, 2011. On July 5, 2011 – more than one year after Reyes filed his lawsuit and more than two months after the U.S. Supreme Court decided Concepcion – Liberman filed a motion to compel arbitration. The trial court denied the motion on the ground that Liberman had waived its right to arbitration by its “failure to properly and timely assert it.” On appeal, the Court of Appeal reversed. In reaching this conclusion, the Court of Appeal analyzed the following factors in determining that no waiver of right to arbitrate occurred: ● Whether LBI’s actions were inconsistent with the right to

arbitrate; ● Whether the “litigation machinery [had] been substantially

invoked” and the parties “were well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate;

● Whether a party either requested arbitration enforcement close

to the trial date or delayed for a long period before seeking a stay;

● Whether a defendant seeking arbitration filed a counterclaim

without asking a stay of the proceedings; ● “Whether important intervening steps…had taken place;” ● Whether the delay “affected, misled, or prejudiced” the

opposing party. In reversing, the Court of Appeal also held that D.R. Horton, 357 NLRB 184 (2012), was not persuasive. \\\ \\\

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V. Attorneys' Fees

Henry M. Lee Law Corp. v. Superior Court, --- Cal.Rptr.3d ----, 2012 WL 1255306 (2012)(Attorneys' Fees Belong To The Attorney Unless Otherwise Provided By Attorney-Client Contract) File this case in the "no good deed goes unpunished" category. Henry M. Lee represented Ok Song Chang in a wage and hour lawsuit against A-Ju Tours, Inc. Mr. Lee prevailed and recovered a $62,246.74 judgment in favor of Chang after a jury trial. The trial court also awarded Chang $300,000.00 in attorney fees under Labor Code sections 1194, subdivision (a) and 226, subdivision (e). Chang substituted herself in propria persona for Mr. Lee. Mr. Lee moved to intervene in the action and to amend the post-judgment order awarding attorney fees to make the fee award payable to his law firm. The trial court denied the motion. Mr. Lee filed a writ with the Court of Appeal contending that he is entitled to intervene and that the attorneys' fee award belongs to and should be made payable to him. Chang and A–Ju Tours requested a stipulated reversal of the judgment and the post-judgment order awarding attorney fees, stating that they agreed that reversible error had occurred. They stated that they had reached a settlement and requested that the judgment and order be reversed with directions to the trial court to dismiss the action and order each party to bear its own costs and attorney fees. The Court of Appeal denied the request pursuant to Code of Civil Procedure section 128, subdivision (a) on the grounds that there was a reasonable possibility that Mr. Lee's interests would be adversely affected by the reversal. The Court of Appeal then concluded that Mr. Lee, as a person whose interests were injuriously affected by the order awarding attorney fees to Chang, was entitled to move to vacate the order and enter a new order awarding the attorneys' fees to him. The Court of Appeal also

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concluded that an appeal from the denial of Mr. Lee's motion is not an adequate legal remedy in these circumstances and that extraordinary writ review was appropriate. On the merits of the motion, the Court of Appeal held that an attorneys' fee award under Labor Code sections 1194, subdivision (a) and 226, subdivision (e) should be made payable to the attorney who provided the legal services rather than the client, unless their fee agreement otherwise provides.

VI. Class Action (Arbitration Waivers)

Brown v. Ralphs Grocery Company, 197 Cal.App.4th 489 (2011)(California and U.S. Supreme Courts Decline To Review Court of Appeal Decision That Employer Can Not Enforce Waivers Of The Right To Bring A Representative Action Under PAGA) As everyone knows by now, in April 2011, the U.S. Supreme Court issued yet another pro-corporate decision, AT&T Mobility LLC v. Concepcion, -- U.S. --, 131 S.Ct. 1740 (2011), holding that employers could not only force consumers/employees to sign arbitration agreements but also that those agreements could contain class action waivers. Three months later, in July, in Brown v. Ralphs Grocery Company, 197 Cal.App.4th 489 (2011), the California Court of Appeal considered whether class action waiver covered claims brought pursuant to California's Labor Code Private Attorneys General Act ("PAGA"). Distinguishing AT&T Mobility v. Concepcion on grounds that it "does not purport to deal with the FAA's possible preemption of contractual efforts to eliminate representative private attorney general actions to enforce the Labor Code" the Court of Appeal held that such waivers were unenforceable. The prognosticators claimed that the California Supreme Court would have no choice but to accept the employer's petition for review and reverse. On October 19, 2011, the California Supreme Court denied the employer's petition for review.

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Pouncing, the defense bar boldly predicted that a summary reversal on the merits by the U.S. Supreme Court would not be surprising. Others suggested that U.S. Supreme Court send the case back to the California Supreme Court to review the case again and to apply the standards set forth in AT&T Mobility v. Concepcion as it did in Sonic-Calabasas A, Inc. v. Moreno. Shockingly, on April 16, 2012, the U.S. Supreme Court denied certiorari.

VII. Class Action (Non-Arbitration Waivers)

***Duran v. U.S. Bank Nat'l Ass'n, 203 Cal.App.4th 212 (2012)(Employer Was Deprived Of Due Process By Trial Court's Erroneous Use Of Representative Sampling)(Petition For Review Granted) U.S. Bank ("USB") appealed a $15 million judgment that was entered against it following a bifurcated bench trial. The plaintiffs are 260 current and former business banking officers who claimed they were misclassified by USB as outside sales personnel exempt from overtime pay. The Court of Appeal agreed with USB that the trial management plan prevented it from defending against the individual claims of over 90 percent of the class because the plan erroneously relied on a representative sampling of 21 of the 260 class members. Citing the Supreme Court's opinion in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), the Court stated that "While Wal-Mart is not dispositive of our case, we agree with the reasoning that underlies the court's view that representative sampling may not be used to prevent employers from asserting individualized affirmative defenses in cases where they are entitled to do so." See also Muldrow v. Surrex Solutions Corp., 202 Cal. App. 4th 1232 (2012) (trial court properly determined that recruiters were exempt commissioned employees).

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But see Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004, ___ (2012)(Werdegar concurring)(suggesting that, at least with respect to the extent of liability, representative sampling is permissible – “For purposes of class action manageability, a defense that hinges liability vel non on consideration of numerous intricately detailed factual questions, as is sometimes the case in misclassification suits, is different from a defense that raises only one or a few questions and that operates not to extinguish the defendant's liability but only to diminish the amount of a given plaintiff's recovery. We have long settled that individual damages questions will rarely if ever stand as a bar to certification . . . Instead, we have encouraged the use of a variety of methods to enable individual claims that might otherwise go unpursued to be vindicated, and to avoid windfalls to defendants that harm many in small amounts rather than a few in large amounts. Representative testimony, surveys, and statistical analysis all are available as tools to render manageable determinations of the extent of liability.”)(Emphasis added; citations and footnote omitted). Harris v. Superior Court, 207 Cal. App. 4th 1225 (2012)(Properly Sticking To Its Guns, Court Of Appeal, On Remand, Again Reverses Orders Decertifying Class and Denying Plaintiffs' Motion for Summary Judgment of Exemption Defense) On remand from the California Supreme Court, the Court of Appeal summarized the case as follows:

Employers claim that the administrative exemption to the overtime compensation requirements applies to claims adjusters. Adjusters claim that the exemption does not apply. In addition, Adjusters contend that the issue of whether their work duties are of the kind required for application of the administrative exemption is a predominant issue common to the claims of all putative class members, warranting class certification. The trial court initially agreed and certified Adjusters' proposed class. Later, however, the court revisited the issue and decertified the class for all claims arising after October 1,

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2000, on the ground that under Wage Order 4–2001, but not under Wage Order 4–1998, the work duties issue is neither dispositive nor a predominant issue that would justify class treatment of Adjusters' claims. Both sides petitioned for writ review. Employers seek decertification of the portion of the class that remains certified. Adjusters seek recertification of the decertified portion of the class and also challenge the trial court's denial of their motion for summary adjudication of Employers' affirmative defense based on the administrative exemption. We grant Adjusters' petition and deny Employers' petition because Adjusters' primary work duties are the day-to-day tasks of adjusting individual claims not directly relating to management policies or general business operations.

207 Cal. App. 4th at 144. Knepper v. Rite Aid Corp., 675 F.3d 249 (3d Cir. 2012)(“Hybrid” Wage And Hour Class Actions Approved By Third Circuit) This case involves a putative conflict between an opt-out Fed.R.Civ.P. 23(b)(3) damages class action based on state statutory wage and overtime laws that parallel the federal Fair Labor Standards Act (FLSA) and a separately filed opt-in collective action under 29 U.S.C. § 216(b) of the FLSA. Both suits allege violations arising from the same conduct or occurrence by the same defendant. At issue is whether federal jurisdiction over the Rule 23 class action based solely on diversity under the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d), is inherently incompatible with jurisdiction over the FLSA action, and whether the FLSA preempts state laws that parallel its protections. The Third Circuit concluded that federal jurisdiction over class actions asserting claims under state statutory wage and overtime laws paralleling the FLSA is not precluded, on an “inherent incompatibility” theory, by a separately filed opt-in collective action under the FLSA. With its opinion in Knepper, the Third Circuit joined the other four circuits that have rejected the inherent incompatibility argument, finding that Congress did not intend to eliminate opt-out class actions entirely when it amended § 216(b).

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VIII. Computer Fraud and Abuse Act

U.S. v. Nosal, --- F.3d ----, 2012 WL 1176119 (9th Cir. 2012)(En Banc, Ninth Circuit Holds That CFAA Does Not Extend To Violations Of So-Called "Use Restrictions” Promulgated By Employer Policy And/Or Websites) For some time, employers have been utilizing the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030 et. seq., in an effort to criminalize employee violations of the "use restrictions" contained in employer electronic communication policies. The Ninth Circuit's en banc decision in Nosal should put an end to this reprehensible practice. Writing for the 9 – 2 en banc court, Judge Kozinski summarized the issue before the court thusly:

Computers have become an indispensable part of our daily lives. We use them for work; we use them for play. Sometimes we use them for play at work. Many employers have adopted policies prohibiting the use of work computers for nonbusiness purposes. Does an employee who violates such a policy commit a federal crime? How about someone who violates the terms of service of a social networking website? This depends on how broadly we read the Computer Fraud and Abuse Act.

--- F.3d at ----. David Nosal used to work for Korn/Ferry, an executive search firm. Shortly after he left the company, he convinced some of his former colleagues who were still working for Korn/Ferry to help him start a competing business. The employees used their log-in credentials to download information from a confidential database on the company's computer, and then transfer that information to Nosal. The employees were authorized to access the database, but Korn/Ferry had a policy that forbade disclosing confidential information. The government indicted Nosal on twenty counts, including violations of

43


the CFAA for aiding and abetting the Korn/Ferry employees in “exceed[ing their] authorized access” with intent to defraud. Nosal filed a motion to dismiss the CFAA counts, arguing that the statute targets only hackers, not individuals who access a computer with authorization but then misuse information they obtain by means of such access. Relying on LVRC Holdings LLC v. Brekka, 581 F.3d 1127(9th Cir. 2009), which construed narrowly the phrases “without authorization” and “exceeds authorized access” in the CFAA, dismissed the CFAA counts against Nosal. The government appealed. A three judge panel of the Ninth Circuit reversed. Judge Kozinski, writing for the 9 – 2 en banc majority reversed that decision (affirming the district court's dismissal of the CFAA claims) focusing on the potential for overbroad and arbitrary application of the CFAA:

In the case of the CFAA, the broadest provision is subsection 1030(a)(2)(C), which makes it a crime to exceed authorized access of a computer connected to the Internet without any culpable intent. Were we to adopt the government’s proposed interpretation, millions of unsuspecting individuals would find that they are engaging in criminal conduct. Minds have wandered since the beginning of time and the computer gives employees new ways to procrastinate, by chatting with friends, playing games, shopping or watching sports highlights. Such activities are routinely prohibited by many computer-use policies, although employees are seldom disciplined for occasional use of work computers for personal purposes. Nevertheless, under the broad interpretation of the CFAA, such minor dalliances would become federal crimes. While it’s unlikely that you’ll be prosecuted for watching Reason.TV on your work computer, you could be. Employers wanting to rid themselves of troublesome employees without following proper procedures could threaten to report them to the FBI unless they quit. Ubiquitous, seldom-

44


prosecuted crimes invite arbitrary and discriminatory enforcement.

. . . Employees who call family members from their work phones will become criminals if they send an email instead. Employees can sneak the sports section of the New York Times to read at work, but they’d better not visit ESPN.com. And Sudoku enthusiasts should stick to the printed puzzles, because visiting ww.dailysudoku.com from their work computers might give them more than enough time to hone their Sudoku skills behind bars.

--- F.3d at ----. Recently, the U.S. Solicitor General decided not to seek certiorari of the Nosal decision before the Supreme Court. WEC Carolina Energy Solutions LLC v. Miller, 687 F.3d 199, 2012 WL 3039213 (4th Cir. 2012)(Fourth Circuit Holds That CFAA Does Not Extend To Violations Of So-Called "Use Restrictions” Promulgated By Employer Policy And/Or Websites) In holding that the CFAA does not extend to violations of employer’s so-called "use restrictions,” the Fourth Circuit wrote:

Our conclusion here likely will disappoint employers hoping for a means to rein in rogue employees. But we are unwilling to contravene Congress's intent by transforming a statute meant to target hackers into a vehicle for imputing liability to workers who access computers or information in bad faith, or who disregard a use policy. Providing such recourse not only is unnecessary, given that other legal remedies exist for these grievances, but also is violative of the Supreme Court's counsel to construe criminal statutes strictly. Thus, we reject an interpretation of the CFAA that imposes liability on

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employees who violate a use policy, choosing instead to limit such liability to individuals who access computers without authorization or who obtain or alter information beyond the bounds of their authorized access.

--- F.3d at ---- (citations omitted). Given that the Eleventh, Fifth, and Seventh Circuits permit employers to pursue CFAA claims against employees who violate computer use policies, there is now a split in the circuits such that the Supreme Court may decide to resolve this issue. See United States v. Rodriguez, 628 F.3d 1258 (11th Cir. 2010); United States v. John, 597 F.3d 263 (5th Cir. 2010); Int’l Airport Ctrs., LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006). Dennis v. Kellogg Co., --- F.3d ----, ---- WL ------- (9th Cir. 2012)(Approval Of Class Action Settlement That Included Cy Pres Distributions To Unidentified Charities Was An Abuse Of Discretion) The Ninth Circuit aptly summarized this case as follows:

In this false advertising case, we confront a class action settlement, negotiated prior to class certification, that includes cy pres distributions of money and food to unidentified charities. It also includes $2 million in attorneys’ fees while offering class members a sum of (at most) $15. After carefully reviewing the class settlement, we conclude that it must be set aside. The district court did not apply the correct legal standards governing cy pres distributions and thus abused its discretion in approving the settlement. The settlement neither identifies the ultimate recipients of the product and cash cy pres awards nor sets forth any limiting restriction on those recipients, other than characterizing them as charities that feed the indigent. To the extent that we can meaningfully review such distributions where the parties fail to identify the recipients, we hold that both cy pres portions of the settlement are not sufficiently related

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to the plaintiff class or to the class’s underlying false advertising claims. Moreover, the $5.5 million valuation the parties attach to the product cy pres distribution is, at best, questionable. We therefore reverse the district court’s approval of the settlement, vacate the judgment and the award of attorneys’ fees, and remand for further proceedings consistent with this opinion.

----- WL ------, at * .

IX. Disability Discrimination

Samper v. Providence St. Vincent Medical Center, --- F.3d ---, 2012 WL 1194141 (9th Cir. 2012)(Regular Attendance Can Be An Essential Function Of Certain Positions) Monika Samper was a neo-natal intensive care unit ("NICU") nurse at Providence St. Vincent Medical Center ("Providence"). Providence had an attendance policy that allows its employees to take up to five unplanned absences during a rolling twelve-month period. In addition, unplanned absences related to family medical leave, jury duty, bereavement leave and other approved bases are not counted towards the hospital's limit, and each such absence, no matter long, counts as only one occurrence. Samper suffers from fibromyalgia, a condition that limits her sleep and causes her chronic pain. As an accommodation, she requested to be relieved from the hospital's attendance policy. The hospital denied her request. Thereafter, the hospital fired Samper when she had seven absences in a twelve month period. Samper filed suit alleging, among other claims, a violation of the ADA due to failure to accommodate. The district court granted summary judgment in favor of Providence, reasoning that because Samper was unable to adhere to Providence's attendance policy, she was unqualified for her position as a matter of law. Samper appealed.

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Writing broadly where it should have written narrowly, the Ninth Circuit held that attendance can be essential:

It is a “rather common-sense idea ... that if one is not able to be at work, one cannot be a qualified individual.” Waggoner v. Olin Corp., 169 F.3d 481, 482 (7th Cir.1999). Both before and since the passage of the ADA, a majority of circuits have endorsed the proposition that in those jobs where performance requires attendance at the job, irregular attendance compromises essential job functions. Attendance may be necessary for a variety of reasons. Sometimes, it is required simply because the employee must work as “part of a team.” Other jobs require face-to-face interaction with clients and other employees. Yet other jobs require the employee to work with items and equipment that are on site. The common-sense notion that on-site regular attendance is an essential job function could hardly be more illustrative than in the context of a neo-natal nurse. This at-risk patient population cries out for constant vigilance, team coordination and continuity. As a NICU nurse, Samper's job unites the trinity of requirements that make regular on-site presence necessary for regular performance: teamwork, face-to-face interaction with patients and their families, and working with medical equipment.

. . . . Samper's performance is predicated on her attendance; reliable, dependable performance requires reliable and dependable attendance. An employer need not provide accommodations that compromise performance quality—to require a hospital to do so could, quite literally, be fatal.

--- F.3d at ---.

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E.E.O.C. v. United Airlines, Inc., 2012 WL 3871503 (7th Cir. 2012)(ADA Mandates That Employer Appoint Employees With Disabilities To Vacant Positions For Which They Are Qualified) In a case concerning an issue that the Ninth Circuit has not yet addressed, the Seventh Circuit recently switched sides and adopted a pro-employee position. The issue: Does the ADA require an employer to skip a best-qualified selection policy and appoint employees with disabilities to vacant positions for which they are qualified? Previously, in E.E.O.C. v. Humiston-Keeling, Inc., 227 F.3d 1024 (7th Cir. 2000), the Seventh Circuit held that an employee was not required to transfer a disabled employee to a position as a reasonable accommodation if the employee was not the best-qualified candidate:

But there is a difference, one of principle and not merely of cost, between requiring employers to clear away obstacles to hiring the best applicant for a job, who might be a disabled person or a member of some other statutorily protected group, and requiring employers to hire inferior (albeit minimally qualified) applicants merely because they are members of such a group. That is affirmative action with a vengeance. That is giving a job to someone solely on the basis of his status as a member of a statutorily protected group. It goes well beyond enabling the disabled applicant to compete in the workplace, or requiring the employer to rectify a situation (such as lack of wheelchair access) that is of his own doing.

227 F.3d at 1028-29. In E.E.O.C. v. United Airlines, Inc., the Seventh Circuit reversed Humiston–Keeling:

While we understand that this may be a close question, we now make clear that Humiston–Keeling did not survive Barnett. We reverse and hold that the ADA does indeed mandate that an employer appoint employees with

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disabilities to vacant positions for which they are qualified, provided that such accommodations would be ordinarily reasonable and would not present an undue hardship to that employer.

WL 3871503 (7th Cir. Sept. 7, 2012) E.E.O.C. v. United Airlines, Inc. creates a split in the Circuit Courts of Appeal which will likely have to be resolved by the Supreme Court. Boitnott v. Corning Inc., 669 F.3d 172 (4th Cir. 2012)(Employee's Inability To Work Overtime Due To Cardiac Difficulties And Treatment Was Not A Substantial Limitation On A Major Life Activity) Michael R. Boitnott sued his employer, Corning Incorporated under the Americans with Disabilities Act claiming inability to work more than eight hours per day and rotate day/night shifts as a result of his physical impairments rendered him disabled under the ADA and that Corning had violated the ADA by failing to provide him a “reasonable accommodation” for his disability. Corning responded that, since Boitnott was physically able to work a normal forty hour work week and had not demonstrated that his impairments significantly restricted the class of jobs or a broad range of jobs available to him, he could not establish that he had a “substantial” limitation upon which to base a claim of disability under the ADA. The District Court granted summary judgment to Corning. The Fourth Circuit affirmed:

Numerous sister circuits have addressed the issue of whether an employee under the ADA is substantially limited” in “one or more major life activities if the employee is capable of working a normal forty hour work week but is not able to work overtime because of a physical or mental impairment. All circuit courts which have addressed this issue have held that an employee under the ADA is not “substantially” limited if he or she can handle a forty hour work week but is incapable of performing overtime due to an impairment.

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669 F.3d at 175 (internal quotations and citations omitted). However, the Fourth Circuit recognized that the determination of whether an employee capable of working 40 hours in a week but unable to work overtime had a disability necessitated an individualized inquiry and that in certain circumstances such an individual might be disabled:

We have also reviewed the record, in a light most favorable to Boitnott as the non-moving party, to determine if there was evidence to demonstrate that his inability to work overtime “significantly restricted” his “ability to perform either a class of jobs or a broad range of jobs in various classes as compared to the average person having comparable training, skills and abilities.” 29 C.F.R. § 1630.2(j)(3). This individualized inquiry is in recognition that Boitnott's particular impairments and/or the labor market in his area could, under certain circumstances, make his inability to work overtime a substantial restriction on a class of jobs or a broad range of jobs in his area of maintenance engineering. The record contains no evidence indicating that Boitnott's inability to work overtime “significantly restricted” his ability to perform a class of jobs or a broad range of jobs in various classes.

669 F.3d at 176-77 (internal quotations and citations omitted). Kallail v. Alliant Energy Corporate Services, Inc., 2012 WL 3792609 (8th Cir. 2012)(Ability To Work A Rotating Shift Is An Essential Function Of The Position) Terri Kallail was employed by Alliant Energy Corporate Services as a Resource Coordinator at the Distribution Dispatch Center ("DDC") in Cedar Rapids. Employees in the DDC monitor the distribution of electricity, gas, and steam throughout the service territory, schedule and route resources to respond to routine and emergency work, and

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handle outage and other emergency situations so as to restore service and maintain system integrity. To provide coverage twenty-four hours per day, seven days a week, Alliant requires Resource Coordinators at the DDC to work a rotating schedule. Resource Coordinators work in teams of two on nine-week schedules that rotate between twelve-hour and eight-hour shifts, and day and night shifts. During the first week, the team assists with storm work or outages and fills in for other Resource Coordinators who are absent from work. The second week is for training; the team travels to different service areas to learn about the areas and meet the employees who work in them. In the remaining weeks, Resource Coordinators work shifts differing in length, time of day, and day of the week. Kallail has Type I diabetes and is dependent on insulin. To maintain acceptable blood sugar levels, Kallail must test her blood sugar six to eight times per day, and must carefully manage the timing, frequency, quantity, carbohydrate count, and quality of the food and drink that she consumes. Kallail also suffers from Peripheral Vascular Disease (“PVD”), which significantly limits circulation to her legs and feet. As a result of her PVD, it is difficult for Kallail to walk or do anything else that causes her to lose blood flow to her legs. By the fall of 2004, Kallail had increased difficulty managing her diabetes while working a rotating shift. The rotating shift was causing her to experience erratic changes in blood pressure and blood sugar, and it put her at a higher risk for diabetic complications and death. Kallail's physician recommended that Kallail work only straight day shifts. Alternatively, Kallail notified the Company that she would consider reassignment to another position. In response, the company provided Kallail with a list of three open positions for which she could apply through the normal process. Kallail informed Kleisch that she was not interested in any of the three positions because one required walking, which she was unable to do, one paid less than her current position, and one would have required her to relocate or to commute a significant distance to work. Eventually, Alliant offered Kallail reassignment to a Customer Operations Assistant II position in Cedar

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Rapids. Kallail declined the position, and applied for and received short-term disability benefits. She then sued Alliant, alleging disability discrimination, in violation of the Americans with Disabilities Act (“ADA”), 42 U.S.C. §§ 12101–12213, because the Company refused to accept her proposal to work a regular eight-hour day shift as a Resource Coordinator. The District Court granted Alliant's motion for summary judgment finding that the rotating shift was an essential function of the Resource Coordinator position. On appeal, Kallail argues that the district court erred in concluding that the rotating shift was an essential function of the Resource Coordinator position. Rather, she contends that she was able to perform the essential functions of the position, which did not include the rotating shift, with a reasonable accommodation. The Eighth Circuit concluded that the ability to work a rotating shift was an essential function of the position and affirmed:

Alliant has determined that the rotating shift is essential to the Resource Coordinator position, and lists it as a requirement on the written job description for the position. According to Alliant, the rotating shift provides enhanced experience and training for Resource Coordinators by allowing them to become familiar with all geographic territories in Alliant's service area, and to receive on-the-job training by working with different partners and Senior Resource Coordinators. This enhanced training also allows Alliant to handle emergencies more effectively, because each Resource Coordinator summoned during an emergency will have experience working in all geographic areas and with all personnel. Shift rotation also enhances the non-work life of Resource Coordinators by spreading the less desirable shifts—nights and weekends—among all Resource Coordinators. If Kallail were switched to a straight day shift and not required to work the rotating shift, then other Resource Coordinators would have to work more night and weekend shifts.

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2012 WL 3792609, * 4. Kroll v. White Lake Ambulance Auth., 2012 WL 3590284 (6th Cir. 2012)(Psychological Counseling That Employer Instructed Employee To Attend Was A Prohibited Medical Examination) The Sixth Circuit summarized this case as follows:

Emily Kroll (“Kroll”) appeals the district court's grant of summary judgment in favor of White Lake Ambulance Authority (“WLAA”), Kroll's former employer, on claims under the Americans with Disabilities Act (“ADA”). Kroll argues that the district court erred in holding as a matter of law that the counseling WLAA ordered Kroll to attend does not constitute a “medical examination” under 42 U.S.C. § 12112(d)(4)(A). WLAA contends that the district court properly granted summary judgment in its favor and asserts, for the first time on appeal, that Kroll lacks standing to bring suit. This dispute presents an issue of first impression in the Sixth Circuit as to the meaning of “medical examination” under 42 U.S.C. § 12112(d)(4)(A). For the reasons that follow, we VACATE the judgment of the district court and REMAND for further proceedings consistent with this opinion.

2012 WL 3590284, at * 1. Magnus v. St. Mark United Methodist Church, 688 F.3d 331 (7th Cir. 2012)(Under ADA, Employers Need Not Make Reasonable Accommodations For A Non-Disabled Employee Responsible For Caring For A Disabled Person) In Magnus, the Seventh Circuit held that an employer can lawfully fire a non-disabled employee because her responsibilities caring for a disabled child preclude her from working weekends:

We agree with the district court that “it is ... difficult to

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escape the conclusion that the crux of this case remains Magnus' belief that she should not be made to work on weekends when she needs to care for her daughter.” Unfortunately for Magnus, despite the fact that the church may have placed her in a difficult situation considering her commendable commitment to care for her disabled daughter, she was not entitled to an accommodated schedule.

688 F.3d at 339 (citations omitted).

X. Discrimination & Harassment (Generic Issues)

Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, -- U.S. --, 132 S.Ct. 694 (2012) (First Amendment Precludes "Minister" From Suing Religious Employer For Wrongful Termination) The EEOC filed a lawsuit against a member congregation of Lutheran Church, alleging that Cheryl Perich, a “called” teacher (meaning she had a “diploma of vocation” designating her as a commissioned minister), at its school had been fired in retaliation for threatening to file an Americans with Disabilities Act lawsuit. The Supreme Court summarized the question presented in the case as follows:

Certain employment discrimination laws authorize employees who have been wrongfully terminated to sue their employers for reinstatement and damages. The question presented is whether the Establishment and Free Exercise Clauses of the First Amendment bar such an action when the employer is a religious group and the employee is one of the group's ministers.

-- U.S. at --, 132 S.Ct. at 699. The Supreme Court answered this question in the affirmative, holding that both the Establishment and Free Exercise Clauses of the First

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Amendment trump anti-discrimination legislation purporting to restrict religious employers from firing "ministers":

Until today, we have not had occasion to consider whether this freedom of a religious organization to select its ministers is implicated by a suit alleging discrimination in employment. The Courts of Appeals, in contrast, have had extensive experience with this issue. Since the passage of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and other employment discrimination laws, the Courts of Appeals have uniformly recognized the existence of a “ministerial exception,” grounded in the First Amendment, that precludes application of such legislation to claims concerning the employment relationship between a religious institution and its ministers. We agree that there is such a ministerial exception. The members of a religious group put their faith in the hands of their ministers. Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group's right to shape its own faith and mission through its appointments. According the state the power to determine which individuals will minister to the faithful also violates the Establishment Clause, which prohibits government involvement in such ecclesiastical decisions.

-- U.S. at --, 132 S.Ct. at 705-706. The Supreme Court then passed on the opportunity to set forth a precise definition of the term "minister":

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Every Court of Appeals to have considered the question has concluded that the ministerial exception is not limited to the head of a religious congregation, and we agree. We are reluctant, however, to adopt a rigid formula for deciding when an employee qualifies as a minister.

-- U.S. at --, 132 S.Ct. at 707. Instead, in concluding that Perich qualified as a "minister," the Supreme Court looked to the particular facts of the case including that: • The Church held Perich out as a minister; • Perich's title as a minister reflected a significant degree of religious training followed by a formal process of commissioning; • Perich held herself out as a minister of the Church; and • Perich's job duties reflected a role in conveying the Church’s message and carrying out its mission. Justice Thomas filed a concurring opinion in which he would have gone further and held that a "minister" is anyone whom a religious group says, in good faith, is a minister. Justice Alito, with whom Justice Kagan joined, filed a concurring opinion in which he wrote that he would reserve the ministerial exemption for personnel essential to the performance of religious functions such as the conducting of worship services and other religious ceremonies and rituals, as well as the critical process of communicating the faith. Townsend v. Benjamin Enterprises, --- F.3d ----, 2012 WL 1605758 (2nd Cir. 2012)(Addresses Two Open Questions Regarding Internal Investigations and the Faragher/Ellerth Defense) In this case, the Second Circuit addressed to issues of first impression: (1) does the participation clause of Title VII's anti-retaliation provision protect participation in an internal employer investigation not associated with any formal EEOC charge; (2)

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is the Faragher/Ellerth affirmative defense available when the employer's senior executive, proxy or alter ego committed the harassment in violation of Title VII. Plaintiff Martha Townsend, an employee of Benjamin Enterprises, Inc. ("BEI"), alleged that she was sexually harassed by the husband of BEI’s president. The alleged harasser was also the sole corporate Vice-President of BEI and a shareholder of the company. Karlean Victoria Grey–Allen, the former Human Resources Director at BEI, also sued BEI alleging that she was fired in retaliation for her participation in BEI’s internal investigation of Townsend’s allegations. The district court granted summary judgment dismissing Grey–Allen's retaliation claims. Townsend's sexual harassment claim went to trial and a jury returned a verdict in favor of Townsend against BEI. Cross-appeals resulted. First, Grey–Allen challenged the order granting summary judgment dismissing her Title VII retaliation claim. The district court granted summary judgment on the ground that Grey–Allen's participation in an internal employer investigation into Townsend's sexual harassment allegations, an investigation that was not connected to any formal charge with the EEOC, did not qualify as protected activity under the participation clause of Title VII's anti-retaliation provision. The Second Circuit affirmed on the basis that the anti-retaliation language of Title VII simply does not encompass "participating" in an employer's internal investigation unrelated to an EEOC charge:

Grey–Allen contends that the language “participate[ ] in any manner in an investigation, proceeding, or hearing under this subchapter,” 42 U.S.C. § 2000e–3(a), encompasses participation in any proceeding intended to remedy employment discrimination under Title VII, including internal sexual harassment investigations not connected with any formal EEOC proceeding or charge. We decline to adopt such a strained interpretation of the language of the statute.

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The language of the participation clause confines those proceedings in which participation is protected to those “under this subchapter,” meaning subchapter VI of Chapter 21 of Title 42. 42 U.S.C. §§ 2000e–2000e–17. Much of this subchapter is devoted to describing the enforcement powers of the EEOC and the procedures by which the EEOC carries out its investigations and hearings. See, e.g., 42 U.S.C. §§ 2000e–5, 2000e–8, 2000e–9. An “investigation ... under this subchapter” thus plainly refers to an investigation that “occur[s] in conjunction with or after the filing of a formal charge with the EEOC; it does not include participating in an employer's internal, in-house investigation, conducted apart from a formal charge with the EEOC.” Total Sys. Servs., 221 F.3d at 1174. Every Court of Appeals to have considered this issue squarely has held that participation in an internal employer investigation not connected with a formal EEOC proceeding does not qualify as protected activity under the participation clause.

--- F.3d at ----. The Second Circuit also rejected the Grey-Allen's contention that the Supreme Court's Faragher/Ellerth decision extended protection to employees who participate in employer internal investigations:

Grey–Allen also contends that the affirmative defense created by the Supreme Court in Faragher and Ellerth brings internal investigations “under” Title VII within the language of the participation clause. In Faragher and Ellerth, the Supreme Court established an affirmative defense to an employer's vicarious liability for a hostile work environment created by a supervisor of the plaintiff employee. To raise such a defense successfully, the employer must not have taken a tangible employment

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action against the plaintiff and must demonstrate: “(a) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.” Faragher, 524 U.S. at 807; Ellerth, 524 U.S. at 765. While the Faragher/Ellerth affirmative defense creates an incentive for employers to conduct internal investigations in order to show that they have met the first prong of this defense, it does not impose an obligation on employees to participate in such investigations as a necessary prerequisite to bringing a discrimination claim under Title VII. Faragher and Ellerth do not provide a basis for bringing internal investigations not associated with a formal EEOC charge “under this subchapter” within the language of the participation clause.

--- F.3d at ---- (internal citation omitted). Second, BEI challenged the district court's order denying their post-trial motion for judgment as a matter of law or, in the alternative, for a new trial. It argued that the district court erred in rejecting its argument that there is no “proxy” or “alter ego” exception to the Faragher/Ellerth affirmative defense:

BEI [argues] that the district court erred in concluding that the doctrine of proxy/alter ego liability survives Faragher and Ellerth. [It] contend[s] that the Faragher/Ellerth affirmative defense remains available even when the alleged harasser holds a sufficiently high position within the hierarchy of an organization to be considered the organization's proxy or alter ego. This is a question of first impression in this Court. This argument cannot be squared with a fair reading of Faragher and Ellerth.

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. . . .

Every Court of Appeals to have considered this issue has held that the Faragher/Ellerth affirmative defense is unavailable when the supervisor in question is the employer's proxy or alter ego.

. . . . In sum, there was no error in the district court's conclusion that the Faragher/Ellerth defense is unavailable when the alleged harasser is the employer's proxy or alter ego and in the district court's denial of the defendants' posttrial motion on this basis.

--- F.3d at ----. The Second Circuit expressed no opinion on whether participation in an internal investigation that is begun after a formal charge is filed with the EEOC falls within the scope of the participation clause. In a concurring opinion, the Hon. Raymond J. Lohier Jr. recommended that Congress needed to fix Title VII to avoid this situation:

[I]t is up to Congress, now accustomed to the centrality of internal investigations in the employment context as a result of these developments, to consider the issue. Congress is best placed to fill this statutory gap between the text and history of the participation clause on the one hand, and Title VII's broad antiretaliation goals on the other hand. It may decide to do so by clarifying that the participation clause prohibits private employers from firing their human resources directors and EEO officers simply because they have conducted an internal investigation of, say, a sexual harassment complaint.

--- F.3d at ---- (Emphasis in original).

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The Hon. Raymond J. Lohier Jr. also suggested that the outcome may have been different under the "opposition" clause:

[I]n agreeing that Grey–Allen was not protected from retaliation under the participation clause as Congress conceived it in 1964, the majority and I take some solace in the possibility that, after Crawford, employees in Grey–Allen's position will be protected by the opposition clause. That remains to be decided; whether a human resources director who neutrally investigates a claim of discrimination nevertheless can be said to “oppose” a discriminatory practice is an open question in this Circuit.

--- F.3d at ---- (Emphasis in original). The Hon. Raymond J. Lohier Jr. also suggested that consulting with a state FEP agency would have also been sufficient to gain the protection of Title VII's participation clause. Rehmani v. Superior Court, --- Cal.Rptr.3d ----, 2012 WL 1034533 (2012)(Fantastic Hostile Work Environment Summary Judgment Case!) Rehmani is a fantastic hostile work environment summary judgment case in which the California Court of Appeal reiterated that "Whether an employee was subjected to a hostile work environment is ordinarily one of fact." As described below, it addresses a fact pattern that we frequently encounter – (1) co-workers who make one or two harassing comments in combination with rudeness, condescension, dismissive or other inappropriate interpersonal relations; (2) complaints by the plaintiff about that conduct that don't necessarily utilize the words "harassment," "discrimination," or mention the plaintiff's protected class; and (3) a Human Resources investigation into those complaints that concludes there is no discrimination or harassment. Mustafa Rehmania, a Muslim born in Pakistan, worked as a System Test Engineer for Ericsson. During his employment at Ericsson,

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Rehmania had coworkers from at least 12 different countries, including India, China, and Pakistan. Rehmania alleged that three of those coworkers—Amit Patel, Aneel Choppa, and Ashit Ghevaria— harassed him based on his Pakistani nationality and his Muslim faith, and that his supervisor, Afarin Daftari, took no remedial action when he reported this conduct. Subsequently, Rehmani reported to the HR Director, Dawn Ehrsam, that the Indian employees had harassed him by being uncooperative, humiliating him over technical matters, providing him with a lack of support, and being rude to him. Rehmani also complained that he had suffered “salary discrimination” because his salary was not commensurate with his years of experience, as well as “promotion discrimination” because Indian employees were promoted while he was not. Based on her investigation, the HR director, Dawn Ehrsam, concluded that there was no evidence of discrimination or harassment based on national origin or religion. Shortly thereafter, Ericsson fired Rehmani and he sued for hostile work environment harassment based on his religion and national origin and wrongful termination. Ericsson moved for summary adjudication contending that the comments alleged to be harassing did not relate to national origin or religion and could not be considered severe or pervasive. The superior court granted summary adjudication of the first two causes of action, because the undisputed facts “demonstrate that Plaintiff was not subjected to unwelcome harassment based on religion and/or national origin, and/or the harassment did not unreasonably interfere with his work performance by creating an intimidating, hostile, or offensive work environment.” Rehmani then filed a petition for a writ of mandate, seeking immediate relief to foreclose the prospect of duplicate trials should an appeal result in a favorable outcome. Initially, the Court of Appeal reiterated the Supreme Court's decision in Roby v. McKesson Corp., 47 Cal.4th at 686, 709 (2009), that ultimate employment actions such hiring, promotions, favorable work assignments, and salary increases could be used to demonstrate a hostile work environment:

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Rehmani's evidence in support of his discrimination claims—notably Ericsson's favoritism toward Indian engineers in hiring, promotions, salary increases, and work assignments and the managers' practice of assigning non-Indian employees to tasks that help the Indian employees look impressive—may also be relevant in proving a hostile workplace.

--- Cal.Rptr.3d at ----. Finally, citing Nazir v. United Airlines, Inc., 178 Cal.App.4th 243, 264 (2009), the Court of Appeal held that "[w]hether an employee was subjected to a hostile work environment is ordinarily one of fact," granted Rehmani's writ, and instructed the Superior Court to enter a new order denying Erisson's motion for summary adjudication. Shelley v. Geren, 666 F.3d 599 (9th Cir. 2012)(Evidence Of A Plaintiff's Superior Qualifications, Standing Alone, May Be Sufficient To Prove Pretext)

In this age discrimination case – See § __ Age Discrimination for more detailed information about the facts of the case – the Ninth Circuit held that evidence of a plaintiff's superior qualifications, standing alone, may be sufficient to prove pretext. This is obviously very helpful language. The Ninth Circuit also held rejected the argument that no discrimination can be found when an employer interviews many people possessing the same protected classification as the plaintiff even if the job ultimately goes to someone outside of the protected classification:

The Corps argues that age bias cannot be inferred in the selection for the permanent position, because other applicants close in age to Shelley were interviewed for that position and Shelley was not. Those applicants, however, were not selected for the position, and instead Marsh, the

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significantly younger applicant, was hired. Stacking the interview pool with older candidates does not immunize the decision to hire a younger one.

666 F.3d at 611. Finally, the Ninth Circuit took an expansive definition of "direct evidence" holding that a decision-maker's inquiry into the protected status possessed by employees at around the same time as the decision is direct evidence of discrimination:

Shelley presented direct evidence of age discrimination to rebut the Corps' purported non-discriminatory reason. Oberle testified that Scanlan and Brice inquired about the projected retirement dates for employees in the contracting divisions during the hiring period for the 120–day and permanent positions. A fact-finder could infer from this that they considered age and projected retirement relevant to the hiring decision. Despite the absence of names in the Capable Workforce Matrix, the format of the matrix permitted the identification of specific employees. The matrix contradicts Scanlan's testimony that individual age information was not provided in that format. The Corps contends that the matrix, at best, establishes that Scanlan and Brice knew Shelley's prospective retirement date, which, standing alone, would not support an inference of age discrimination. But the fact that Scanlan and Brice sought out the retirement dates at the time of their participation in the hiring process for the temporary and permanent positions shows more than that the decision-makers may have known of the candidates' ages. It raises an inference that they considered this information relevant to their decisions. Although Scanlan and Brice did not make the hiring decisions alone, evidence of their inquiry and of their influence over the process supports an inference that the

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Corps' proffered explanation for hiring Marsh was a pretext for age discrimination.

666 F.3d at 610-11. Fuentes v. AutoZone, Inc., 200 Cal. App. 4th 1221 (2011), review denied (Feb. 1, 2012)(So-Called “Inherent Improbability” Of Plaintiff’s Allegations Insufficient Reason To Set Aside Sexual Harassment Jury Verdict) Marcela Fuentes worked for AutoZone, Inc. as a part-time cashier. She sued the store alleging that the Assistant Store Manager, Melvin Garcia, and the Parts Sales Manager, Gonzalo Carrillo, sexually harassed her by: (1) spinning her around one day to expose her buttocks to some customers and telling her that was how to sell; (2) suggesting that she become a stripper or a bikini model to make more money; (3) making bets whether she was sleeping with a co-worker; (4) asking her to go to a strip club; and (5) spreading rumors that she had an STD because she had a fever blister on her lip. A jury found in her favor and awarded her $160,000.00. The trial court awarded her attorney’s fees of $677,000.00. On appeal, Autozone argued that the testimony of the plaintiff and her witnesses was "inherently improbable" based on the plaintiff’s time line of events and inconsistencies. The Court of Appeal affirmed the verdict and the award of attorneys’ fees. In so doing, it noted that inconsistencies and contradictions in trial testimony were commonplace and that such factual matters, together with questions of credibility, must be resolved by the trier of fact, which the jury did in favor of the plaintiff. "[T]he testimony of a witness offered in support of a judgment," the Court explained, "may not be rejected on appeal unless it is physically impossible or inherently improbable and such inherent improbability plainly appears."

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Baker v. Mulholland Sec. and Patrol, Inc., --- Cal.Rptr.3d ----, 2012 WL 1021445 (2012)(Prevailing FEHA Defendant Must Show Plaintiff's Case Was Frivolous In Order To Recover Expert Witness Fees) Seeking its "pound of flesh," Ogletree Deakins filed a motion to recover the expert witness fees incurred by its client after it defeated the plaintiff's FEHA retaliation claim on summary adjudication. The trial court (Conrad R. Aragon) granted the motion. The plaintiff appealed and the Court of Appeal reversed finding that expert witness fees may only be awarded to a prevailing FEHA defendant upon a showing that the plaintiff's claim was frivolous. Chattman v. Toho Tenax Am., Inc., 2012 WL 2866296 (6th Cir. 2012)(Sixth Circuit Examines The Cat’s Paw Theory Of Liability In Light Of Staub v. Proctor Hospital) Everett “Sly” Chattman, an African-American employee, and a Caucasian coworker, Frank Johnson (a Caucasian), engaged in horseplay at work. Subsequently, Chattman was called into a meeting with Jeff Tullock, the Company’s Human Resources Director, and two other individuals and told that he was being suspended for violation of the Company’s no “horse play” rule pending the outcome of the Company’s investigation. Following the Company’s investigation, Tullock recommended that Chattman be fired but upper management decided to him and Johnson final written warning. According to Company policy, a final written warning means that for one year the employee is ineligible for promotions. Chattman sued his employer alleging that it discriminated against him on basis of race by failing to promote him, in violation of Title VII. Chattman alleges that Tullock harbored racial bias against African Americans, including Chattman himself and that Tullock's racial animus infected the Company’s decision-making process and caused him to be given a final written warning which precluded him from being promoted. Chattman offerred three incidents in which

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Tullock made racial comments as evidence of his animosity toward African Americans: (1) Tullock told a “joke” that O.J. Simpson was innocent and that Nicole Brown was killed by their son because O.J. Simpson responded to a question from his son by answering “go axe your mother;” (2) Tullock responded to another employee's complaint that her son had gotten into trouble at school for fighting by saying “you know what my grandmother always says about boys scuffling? That's how the nigger graveyard got full;” and (3) Tullock commented about then-Presidential-candidate Barack Obama by saying “well you better look close at Obama's running mate because Americans won't allow a nigger president.” Chattman also presented evidence that Tullock lied to the Company about the severity of the “horse playing” incident and about various aspects of the investigation into that incident. The district court granted the Company’s motion for summary judgment. On appeal, the Sixth Circuit reversed holding that Chattman had presented sufficient evidence under the Cat’s Paw theory to proceed to trial. More specifically, the Sixth Circuit found that because Tullock actively inserted himself into the Company’s decision making process by misinforming the decision-makers about the “horse play” incident, a reasonable fact finder could find Tullock's actions were a proximate cause of the adverse decision. Schechner v. KPIX-TV, 686 F.3d 1018 (9th Cir. 2012)(Plaintiff Can Make Out A Prima Facie Case Of Disparate-Treatment Age Discrimination Using Statistical Evidence, Even Where That Evidence Does Not Account For The Defendant's Legitimate Nondiscriminatory Reason For The Discharge) Plaintiffs William Schechner and John Lobertini were television news reporters at KPIX-TV, a San Francisco affiliate of CBS. They were laid off after CBS issued a directive requiring affiliates to reduce annual budget by ten percent. Schechner and Lobertini were sixty-six and forty-seven years old, respectively, when they lost their jobs. They brought suit alleging that KPIX discriminated against them on the basis of age and gender, in violation of California law.

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KPIX moved for summary judgment. Relying on the McDonnell-Douglas burden shifting test to oppose KPIX’s motion, the plaintiffs submitted reports by an expert statistician who concluded that the age disparity between the RIF group and the group of individuals that KPIX decided to retain was "statistically significant" and age "correlated closely" with the decision to terminate. KPIX argued that this evidence was insufficient to satisfy the fourth prong of the test – the prong that requires the plaintiff to demonstrate that she was either replaced by substantially younger employees with equal or inferior qualifications or discharged under circumstances otherwise "giving rise to an inference of discrimination – because the expert statistician did not take into account its proffered non-discriminatory reasons for the layoff – i.e., news anchors generally would not be subject to termination because they were the "face" of the station, that specialty reporters would not be subject to termination because they were being promoted to push the brand of the station, and that general assignment reporters would be subject to termination based on their respective dates of contract expiration. The district court [N.D.Cal., Judge Marilyn Hall Patel] agreed that the plaintiff’s failed to satisfy the fourth prong of the McDonnell-Douglas test and granted KPIX's motion for summary judgment, dismissing all of Plaintiffs' claims. The Ninth Circuit affirmed. Win for the employer. Yes. But in language extremely helpful to plaintiffs, the Ninth Circuit held that a plaintiff can make out a prima facie case of disparate-treatment age discrimination using statistical evidence, even where that evidence does not account for the defendant's legitimate nondiscriminatory reason for the discharge. On the other hand, the Ninth Circuit supplied employers with really good language regarding the same actor inference – ““[W]here the same actor is responsible for both the hiring and the firing of a discrimination plaintiff, and both actions occur within a short period

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of time, a strong inference arises that there was no discriminatory motive” However, some California courts say that the same actor inference deserves no weight particularly on summary judgment – Nazir v. United Airlines, Inc., 178 Cal. App. 4th 243, 272-73 (2009) and Sandell v. Taylor-Listug, Inc., 188 Cal. App. 4th 297 (2010). Apsley v. Boeing Co., 2012 WL 3642800 (10th Cir., 2012)(Tenth Circuit Adopt High Standard For Statistical Proof Of Pattern Or Practice Discrimination) In contrast to the pro-plaintiff view of statistics taken by the Ninth Circuit in Schechner v. KPIX-TV, 686 F.3d 1018 (9th Cir. 2012), the Tenth Circuit in Apsley took a narrow view. Apsley arose from the Boeing Company's 2005 sale, to Spirit AeroSystems, Inc., of facilities in Wichita, Kansas, and Tulsa and McAlester, Oklahoma. On June 16, 2005, Boeing terminated the Division's entire workforce of more than 10,000. The next day, Spirit rehired 8,354 employees, who had been selected by Boeing's managers. Although older employees predominated in the workforce both before and after the sale, a lower percentage of older workers than younger ones were rehired. The plaintiffs sued, seeking to represent a class of about 700 former Boeing employees who were not hired by Spirit. The plaintiff employees alleged, among other things, that Boeing, Onex, and Spirit violated the Age Discrimination in Employment Act (“ADEA”), the Employee Retirement Income Security Act (“ERISA”), Title VII of the Civil Rights Act of 1964 (“Title VII”), and the Americans with Disabilities Act (“ADA”). The district court granted summary judgment. The Court of Appeal affirmed holding that while the employees put forth statistical evidence of discrimination, it was not sufficient:

Although the Employees have provided evidence that discrimination occurred during Boeing's divestiture of the Division, we agree with the district court that the

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Employees cannot prove a pattern or practice of age discrimination. And while older employees fared slightly worse than younger ones in the divestiture, the Employees are unable to show that the Companies' hiring practices had a significant disparate impact on older workers.

2012 WL 3642800, at * 4. The Tenth Circuit then explained why it believed that the statistical evidence put forth by the plaintiffs was insufficient:

The Employees contend that the district court misinterpreted their statistical evidence. In particular, they challenge the district court's conclusion that even though the Employees' aggregated statistics showed a disparity between older and younger workers that was statistically significant, the disparity lacked “practical significance.” This is, in the end, a case that turns largely on the statistics. Accordingly, we begin our review of the district court's conclusions with a brief discussion of the key statistical concepts at issue. Older workers were recommended and hired by Spirit at lower rates than were younger workers. This fact alone, of course, does not necessarily mean that any discrimination occurred, much less that a pattern or practice of discrimination existed. A completely age-neutral process could, purely by chance, have resulted in fewer older employees being recommended or hired. The Employees' statistical evidence was offered to demonstrate that a nondiscriminatory process would have been highly unlikely to yield the observed disparities. In Carpenter v. Boeing Co., 456 F.3d 1183, 1202 (10th Cir.2006), we used a hypothetical coin-flip experiment to illustrate related statistical concepts. We find the same approach instructive here.

https://a.next.westlaw.com/Link/Document/FullText?findType=Y&serNum=2009679880&pubNum=506&originationContext=document&transitionType=DocumentItem&contextData=(sc.Search)#co_pp_sp_506_1202

https://a.next.westlaw.com/Link/Document/FullText?findType=Y&serNum=2009679880&pubNum=506&originationContext=document&transitionType=DocumentItem&contextData=(sc.Search)#co_pp_sp_506_1202

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Consider an experiment involving 1,000,000 flips of a coin. The canonical result, of course, would be 500,000 heads and 500,000 tails. Assume that, instead, the observed results were 510,000 heads and 490,000 tails. To determine whether the coin was fair, a statistician could model the results one would expect to obtain if one assumed that heads and tails were equally likely on each flip. We will refer to this assumption as the “null hypothesis.” If one were to model the results of conducting the million-flip experiment many times with a fair coin, most of the results would approach an even heads-to-tails distribution. But one would also expect to find a certain number of anomalous results—where, by pure chance, a fair coin landed much more often on either heads or tails. The model would reveal the actual observed result—510,000 heads—to be extremely unlikely. Although the magnitude of the difference is small, only about 4% more heads than tails, the odds of such a difference occurring in the absence of a weighted coin are exceedingly small—the departure from equality is 20 standard deviations. The odds of such a difference occurring can be referred to as the probability, or p-value. If p is small, the observed data are far from what is expected under the null hypothesis—too far to be readily explained by the operations of chance. That discredits the null hypothesis. In other words, in the coin example, the difference strongly indicates some influence on the results other than the operation of pure chance. The coin, a statistician could conclude, was not fair.

. . . . The district court phrased some of [the plaintiff's statistical expert's] results in terms of standard deviations. It noted that the difference between predicted and actual recommendations was greater than five standard deviations, while the difference between

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predicted and actual hires was greater than four-and-a-half deviations. As the district court recognized, these results typically would be considered statistically significant. Nonetheless, the district court concluded that this was a case where a large number of standard deviations simply will not be enough. In the passages excerpted above, the court reasoned that small discrepancies in large samples mean little even if they are statistically significant. The court noted that any discrepancy would have disappeared if Boeing had recommended sixty more older workers or if forty-eight more older workers had been hired by Spirit. It also pointed out that Boeing recommended and Spirit hired over 99% of the workers that [the plaintiff's statistical expert's] model predicted. Thus, it concluded that any disparity was practically insignificant.

. . . . [W]e agree with the district court that the Employees' statistics suggest, at most, isolated or sporadic instances of age discrimination. As the district court properly noted, the Employees' own figures show that the Companies recommended and hired over 99% of the older employees they would have been expected to recommend and hire in the absence of any discrimination. While this disparity might still lead a social scientist to suspect that the divestiture process was not wholly free of age-based discrimination, it would not permit a jury to find that such discrimination was the Companies' standard operating procedure.

2012 WL 3642800, at * 8 – 11 (citations and internal omitted). Patterson v. Domino's Pizza, LLC, 207 Cal. App. 4th 385 (2012)(Holding Franchisee And Franchisor Liable For Sexual Harassment Of Franchisee's Employee) Taylor Patterson was an employee of a Domino’s Pizze franchisee, Sui Juris, LLC. Patterson alleged she was sexually harassed and assaulted

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at her job. She sued both the franchisee, Sui Juris and the franchisor, Domino's Pizza. Domino’s Pizza moved for summary judgment on the grounds that it did not employ Patterson and, even if it did employ her, it couldn’t be liable because it had no notice of, ratified, or condoned the alleged conduct. The trial court granted the motion and Patterson appealed. The Court of Appeal reversed finding that Domino’s Pizza held sufficient control over its franchisee to be liable:

If the franchisor has substantial control over the local operations of the franchisee, it may potentially face liability for the actions of the franchisee's employees.

207 Cal. App. 4th at 389. The Court of Appeal then addressed the trial court's holding that, there are no triable issues of fact showing it had notice of, ratified, or condoned the alleged conduct. The Court of Appeal held that this was irrelevant because the alleged harasser was Patterson's supervisor:

A single sexually offensive act by one employee against another usually is not sufficient to establish employer liability. But where the act is committed by a supervisor, the result may be different. Because the employer cloaks the supervisor with authority, we ordinarily attribute the supervisor's conduct directly to the employer. Thus, a sexual assault by a supervisor, even on a single occasion, may well be sufficiently severe so as to alter the conditions of employment and give rise to a hostile work environment claim.

207 Cal. App. 4th at 394 (citations and internal quotations omitted). \\\ \\\

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XI. Ethics

Johnson v. Nextel Communications, Inc., 660 F.3d 131 (2d Cir. 2011)(Second Circuit Finds Collusive Settlement Deal Created Conflict for Firm) The Second Circuit summarized this case thusly,

This is an appeal from Judge Daniel's dismissal of appellants' class action complaint against Nextel Communications, Inc., the law firm of Leeds, Morelli & Brown, P.C. (“LMB”), and seven of LMB's lawyers (also “LMB”). Appellants are former clients of LMB who retained the firm to bring discrimination claims against Nextel. The class is composed of approximately 587 clients who retained LMB for the same purpose. The complaint asserts a number of claims, including one alleging that LMB breached its fiduciary duty of loyalty to them and the class by entering into an agreement with Nextel in which Nextel agreed to pay: (i) $2 million to LMB to persuade en masse its approximately 587 clients to, inter alia, abandon ongoing legal and administrative proceedings against Nextel, waive their rights to a jury trial and punitive damages, and accept an expedited mediation/arbitration procedure; (ii) another $3.5 million to LMB on a sliding scale as the clients' claims were resolved through that procedure; and (iii) another $2 million to LMB to work directly for Nextel as a consultant for two years beginning when the clients' claims had been resolved. None of the payments were conditioned on recovery by any of LMB's clients. We conclude that appellants have alleged facts sufficient to state a claim against LMB for, inter alia, breach of fiduciary duty and against Nextel for aiding and abetting breach of fiduciary duty. We therefore vacate and remand for further proceedings.

660 F.3d at 134-35.

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The Second Circuit concluded that the law firm had an unconsentable conflict of interest with its clients:

Appellants contend that [their law firm] breached its fiduciary duty to the claimants by signing the [Dispute Resolution and Settlement Agreement (“DRSA”)] because the terms of the DRSA created a conflict of interest between [the law firm] and its claimant clients—a conflict that was not consentable, that is, one that could not be obviated by procuring the clients' consent. Moreover, they allege that even if the conflicts were consentable, [their law firm] failed to properly disclose them. Appellants further argue that as a result of [their law firm’] undisclosed conflicts of interest, their settlement awards were “unreasonably low and did not approximate the true value of the[ir] claims.” [The law firm] and Nextel contend that any conflicts of interest created by the DRSA were consentable and that, as a matter of law, appellants cannot claim to have been unaware of the terms of the DRSA in light of their signatures on the Individual Agreements, which stated that appellants had reviewed the DRSA. We conclude that the conflicts were unconsentable.

660 F.3d at 138-39.

XII. False Claims Act

* * * Hooper v. Lockheed Martin Corp., 2012 WL 3124970 (9th Cir. 2012)(Former Lockheed Engineer May Proceed With False Claims Act Lawsuit) Nyle J. Hooper brought suit against Lockheed Martin under the qui tam provisions of the False Claims Act (the “FCA”). Hooper filed suit in the District Court for the District of Maryland, which transferred the suit at Lockheed’s request to the Central District of California on forum non conveniens grounds. The California district court granted

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summary judgment in favor of Lockheed on all grounds, but the Ninth Circuit reversed in part. The Ninth Circuit affirmed summary judgment in Lockheed’s favor of Hooper’s claims of fraudulent use of certain software and defective testing procedures because there is no genuine issue of material fact as to whether Lockheed “knowingly” submitted a false claim to the government regarding those issues. However, the Court reversed summary judgment of Hooper’s wrongful discharge claim because the district court erroneously applied California’s two-year statute of limitations rather than Maryland’s three-year statute. The Court also reversed the dismissal of Hooper’s claim that Lockheed violated the FCA by knowingly underbidding the contract at issue. See also Fahlen v. Sutter Central Valley Hospitals, 208 Cal. App. 4th 557 (2012) (whistleblower doctor need not exhaust administrative remedies before filing a whistleblower lawsuit under Health & Safety Code § 1278.5); Aguilar v. Goldstein, 207 Cal. App. 4th 1152 (2012) (anti-SLAPP motion was properly denied in response to plaintiff physicians’ breach of fiduciary duty lawsuit).

XIII. Family And Medical Leave Act

Seeger v. Cincinnati Bell Tel. Co., LLC, 681 F.3d 274 (6th Cir. 2012)(Employer Had Honest Belief That Employee Committed Disability Fraud In Taking FMLA Leave, And Therefore, Termination For Such Fraud Was Not Pretext For FMLA Retaliation) Seeger involves a disturbing new trend in which the courts allow employers escape “scot free” from liability in employment cases due to their purported “honest (but mistaken) good faith belief” that the employee engaged in some type of wrongdoing. Tom Seeger was employed as a network technician by Cincinnati Bell Telephone (“CBT”). One day, Seeger experienced pain and numbness in his left leg. He sought medical care where he was prescribed pain medications, administered a steroid injection and a muscle relaxer, diagnosed with a herniated lumbar disc at L4–5 and L5–S1. CBT informed Seeger’s doctor that the Company could provide Seeger with

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restricted work which would consist of part-time sedentary telephone work and that such work might involve as few as two hours of work a day. Seeger’s doctor responded that Seeger was unable to perform any work including restricted work. Thereafter, Seeger commenced a leave of absence, which was approved as both FMLA leave and paid disability leave by CBT. During his leave, Seeger and his wife Rose attended the downtown Cincinnati Oktoberfest for approximately ninety minutes, during which time Seeger admittedly walked a total of ten blocks to and from the festival and consumed one or two beers. There, they had separate chance encounters with several co-workers. Subsequently, Seeger returned to work. However, upon hearing of Seeger's attendance at Oktoberfest, the Company launched an investigation and obtained sworn statements from his co-workers indicating that they saw Seeger drinking a beer and “walking unassisted and seemingly unimpaired through the crowded festival.” They further swore that Seeger “did not appear to be impaired or disabled.” CBT suspended Seeger pending the completion of its investigation and invited Seeger to submit any information that might be relevant to the inquiry. Seeger thereafter provided a letter from his doctor which explained “Walking for one and a half hours at one's own pace doesn't equal working for an eight hour day nor is it reasonable to assume that he could perform even limited duties for an eight hour day. Most patients with herniated discs are most comfortable standing and/or walking but [are] unable to sit or change positions.” CBT’s investigation concluded that Seeger had “over reported” his symptoms to his doctor in order to avoid the Company’s part-time light-duty work called for in the paid-leave policy and that he had, therefore, engaged in disability fraud. Accordingly, the Company fired him. Seeger sued for violation of the FMLA. CBT moved for summary judgment which was granted by the district court. Seeger appealed.

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The Seventh Circuit affirmed on the grounds that Seeger was unable to establish that CBT’s “honest (but mistaken) belief” that he had engaged in disability fraud was pretext for FMLA retaliation:

As long as the employer held an honest belief in its proffered reason, the employee cannot establish pretext even if the employer's reason is ultimately found to be mistaken, foolish, trivial, or baseless. An employer's invocation of the honest belief rule does not automatically shield it, because the employee must be afforded the opportunity to produce evidence to the contrary, such as an error on the part of the employer that is too obvious to be unintentional. CBT contends, and the district court agreed, that it has shown that it reasonably relied upon particularized facts in determining that Seeger committed disability fraud and, therefore, given Seeger's lack of evidence disputing its honest belief, summary judgment in its favor was appropriate. Viewing the evidence in the light most favorable to Seeger, we, too, conclude that CBT made a reasonably informed and considered decision before it terminated him, and Seeger has failed to show that CBT's decision-making process was “unworthy of credence.

681 F.3d at 285-86 (internal citations and quotations omitted). Senior District Judge Arthur J. Tarnow (sitting by designation) issued a cogent dissent explaining why the majority was wrong:

[W]hether the court finds “that CBT made a reasonably informed and considered decision before terminating Seeger” is immaterial. The proper question is whether a reasonable jury could have concluded that Appellee's investigation was “unworthy of credence.” Appellee's only reason for its purported “honest belief” that Appellant engaged in disability fraud are the statements of two fellow employees who say they saw Appellant walking for approximately fifty to seventy-five feet. In Appellant's

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favor are the statements of other employees who said Appellant was in extreme pain while walking, the statements of Appellant's treating physician, and the undisputed medical evidence that Appellant was suffering from a condition that would have caused him to be unable to work but was ameliorated by physical exercise such as walking. Despite possessing all of this evidence, Appellee chose to neither consult an independent medical expert nor even to consult Appellant's physician prior to its decision to suspend and then fire him. In this case Appellee focused on isolated and flimsy evidence while ignoring strong contrary evidence. Additionally, Appellee took no steps to obtain easily accessible information that would have helped Appellee arrive at an informed decision. While this Court does not require that an investigation “be optimal or that it left no stone unturned,” the lackluster nature of Appellee's investigation strains the bounds of credulity. Moreover, at the summary judgment stage the question is not whether Appellee's investigation was, in fact, “unworthy of credence,” but whether a reasonable jury could have come to such a conclusion.

681 F.3d at 288-89. Pagel v. TIN Inc., 2012 WL 3217623 (7th Cir. 2012)(FMLA Leave Requires An Employer To Adjust Performance Standards) The Seventh Circuit summarized the case thusly:

Pagel argues that TIN interfered with his employment by failing to make a reasonable adjustment to its employment expectations to account for his FMLA-protected leave, and then terminating him when he failed to meet those unadjusted expectations. The FMLA does not require an employer to adjust its performance standards for the time an employee is actually on the job, but it can require that performance standards be adjusted

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to avoid penalizing an employee for being absent during FMLA-protected leave.

2012 WL 3217623, at * 6. Lichtenstein v. Univ. of Pittsburgh Med. Ctr., 2012 WL 3140350 (3d Cir. 2012)(Third Circuit Clarifies Type Of Notice That Employees Must Give In Cases Of Unforeseeable FMLA leave) Jamie Lichtenstein called into work prior to the start of her shift and told her supervisor that she “was currently in the emergency room, that my mother had been brought into the hospital via ambulance, and I would be unable to work that day.” Lichtenstein worked the following two days and then was fired due to tardiness and absenteeism. Lichtenstein sued for violation of the FMLA. Her employer moved for summary judgment contending, among other things, that Lichtenstein’s notice was insufficient to trigger the protections of the FMLA. The District Court granted summary judgment and Lichtenstein appealed. On appeal, the Third Circuit reversed:

Under the circumstances of this case, we believe that the adequacy of Lichtenstein's notice is a question of fact. We begin by noting several facts that are not in dispute. First, Lichtenstein's mother suffered a sudden, severe, and unexpected health condition on January 3, 2008 that required staying at the hospital for over a week. As such, Lichtenstein's mother suffered a “serious health condition” that entitled Lichtenstein to take FMLA leave on January 3rd. Second, Lichtenstein correctly followed UPMC's call-off procedure by calling UPMC's nursing supervisor soon after arriving at the emergency room. This is sufficient to establish a genuine dispute about whether Lichtenstein notified UPMC “as soon as [was] practicable under the facts and circumstances.”15 29 C.F.R. § 825.303(a). Finally, during Lichtenstein's telephone call with the nursing supervisor, Lichtenstein

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conveyed the following facts: (1) she was “currently in the emergency room,” (2) her “mother had been brought into the hospital via ambulance,” and (3) she “would be unable to work that day.” The District Court concluded that Lichtenstein conveyed insufficient information to the nursing supervisor to place UPMC on notice. According to the District Court, the information was inadequate because “the fact that a family member has been taken to the emergency room does not necessarily reflect a serious medical condition sufficient to support a request for leave under the FMLA.” “While the condition precipitating an emergency room visit may be serious,” the District Court reasoned that “the condition might not require ongoing hospitalization or medical treatment.” In so reasoning, the District Court answered the wrong question. The question is not whether the information conveyed to the employer necessarily rules out non-FMLA scenarios. The question is whether the information allows an employer to reasonably determine whether the FMLA may apply. Reasonableness does not require certainty, and “may” does not mean “must.” It does not matter that a person rushed by ambulance to the emergency room “might not” require inpatient care as defined under the FMLA. Since many people in this situation do require such care, a jury might find that reasonable notice was given under the circumstances.

2012 WL 3140350, * 8 – 9 (citations and internal quotations omitted). Medley v. County of Montgomery, 2012 WL 2912307 (E.D. Pa. 2012)(Doctrine Of Equitable Estoppel Precludes Dismissal Of FMLA Claim Even Though Employee Was Not Eligible For FMLA) In Medley, the plaintiff, Amy Medley, alleged that her employer told her, incorrectly, that she was qualified for, and covered by, the FMLA.

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Medley further alleged that she relied on these misrepresentations and took leave she thought was FMLA leave, and that she would not have taken leave and found other ways to care for her son had she known that her leave would not be protected. She further alleged that she suffered a detriment as a result of relying on Defendant's misrepresentations because she was fired for taking the leave. The District Court held that Medley alleged sufficient facts that, under the doctrine of equitable estoppel, preclude her employer from asserting that her FMLA discrimination claim fails because she was not qualified.

XIV. Independent Contractor Issues

***Ruiz v. Affinity Logistics Corp., 2012 WL 388171 (9th Cir. 2012)(California Law Should Have Been Applied To Determine If Drivers Were Employees Or Independent Contractors) Fernando Ruiz and similarly situated drivers filed a class action against Affinity alleging violations of the Fair Labor Standards Act and California law for failure to pay overtime, failure to pay wages, improper charges for workers' compensation insurance and unfair business practices. To work for Affinity, the drivers had to enter into an "Independent Truckman's Agreement and Equipment Lease Agreement" with Affinity, which stated that the parties were entering into an independent contractor relationship and that Georgia law applied to any disputes. The district court applied Georgia law and ruled in favor of Affinity, but the Ninth Circuit vacated the judgment and remanded the case after concluding that the parties' choice of Georgia law was unenforceable and that California (not Georgia) law applied. On remand, the district court was ordered to apply California law in order to determine whether the drivers are employees or independent contractors. \\\ \\\

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XV. Non-Competition Agreements

Fillpoint, LLC v. Maas, 2012 WL 3631266 (2012)(Court Of Appeal Affirms Dismissal Of Lawsuit Against Employee For Breach Of Non-Competition Agreement Even Though It Was Executed As Part Of The Sale Of The Employee's Business) The Court of Appeal neatly summarized this case as follows:

When Michael Maas sold his stock in Crave Entertainment Group, Inc. (Crave), to Handleman Company (Handleman), he signed a stock purchase agreement, which contained a three-year covenant not to compete. As part of Handleman's acquisition of Crave, Maas—a Crave employee—also signed an employment agreement containing a one-year covenant not to compete, which would become operative when Maas's employment with Crave was terminated. Maas resigned from Crave three years after its acquisition by Handleman. About six months later, he began working for Solutions 2 Go, Inc., a competitor of Crave, owned by Nima Taghavi. Fillpoint, LLC (Fillpoint), which had acquired Crave from Handleman, sued Maas for breaching his employment agreement, and also sued Solutions 2 Go and Taghavi for interference with contract. (Maas, Solutions 2 Go, and Taghavi will be referred to collectively as defendants.) The trial court granted defendants' nonsuit motion; we affirm. Under the general rule in California, covenants not to compete are unenforceable. To protect an acquired business's goodwill, an exception to this rule allows such covenants in connection with the sale of a business. This exception, however, is limited. In this case, the three-year covenant not to compete in the stock purchase agreement was designed to protect the goodwill of the business being sold. Handleman and its successor in interest, Fillpoint,

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received the full benefit of that covenant for three years following Handleman's acquisition of Maas's Crave stock. The covenant Fillpoint seeks to enforce in this litigation is a separate noncompetition and nonsolicitation covenant in the employment agreement, which could only be triggered when Maas left Crave's employ. We agree with Fillpoint that the stock purchase agreement and the employment agreement are part of a single transaction and must be read together. When a purchase agreement and an employment agreement are entered into at the same time or roughly the same time, as part of a single transaction, and the two different agreements contain different covenants not to compete, the agreements must be read together. In this case, when we read the two noncompetition covenants together, we hold that the noncompetition and nonsolicitation covenant contained in the employment agreement is void and unenforceable under California law. For the reasons we discuss, that covenant does not fit within the limited exception to California's prohibition against covenants not to compete.

2012 WL 3631266, at * 1.

XVI. NLRA

***Dresser-Rand Company, 358 NLRB No. 34 (April 19, 2012)(Maliciously False Statements By Employee To Third Party Not Protected) This case was concisely summarized (from the perspective of management) by Mark Theodore of Proskauer Rose in that law firm's Labor Relations Update:

A problem that has vexed employers since the inception of the NLRA is the exact contours of employee free speech

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under the Act. We know that employees are given a great deal of latitude to express discontent, even to the point where they can wear t-shirts identifying themselves as prisoners to customer homes. This issue generally has gained additional scrutiny with the attention given to the posts made by employees on social media sites. At what point do employee statements attacking the employer, even when made in the context of a labor dispute, lose protection of the Act justifying discipline or discharge? It is not an easy question to answer. The Board recently ruled in favor of an employer concerning an employee's false statement to a third party in Dresser-Rand Company, 358 NLRB No. 34 (April 19, 2012). The case is interesting not only because of the conclusion, but for the tactics employed by the union to put pressure on the employer. It was an extension of these tactics that ended up in an employee's discharge being upheld by the Board as lawful. In Dresser-Rand, the employer and union had been invovled in a protracted labor dispute over the course of a couple of years. The parties used all manner of economic weapons against each other. There was a strike by the union; the employer hired replacement workers and continued to operate. The union picketed on occasion. Both parties exchanged heated communications about the dispute. One tactic the union employed was to have employees call investment analysts in an attempt to hold company "executives accountable for their actions." The calls were made from the union hall on a Saturday when the analysts would not be "expected to be at work." The caller would then leave voicemails so as to "avoid creation of a written record of the contents of the representations." Incredibly, and despite the foregoing manner in which the calls were made, the union's stated intention was to "not talk[] the

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[employer's] stock price down" and so a written script of the comments was created. An employee who volunteered to make calls became frustrated by the employer's proposal in negotiations to eliminate paid time off for union business, something in which the employee, a chief union steward, had a direct interest. This employee made additional calls from his home, anonymously, to the investment analysts using his own script, part of which made the false statement that the workload at a particular plant "has also dropped off by 50-percent." After an investigation, the employer discharged the employee. The union filed charges. The basic analysis in these cases is that the conduct must be "concerted" meaning related to or on behalf of other employees. The statements also must be "protected" meaning they must relate to the dispute at hand. Statements that are indirectly related to the dispute and are "blatantly" or "maliciously" false or defamatory are not protected by the Act. Applying this analysis, the Administrative Law Judge, found that the employee's actions were "concerted" because his "calls to investment analysts were designed to apply pressure to the Employer to amelioriate his own terms and conditions of employment and the terms and conditions of employment of his coworkers...." Thus, even though the employee's statements were unauthorized by any co-worker, the motivation for making them made them concerted. Despite the concerted nature of the conduct, the judge found the employee's statements were unprotected, citing the following factors before evaluating the false statement:

In the voicemails the employee did not disclose his name, unlike the earlier calls.

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The employee identified himself as "a representative of the union employees" at the employer, which gave the impression that the statements were authorized by the employees' representative. The employee chose to make unduly negative remarks about other employer operations, about which he had no firsthand knowledge.

The judge then addressed the issue of the false statement about the workload "dropping off" by 50 percent. The judge seriously questioned whether such a statement had any value at all towards putting pressure on the employer in negotiations. The judge also found the employee's explanation to not be credible, in part, because the employee asserted his intention was to not harm the employer. The judge stated:

This is absurd. No reasonable person could conclude that information regarding a 50 percent drop in production conveyed to investment analysts would not harm the Company. Indeed, it is evident that the entire purpose of the statement was to harm the Company. . .

In determining that the statement concerning the drop off of workload was "maliciously false," and not protected by the Act, the judge noted it represented "a four-fold" exaggeration of what actually occurred and that such an "asserted level of decline" would be a "material factor [for investment analysts] in making decisions regarding the Company's stock." The judge also considered the timing of the statements to be relevant noting that they had been calculated to cause

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the maximum amount of harm, being made during an economic recession:

Against that backdrop, [the employee] made his reckless and maliciously false statements to the financial community. Coming during the devastating economic downturn, [the employee's] fictitious claim that the [plant] workload had dropped in half was surely calculated to cause fear and consternation among those who owned the Company's stock or were considering such ownership.

The judge found the discharge to be lawful, which was upheld by the Board on appeal. The decision, weighing in at 34 pages, contains a very thorough collection of Board cases in assessing whether an employee's statement to a third party loses protection of the Act.

See http://www.laborrelationsupdate.com/nlrb/nlrb-maliciously-false-statements-by-employee-to-third-party-not-protected/

XVII. PAGA

***Thurman v. Bayshore Transit Mgmt., Inc., 2012 WL 604037 (Cal. Ct. App. 2012)(PAGA Judgment Is Mostly Affirmed In Employee's Favor) Leander Thurman sued Bayshore for alleged violations of the Private Attorneys General Act of 2004 ("PAGA") and the Unfair Competition Law and, following a bench trial, a judgment was entered imposing civil penalties, including unpaid wages, against Bayshore in the total amount of $358,588 and awarding Thurman restitution in the amount of $28,605. Both sides appealed, and the Court of Appeal generally affirmed the judgment except it reversed the trial court's award for missed meal periods after July 2003 because Thurman's complaint contained judicial admissions that defendants had

http://www.laborrelationsupdate.com/nlrb/nlrb-maliciously-false-statements-by-employee-to-third-party-not-protected/

http://www.laborrelationsupdate.com/nlrb/nlrb-maliciously-false-statements-by-employee-to-third-party-not-protected/

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provided meal periods as required since that date. The Court of Appeal affirmed the trial court's orders denying a continuance of the trial; denying Thurman's motion to certify the case as a class action; denying PAGA penalties under a wage order (as opposed to a statute); reducing defendants' civil penalties by 30 percent because they had attempted to comply with the law; awarding underpaid wages as part of a civil penalty; and permitting PAGA penalties for missed rest periods. See also Bridgeford v. Pacific Health Corp., 202 Cal. App. 4th 1034 (2012) (unnamed putative members of a class that was never certified are not bound by collateral estoppel, and PAGA claims should not have been dismissed); Pickett v. Superior Court, 2012 WL 556314 (Cal. Ct. App. 2012) (two related PAGA cases were not "one action" for purposes of a Cal. Code Civ. Proc. § 170.6 peremptory challenge to the judge).

XVIII. Pregnancy Discrimination

Holland v. Gee, --- F.3d ----, 2012 WL 1292342 (11th Cir. 2012)(An Employer's So-Called "Good Intentions" Will Not Shield It From A Pregnancy Discrimination Claim) Lisa Holland worked for the Hillsborough County Sheriff's Office as a data processing telecommunications technician (“DP Tech”). Several months after she informed the Sheriff's Office that she was pregnant, she was transferred to the Help Desk. She protested the decision, but to no avail. Eventually, however, she was transferred back to her DP Tech duties and then subsequently terminated. Ms. Holland filed suit against the Hillsborough County Sheriff David Gee, in his official capacity, asserting claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., as amended by the Pregnancy Discrimination Act, 42 U.S.C. § 2000e(k). After the jury returned a verdict in favor of Ms. Holland in the amounts of $80,000 in back pay and $10,000 for emotional distress, Sheriff Gee appealed. Initially, Sheriff Gee urged the Court of Appeal to overturn the jury's verdict on the ground that Ms. Holland did not establish a prima facie case. But, as the case had been fully tried on the merits, the Court of

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Appeal declined -- “Our task is not to revisit whether the plaintiff below successfully established a prima facie case of discrimination.” quoting Tidwell v. Carter Prods., 135 F.3d 1422, 1426 n. 1 (11th Cir.1998). Next, Sheriff Gee argued that the jury could not have found that Ms. Holland's transfer to the Help Desk was an adverse employment action or that it was motivated by her pregnancy. The Court of Appeal rejected both of these arguments. First, in helpful language, the Court of Appeal held that the transfer was an adverse employment action because the jury could have found that it was a permanent “reassignment with significantly different” duties and that it carried a reduction in both prestige and responsibility. In that regard, the Court of Appeal explicitly rejected Sheriff Gee's argument that there was no adverse employment action because there was no reduction in pay – "This argument, however, conflicts with the principle that Title VII does not require proof of direct economic consequences in all cases." Second, the Court of Appeal held that an employer's good intentions can still be discriminatory. That is, the Sheriff's Office argued that it transferred Ms. Holland to the Help Desk in order to minimize the possibility that she would have another miscarriage and not out of any discriminatory intent. The Court of Appeal rejected this defense:

The fact that [the Sheriff's Office] may have acted out of concern that Ms. Holland previously had a miscarriage—in other words, the fact that [the Sheriff's Office] may have had benign intentions—is beside the point. After all, “[c]oncern for a woman's existing or potential offspring historically has been the excuse for denying women equal employment opportunities.” Int'l Union, UAW v. Johnson Controls, Inc., 499 U.S. 187, 211 (1991).

--- F.3d at ----.

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XIX. Procedure

Coito v. Superior Court, 54 Cal. 4th 480, 495, 278 P.3d 860, 869-70 (2012)(The California Supreme Court’s Latest Pronouncement On The Discoverability of Attorney Directed Witness Statements) The Supreme Court held that attorney directed witness statements may, under certain circumstances, be discoverable:

[W]e hold that a witness statement obtained through an attorney-directed interview is entitled as a matter of law to at least qualified work product protection. A party seeking disclosure has the burden of establishing that denial of disclosure will unfairly prejudice the party in preparing its claim or defense or will result in an injustice. (§ 2018.030, subd. (b).) If the party resisting discovery alleges that a witness statement, or portion thereof, is absolutely protected because it “reflects an attorney's impressions, conclusions, opinions, or legal research or theories” (§ 2018.030, subd. (a)), that party must make a preliminary or foundational showing in support of its claim. The trial court should then make an in camera inspection to determine whether absolute work product protection applies to some or all of the material.

54 Cal. 4th at 499-500. The California Supreme Court also held that parties typically must respond to form interrogatory No. 12.3 which asks whether a party or its agent has “obtained” a written or recorded witness statement:

Because it is not evident that form interrogatory No. 12.3 implicates the policies underlying the work product privilege in all or even most cases, we hold that information responsive to form interrogatory No. 12.3 is not automatically entitled as a matter of law to absolute or qualified work product privilege. Instead, the interrogatory usually must be answered. However, an

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objecting party may be entitled to protection if it can make a preliminary or foundational showing that answering the interrogatory would reveal the attorney's tactics, impressions, or evaluation of the case, or would result in opposing counsel taking undue advantage of the attorney's industry or efforts. Upon such a showing, the trial court should then determine, by making an in camera inspection if necessary, whether absolute or qualified work product protection applies to the material in dispute. Of course, a trial court may also have to consider non-party witnesses' privacy concerns.

54 Cal. 4th at 502. Baker v. Mulholland Sec. & Patrol, Inc., 204 Cal. App. 4th 776, 778-79 (2012)(A Prevailing FEHA Defendant May Recover Expert Witness Fees Only When The Action Is Frivolous, Groundless, Or Unreasonable) Eric Baker (plaintiff) sued Mulholland Security and Patrol, Inc. (defendant), for retaliation, failure to pay overtime compensation, and failure to maintain records, claiming he was terminated after just 13 days of employment when he complained about discriminatory remarks made at his workplace. The trial court disposed of his retaliation claim by summary adjudication, and the remainder of his claims were dismissed after the parties reached a settlement. The trial court concluded plaintiff was terminated for his poor performance and that plaintiff failed to demonstrate there were triable issues whether defendant's justification for its termination decision was pretextual. Plaintiff filed two appeals, which were consolidated, challenging the judgment on the retaliation claim, as well as the trial court's order awarding expert witness fees to defendant. Finding no error with the summary adjudication of plaintiff's retaliation claim, we affirm the judgment. However, we conclude the trial court applied an erroneous legal standard in awarding defendant its expert witness fees, and that any expert fee award *779 would be an abuse of discretion because plaintiff made a sufficient prima facie showing of retaliation. We therefore reverse the expert fee award.

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Rickards v. United Parcel Serv., Inc., 206 Cal. App. 4th 1523 (2012)(Court Rejects Paul Hasting’s Argument That Plaintiff’s Counsel’s Submission of Complaint Through DFEH's Online System Was Somehow Insufficient to Meet The Jurisdictional Prerequisites for Filing FEHA Lawsuit) George Rickards sued respondent United Parcel Service, Inc. (“UPS”) for violating FEHA. Prior to so doing, his counsel filed Rickard’s DFEH Complaint with the DFEH online filing system. UPS’s counsel, Paul Hastings, argued that because Rickard’s counsel did not physically sign the complaint, it was defective and failed to meet the jurisdictional prerequisites for filing a FEHA lawsuit. The trial court granted UPS's summary judgment motion. The Court of Appeal reversed finding that that the complaint Rickards' attorney filed through DFEH's online automated system was sufficient under FEHA. Yeager v. Bowlin, --- F.3d ----, 2012 WL 3892903 (9th Cir. 2012)(Inability To Recall Information At Deposition May Render Subsequent Declaration Sham And Justify Grant Of Summary Judgment)(Non-employment Case) In Yeager, the plaintiff, Charles Elwood "Chuck" Yeager (a retired major general in the United States Air Force who was the first pilot to travel faster than sound), brought eleven claims against the defendants for misappropriating his right to publicity. At his deposition, Yeager did not recall answers to approximately two hundred questions, including questions on topics central to his. Approximately three months later, on the same day that he filed his opposition to the defendants' motion for summary judgment, Yeager filed a declaration. The declaration contained many facts that Yeager could not remember at his deposition, even when he was shown exhibits in an attempt to refresh his recollection. The district court held that Yeager's declaration was a sham and, for summary judgment purposes, disregarded it where it contained facts that

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Yeager could not remember at his deposition. The district court granted the Bowlins' motion for summary judgment on all claims. On appeal, the Ninth Circuit affirmed:

Yeager argues that his declaration cannot be a sham because he did not declare facts which contradict facts he testified to at his deposition. We disagree. The general rule in the Ninth Circuit is that a party cannot create an issue of fact by an affidavit contradicting his prior deposition testimony. This sham affidavit rule prevents a party who has been examined at length on deposition from raising an issue of fact simply by submitting an affidavit contradicting his own prior testimony, which would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact. But the sham affidavit rule should be applied with caution because it is in tension with the principle that the court is not to make credibility determinations when granting or denying summary judgment. In order to trigger the sham affidavit rule, the district court must make a factual determination that the contradiction is a sham, and the inconsistency between a party's deposition testimony and subsequent affidavit must be clear and unambiguous to justify striking the affidavit. According to the district court, the deponent remembered almost nothing about the events central to the case during his deposition, but suddenly recalled those same events with perfect clarity in his declaration in opposition to summary judgment without any credible explanation as to how his recollection was refreshed. During his deposition, Yeager responded that he did not recall answers to approximately 185 different questions. For example, Yeager stated that he did not recall significant or difficult-to-forget events in the recent past, such as testifying in court or his involvement in a plane crash. In his declaration, Yeager provided no reason for his sudden ability to recall specific facts that he could not recall

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during his deposition other than stating that since his deposition he reviewed several documents that have refreshed [his] recollection about some things [he] did not recall. The district court found this explanation to be “unbelievable given that Yeager was shown over twenty exhibits during his deposition in an attempt to refresh his recollection. Several of our cases indicate that a district court may find a declaration to be a sham when it contains facts that the affiant previously testified he could not remember. In Scamihorn v. General Truck Drivers, we implied this result in dicta when we noted that a declaration could be considered a sham if the declarant provides information which he had testified he could not recall. 282 F.3d 1078, 1085 n. 7 (9th Cir.2002). We have also held that a witness can be punished for contempt of court when he refuses to give information “which in the nature of things [he] should know.” Collins v. United States, 269 F.2d 745, 750 (9th Cir.1959). In Collins, we quoted Learned Hand's example that to evade contempt of court “ ‘it could not be enough for a witness to say that he did not remember where he had slept the night before, if he was sane and sober....’ “ Id. (quoting United States v. Appel, 211 F. 495, 495–96 (S.D.N.Y.1913)). The utility of the sham affidavit rule to maintain summary judgment as integral to the federal rules, Van Asdale, 577 F.3d at 998, would be undermined if we were to hold that the rule did not apply in this case.

--- F.3d at ---, 2012 WL 3892903, * 2 (9th Cir. 2012)(citations and internal quotations omitted). However, these courts have also recognized that striking a declaration because it contains newly-remembered facts and/or new facts, should rarely, if ever, occur where the declaration contains a reasonable explanation:

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We caution that newly-remembered facts, or new facts, accompanied by a reasonable explanation, should not ordinarily lead to the striking of a declaration as a sham. The non-moving party is not precluded from elaborating upon, explaining or clarifying prior testimony elicited by opposing counsel on deposition and minor inconsistencies that result from an honest discrepancy, a mistake, or newly discovered evidence afford no basis for excluding an opposition affidavit. This is not a case in which a deponent's memory could credibly have been refreshed by subsequent events, including discussions with others or his review of documents, record, or papers. In this case, the district court found that the disparity between the affidavit and deposition is so extreme that the court must regard the differences between the two as contradictions. This finding was not clearly erroneous. The district court could reasonably conclude that no juror would believe Yeager's weak explanation for his sudden ability to remember the answers to important questions about the critical issues of his lawsuit. It is implausible that Yeager could refresh his recollection so thoroughly by reviewing several documents in light of the extreme number of questions to which Yeager answered he could not recall during his deposition and the number of exhibits used during the deposition to try to refresh his recollection. Thus, the district court's invocation of the sham affidavit rule to disregard the declaration was not an abuse of discretion.

--- F.3d at ---, 2012 WL 3892903, at * 3 (9th Cir. 2012)(citations and internal quotations omitted). Pulli v. Pony Int'l, LLC, 206 Cal. App. 4th 1507, 1510-11 (2012)(Labor Code Section 206.5 – Which Prohibits An Employer From Requiring An Employee To Execute A Release Of A Claim For Wages -- Does Not Prohibit The Employer From Requesting That The Employee Agree To Arbitrate His Employment-Related Claims)

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Kyle Pulli sued his former employer, Pony International, LLC alleging that he was fraudulently induced to enter into an employment agreement and that Pony wrongfully terminated his employment. Pony filed a motion to compel arbitration in which it argued that Pulli's claims were subject to an arbitration provision in Pulli's employment agreement. Pulli filed an opposition in which he argued that the employment agreement was unenforceable pursuant to Labor Code section 206.5, which prohibits an employer from requiring an employee to execute “a release of a claim or right on account of wages due....” The trial court denied Pony's motion to compel, concluding that the employment agreement was void under section 206.5 and that the arbitration provision contained in the employment agreement was therefore unenforceable. On appeal, Pony argued that the trial court erred in failing to permit the arbitrator to determine whether section 206.5 rendered the arbitration provision in the employment agreement unenforceable. On the merits, Pony contended that the trial court erred in determining that the arbitration provision was unenforceable pursuant to section 206.5. The Court of Appeal held that that Pony waived its right to have the arbitrator determine the section 206.5 issue by submitting the section 206.5 issue to a judicial forum. On the merits, the Court of Appeal held that that Labor Code 206.5 does not prohibit waiver of right to jury trial in wage actions. United States v. USDC - Northern Mariana Is., --- F. 3d ---, 2012 WL -------- (9th Cir. 2012)(District Courts Have The Authority To Compel Parties To Attend Mandatory Settlement Conferences)(Non-employment Case) The courts have broad discretion to compel parties to attend mandatory settlement conferences. The Ninth Circuit recently summarized the source of this authority as follows:

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We conclude that the district court has broad authority to compel participation in mandatory settlement conference. Such authority arises from at least three different sources. First, Rule 16(c)(1) of the Federal Rules of Civil Procedure provides that “[i]f appropriate, the court may require that a party or its representative be present or reasonably available by other means to consider possible settlement.” Second, the Civil Justice Reform Act of 1990 authorizes a district court to provide for mandatory settlement conferences as part of a civil justice and delay reduction plan. The statute lists litigation management techniques which the court should consider and may implement, including “a requirement that, upon notice by the court, representatives of the parties with authority to bind them in settlement discussions be present or available by telephone during any settlement conference.” 28 U.S.C. § 473(b)(5) . . . Third, the district court has inherent power to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.

--- F. 3d at ---, 2012 WL --------, * __ (citations and internal quotations omitted). Gonzalez v. Heritage Pac. Fin., LLC, 2012 WL 3263749 (C.D. Cal. 2012)(FRCP 12(f) Motion To Strike "Boilerplate" Affirmative Defenses Granted) In Gonzales, the Honorable Judge Otis D. Wright II explained that a FRCP 12(f) motion to strike affirmative defenses is both appropriate and warranted where defendants assert "boilerplate" affirmative defenses with no supporting facts:

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Defendants fail to allege sufficient facts to provide fair notice to Gonzalez as to the nature of any of its affirmative defenses. Each of the twenty affirmative defenses provides only a conclusory recitation that the specific affirmative defense exists. For example, the eleventh affirmative defense states in its entirety, “Plaintiff is barred from recovery against defendants by operation of the Doctrine of Laches.” This asserts no facts, gives no notice of how the doctrine of laches applies, and is precisely the type of “labels and conclusions” that Iqbal/Twombly forbids. This affirmative defense is not pleaded with sufficient detail to give Gonzalez sufficient notice of the grounds for the asserted defense. Because each of Defendants' affirmative defenses is pleaded in the same conclusory manner as the above example, the Court hereby DISMISSES all twenty affirmative defenses.

2012 WL 3263749 at * 2. O'Sullivan v. AMN Services, Inc., 2012 WL 2912061 (2012) (FRCP 12(f) Motion To Strike "Boilerplate" Affirmative Defenses Contained In Answer Filed In State Court And Then Removed To Federal Court Granted) Magistrate Judge Joseph C. Spero of the Northern District of California, recently explained in O'Sullivan, that "boilerplate" affirmative defenses should be stricken pursuant to FRCP 12(f) because such defenses not only fail to comply with the Federal Rules of Civil Procedure but also because those affirmative defenses will subject plaintiffs to expensive and potentially unnecessary and irrelevant discovery:

[W]hen an action is removed to federal court, the "regime of the Federal Rules" replaces state law procedural standards. Com/Tech, 163 F.3d at 151. Regardless of whether AMN's Answer complied with state law procedural requirements at the time it was filed, once AMN removed the action to federal court,

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its Answer was required to conform with the requirements of the Federal Rules of Civil Procedure and in particular, Rule 8(c). Twombly and Iqbal make clear that in Federal Court, notice requires more than mere legal conclusions; factual allegations must establish a right to relief that is "beyond the speculative level." Twombly, 550 U.S. at 555. Here, AMN asserts that it is not required to allege any specific facts because its affirmative defenses "readily put Plaintiff on notice of the defenses Defendant might pursue." Opposition at 8 (emphasis added). That is not the applicable standard. Further, such an approach threatens to subject Plaintiff to expensive and potentially unnecessary and irrelevant discovery -- one of the outcomes that Twombly and Iqbal are aimed at preventing. Accordingly, the Court strikes all of Defendants' affirmative defenses under Rule 12(f) on the basis that they are insufficiently pled, with leave to amend. As an additional source of authority, the Court exercises its discretion under Rule 81(c) to order AMN to replead its affirmative defenses to comply with federal pleading standards.

2012 WL 2912061, at * 8 Peleg v. Neiman Marcus Group, Inc., 204 Cal. App. 4th 1425, (2012)(Court Of Appeal Determines That Neiman Marcus’s Arbitration Agreement Is Illusory And Unenforceable) In this employment case, an employer and its at-will employee entered into a contract requiring the arbitration of claims by both sides. But the contract contains a modification provision stating that the employer may amend, modify, or revoke the arbitration contract on 30 days' written notice; at the end of the 30–day period, a contract change applies to any claim that has not been filed with the American Arbitration Association. The contract also has a choice-of-law clause stating that the contract shall be governed by Texas law and the FAA. The employee contends that, under the choice-of-law clause, the

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employer's unilateral right to make contract changes renders the contract illusory. The Court of Appeal held that while the choice-of-law clause is valid, the arbitration contract is illusory under Texas law. In reaching that conclusion, the Court of Appeal also examined California law regarding illusory arbitration contracts. On that subject, the Court of Appeal determined that an arbitration contract containing a modification provision is illusory if an amendment, modification, or revocation—a contract change—applies to claims that have accrued or are known to the employer. If a modification provision is restricted—by express language or by terms implied under the covenant of good faith and fair dealing—so that it exempts all claims, accrued or known, from a contract change, the arbitration contract is not illusory. Were it otherwise, the employer could amend the contract in anticipation of a specific claim, altering the arbitration process to the employee's detriment and making it more likely the employer would prevail. The employer could also terminate the arbitration contract altogether, opting for a judicial forum if that seemed beneficial to the company. Noel v. New York State Office of Mental Health Cent. New York Psychiatric Ctr., 2012 WL 3764527 (2nd Cir. 2012)(Title VII Awards For Back And Front Pay Are “Wages” When Paid By An Employer Irrespective Of Whether Such Payment Is Made Through A Settlement Or A Final Judgment) A jury determined that the State Office of Mental Health Central New York Psychiatric Center fired Ian Noel in violation of Title VII and awarded him back and front pay. The United States District Court for the Northern District of New York entered a money judgment in his favor in the amount of $318,217.48, including $280,000 for back and front pay. Without seeking to amend or resettle the judgment—and without notice to counsel or to the district court—the defendant made various deductions and mailed a check for $139,582.52 directly to Noel. Noel objected to the deductions and moved under Rule 70(a) for full satisfaction of the judgment and for sanctions. The Second Circuit

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held that Title VII awards constitute “wages” under the Internal Revenue Code and, as such, are subject to statutory withholding. Banner Health System d/b/a Banner Estrella Medical Center, 358 NLRB No. 93 (2012)( NLRB Finds Requesting an Employee Not to Talk to Other Employees During an Investigation to be a Violation Of The NLRA) In Banner Health, the NLRB in a 2-1 decision (Members Griffin and Block in the majority, and Member Hayes dissenting), held that an employer conducting a workplace investigation violated employee Section 7 rights by telling the complaining employee not to discuss the matter with other employees while the investigation was pending.

XX. Punitive Damages

Bankhead v. ArvinMeritor, Inc., --- Cal.Rptr.3d ----, 2012 WL 1354522 (2012)(Non-Employment Case)(Upheld A $4.5 Million Punitive Damages Award Against A Defendant With A Negative Net Worth) (review denied) Gordon Bankhead, an automotive maintenance worker, brought an asbestos personal injury action against defendants including brake shoe manufacturer ArvinMeritor. The jury awarded Bankhead $1.85 million in compensatory damages and $4.5 million in punitive damages (a ratio of 2.4 to one). ArvinMeritor appealed, challenging only the amount of the punitive damages. ArvinMeritor raised two arguments: (1) the amount of the punitive damages is excessive under California law in light of ArvinMeritor's financial condition, and in particular, the evidence that ArvinMeritor has a negative net worth; and (2) the ratio of punitive to compensatory damages is so high as to violate the due process clause of the United States Constitution, under the guidelines adopted by the United States Supreme Court. The Court of Appeal rejected both arguments. As to the first argument, the Court of Appeal held that there is no legal requirement that punitive damages must be measured against a

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defendant's net worth. In this case, there was expert testimony that ArvinMeritor's net worth was not a reliable indicator of its ability to pay punitive damages, and that other indicators in its financial data merited the amount of the award. As to ArvinMeritor's second contention, the Court of Appeal held that the 2.4–to–one ratio of punitive damages to compensatory damages awarded by the jury did not violate the federal due process clause of the Fourteenth Amendment, or the guidelines for making such awards as articulated by the United States Supreme Court. The California Supreme Court denied ArvinMeritor’s petition for review.

XXI. Retaliation

Joaquin v. City of Los Angeles, 202 Cal.App.4th 1207 (2012)(Employee's Alleged Fabrication Of Sexual Harassment Complaint Was Legitimate Nonretaliatory Reason For Firing Him; Court Identifies "Significant Flaw" In CACI Retaliation Jury Instruction Because It Does Not Require A Finding Of Unlawful Intent) Joaquin is a frightening case. It will allow an employer to shield itself from a complaint of unlawful harassment/discrimination by setting up a "kangaroo" court to investigate such complaints, find them to have been fabricated, and then the employer will then be free to fire the employee for allegedly fabricating the complaint. Richard Joaquin, a Los Angeles Police Department officer, complained of sexual harassment by Sergeant James Sands. The department investigated and found Joaquin's complaint unfounded. Sands then pursued a complaint against Joaquin for filing a spurious sexual harassment charge. Internal Affairs investigated Sands' complaint, agreed that Joaquin's charge was without foundation, and recommended that the matter be adjudicated by a Board of Rights. The Board of Rights found Joaquin's charge to have been fabricated

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and recommended termination. The Chief of Police adopted the recommendation, and Joaquin was terminated. Joaquin filed a petition for writ of mandate. The superior court granted the petition and ordered Joaquin reinstated, finding that the Board of Rights decision was not supported by the weight of the evidence (i.e., the evidence showed that Joaquin's complaint of sexual harassment against Sands was not fabricated):

Joaquin had a lawful right to report sexual harassment, and terminating an employee for reporting what an employee reasonably believes to be sexual harassment is a tort. The uncontradicted evidence is that some or all of the events reported by Joaquin actually occurred. Joaquin provided a detailed and consistent account of conduct which made him feel uncomfortable or offended. In the face of these allegations, Sands did not completely deny the shooting range or weight room incidents, or calling the front desk. He had a different explanation for the field impound location and Olympics incidents, but again did not deny that they occurred.

202 Cal.App.4th at 1216, fn. 3. Following his reinstatement, Joaquin filed the present action against the City of Los Angeles, alleging that his termination was in retaliation for filing a sexual harassment complaint in violation of FEHA. A jury agreed and awarded Joaquin more than $2 million for lost wages and emotional distress. The City appealed, and the Court of Appeal reversed. First, the Court of Appeal held that an employer can fire an employee for making a false complaint of sexual harassment:

[I]n appropriate circumstances, an employer may discipline or terminate an employee for making false charges, even where the subject matter of those charges is an allegation of sexual harassment.

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202 Cal.App.4th at 1226. Then, the Court of Appeal appeared to go even further and held that an employer can fire an employee who has made a complaint of sexual harassment based merely on the employer's "good faith belief that a false statement was knowingly made" (emphasis added):

[I]n making business decisions (including personnel decisions), the employer can lawfully act on a level of certainty that might not be enough in a court of law. In the workaday world, not every personnel decision involving a false statement (or a cover-up) has to be treated as something like a trial for perjury. Therefore, an employer, in these situations, is entitled to rely on its good faith belief about falsity, concealment, and so forth.

202 Cal.App.4th at 1225. Finally, even though Joaquin had satisfied all of the elements of the CACI jury instruction for unlawful retaliation 2 , the Court of Appeal held that he failed to satisfy an additional element that the court believed was wrongly omitted from the jury instruction – namely, retaliatory intent:

[R]etaliatory intent is an essential element of a cause of action for unlawful retaliation under FEHA. However, that element is not identified in the CACI retaliation instruction. In the present case, where intent was a

2 CACI 2025 provides that the plaintiff must prove: (1) That [name of plaintiff]

[describe protected activity]; (2) That [name of defendant] [discharged/demoted/[other adverse employment action]] [name of plaintiff]; (3) That [name of plaintiff]'s [describe protected activity] was a motivating reason for [name of defendant]'s decision to [discharge/demote/[other adverse employment action]] [name of plaintiff]; and (4) That [name of plaintiff] was harmed; and (5) That [name of defendant]'s retaliatory conduct was a substantial factor in causing [name of plaintiff]'s harm.

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significant issue, the omission was material. Indeed, under the unique *1231 facts of the present case, the instruction may have made a plaintiff's verdict inevitable because a jury reasonably could have concluded that the City did not dispute any of the elements on which it was instructed—i.e., that (1) Joaquin reported sexual harassment, (2) the City terminated his employment, (3) Joaquin's report of sexual harassment was a motivating reason for the City's decision to terminate him, (4) Joaquin was harmed, and (5) the City's conduct was a motivating factor in causing Joaquin's harm. We urge the Judicial Council to redraft the retaliation instruction and the corresponding special verdict form so as to clearly state that retaliatory intent is a necessary element of a retaliation claim under FEHA.

202 Cal.App.4th at 1230-31. Mize-Kurzman v. Marin Community College Dist., 202 Cal.App.4th 832 (2012)(Whistleblower's Motivation Is Irrelevant To The Consideration Of Whether His Or Her Activity Is Protected) Pamela Mize–Kurzman appeals from a judgment in favor of her employer, defendant Marin Community College District, following a jury trial on her claims that the district was liable under two California “whistleblower” protection statutes, Labor Code section 1102.5 and Education Code section 87160 et. seq. Mize–Kurzman contended that the trial court committed reversible error by giving the jury an instruction that said the following:

A ‘protected disclosure’ means a good faith communication that discloses or demonstrates an intention to disclose information that may evidence an improper governmental activity. In that regard, Plaintiff must prove that any disclosure was made in good faith and for the public good and not for personal reasons. Debatable differences of opinion concerning policy

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matters are not protected disclosures. Information passed along to a supervisor in the normal course of duties is not a protected disclosure. Reporting publicly known facts is not a protected disclosure. Efforts to determine if a practice violates the law are not protected disclosures.

Specifically, Mize–Kurzman argued that the statement in the jury instructions “Plaintiff Must Prove That Any Disclosure Was Made in Good Faith and for the Public Good and Not for Personal Reasons,” was an incorrect statement of the law. The Court of Appeal agreed:

This sentence of the special instructions misstated the applicable law. As explained in a leading California employment law treatise: “[A] whistleblower's motivation is irrelevant to the consideration of whether his or her activity is protected. Whistleblowing may be prompted by an employee's dissatisfaction, resentment over unfair treatment, vindictiveness, or litigiousness as well as by honest efforts to ensure that the employer is following the law. As long as the employee can voice a reasonable suspicion that a violation of a constitutional, statutory, or regulatory provision has occurred, the employee's report to a government agency may be sufficient to create liability for the employer for retaliation.” (2 Advising California Employers and Employees (Cont.Ed.Bar Feb. 2011 supp.) Whistleblower Issues, § 16.7, p. 1677.)

. . . . [I]t may often be the case that a personal agenda or animus towards a supervisor or other employees will be one of several considerations motivating the employee whistleblower to make a disclosure regarding conduct that the employee also reasonably believes violates a statute or rule or constitutes misconduct. That motivation is irrelevant to the purposes of the disclosure statutes. It easily could lead the finder of fact to detour around the central question of the employee's reasonable belief and

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down a circuitous byway in an attempt to discern the employee's motives by delving into the employee's relationships with coworkers, supervisors and the employer.

202 Cal.App.4th at 850, 852. Next, Mize–Kurzman argued that the statement in the jury instructions that “debatable differences of opinion concerning policy matters are not protected disclosures,” was also an incorrect statement of the law. Again, the Court of Appeal agreed:

Plaintiff contends the court erred in instructing the jury that “debatable differences of opinion concerning policy matters” were not disclosures of information under Labor Code section 1102.5, subdivision (b) and were not “protected disclosures” under Education Code section 87160 et seq. We agree. The court erred in failing to distinguish between the disclosure of policies that plaintiff believed to be unwise, wasteful, gross misconduct or the like, which are subject to the limitation, and the disclosure of policies that plaintiff reasonably believed violated federal or state statutes, rules, or regulations, which are not subject to this limitation, even if these policies were also claimed to be unwise, wasteful or to constitute gross misconduct.

. . . . Those portions of special instructions numbers 2 and 3 stating that “debatable differences of opinion concerning policy matters” are not protected disclosures, improperly conflated disclosures based on the belief that a policy was unwise, “economically wasteful or involves gross misconduct, incompetency, or inefficiency” (Ed.Code, § 87162, subd. (c)(2)), with disclosures founded upon a reasonable belief that a policy was unlawful. (See Ed.Code, § 87162, subd. (c)(1); Lab.Code, § 1102.5, subd.

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(b).) Disclosures related to the wisdom or efficacy of a policy are subject to the debatable policy matters limitation, where there is no claim that the disclosure was made because the employee reasonably believed the policy violated a statute, rule or regulation. Disclosures of a policy that the employee reasonably believes violates a statute or regulation are protected disclosures, whether or not the existence of an actual violation or the wisdom of the policy are debatable. Application of the debatable policy matters limitation broadly, to cases where the alleged whistleblower reasonably believes a policy violates the law, would eviscerate the reasonable belief standard in many, if not most, of such cases.

202 Cal.App.4th at 852 - 53, 54. Next, Mize–Kurzman argued that the statement in the jury instructions that “information passed along to a supervisor in the normal course of duties is not a protected disclosure,” was also an incorrect statement of the law. Again, the Court of Appeal agreed:

This instruction was erroneous under both federal law and established California law.

. . . . The court erred in instructing the jury that information passed along to a supervisor in the normal course of duties was not a protected disclosure under California law. In circumstances where the supervisor is not the alleged wrongdoer (i.e., the supervisor's own conduct is not the asserted wrongdoing that is being disclosed to that supervisor), it cannot categorically be stated that a report to a supervisor in the normal course of duties is not a protected disclosure.

202 Cal.App.4th at 856, 858 (Emphasis in original) Finally, Mize–Kurzman argued that the statement in the jury instructions that “reporting publicly known facts is not a protected

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disclosure,” was also an incorrect statement of the law. This time, however, the Court of Appeal disagreed:

Reporting Publicly Known Facts is Not a Protected Disclosure. We are persuaded that this was a proper limitation on what constitutes disclosure protected by California law. We agree with [Huffman v. Office of Personnel Management, 263 F.3d 1341 (th Cir. 2001), and other federal cases that have held that the report of information that was already known did not constitute a protected disclosure.

. . . . This conclusion is consistent with those cases holding that the employee's report to the employee's supervisor about the supervisor's own wrongdoing, is not a “disclosure” and is not protected whistleblowing activity, because the employer already knows about his or her wrongdoing. Moreover, criticism delivered directly to the wrongdoers does not further the purpose of either the federal WPA or the California whistleblower laws to encourage disclosure of wrongdoing to persons who may be in a position to act to remedy it. In California cases holding that a public employee's report of wrongdoing to his or her own employer is not excluded from qualifying as a disclosure protected under the Labor Code, the superior to whom the report is made is not the person involved in the alleged wrongdoing. The court did not err in instructing that reporting publicly known facts is not a disclosure protected by the California whistleblower statutes at issue here.

202 Cal.App.4th at 858 - 59 (citations and footnote omitted).

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Fitzsimons v. California Emergency Physicians Med. Group, 205 Cal. App. 4th 1423 (2012)(Partners May Assert FEHA Claims For Retaliation For Opposing Harassment Of Employees) Mary Fitzsimons is an emergency physician who has been a member of the California Emergency Physicians Medical Group (“CEP”). CEP is a California general partnership with approximately 700 partners working in hospital emergency rooms throughout California. The partnership is governed by a nine-member elected board of directors. The emergency doctors at each hospital are supervised by a medical director appointed by the board and the hospitals are grouped in regions supervised by appointed regional directors. Fitzsimons became a member of CEP in 1985. In 1987, Fitzsimons began serving as CEP's medical director at Sutter Medical Center in Antioch, California. In June 1999, Fitzsimons became a regional director, serving the four hospitals in her region, including Sutter Medical Center, where she also continued to work as an emergency physician. In November 2003, Fitzsimons was elected to serve on the CEP Board of Directors. Fitzsimons then began reporting that certain officers and agents of CEP had sexually harassed female employees of CEP's management and billing subsidiaries. Shortly after her complaints, Fitzsimons’ appointment as a regional director was terminated but she was not removed from the board of directors and she continued to work as an emergency physician at Sutter Medical Center. Fitzsimons sued for FEHA retaliation. Prior to trial, the court ruled that if Fitzsimons was a bona fide partner in CEP, she did not have standing to assert a cause of action for retaliation under FEHA against CEP. Pursuant to CEP's motion, the jury trial was bifurcated so that the jury would first decide whether plaintiff was an employee or partner. The jury found that Fitzsimons was a partner and the court entered judgment in favor of CEP. Fitzsimons filed a timely notice of appeal. The Court of Appeal held that non-employee partners were protected by FEHA’s anti-retaliation provision:

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While CEP is not in an employment relationship with plaintiff, CEP is the employer of those persons who are the victims of the alleged harassment that plaintiff reported, for which she allegedly became the subject of CEP's retaliation. The harassment of CEP employees, if proven, is an unlawful practice for which CEP is liable under section 12940, subdivision (j). And subdivision (h) makes it an unlawful practice for CEP to retaliate against “any person” for opposing that harassment. Interpreting “person” in the context of those against whom the employer may not retaliate to include a partner gives the word its normal meaning and is consistent with the definition in section 12925, subdivision (d). This interpretation does not contravene any of the reasons explained in Torrey Pines for excluding supervisors from the scope of liability. Plaintiff's claim does not seek to impose liability on any “nonemployer individual” but only upon the employer—the partnership. Upholding plaintiff's claim here does not imply that a partner would have a valid claim for harassment or discrimination against himself or herself by the partnership. As CEP urges, the alleged sexual harassment of a partner by a fellow partner is not a “practice[ ] forbidden under this part,” but harassment of the partnership's employees is an unlawful employment practice forbidden under “this part.”8 Plaintiff, although a partner, is a person whom section 12940, subdivision (h) protects from retaliation for opposing the partnership-employer's harassment against those employees.

205 Cal. App. 4th at 1429. \\\ \\\ \\\

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XXII. Section 1981

Smith v. Bray, 681 F.3d 888 (7th Cir. 2012)(On Issue Of First Impression, Subordinate With Retaliatory Motive Could Be Individually Liable Under § 1981 For Causing Employer To Retaliate Against Another Employee) In this case of apparent first impression, the Seventh Circuit held that employees may sue supervisors in their individual capacities for race discrimination and retaliation (even if accomplished indirectly via the Cat’s Paw theory) under Section 1981:

In most employment discrimination cases that arise in the private sector, the defendants are the employers themselves, most often corporations or other business organizations. In this case of alleged race discrimination and retaliation, however, the employer has gone through bankruptcy and so cannot be sued for relief. The plaintiff in this case has sought relief from two individuals who worked for the bankrupt employer. Such claims are permitted under 42 U.S.C. § 1981 for race discrimination and retaliation in contractual relationships, including employment.

681 F.3d at 892. The Seventh Circuit also addressed the all too common scenario when a party moving for summary judgment uses her reply brief to object to the admissibility of evidence on which the non-moving party relies in opposing summary judgment, and the non-moving party has no further opportunity to respond to the objection:

Where the appellant did not have a meaningful opportunity to be heard on the evidentiary issue in the district court, it would not be fair to refuse to consider his arguments presented for the first time on appeal. In managing summary judgment practice in their courts, district courts need to ensure that they do not base their

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decisions on issues raised in such a manner that the losing party never had a real chance to respond. If a district court does not provide an opportunity to be heard, our doors will be open to consider those arguments.

681 F.3d at 903.

XXIII. Section 1983

Levin v. Madigan, 2012 WL 3538659 (7th Cir. 2012)( Resolving A Matter Of First Impression In The Circuit, The ADEA Does Not Preclude A § 1983 Age Discrimination Claim) Surprisingly given that every other Circuit Court of Appeal to decide this issue as come down the other way, the Seventh Circuit held that the ADEA does not preclude a Section 1983 claim for age discrimination:

Whether the ADEA precludes a § 1983 equal protection claim is a matter of first impression in the Seventh Circuit. All other circuit courts to consider the issue have held that the ADEA is the exclusive remedy for age discrimination claims, largely relying on the Fourth Circuit's reasoning in Zombro v. Baltimore City Police Department, 868 F.2d 1364 (4th Cir.1989).

. . . . Given the conflicting case law, further review of this issue is required. Although the ADEA enacts a comprehensive statutory scheme for enforcement of its own statutory rights . . . we find that it does not preclude a § 1983 claim for constitutional rights. While admittedly a close call, especially in light of the conflicting decisions from our sister circuits, we base our holding on the ADEA's lack of legislative history or statutory language precluding constitutional claims, and the divergent rights and

https://a.next.westlaw.com/Link/Document/FullText?findType=L&pubNum=1000546&cite=42USCAS1983&originatingDoc=I78a220cfe87e11e1b343c837631e1747&refType=LQ&originationContext=document&transitionType=DocumentItem&contextData=(sc.Keycite)

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protections afforded by the ADEA as compared to a § 1983 equal protection claim.

2012 WL 3538659, at * 7 - 9 (citations and footnote omitted).

XXIV. Sex Discrimination

Macy v. Holder, Appeal No. 0120120821 (EEOC Dec., Apr. 20, 2012)(Title VII Protects Transgender Workers) On April 20, 2012, the EEOC found that the claims of Mia Macy, a transgender woman who had applied for a position with the Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF"), were cognizable under Title VII. Citing numerous court decisions, including the recent Glenn v. Brumby, 663 F.3d 1312 (11th Cir. 2011) decision, the EEOC determined that "intentional discrimination against a transgender individual because that person is transgender is, by definition, discrimination 'based on . . . sex,' and such discrimination therefore violates Title VII." The Macy decision can be accessed at http://www.akerman.com/documents/EEOC_Macy.pdf

XXV. Trade Secret Litigation

*** SASCO v. Rosendin Elec., Inc., 143 Cal.Rptr.3d 828, 2012 WL 2826955 (Cal. Ct. App. 2012) SASCO sued three of its former senior managers and their new employer (Rosendin Electric) for, among other things, misappropriation of trade secrets under the California Uniform Trade Secrets Act. More than two years after it filed the litigation (in which the “parties engaged in fierce discovery battles”), SASCO voluntarily dismissed the action without filing an opposition to defendants’ motion for summary judgment. Defendants then filed a motion for attorney’s fees and costs pursuant to Cal. Civ. Code § 3426.4, asserting the lack of evidence of any trade secret misappropriation by



http://www.akerman.com/documents/EEOC_Macy.pdf

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defendants. The trial court granted defendants’ motion and awarded them the total amount of $484,943.46 because there was no evidence of misappropriation of any trade secret – “instead, SASCO sued defendants based on the suspicion that they must have misappropriated trade secrets because the individual defendants left the employ of SASCO to work for a competitor.” The Court of Appeal affirmed.

XXVI. Unemployment

***Paratransit, Inc. v. CUIAB, 206 Cal. App. 4th 1319 (2012)(Employee Terminated For Refusing To Sign Disciplinary Memo Was Disqualified From Unemployment Benefits) Craig Medeiros was terminated by his employer Paratransit for refusing to sign a disciplinary memorandum that was issued in connection with a prior incident of misconduct involving a customer. Medeiros (who was a member of a union) refused to sign the disciplinary memo without a union representative being present (which he had requested and was denied) even though the signature line indicated only “Employee signature as to Receipt.” The employer’s representative informed Medeiros that the collective bargaining agreement required him to sign the disciplinary memo and that if he failed to sign, it would be treated as insubordination and his employment would be terminated. Medeiros refused to sign the memo, and Paratransit terminated his employment. Paratransit subsequently opposed Medeiros’s application for unemployment benefits, and the administrative law judge concluded Medeiros’s “deliberate disobedience of a reasonable and lawful directive of the employer, to sign the memorandum notifying him of disciplinary action, where obedience was not impossible or unlawful and did not impose new or additional burdens upon him, constituted misconduct.” Although the CUIAB reversed the ALJ, the trial court granted the employer’s petition for writ of administrative mandamus, concluding

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“this was misconduct rather than a good faith error in judgment.” The Court of Appeal affirmed the trial court’s judgment. * * *Robles v. Employment Dev. Dep’t, 207 Cal. App. 4th 1029 (2012)(Employee Who Attempted To Buy Shoes For A Friend At Company Expense Was Entitled To Unemployment Benefits) Jose Robles worked as a service technician for Liquid Environmental Solutions for four years prior to his termination. His job was to collect food grease from restaurants and other food outlets. Robles’s employment was terminated after he attempted to buy shoes for a friend with the $150 annual shoe allowance that Robles received from the company. Although Robles’s intent was to “perform a noble gesture for a friend,” the EDD denied him unemployment benefits because he “broke a reasonable employer rule.” Robles challenged the EDD’s determination by filing a petition for writ of administrative mandate with the Court of Appeal, which reversed the decision of the Board because although Robles knew that the employer intended its employees to use the shoe allowance to purchase safety shoes for work, the element of culpable intent was not established. The Court also noted that the employer did not oppose benefits, did not speak with the EDD investigators and did not present evidence in opposition to the claim for benefits. See also McGuire v. Employment Dev. Dep’t, 2012 WL 3590790 (Cal. Ct. App. 2012) (the base period to be used for determining eligibility for extended unemployment benefits is the same base period used for determining regular unemployment compensation benefits).

XXVII. Wage & Hour (Non-Class Action)

Christopher v. SmithKline Beecham Corp., -- U.S. --, -- S.Ct. – (2012)(FLSA’s Outside Sales Exemption Applies To Pharmacy Sales Representatives Even Though They Don’t “Sell” Anything) Pharmacy Sales Representatives (also referred to as “Detailers”) visited physicians in an effort to secure a non-binding agreement to prescribe the drugs manufactured by their employer -- SmithKline

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Beecham. The physicians then prescribed (or not) the drugs to their patients and the patients then purchased the drugs (or not or switched to generics) from their pharmacies. So, to reiterate, the Pharmacy Sales Representatives did not sell anything to their customers (i.e., the physicians) and the customers did not buy anything. Surprisingly, ruling on the FLSA overtime claims brought by the Pharmacy Sales Representatives, the Supreme Court in a 5-4 decision written by Justice Alito rejected the view that a sale required a transfer of title. Instead, the Court held that in the context of the pharmaceutical industry, the commitment obtained by the Pharmacy Sales Representatives was good enough to qualify as a sale and therefore, fit the Representatives into the Outside Sales Representative exemption. Interestingly, all nine Justices rejected the opinion advanced by the Department of Labor arguing that the Pharmacy Sales Representatives did not fall within the Outside Sales Representative exemption. The Court held that no deference whatsoever was due the Department’s position which it criticized for attempting to regulate by amicus. The Court suggested that only regulations issued through the notice and comment would be entitled to significant deference. But see Mortgage Bankers Association v. Solis, 2012 WL 2020987 (D.D.C. 2012)(rejecting challenge to the Department of Labor’s Administrative Interpretation 2012-1 that mortgage loan officers were not exempt under the administrative exemption). Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012)(Victory For Employees? Major Victory For Employers? Depends On Your Perspective -- Important Concurrence By Werdeger/Liu Foreshadowing Their Views Of Duran v. U.S. Bank National Assoc.?) For the employment bar, Brinker was one of the California Supreme Court's most eagerly anticipated decisions in years. The California Supreme Court granted review in that case on October 22, 2008. Finally, on April 12, 2012, the California Supreme Court issued its decision.

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Meal Breaks The most widely publicized issue in Brinker was a dispute over whether or not employers are responsible for "ensuring" that employees received their meal breaks, or if employers are required to merely make these breaks available. The Supreme Court held

[U]nder Wage Order No. 5 and Labor Code section 512, subdivision (a), an employer must relieve the employee of all duty for the designated period, but need not ensure that the employee does no work.

53 Cal.4th at __. Under this standard, the employer must (1) relieve the employee of all duty; (2) relinquish any employer control over the employee and how he or she spends the time (this means, among other things, that employees must be free to leave the workplace); and (3) permit a reasonable opportunity for the employee to take uninterrupted meal periods. The employer is not obligated to "ensure" that the employees actually cease work. However, the employer is not allowed to promulgate an official policy providing employees with meal breaks and then undermining it by: (1) pressuring employees to perform their duties in a way precludes them from taking their meal breaks; (2) encouraging employees to work through their meal breaks; or (3) creating incentives for employees to not take their meal breaks. Another important issue decided in Brinker is when employers must provide their employees with meal breaks. The Court held that employers must provide employees with their first meal break “no later than the end of an employee’s fifth hour of work, and a second meal period no later than the end of an employee’s 10th hour of work.” The following chart illustrates this rule (assuming a half an hour meal break):

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Time Worked Hour

8:00 a.m. to 9:00 a.m. 1st hour 9:00 a.m. to 10:00 a.m. 2nd hour 10:00 a.m. to 11:00 a.m. 3rd hour 11:00 a.m. to 12:00 p.m. 4th hour

12:00 p.m. to 1:00 p.m.

5th hour (meal break must begin before the end of the 5th hour – i.e., no later than 12:59 p.m.)

12:59 p.m. to 1:29 p.m. Meal break 1:30 p.m. to 2:30 p.m. 6th hour 2:30 p.m. to 3:30 p.m. 7th hour 3:30 p.m. to 4:30 p.m. 8th hour 4:30 p.m. to 5:30 p.m. 9th hour

5:30 p.m. to 6:30 p.m.

10th hour (meal break must begin before the end of the 10th hour – i.e., no later than 6:29 p.m.)

Another issue revolving around meal breaks is the permissibility of “early lunching” policies. An "early lunching" policy is when an employer forces the employees to take their meal break within the first hour or two of arriving for work. Once the employee is given this first meal period, the employer would then force the employee to work for eight or more hours without an additional meal break. The plaintiffs argued that this policy was unlawful and that a second meal break would have to be provided five hours later. Unfortunately, the Court held that employers were free adopt an "early lunching" schedule whereby employees had to take their "lunch" during the first hour of work, and then continue working the rest of the day, potentially up to 9.5 more hours straight, without a second meal period. The only exception would be for employees working in the motion picture industry (governed by Wage Order 12) who are are entitled to meal periods at six-hour intervals. Accordingly, if a motion picture employer forced workers to take "lunch" from 8:30 a.m. to 9:00 a.m., the employer would have to provide a second meal period no later than six hours later, i.e., 3:00 p.m. For everyone else, the employer can require them to keep working until 7:00 p.m., for a total of 10 hours, with no further meal period.

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Rest Breaks Another issue in the case revolved around rest breaks. The Supreme Court held that Employees are entitled to 10 minutes’ rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on. Accordingly, employees are entitled to rest breaks as follows: Hours Worked Rest Periods

0 to less than 3.5 hours None 3.5 up to 6 hours 1 More than 6 up to 10 hours 2 More than 10 up to 14 hours 3 More than 14 up to 18 hours 4

As far as when rest breaks must be taken, the Court held that “the only constraint of timing is that rest breaks must fall in the middle of work periods ‘insofar as practicable.’” Unfortunately, the Court did not offer any guidance as to what qualifies as “insofar as practicable.” Accordingly, in the context of an ordinary eight-hour shift, the Supreme Court held that generally one rest break should fall on either side of the meal break while recognizing that "[s]horter or longer shifts and other factors that render such scheduling impracticable may alter this general rule." "Off-The-Clock" Issues The Supreme Court held that employers can only be liable for "off-the-clock" work if there is proof that the employer knew or should have known off-the-clock work was occurring. In this regard, the Court held that when employees "clock out," a presumption is established that they are doing no work and it is the plaintiffs' burden to overcome that presumption.

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Class Certification Issues While most of the discussion about Brinker has been limited to its holding regarding meal and rest periods, it also addressed certain class certification issues. Foreshadowing? Justice Werdeger’s concurrence (joined by Justice Liu) encouraged the courts to continue to certify wage and hour class actions and to use novel techniques such as representative evidence, survey evidence, statistical evidence, and subclasses to avoid employer windfalls. This concurrence certainly foreshadows how Justices Werderger and Liu will view the pending Duran v. U.S. Bank National Assoc., 203 Cal.App.212 (2012), case in which the Court of Appeal held that employer “due process” rights trumped the rights of the class to use innovative techniques such as those suggested in Sav-on Drug Stores, Inc. v. Superior Court, 34 Cal. 4th 319 (2004). Kirby v. Immoos Fire Protection, Inc., --- Cal. 4th ----, 2012 WL 1470313 (2012)(California Supreme Court Rules That Prevailing Parties Not Entitled To Attorney's Fees In Meal And Rest Period Claims Under Labor Code Section 226.7) Anthony Kirby and Rick Leech, Jr., sued Immoos Fire Protection, Inc. and multiple Doe defendants for violating various labor laws as well as the unfair competition law, Bus. & Prof.Code, § 17200 et seq. The amended complaint stated seven claims, the sixth of which alleged the failure to provide rest breaks as required by section 226.7. The plaintiffs ultimately dismissed this claim with prejudice after settling with the Doe defendants. Immoos subsequently moved for attorney's fees under section 218.5. The trial court awarded fees, and the Court of Appeal affirmed. The California Supreme Court granted review to consider when, if ever, a party who prevails on a section 226.7 action for an alleged failure to provide rest breaks may be awarded attorney's fees. The Court concluded that neither section 1194 nor section 218.5

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authorizes an award of attorney's fees to a party that prevails on a section 226.7 claim. Accordingly, the Supreme Court reversed the judgment of the Court of Appeal. The Supreme Court did not answer the arguably more important question of whether one-way fee-shifting for employees is available for meal and rest break claims in actions containing claims for overtime and minimum wages. Until this issue is resolved, plaintiff attorneys should seek attorneys’ fees for meal and rest break violations to the extent they are alleged along with overtime and minimum wage claims under § 1194. Additionally, they should also seek fees under Code of Civil Procedure Section 1021.5, which allows fee-shifting in certain cases brought to vindicate the public interest —something that meal and rest period litigation certainly does. Defense counsel are cheering Immoos decision and the Brinker decision and essentially acknowledging that these decisions will chill the ability of employees to vindicate their rights to meal and rest periods -- "This decision should have a major impact on wage and hour class actions in California, because the inability to recover attorneys’ fees removes a major bargaining chip used by plaintiffs’ counsel in settlement negotiations. This decision, especially when coupled with the Brinker decision, should also have a chilling effect on future cases alleging meal and rest break claims." See http://www.dlapiper.com/prevailing-parties-not-entitled-to-attorneys-fees-in-meal-and-rest-period-claims-in-california/ Arias v. Kardoulias, 2012 WL 3039170 (2012)(Dismissal Of Employee's Untimely Appeal From Labor Commissioner's Wage Claim Determination Didn't Entitle Employer To Attorney Fees Under Fee-Shifting Provision) Worker appealed Labor Commissioner's decision awarding her unpaid wages earned from sister while caring for their father. While appeal was pending, sister filed memorandum of costs and request for attorney's fees. After appeal was dismissed as untimely, the Superior Court awarded costs and fees to sister, and worker appealed. The Court of Appeal held that, as a matter of first impression,

http://www.dlapiper.com/prevailing-parties-not-entitled-to-attorneys-fees-in-meal-and-rest-period-claims-in-california/

http://www.dlapiper.com/prevailing-parties-not-entitled-to-attorneys-fees-in-meal-and-rest-period-claims-in-california/

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employee was not liable under statutory fee shifting provision because the statutory right to recover attorney fees under Section 98.2, subdivision (c) depends upon success at trial. Since the purpose behind this one-way fee-shifting provision is to discourage unmeritorious appeals, the Court of Appeal held that Section 98.2, subdivision (c) does not become operative unless the superior court has jurisdiction to conduct a trial on the merits of the employee's wage claim. And, since the appeal was untimely taken, the Superior Court did not have jurisdiction to conduct a trial. Sciborski v. Pac. Bell Directory, 205 Cal. App. 4th 1152 (2012), review denied (Aug. 8, 2012)(Court Rejects LMRA Preemption Defense in Wage Deduction Action And Clarifies When Commissions Are "Earned" or "Vested") Annie Sciborski was a sales representative for Pacific Bell Directory (“Pacific Bell”) selling advertising for Pacific Bell's Yellow Pages. She was a member of the International Brotherhood of Electrical Workers, AFL–CIO Local Union 2139 (Union), and the terms and conditions of her employment were governed by the collective bargaining agreement (CBA) between Pacific Bell and the Union. Sciborski made a sale for which she received $36,000 in commission (after taxes she received about $17,000). Shortly thereafter, Pacific Bell began deducting monies from her commissions claiming that it had inadvertently assigned her the account for which her sale amounted to the $36,000 commission and that the account should have been assigned to someone else. Accordingly, Pacific Bell did not believe that Sciborski earned the commission. Sciborski sued challenging Pacific Bell's actions in deducting the monies from her sales commission. A jury found Pacific Bell's wage deductions violated Labor Code section 221 and resulted in Sciborski's constructive discharge in violation of public policy. The court awarded Sciborski attorney fees based on her prevailing on the Labor Code section 221 claim.

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On appeal, Pacific Bell initially argued that Sciborski's claims were preempted by federal law under section 301 of the Labor Management Relations Act, 29 U.S.C. § 185. Pacific Bell maintained that Sciborski's claims were preempted because she was a union member governed by a collective bargaining agreement and a consideration of her claims required the court to interpret this agreement. The Court of Appeal rejected this contention holding that Sciborski's claims were not preempted because they arose from independent state law and did not require the interpretation of the collective bargaining agreement. Pacific Bell next argued that Sciborski had not “earned” the commission because she was assigned the account due to a "clerical error” and proper assignment of the account was a condition precedent to earning the commission that had not been satisfied. The Court of Appeal rejected this argument for two reasons. First, it determined that the commission agreement (which Pacific Bell drafted) did not expressly provide that proper assignment of an account was a condition precedent to earning the commission. Second, the Court of Appeal held that any implied contract term that would deny a commission under these circumstances would be unenforceable under California law:

[A]n employer's right to define an “earned” commission in the employment contract is not unlimited. Generally, the essence of an advance is that at the time of payment the employer cannot determine whether the commission will eventually be earned because a condition to the employee's right to the commission has yet to occur or its occurrence as yet is otherwise unascertainable. Thus, for example, an employer may expressly condition an earned sales commission on the sale becoming final (e.g., no returns within a specified time or final payment received) or on the employee completing work in providing follow-up services to the customer. But an employer may not require an employee to agree to a wage deduction in the guise of recouping an advance based on conditions that are unrelated to the sale and/or that merely reflect the

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employer's attempt to shift the cost of doing business to an employee. Where a deduction is unpredictable, and is taken without regard to whether the losses were due to factors beyond the employee's control, an employer cannot avoid a finding that its [sales commission policy] is unlawful simply by asserting that the deduction is just a step in its calculation of commission income.

205 Cal. App. 4th at 1167-68 (internal quotations and citations omitted). Deleon v. Verizon Wireless, LLC, 207 Cal. App. 4th 800 (2012) (Court Of Appeal Clarifies When Employer Can Recover Advances on Commissions when Conditions of Sale Are Not Met) DeLeon is yet another charge back case in which the courts have been called upon to clarify the right of an employer to reclaim or "charge back" amounts that have been paid as advances on commission. In general, the courts have held that such “charge backs” are: (1) permissible if the conditions precedent for earning the commission have not occurred; and (2) not permissible if paid on a completed sale. In Deleon, Verizon utilized a compensation plan that provided that commissions on the sale of cell phone service plans are paid in advance, but not earned until the expiration of a chargeback period during which the customer may cancel the service. In other words, if the customer cancelled during the chargeback period (one year for post-paid plans), the employee's future commission advances would be reduced by the original amount advanced for the sale. Saul Deleon, on behalf of himself and other aggrieved employees, filed a complaint seeking civil penalties under the Labor Code Private Attorneys General Act of 2004 (“PAGA”) for a violation of section 223, which prohibits the secret underpayment of wages. The trial court granted summary judgment in favor of Verizon and the Court of Appeal affirmed:

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Deleon's commissions depended upon the conditions set forth in the compensation plans. As specifically described in the compensation plans, Deleon received advances and his commissions were earned at the expiration of the chargeback period. Section 223 refers to the underpayment of wages. Commission advances are not wages.

207 Cal. App. 4th at 809 (citations omitted). ***Aleksick v. 7-Eleven, Inc., 205 Cal.App.4th 1176 (2012)( Unfair Competition Claim Against Franchisor Was Properly Dismissed) Kimberly Aleksick, who worked as a clerk at a 7-Eleven store, sued 7-Eleven (the franchisor of the store where Aleksick was employed) for violation of the Unfair Competition Law ("UCL"). Aleksick alleged that 7-Eleven, which provides payroll services to its franchisees, violated the UCL by converting any partial hour worked in a pay period from minutes to hundredths of an hour, which sometimes shorted employees a few seconds of time. The trial court granted 7-Eleven's motion for summary judgment on the ground that Aleksick had failed to allege any statutory predicate for her UCL claim and, in any event, the Labor Code wage statutes govern the employer-employee relationship, and the undisputed evidence showed that 7-Eleven was not the employer of Aleksick or the other class members. The Court of Appeal affirmed summary judgment against Aleksick. *** Cash v. Winn, 205 Cal. App. 4th 1285 (2012)(Personal Attendant Who Cared For Elderly Person Was Exempt From Overtime) Joy Cash, who is not a licensed or trained nurse, cared for Iola Winn, who is in her 90's, in Winn's home. After she left her employment, Cash sued Winn for failure to pay her overtime wages. Winn claimed that Cash was a personal attendant within the meaning of Wage Order No. 15 and thus exempt from overtime. At trial, the court instructed the jury that a personal attendant is a person who is employed to "supervise, feed or dress" an elderly person and

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explained that "supervision" includes assisting the elderly person with various daily living tasks. The trial court also instructed the jury that the personal care exemption (from overtime) does not apply when the employee's duties require the regular administration of health care services "such as the taking of temperatures or pulse or respiratory rate, regardless of the amount of time such duties take." Following the jury trial, the court entered judgment in Cash's favor for over $123,000, consisting of $33,700 in overtime wages, $14,000 in prejudgment interest, $73,000 in attorney's fees and $3,000 in litigation costs. The Court of Appeal reversed the judgment on the ground that the trial court had erred in instructing the jury about the existence of a health care exception to the personal attendant exemption. Frye v. Baptist Mem'l Hosp., Inc., 2012 WL 3570657 (6th Cir. 2012)(Sixth Circuit Affirms Decertification Of FLSA Collective Action Challenging Automatic Meal Break Deductions And Holds That Even Name Plaintiffs Must File Written Consents In FLSA Actions) In Frye, the Sixth Circuit upheld decertification of an FLSA collective action challenging the use of an automatic 30-minute deduction for unpaid meal breaks. The Court found that the plaintiff had failed to put forward evidence sufficient to demonstrate that the opt-in plaintiffs were similarly situated and experienced a common FLSA violation. The Court also held that automatic deduction policies are lawful under the FLSA. It then found that the evidence overwhelmingly supported the district court's conclusion that the opt-in plaintiffs were aware of the exception procedures for reporting time worked during meal breaks, successfully used such procedures to get paid for meal-break work, and were not disciplined for or otherwise discouraged from reporting meal-break work. The Sixth Circuit also held that even name plaintiffs must file written consents in FLSA actions:

Frye argues that the FLSA does not require named plaintiffs, such as himself, to file written consents. But the plain language of § 256(a) does. That provision

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unambiguously provides that collective actions “shall be considered to be commenced” for statute-of-limitations purposes “on the date when the complaint is filed, if he is specifically named as a party plaintiff in the complaint and his written consent to become a party plaintiff is filed on such date.” Id. § 256(a) (emphasis added). If any doubt remains, subsection (b) confirms the written-consent requirement by providing that an FLSA collective action commences “on the subsequent date on which such written consent is filed.” Id. § 256(b). Accordingly, courts construe the above language to do what it says: require a named plaintiff in a collective action to file a written consent to join the collective action.

2012 WL 3570657, * 7. ***Headley v. Church of Scientology Int’l, 687 F.3d 1173 (9th Cir. 2012)(Former Church Ministers May Not Proceed With Trafficking Victims Protection Act Claims) Marc and Claire Headley were ministers in the Sea Organization (“Sea Org”), which is an elite religious order of the Church of Scientology. The Sea Org demands much of its ministerial members, renders strict discipline, imposes stringent ethical and lifestyle constraints and goes to great efforts to retain clergy and to preserve the integrity of the ministry. The Headleys claimed they worked more than 100 hours per week and that each received a $50 weekly stipend as well as room and board at the Church’s headquarters in Gilman Hot Springs, California. After leaving the Sea Org, the Headleys sued the Church under the federal Trafficking Victims Protection Act, which makes it a crime “knowingly” to “provide or obtain the labor or services of a person by…means of force, threats of force, physical restraint,” etc. The Headleys alleged the Church “psychologically coerced” them to provide forced labor, but the Ninth Circuit affirmed summary judgment against the Headleys because “the record contains little evidence that the defendants obtained the Headleys’ labor ‘by means of’ serious harm, threats, or other improper methods.” The Court did

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not find it necessary to consider the applicability of the ministerial exception defense in this case. ***Peabody v. Time Warner Cable, Inc., 2012 WL 3538753 (9th Cir. 2012)(Ninth Circuit Certifies Question To California Supreme Court Regarding Commission Exemption) Susan J. Peabody was employed as a commissioned salesperson by Time Warner Cable (“TWC”) for approximately 10 months. Peabody’s commissions were based on the revenue generated by advertising that was aired every broadcast month, which lasted four or five weeks. Peabody also received a base salary of $20,000 per year. During her 10 months of employment, Peabody was paid approximately $75,000 in total compensation. In this putative class action, Peabody alleges that her earnings did not exceed one and one-half times the minimum wage at all relevant times because she only received commission payments every four or five weeks. On the other hand, TWC contends that Peabody’s earnings should be calculated based on the broadcast month so that Peabody’s commissions count towards the pay period in which they were earned rather than the pay period in which the commissions were actually paid. Finding no “California case directly on point” and disregarding the DLSE Manual, the U.S. Court of Appeals for the Ninth Circuit certified the following question to be answered by the California Supreme Court pursuant to Cal. Rule of Court 8.548:

To satisfy California’s compensation requirements, whether an employer can average an employee’s commission payments over certain pay periods when it is equitable and reasonable for the employer to do so.

***Hernandez v. Chipotle Mexican Grill, Inc., 2012 WL 3579567 (Cal. Ct. App. 2012)(Appellate Courts Begin To Apply Brinker Decision) Rogelio Hernandez appealed from the order denying his motion for class certification and granting Chipotle’s motion to deny class certification as to his claims that Chipotle denied non-exempt

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employees their meal and rest breaks. Chipotle moved to deny class certification on the ground that it had met its responsibility under California law to provide (i.e., to authorize and permit) employees to take meal and rest breaks. Hernandez contended that while an employer need only provide employees with rest breaks, it must ensure that employees take their meal breaks. Relying upon the California Supreme Court’s opinion in Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004 (2012), the court held that an employer need only provide not ensure meal and rest breaks and that the trial court had properly denied class certification. See also Lamps Plus Overtime Cases, 2012 WL 3587610 (Cal. Ct. App. 2012) (same); Muldrow v. Surrex Solutions Corp., 2012 WL 3711553 (Cal. Ct. App. 2012) (employment recruiters were properly classified as exempt commissioned employees and were properly provided meal and rest breaks). ***Bell v. H.F. Cox, Inc., 2012 WL 3846827 (Cal. Ct. App. 2012)(Claim For Unpaid Vacation Benefits Was Properly Dismissed) Oscar Bell and other truck drivers filed a putative class action against Cox, alleging wage and hour violations. Among other things, the drivers alleged that Cox had failed to pay promised vacation benefits to current employees (it paid them a flat rate of $500 of vacation pay per week, which was later increased to $650) as well as vacation benefits due upon termination of employment. The trial court held that the vacation benefits claims were preempted by ERISA. The Court of Appeal reversed in part, finding a triable issue of fact as to whether Cox’s vacation benefits plan was funded from Cox’s general assets or from a separate trust (as required by ERISA). However, the Court held that the trial court had properly adjudicated in Cox’s favor the claim for failure to pay promised vacation benefits because “a vacation benefits policy [need not] provide for payment of vacation time at an employee’s regular rate of pay.” The Court also determined that the employees are exempt from the FLSA’s overtime compensation requirement pursuant to the Motor Carrier Exemption. Finally, the Court held that the partial reversal of the judgment compelled reversal of the trial court’s award to Cox of $120,000 in attorney’s fees. See also Arias v. Kardoulias, 207 Cal. App. 4th 1429

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(2012) (employee’s untimely appeal of labor commissioner’s award did not entitle employer to recovery of attorney’s fees pursuant to Labor Code § 98.2); Hester v. Vision Airlines, 687 F.3d 1162 (9th Cir. 2012) (answer of employer that engaged in multiple discovery violations was properly stricken, default judgment was properly entered and class should have been permitted to seek punitive damages during trial). IV. Whistleblowers * * * Mize-Kurzman v. Marin Cmty. Coll. Dist., 202 Cal. App. 4th 832 (2012)(Community College Employee Is Entitled To New Trial On Whistleblower Claims) Pamela Mize-Kurzman, who had been promoted to Dean of Enrollment Services as part of a settlement of a previous lawsuit against the district, claimed the district retaliated against her for disclosing what she believed to be violations of the law or regulations to various individuals and entities. Mize-Kurzman went to trial against the district on claims alleging violation of the whistleblower protection provisions codified in Cal. Labor Code § 1102.5 and the Education Code. The jury deliberated two days before finding against Mize-Kurzman on all of her claims. In this appeal, Mize-Kurzman asserted instructional error on the part of the trial court. The Court of Appeal reversed the judgment and ordered a new trial after concluding the trial court had erroneously instructed the jury. Specifically, the Court held the trial court had erroneously instructed the jury that a plaintiff must prove that any disclosure was made in good faith and for the public good and not for personal reasons, holding that "it may often be the case that a personal agenda or animus towards a supervisor or other employees will be one of several considerations motivating the employee whistleblower to make a disclosure regarding conduct that the employee also reasonably believes violates a statute or rule or constitutes misconduct." The Court also held that it was error to instruct the jury that "debatable differences of opinion concerning policy matters are not protected disclosures" and "information passed along to a supervisor in the normal course of duties is not a protected disclosure." However, the

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Court found no error in the instructions that "reporting publicly known facts is not a protected disclosure" and "efforts to determine if a practice violates the law are not protected disclosures." The Court did find error in the trial court's admission of evidence of Mize-Kurzman's retirement eligibility and income with respect to the issue of mitigation of her damages. See also Chaaban v. Wet Seal, Inc., 203 Cal. App. 4th 49 (2012) (prevailing party that served Cal. Code Civ. Proc. § 998 may recover fees paid to opposing party's expert witness).

VI. Wrongful Termination

*** Touchstone Television Prods. v. Superior Court, 208 Cal. App. 4th 676 (2012)(Desperate Housewife’s Wrongful Termination Claim Should Have Been Dismissed) Touchstone had an agreement with actress Nicollette Sheridan that gave it the exclusive option to renew Sheridan’s contract on an annual basis for an additional six seasons (after the first season) of the television show “Desperate Housewives.” Sheridan sued Touchstone for wrongful termination in violation of public policy, claiming she had been fired because she had complained about a battery allegedly committed upon her by Marc Cherry, the creator of the show. When the jury deadlocked on this claim, Touchstone moved for a directed verdict, contending that it had not terminated Sheridan, but rather had simply not renewed her contract for an additional season. The trial court denied the motion, but the Court of Appeal issued an alternative writ of mandate compelling the trial court to grant the directed verdict motion on the ground that a cause of action for wrongful termination in violation of public policy does not lie if an employer decides simply not to exercise an option to renew a contract. The Court also ordered the trial court to permit Sheridan to file an amended complaint alleging a cause of action under Labor Code § 6310(b) (prohibiting retaliation against an employee who complains about unsafe working conditions, etc.) See also Howard Entertainment, Inc. v. Kudrow, 2012 WL 3704928 (Cal. Ct. App. 2012) (entertainer’s former personal manager could proceed with breach of contract claim in which he seeks a percentage of the

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entertainer’s income from the services rendered during the period of his retention).

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