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

Goldberg v. Warner/Chappell Music, Inc., 125 Cal. App. 4th 752 (2005)

Ilene Goldberg sued her former employer, Warner/Chappell Music, and her former supervisor for wrongful termination, discrimination, and retaliation for “whistle blowing,” among other things. Goldberg moved to disqualify Warner’s counsel, the law firm of Mitchell Silberberg & Knupp LLP (MS&K), on the ground that six years earlier she had consulted with an MS&K partner who had left the firm three years prior to the commencement of the lawsuit. The trial court denied the disqualification motion, and the Court of Appeal affirmed on the grounds that there was no need for vicarious disqualification of MS&K based upon Goldberg's meeting with a former MS&K partner who had left the firm years before the instant litigation arose and there was no evidence that the former partner had actually passed any confidential information about Goldberg to any of the remaining MS&K attorneys. (The Court was persuaded in part by ABA Model Rule of Professional Conduct 1.10(b), which permits adverse representation in a situation such as the one presented here.)
 

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Estrada v. RPS, Inc., 125 Cal. App. 4th 976 (2005)

Anthony Estrada, a former driver for RPS, alleged unfair business practices under Business & Professions Code § 17200, contending that RPS unlawfully classified its pickup and delivery drivers as “independent contractors” rather than employees and, as a result, had failed to reimburse them for employment-related expenses as required by Labor Code § 2802. After the statutory opt-out period had expired, the trial court accepted a certified list of approximately 700 class members. The list was later reduced to 207 members after potential class members failed to respond adequately or at all to questionnaires that had been sent to them during the litigation. The remaining class members appealed the dismissal of the non-responding class members on the ground that the questionnaires never should have been authorized by the trial court and the dismissals should not have been entered. However, the Court of Appeal dismissed the appeals as premature on the ground that the dismissal orders had no “death knell” effect (and thus were not appealable) “as evidenced by the fact that the 207 qualified class members have completed the first phase of trial and are currently in the midst of litigating their damage claims.”
 

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Moran v. Murtaugh, Miller, Meyer & Nelson, 126 Cal. App. 4th 323 (2005)

Gene Moran was hired as a paralegal by the Murtaugh, Miller law firm. Shortly thereafter, one of the firm's associates conducted a computerized legal database search and discovered that Moran had several felony convictions in his past, including grand theft and second-degree burglary. The associate notified a number of the firm’s partners of Moran’s criminal history, and the partners met with Moran and asked him whether he had ever been convicted of a felony. When Moran confirmed that he had been convicted of the felonies, the partners requested and received Moran's immediate resignation from the firm. Approximately 10 days after his resignation, Moran requested that the firm provide him with the public record information upon which the adverse employment decision was based, citing the California Investigative Consumer Reporting Agencies Act (ICRA). The next day, the firm mailed Moran a copy of the information that had been obtained online concerning his prior convictions. Moran then filed suit against Murtaugh, Miller, alleging a violation of ICRA, among other claims. Upon learning that Moran had filed numerous unmeritorious lawsuits, the firm obtained an order identifying Moran as a vexatious litigant and requiring him to post a bond, which he failed to do. The trial court proceeded to dismiss Moran's lawsuit. The Court of Appeal affirmed, holding that the firm did not violate ICRA since it had provided Moran with copies of the relevant documents within a reasonable amount of time (eight business days) after confronting him with the information.
 

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Steinhebel v. Los Angeles Times Communications, 126 Cal. App. 4th 696 (2005)

Kurt Steinhebel and other telesales employees of the Los Angeles Times sold newspaper subscriptions and received commissions for those sales. Under the Telesales Agreement, a “chargedback order (when a customer does not keep the paper for at least 28 days)” was not a commissionable order. The employees received commission advances against which cancelled subscriptions were subsequently deducted. The employees sued the Times for various viola tions of the California Labor Code and Business & Professions Code § 17200. The Court of Appeal affirmed summary judgment in favor of the Times after determining that the chargeback of advanced commissions did not violate Labor Code § 221 (collection or receipt of wages previously paid), § 203 (waiting time penalties) or Business & Professions Code § 17200.
 

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Honeywell v. WCAB, 35 Cal. 4th 24 (2005)

William Wagner, a sheet metal specialist for Honeywell, claimed work-related injuries to his body and psyche due to employment. On July 20, 1998, Wagner made statements that management was prejudiced against him and hampered his promotion and transfer, that he could not “take it anymore,” and that his doctor had prescribed medication for work stress. On October 16, 1998, Wagner’s wife left a message with Honeywell’s disability coordinator that Wagner had been admitted to a psychiatric facility with a nervous breakdown and that his supervisor and others had pushed her husband over the edge with their “head games”; she requested disability claim forms. Wagner did not serve a completed workers’ compensation claim form on Honeywell until January 15, 1999. The Workers’ Compensation Judge ruled that Honeywell had sufficient information to require provision of a claim form at the latest on October 16, 1998 following the contact with Wagner’s wife. The WCAB held that under Labor Code § 5402, Honeywell was required to deny liability within 90 days of the time that it knew or should have known of the industrial injury, or a compensable injury was presumed to exist. The Court of Appeal annulled the WCAB’s decision, and the California Supreme Court affirmed. The Supreme Court held that “Section 5402's 90- day period for denial of liability runs only from the date the employee files a claim form, not from the date the employer receives notice or knowledge of the injury or claimed injury.” The Supreme Court remanded the matter to the WCAB to determine if there was evidence to establish an estoppel precluding Honeywell from asserting the defense. Cf. Starving Students, Inc. v. Department of Industrial Relations, 125 Cal. App. 4th 1357 (2005) ($100,000 penalty upheld against employer that failed to obtain workers’ compensation insurance from an authorized insurer).

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CIR v. Banks, 543 U.S. 426, 125 S. Ct. 826 (2005)

In these consolidated cases, John W. Banks, II and Sigitas J. Banaitis failed to report as income portions of a settlement (in Banks’s case) and a favorable judgment (in Banaitis’s case) that were paid to their attorneys. The United States Supreme Court held that when a litigant's recovery constitutes income, the income includes that portion of the recovery paid to the attorney as a contingent fee. The Court observed that the American Jobs Creation Act of 2004, which was enacted after these cases arose, allows a taxpayer to deduct attorney’s fees and court costs in connection with actions involving employment rights. “Had the Act been in force for the transactions now under review, these cases likely would not have arisen. The Act is not retroactive, however, so while it may cover future taxpayers in respondents' position, it does not pertain here.”

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Mondero v. Salt River Project, 400 F.3d 1207 (9th Cir. 2005)

Sylvia Mondero sued the Salt River Project under Title VII of the Civil Rights Act of 1964, alleging gender discrimination associated with the Project’s failure to give her the opportunity to serve as an operations journeyman in an experimental program offered to several male employees that provided onthe- job training and a guarantee of a permanent assignment. The Project contended that it had not offered the position to Mondero because it did not want to pay journeyman-level wages for serviceman-level work and because the program, which was experimental and ultimately abandoned, was still being evaluated. Additionally, the Project contended that allegedly biased comments made by two working foremen who served as trainers were “stray remarks” and not direct evidence of discriminatory animus. The district court granted the Project’s motion for summary judgment, and the Ninth Circuit affirmed, holding that “stray remarks not acted upon or communicated to a decision maker are insufficient to establish pretext.” Additionally, the Court held that a favorable prior determination by the EEOC finding “reasonable cause” to believe there was gender discrimination did not create a genuine issue of material fact.

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ReadyLink Healthcare v. Cotton, 126 Cal. App. 4th 1006 (2005)

ReadyLink obtained an injunction against Jerome Cotton, a former employee, prohibiting Cotton from soliciting ReadyLink employees and customers and from using or disclosing ReadyLink’s trade secrets and confidential information. ReadyLink fired Cotton for stealing ReadyLink records containing proprietary and confidential information. During a search of his residence and storage locker (to which Cotton consented), the police recovered one or two boxes of stolen ReadyLink documents; Cotton also was videotaped entering ReadyLink’s private offices late at night and copying payroll records and other confidential documents. Cotton acknowledged in a declaration that he had misappropriated and improperly used ReadyLink’s confidential and proprietary information and agreed not to become employed at any other healthcare staffing company. Nonetheless, Cotton began working for a ReadyLink competitor two weeks after his termination. ReadyLink then sued Cotton and his new employer for violation of the Uniform Trade Secrets Act, unfair competition, interference with economic relations, tortious interference with prospective business advantage, etc. The Court of Appeal affirmed the injunction in favor of ReadyLink on the ground the company was likely to prevail on the merits given the evidence that Cotton had misappropriated trade secrets and committed acts of unfair competition. Cf. Millennium Corporate Solutions v. Peckinpaugh, 126 Cal. App. 4th 352 (2005) (upholding employees' unopposed injunction compelling former employer to turn over client files and documents).

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Krell v. Gray, 126 Cal. App. 4th 1208 (2005)

Robert Krell, the assistant principal at Pacoima Middle School, issued a reprimand to Fleming Gray, a substitute teacher at the school, after Gray refused to permit one of his students to use the restroom during class. Gray filed a grievance with the LAUSD, and the matter was settled by removing the reprimand from Gray’s file in exchange for his agreeing not to return to the school for substitute work. A few months later, Gray began to picket the school and pass out leaflets critical of Krell and some of the students. At the same time, Krell began receiving daily threats by telephone and mail, including ones that said “Die Krell Racist.” In response, the LAUSD filed a petition for an injunction on behalf of its employee under Code of Civil Procedure § 527.8, which was denied on the ground that Gray's conduct did not constitute unlawful violence or a credible threat of violence. Thereafter, Krell himself filed a petition seeking an injunction against Gray under Section 527.6, which was granted. The Court of Appeal held that the trial court’s denial of the employer's injunction did not collaterally estop Krell from obtaining an injunction under Section 527.6, and it rejected Gray's assertion that his conduct constituted “peaceful picketing” under Section 527.3. Finally, the Court held that although an injunction was appropriate in this case to the extent it was designed to prevent harassing acts by Gray, a blanket prohibition against naming Krell on Gray's signs and in his written materials and a 100-yard distance restriction were too restrictive.

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Leonel v. American Airlines, Inc., 400 F.3d 702 (9th Cir. 2005)

Walber Leonel and two other individuals applied for flight attendant positions with American Airlines. Plaintiffs were interviewed in Dallas and received conditional offers of employment, contingent upon their passing background checks and medical examinations. Although none of the applicants disclosed his HIV-positive status or related medications, American conducted tests on the blood samples obtained during the examinations, discovered the applicants’ HIV status and then rescinded the job offers, citing the applicants’ failure to disclose information during the medical examinations. Although the district court granted American’s motion for summary judgment of plaintiffs’ claims for violations of the Americans with Disabilities Act, the California Fair Employment and Housing Act, the California Constitution’s right to privacy, and the Unfair Competition Law, the Ninth Circuit reversed. The appellate court held that the medical examinations were improperly premature since none of the plaintiffs had yet passed his background check when the examinations were conducted. Furthermore, the court held that American may have violated the applicants’ privacy by performing blood tests outside of the ordinary or accepted medical practice regarding general or pre-employment medical exams.

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