California Employment Law Update : Labor and Employment Lawyers & Attorneys : Proskauer Rose Law Firm : Wage & Hour Laws, Disability, Workplace Safety

Catholic Charities of Sacramento, Inc. v. Superior Court, 32 Cal. 4th 527 (2004)

Catholic Charities challenged the Women's Contraception Equity Act (WCEA) under the establishment and free exercise clauses of the United States and California Constitutions. Among other things, the WCEA requires that certain health and disability insurance contracts must cover prescription contraceptives. Although Catholic Charities offered health insurance, including prescription drug benefits to its 183 full-time employees, it did not offer insurance for prescription contraceptives in light of the Roman Catholic Church's religious teachings on the subject. Although the WCEA has an exemption for a "religious employer," Catholic Charities did not qualify for the exemption because its corporate purpose is "not the direct inculcation of religious values" as required by the statute. The California Supreme Court held that the statute as applied to Catholic Charities violated neither the state nor federal constitution. Cf. Bodett v. CoxCom, Inc., 366 F.3d 736 (9th Cir. 2004) (evangelical Christian employee's claim for religious discrimination was properly dismissed since she had been terminated for harassing an openly gay subordinate about the employee's sexual orientation).

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Mason v. Lake Dolores Group, LLC, 117 Cal. App. 4th 822 (2004)

James Mason was rendered a paraplegic after he rode down the "Doo Wop Super Drop" water slide and crashed into a dam at the end of the slide that was owned and operated by his employer, Lake Dolores Group (LDG). Shortly before the accident, Mason reported to work but did not clock in. The park was closed and the water slide was turned off, but Mason instructed another employee to turn the water slide on. An insufficient amount of water had pooled in the "runout lane" before Mason descended the slide. Although a jury awarded Mason approximately $4.4 million, the trial court granted LDG's motion for judgment notwithstanding the verdict on the ground that Mason's negligence claim was barred by the Workers' Compensation Act. The Court of Appeal reversed the trial court and held that substantial evidence supported the jury's finding that Mason was not acting within the course and scope of his employment when he was injured and that his claim, therefore, was not barred by workers' compensation.

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Rivera v. NIBCO, Inc., 364 F.3d 1057 (9th Cir. 2004)

Twenty-three Latina and Southeast Asian female immigrants had been employed at NIBCO's factory in Fresno and were terminated following their poor performance on a basic job skills examination that was given in English. The employees alleged discrimination under Title VII and the California Fair Employment and Housing Act. During a deposition, Martha Rivera's counsel instructed her not to answer NIBCO's questions regarding her immigration status. The Magistrate Judge issued a protective order barring any discovery from the employees about their immigration status on the ground that such discovery would unnecessarily chill legitimate claims of undocumented workers under Title VII. Relying upon Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002), NIBCO argued that it was entitled to inquire into the immigration status of the former employees during the discovery process. The Ninth Circuit (Reinhardt, J.) disagreed with NIBCO and held that the balancing of the interests favored the prohibition of such inquiry given the Court's view that Hoffman Plastic does not foreclose an award of backpay to an undocumented immigrant in a Title VII lawsuit – as it does in cases involving alleged violations of the National Labor Relations Act. The Court also held that such inquiries were not justified under either the "After-Acquired Evidence Doctrine" or federal immigration law.

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Chamber of Commerce of the U.S. v. Lockyer, 364 F.3d 1154 (9th Cir. 2004)

In 2000, California enacted Assembly Bill No. 1889 (Government Code §§ 16645-16649) which, among other things, prohibits private employers "receiving state funds in excess of $10,000 in any calendar year" from using such funds to "assist, promote, or deter union organizing." The United States Chamber of Commerce brought an action for injunctive and declaratory relief challenging the statute on numerous grounds, including preemption under the National Labor Relations Act. The Ninth Circuit affirmed the judgment of the district court and held that the statute is preempted by federal labor law.

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Pfohl v. Farmers Ins. Group, 2004 WL 554834 (C.D. Cal. Mar. 1, 2004)

Thomas Pfohl filed this putative class action for unpaid overtime under the Fair Labor Standards Act (FLSA) on behalf of himself and all other similarly situated individuals who worked for Farmers as temporary full-time insurance adjusters. In this proceeding, the District Court denied Pfohl's Motion for Certification of Collective Action. Pfohl was employed by an outside staffing agency and not by Farmers itself. The Court held that as an independent contractor of Farmers, Pfohl was not covered by the FLSA, which only applies to employees. Further, the Court held that Pfohl was not similarly situated to the employees of the other staffing agencies, all of whom were included in the putative class, and that in any case, Pfohl was not similarly situated to the other members with respect to the elements of the administrative exemption of the FLSA. Cf. Leever v. City of Carson, 360 F.3d 1014 (9th Cir. 2004) ("reasonable agreement" exception to overtime provisions of FLSA did not apply where union negotiated the agreement without taking into account "all of the pertinent facts").

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Jasmine Networks, Inc. v. Marvell Semiconductor, Inc., 117 Cal. App. 4th 794 (2004)

Marvell Semiconductor, Inc. and Jasmine Networks, Inc. are competitors in the business of designing and manufacturing telecommunications chips. Marvell offered to buy some of Jasmine's technology, along with some of its engineers, and Jasmine accepted after negotiating a nondisclosure agreement preventing Marvell from obtaining Jasmine's trade secrets or employees without paying for them. During the course of the parties' negotiations, several of Marvell's officers and lawyers inadvertently failed to hang up their speakerphone after leaving a message on Jasmine's voicemail system – and proceeded to be recorded discussing their plan to steal Jasmine's trade secrets and hire away its key employees. In response, Jasmine filed suit against Marvell, alleging misappropriation of its trade secrets; Marvell then filed a motion for a preliminary injunction, enjoining Jasmine from disclosing, disseminating or referring to the contents of the inadvertently recorded conversation on the grounds of attorney-client privilege. The trial court granted the motion, but the Court of Appeal reversed, holding that Marvell had waived the privilege by leaving the message on Jasmine's voicemail system and, in any event, the crime-fraud exception to the attorney-client privilege barred its application in this case.

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Powers v. Rug Barn, 117 Cal. App. 4th 1011 (2004)

Fred Powers and Suzanne DeVall were partners in a company called Earth Tapestries, which was engaged in providing consulting, design and sales related to textiles and home furnishings and products. Another company, Rug Barn, expressed an interest in entering into a business agreement with Earth Tapestries but later indicated that it was withdrawing its interest in such a transaction. Four months later, Rug Barn hired DeVall. Powers filed suit against DeVall and Rug Barn, alleging, among other things, interference with contract on the theory that Rug Barn lured DeVall away from Earth Tapestries and induced her to breach the partnership agreement. The trial court granted summary judgment to Rug Barn on the ground that Powers had failed to establish "independently actionable conduct by [Rug Barn] in connection with [its] employment of DeVall." The Court of Appeal affirmed.

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CalMat Co. v. United States Dep't of Labor, 364 F.3d 1117 (9th Cir. 2004)

Robert Germann had worked at CalMat for nearly 20 years when he was elected to be the local union's shop steward. After a fellow employee told Germann that three of the company's drivers had worked more than 15 hours the previous day in violation of state and federal safety regulations, Germann advised the drivers not to drive more than 15 hours in one day even if they were encouraged to do so by their supervisors. Germann also notified the California Highway Patrol about the alleged safety violations. One of the drivers told the transportation manager that Germann had harassed him about the over-hours violation and had used profanity and an ethnic slur during their discussion. The manager suspended Germann without pay for using an ethnic slur and obscene language and for encouraging a work slowdown. Germann filed a complaint with OSHA, alleging that he had been suspended in retaliation for making safety complaints in violation of the whistleblower protection provisions of the Surface Transportation Assistance Act (STAA). The Administrative Law Judge determined that CalMat's reasons for suspending Germann were pretext for retaliation or that retaliation was at least part of a mixed motive for the suspension. The Administrative Review Board and the Ninth Circuit upheld the ALJ's decision.

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Lyle v. Warner Bros. Television Prods., 38 Cal. App. 4th 264 (2004)

The producers of the television show "Friends" hired Amaani Lyle as a writers' assistant in June of 1999 and terminated her employment four months later based, they said, on her poor job performance and deficient typing skills. Among other things, Lyle alleged that she was subjected to racial and sexual harassment through offensive and bigoted comments and jokes that the writers made in her presence during the writers' meetings. Although the trial court granted summary judgment in favor of the producers/writers, the Court of Appeal reversed the judgment in part. The Court held that even though the writers' jokes were not specifically directed at Lyle, she still could have been the victim of sexual harassment to the extent that she was forced to work in an atmosphere of hostility or degradation of her gender. (Among other things, Lyle testified at her deposition that the writers made "crude sexrelated jokes, disparaging remarks about women and pretended to masturbate in her presence.") The Court further held that there were triable issues of fact about whether the writers' conduct was sufficiently severe or pervasive as to create a sexually hostile environment. Although the Court rejected (for purposes of summary judgment) the writers' assertion of a "creative necessity" defense associated with their contention that they "were only doing their job," it opined that they "may be able to convince a jury [that] the artistic process for producing episodes of 'Friends' necessitates conduct which might be unacceptable in other contexts."

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Computer Task Group, Inc. v. Brotby, 364 F.3d 1112 (9th Cir. 2004)

Computer Task Group (CTG) sued William Brotby for breach of a non-solicitation/non-disclosure agreement that he signed while he was working as an information technologies consultant. CTG succeeded in obtaining an injunction prohibiting Brotby from working for Alyeska Pipeline Service Company, one of CTG's clients. During the discovery phase of the lawsuit, Brotby refused to respond fully to interrogatories and document requests; CTG filed eight motions to compel (all of which were granted) and obtained orders imposing monetary sanctions, some of which Brotby did not pay. The Magistrate Judge recommended that CTG's motion for terminating sanctions be granted, and the district court adopted the recommendation, dismissing Brotby's counterclaims, striking his answer and entering default against Brotby on CTG's claims. The Ninth Circuit affirmed "in light of Brotby's egregious record of discovery abuses." Cf. London v. Dri-Honing Corp., 117 Cal. App. 4th 999 (2004) (monetary sanctions were properly imposed against employer that failed to produce documents in wrongful termination lawsuit).

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Fashion 21 v. Coalition for Humane Immigrant Rights of Los Angeles, 117 Cal. App. 4th 1138 (2004)

Fashion 21, a nationwide retailer of women's clothing, purchased garments from manufacturers and sewing contractors that allegedly exploited their employees by refusing to properly pay them or provide them with clean and safe facilities in which to work. The Coalition for Humane Immigrant Rights of Los Angeles (CHIRLA) attempted to negotiate a settlement with the company by which it would agree to accept responsibility for, and pay its proportionate share of, the allegedly unpaid wages of 19 garment workers. When the negotiations proved unsuccessful, CHIRLA called for a nationwide boycott of the company's stores, picketed and issued press releases urging the public to contact the company and demand that it pay the workers the wages they were allegedly owed. In response, Fashion 21 filed a lawsuit against CHIRLA alleging defamation, interference with prospective business advantage, unfair business practices and nuisance. CHIRLA filed a motion to strike Fashion 21's complaint as a SLAPP suit since Fashion 21's claims arose from CHIRLA's exercise of its first amendment right of free speech in connection with a public issue. The trial court denied CHIRLA's motion, but the Court of Appeal reversed and held that Fashion 21 had failed to establish a reasonable probability of showing the falsity of CHIRLA's statements regarding the company's responsibility for the workers' unpaid wages. The Court reasoned that pursuant to the Labor Commissioner's interpretation of Labor Code § 2671, a retailer may, under certain circumstances, be liable for the unpaid wages of a manufacturer's employees. Cf. Garment Workers Ctr. v. Superior Court, 117 Cal. App. 4th 1156 (2004) (CHIRLA should not have been ordered to comply with discovery requests before trial court determined if Fashion 21 had a reasonable probability of establishing libel).

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Sampson v. Parking Service 2000.Com, Inc., 117 Cal. App. 4th 212 (2004)

George Sampson filed a wage claim with the California Division of Labor Standards Enforcement (the Labor Commissioner) in which he sought unpaid overtime, vacation pay, tips and penalties. After a two-day administrative hearing (at which Sampson was represented by an attorney), the hearing officer decided in Sampson's favor and awarded him approximately $58,000. The employer challenged the decision and sought a trial de novo in the superior court. After a five-day trial, the court also ruled in Sampson's favor. After the trial, Sampson filed a request for $45,598 in attorney's fees, including fees that Sampson incurred in the administrative proceeding. Based upon Labor Code § 1194, the trial court awarded Sampson only $6,750 (part of the attorney's fees that he allegedly incurred in the civil action) and nothing for the fees that he incurred during the administrative proceeding. The Court of Appeal affirmed, holding that Sampson was not entitled to recover any of the attorney's fees that he incurred in the administrative proceeding.
 

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Franklin v. Dynamic Details, Inc., 116 Cal. App. 4th 375 (2004)

Bryan Franklin and Franklin-Choi Corporation (FCC) sued Dynamic Details, Inc. (DDi) and Jim Axton for defamation and tortious interference after Axton sent three e-mail messages to companies with which Franklin and FCC did business; the e-mail messages accused Franklin and FCC of plagiarism and violation of copyright laws, among other things. The trial court granted summary judgment to DDi and Axton. The Court of Appeal affirmed the judgment on the ground that Axton's e-mail messages merely expressed Axton's opinions and disclosed all of the provable facts supporting those opinions. The Court also affirmed summary judgment of the interference claims on the ground that Franklin and FCC had failed to establish a causal nexus between Axton's e-mail messages and any damages or other harm suffered by FCC.
 

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