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

Dore v. Arnold Worldwide, Inc., 39 Cal. 4th 384 (2006)

Brook Dore, who was employed as a management supervisor, countersigned an employment agreement (in the form of a letter) that characterized his employment as "at-will," which was defined as the right of either party to terminate the employment "at any time." Although the trial court granted the employer's motion for summary judgment, the court of appeal reversed, and the Supreme Court in turn reversed the appellate court, reinstating summary judgment in favor of the employer. The Supreme Court held that the verbal formulation "at any time" in the termination clause of the employment contract was not ambiguous merely because it did not expressly indicate whether "cause" was or was not required for termination. Therefore, there was no triable issue of material fact as to the claims for breach of contract and breach of the implied covenant of good faith and fair dealing. The employer also was entitled to summary adjudication of the claim for promissory fraud because the employee produced insufficient evidence of justifiable reliance given the at-will nature of the employment relationship.

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Seever v. Copley Press, Inc., 141 Cal. App. 4th 1550 (2006)

Michael Seever worked as a building superintendent for The Daily Breeze (owned by Copley) before the company instituted a reduction in force that resulted in the elimination of 18 positions, including Seever's. Seever alleged discrimination on the basis of a disability (he had tripped over his cat, injuring his shoulder) and his age (50 years old). After a three-week trial, the jury rendered a unanimous verdict in favor of the company on all counts. As the prevailing party, Copley sought to recover its costs and its expert witness fees under Code of Civil Procedure Section 998. The Court of Appeal affirmed the award to Copley of most of its costs (including the costs associated with videotaping depositions and traveling to depositions). As for the $62,131 in expert witness fees granted to Copley under Section 998, the Court held that the trial court erred by failing to consider the parties' "respective resources" in awarding to Copley all of its expert witness fees and remanded the matter back to the trial court for a further evidentiary hearing.

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Wallace v. City of San Diego, 460 F.3d 1181 (9th Cir. 2006)

James D. Wallace was employed as a police officer and detective by the City of San Diego for more than 25 years. In 1982, Wallace began serving as an officer in the Naval Reserve. After several tours of duty, including tours in Iraq (during Operation Desert Storm) and Bosnia, Wallace resigned from the SDPD, alleging that his resignation constituted a constructive discharge in violation of the Uniformed Services Employment and Reemployment Rights Act (USERRA). During the trial, Wallace offered evidence of a pattern of discrimination and retaliation by the SDPD based upon his military status beginning in early 1991 and continuing through 2000. The jury rendered a verdict in Wallace's favor in the amount of $256,800, which the Ninth Circuit upheld despite the trial court's grant of judgment as a matter of law/new trial motion in favor of the City. The Ninth Circuit further upheld the jury's finding that the City's violations of USERRA were not willful.

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Bass v. County of Butte, 2006 WL 2348467 (9th Cir. 2006)

Allison Bass and two co-workers asserted employment discrimination claims against the County of Butte based upon the county's alleged failure to accommodate their work-related disabilities. Plaintiffs alleged violation of the Unruh Civil Rights Act and the Disabled Persons Act on the theory that the two state statutes incorporated Title I (the anti-discrimination provision) of the Americans with Disabilities Act. (Although they could have, plaintiffs failed to assert claims under the California Fair Employment and Housing Act.) The Ninth Circuit affirmed summary judgment in favor of the county, concluding that neither state statute provided a cause of action for employment discrimination.

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Romaneck v. Deutsche Asset Mgmt., 2006 WL 2385237 (N.D. Cal. Aug. 17, 2006)

Lawrence Romaneck worked as the Director of Sales for Deutsche Asset Management's West Region from 1996 to 2004. Deutsche Bank asserted that it had terminated Romaneck for his involvement in facilitating market timing by one of the company's clients; Romaneck alleged his employment was terminated in violation of several statutes, including the Sarbanes-Oxley Act, which prohibits the termination of a "whistleblower." Among other things, Romaneck alleged his employment was terminated based upon adverse testimony that Deutsche Asset Management anticipated he would give before the SEC as well as documents and testimony that he actually did provide to the SEC. The District Court concluded that because Romaneck had been terminated before he had provided documents or testimony to the SEC, he had failed to establish a causal connection between those activities and the termination of his employment. However, his claim could proceed insofar as it was based upon Deutsche Asset Management's anticipation of what he would testify about before the SEC. The Court also dismissed Romaneck's claims based upon the Family and Medical Leave Act/ California Family Rights Act, but left standing his claims for age and disability discrimination.

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Baptist v. Robinson, 2006 WL 2699181 (Cal. Ct. App. 2006)

While riding his motorcycle, Ronald Baptist struck a large plastic agricultural bin that had fallen onto the highway from the back of a pickup truck that was owned and driven by Thomas Robinson. Robinson was employed by Thomas Fogarty Winery and had, without the winery's knowledge or permission, borrowed and was transporting the bin on his own time and for his own benefit - to pick up grapes to make wine for himself. Baptist filed a personal injury action against Robinson and the winery, and Robinson filed a cross complaint for indemnity and contribution against the winery. The Court of Appeal affirmed summary judgment in favor of the winery, concluding that the winery was not vicariously liable for Baptist's injuries since Robinson had not been acting within the course and scope of employment, nor had it been directly negligent with respect to its control over the bin that Robinson had borrowed. Cf. Pettigrew v. WCAB, 2006 WL 2729667 (Cal. Ct. App. 2006) (state correctional officer was not acting within the course of his employment for purposes of workers' compensation coverage when he was injured while providing assistance at an accident scene on the way to work).

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Sonoma State Univ. v. WCAB, 142 Cal. App. 4th 500 (2006)

Lesley Hunton worked as a police dispatcher for Sonoma State University for 14 years before filing a workers' compensation claim in which she alleged an injury to her psyche arising out of and in the course of her employment. Hunton complained that the frequent and unexpected sounding of false fire and burglar alarms in the work place was causing her to suffer from stress and anxiety. An agreed medical evaluator determined that 65% of Hunton's psychiatric disability was attributable to non-industrial factors and that the remaining 35% was attributable to industrial factors. Although the WCAB upheld the decision of the workers' compensation judge to grant benefits to Hunton because 100% of one of her disorders was work-related, the Court of Appeal reversed, holding that events of employment must predominate in the aggregate among all combined causes of an alleged psychiatric disability. Cf. JKH Enterprises, Inc. v. Department of Indus. Relations, 2006 WL 2412270 (Cal. Ct. App. 2006) (courier service was properly assessed penalty of $1,000 per employee for failure to provide workers' compensation coverage to drivers who were improperly classified as "independent contractors").

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McRae v. Dep't of Corrections, 142 Cal. App. 4th 377 (2006)

Dr. Margie McRae filed a lawsuit against her employer, the California Department of Corrections, and four individual defendants, seeking damages for discrimination and retaliation in violation of the Fair Employment and Housing Act (FEHA). The trial court granted summary judgment to the four individual defendants, and the case proceeded to trial against the Department. The jury returned a verdict against McRae on her discrimination claim, but it awarded her $75,000 on her claim of retaliation. The Court of Appeal reversed the judgment, holding (as it had in an earlier opinion) that neither the law nor the evidence permitted a finding of retaliation in this case. Plaintiff had failed to prove that the Department's allegedly retaliatory actions (a letter of instruction, an unimplemented suspension and a transfer to another facility) had a "substantial and material adverse effect on the terms and conditions of [her]employment." Compare Freitag v. Ayers, 2006 WL 2614120 (9th Cir. 2006) (Department of Corrections was liable for failure to correct hostile work environment created by male prisoners' sexual harassment of female guards and for retaliation in violation of Title VII).

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Edwards v. Arthur Andersen LLP, 142 Cal. App. 4th 603 (2006)

Raymond Edwards II, the former tax manager for the Los Angeles office of the now defunct accounting firm Arthur Andersen LLP, had executed a non-competition agreement that prohibited him from performing professional services for 18 months post-employment for any client whose account he had handled during the final 18 months of his employment with Andersen. He also was prohibited from soliciting clients as well as other Andersen employees. In his lawsuit against Andersen, Edwards alleged intentional interference with prospective economic advantage arising from these noncompete/ non-solicitation covenants. The Court of Appeal rejected the "narrow restraint" exception to Business & Professions Code § 16600 (which strictly prohibits non-competes in California) and held not only that the non-compete and customer non-solicitation provisions were unenforceable but that their use created potential tort liability for Andersen. (The Court upheld the employee non-solicitation and the nondisparagement provisions of the Andersen agreement.) Finally, Andersen's failure to carve-out Edwards's statutory right to indemnity from a general release agreement that Edwards had signed also created potential tort liability for the company. Cf. Strategix, Ltd. v. Infocrossing West, Inc., 2006 WL 2589988 (Cal. Ct. App. 2006) (under Bus. & Prof. Code § 16601, seller of business may only be prohibited from soliciting its own customers and employees who were transferred to buyer as part of an asset sale).

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Dunbar v. Albertson's, Inc., 141 Cal. App. 4th 1422 (2006)

Maurice Dunbar, a grocery manager for Albertson's, filed this class action in which he asserted that he and other similarly situated Albertson's employees were misclassified as executive employees exempt from overtime. The putative class consisted of approximately 900 individuals who had worked as grocery managers for Albertson's since 2000. In support of his motion to certify the class, Dunbar argued that common issues of classification would predominate, while Albertson's argued that individualized issues of liability and damages - including which specific tasks each manager performed and for how long - would predominate, given the variation in the work performed by the different managers. The trial court denied Dunbar's motion to certify the class, concluding that plaintiffs could not satisfy the commonality requirement of the law simply by making reference to an employer's common policy to classify a certain group of employees as exempt. The trial court further concluded that in determining whether an employee is exempt or non-exempt, the court should focus on the evidence concerning the actual experiences of the class members rather than on the formal job descriptions and policies. The Court of Appeal affirmed the order denying the class certification motion. Cf. Dunlap v. Superior Court, 142 Cal. App. 4th 330 (2006) (trial court erred in granting employer's motion to strike Private Attorneys General Act class action claims for plaintiffs' failure to exhaust administrative remedies).

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Koehl v. Verio, Inc., 2006 WL 2615515 (Cal. Ct. App. 2006)

Jeffrey Koehl, et al., worked as sales associates for Verio, an Internet service provider. Sales associates earned base salaries of between $40,000 and $75,000 plus commissions based on their sales volumes. If a customer cancelled an installation order before paying for the first three months of service, Verio would recover the commission payments it had previously advanced to the sales associate involved in the transaction. The sales associates challenged Verio's chargeback practice as a violation of the California Labor Code and of the Unfair Competition Law. Following a bench trial, the trial court entered judgment in favor of Verio, concluding that the chargebacks did not violate California law because the commission advances were not wages. The Court of Appeal affirmed, relying principally upon Steinhebel v. Los Angeles Times Communications, 126 Cal. App. 4th 696 (2005).

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Syverson v. IBM, 2006 WL 2506421 (9th Cir. 2006)

The former IBM employees in this class action challenged their purported waiver of claims arising under the federal Age Discrimination in Employment Act (ADEA) on the ground that the waiver, which was part of a severance agreement, was not "knowing and voluntary" within the meaning of the Older Workers Benefit Protection Act (OWBPA). According to the Ninth Circuit (and the Eighth Circuit before it in Thomforde v. IBM, 406 F.3d 500 (8th Cir. 2005)), the problem with the release IBM prepared was that it included a general release of claims (including ADEA claims) that appeared to conflict with a covenant not to sue, which read: "This covenant not to sue does not apply to actions based solely under the [ADEA]." (The reason IBM had included a carve-out from the covenant not sue was in order to comply with a separate federal regulation prohibiting an employer from recovering its attorneys' fees from an employee who challenges a release under the ADEA.) The Court concluded that "to a lay reader - and…to many lawyers as well - these provisions seem first to release all ADEA claims an employee might have, and then to preserve a right to sue under the ADEA, implying retention, not release, of ADEA claims."

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United States v. Ziegler, 456 F.3d 1138 (9th Cir. 2006)

After the owner of Frontline Processing contacted the FBI with a tip that an employee, Brian Ziegler, had accessed child pornography on the Internet from a workplace computer, Frontline entered Ziegler's locked office and made a copy of the computer's hard drive, which was provided to the FBI. Forensic examiners at the FBI discovered many images of child pornography on the hard drive. A federal grand jury handed down a three-count indictment charging Ziegler with receipt and possession of child pornography and receipt of obscene material in violation of federal law. Ziegler pled not guilty and filed a motion to suppress the evidence obtained from the hard drive, arguing the FBI had violated his Fourth Amendment rights by directing Frontline to search his computer. The Ninth Circuit affirmed the trial court's order denying the motion to suppress on the ground that Ziegler had no reasonable expectation of privacy in the Internet files he accessed from Frontline's computer. Citing California law, the Court held that "social norms suggest that employees are not entitled to privacy in the use of workplace computers, which belong to their employers and pose significant dangers in terms of diminished productivity and even employer liability." The Court further observed that employer monitoring of company computers is "largely an assumed practice" and that a "disseminated computeruse policy is entirely sufficient to defeat any expectation [of privacy] that an employee might nonetheless harbor." Compare Hernandez v. Hillsides, Inc., 2006 WL 2640234 (Cal. Ct. App. 2006) (residential facility for abused children failed to show on summary judgment that employees had diminished expectation of privacy in their office); cf. Leon v. IDX Sys. Corp., 2006 WL 2684512 (9th Cir. 2006) (dismissal of employment claims and $65,000 in sanctions upheld where former employee deleted 2,200 files from employer's laptop computer).

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