Labor and Employment Law
Newly-Published Labor and Employment Cases
Wood v. Super. Ct. (CA4/1 D076325 3/13/20) DFEH/Attorney-Client Privilege [Unruh Act case equally applicable to FEHA employment cases]
Petitioner Christynne Lili Wrene Wood contacted the California Department of Fair Employment and Housing (DFEH) to report alleged gender discrimination by her Crunch fitness club, which is owned and operated by CFG Jamacha, LLC and John Romeo (collectively, Crunch). After an investigation, DFEH filed a lawsuit against Crunch alleging violations of the Unruh Civil Rights Act (Civ. Code, § 51) for unlawful discrimination on the basis of gender identity or expression. Wood intervened as a plaintiff in the lawsuit. During discovery, Crunch requested that Wood produce all communications with DFEH relating to Crunch. As relevant here, Wood refused to produce one such communication, a prelitigation email she sent to DFEH lawyers regarding her DFEH complaint, on the grounds of attorney-client privilege. Crunch moved to compel production of the email, and the trial court granted the motion. Wood filed a petition for writ of mandate in the Court of Appeal. The Court summarily denied the writ. The California Supreme Court granted review and transferred the matter back to this court with directions to vacate the order denying mandate and to issue an order directing the superior court to show cause why the relief sought in the petition should not be granted. The Court of Appeal concluded that Wood had not shown the attorney-client privilege applies to the email at issue. A prima facie showing of privilege requires that the communication be made in the course of an attorney-client relationship. DFEH lawyers have an attorney-client relationship with the State of California. Wood did not show DFEH lawyers formed an attorney-client relationship with her.
Lange v. Monster Energy Co. (CA2/1 B294091 3/12/20) Arbitration/ Unconscionability
Monster Energy Company appealed from a trial court order denying its motion to compel arbitration [of an employment agreement]. The trial court concluded that the parties’ arbitration agreement was so permeated with unconscionability that it could not remove the unconscionability merely by severing. The trial court based that conclusion on two independent grounds: that the existence of more than one unconscionable provision in the arbitration agreement precluded severance, and that merely severing provisions would not eliminate the unconscionability. The Court of appeal disagreed with the trial court’s conclusion that the existence of more than one unconscionable provision precludes severance. But Monster did not address the trial court’s alternative basis for its order. The Court of appeal undertook an independent unconscionability analysis and reached the same conclusion as the trial court.
McHenry v. Asylum Entertainment Delaware, LLC (CA2/2 B292457 3/12/20) Jones Act/Maritime Law
A seaman on a commercial fishing vessel out on the Gulf of Mexico accidentally sliced up his hands with hooks and fish gills. The vessel’s captain arranged to have a second vessel meet them at sea and ferry the seaman back to shore so he could get medical attention. The middle-of-the-night rendezvous on the high seas was a success but did not come soon enough to save all of the seaman’s fingers; due to infection, many had to be amputated. These dramatic events were all caught on film because, as serendipity would have it, a production company was filming a reality TV show on the fishing vessel as these events unfolded. The seaman sued the vessel’s owner and the production company, among other parties, for his injuries under federal maritime law.
The viability of the seaman’s lawsuit against the production company required the Court of Appeal to address the following questions: (1) Is the production company liable under the Jones Act (46 U.S.C. § 30104) because it “borrowed” the crew members as “employees” by filming them doing their jobs and by occasionally asking them to repeat what they are doing for the camera and explain it, and (2) Is the production company liable under maritime tort law because (a) it had a “special relationship” with the crew members it was filming sufficient to give rise to a duty to rescue them, (b) it voluntarily assumed a duty to rescue but effectuated that rescue with gross negligence, worsened the crewman’s position or caused the crewman to detrimentally rely on its rescue efforts, or (c) it acted negligently in “taking charge” of a “helpless” person within the meaning of Restatement First and Second of Torts, section 324? The Court concluded that the answer to these questions is “no,” and affirmed the trial court’s grant of summary judgment in favor of the production company.
Montoya v. Ford Motor Co. (CA4/3 G056752 3/12/20) Class Action/Multiple Tolling Periods or Stacking [may be applicable to employment cases]
The Court of Appeal analyzed the borders of a rule recently promulgated by the United States Supreme Court in China Agritech, Inc. v. Resh (2018) 548 U.S. ___ [138 S.Ct. 1800] (China Agritech). The Court of Appeal concluded the proper application of the rule of that case dictates that multiple tolling periods cannot be “stacked” here to extend a statute of limitations.
Alexander v. Community Hospital of Long Beach (CA2/1 B279155, filed 2/13/20, ord. pub. 3/10/20) Hostile Work Environment/Wrongful Discharge/Exhaustion of Administrative Remedies
A jury found that a hospital and medical group created a hostile work environment and wrongfully discharged three nurses based on their opposition to a supervisor’s harassment, using a pretext that the nurses had abused a patient. The nurses soon found new jobs, but a year later lost them when the State of California filed criminal charges against them for the patient abuse. They were acquitted of the charges. The jury awarded the nurses substantial past and future economic and noneconomic damages suffered up to and after—but not during—their second round of employment. The hospital and medical group appealed, and the nurses cross-appealed.
The hospital and medical group contended insufficient evidence supported the verdict in several respects- the jury improperly awarded damages caused by the criminal prosecution, and the trial court made prejudicial evidentiary errors. The medical group further contended the nurses failed to exhaust their administrative remedies as to it. The nurses argued a second medical group should have been found liable as an alter ego of the first.
The Court of Appeal concluded plaintiffs failed to exhaust their administrative remedies against the medical group; insufficient evidence supported some of the jury’s findings and its damages awards; and the court made several prejudicial evidentiary errors. The Court also concluded the second medical group may not be held liable on an alter ego theory. The judgment was reversed and the matter was remanded for further proceedings.
Scalia v. Employer Solutions Staffing Grp. (9th Cir. 18-16493 3/2/20) FLSA Overtime/Staffing Agency/Willful Violation
The panel affirmed the district court’s summary judgment entered in favor of the Secretary of Labor in an action challenging four companies’ failure to pay overtime to employees who worked more than 40 hours in a workweek in violation of the Fair Labor Standards Act (“FLSA”).
Employer Solutions Staffing Companies (“ESSG”) contracts with other companies to recruit employees and place them at jobsites for which ESSG handled administrative tasks. ESSG conceded that it qualified as an “employer” of the recruited employees under FLSA. ESSG contracted with Sync Staffing, which placed the recruited employees at a jobsite run by TBG Logistics. One of ESSG’s employees, Michaela Haluptzok, was responsible for processing the TBG Logistics payroll. A Sync employee told Haluptzok to pay overtime hours as “regular” hours, which was a FLSA violation.
Consistent with the law of agency, the panel imputed Haluptzok’s actions to ESSG. The panel held that because Haluptzok admitted that she knew the recruited employees were not being paid overtime owed to them, the district court correctly found no dispute of material fact as to ESSG’sultimate liability under the FLSA.
Ordinarily, a two-year statute of limitations applies to claims under FLSA, but for a “willful violation,” the limitations period extends to three years. The panel held that through its agent, Haluptzok, ESSG recklessly disregarded the possibility that it was violating FLSA. Accordingly, the three-year statute of limitations applied to the Secretary’s claim, making the action timely.
FLSA mandates liquidated damages in an amount equal to the unpaid overtime compensation claims unless the employer acted in “good faith” and had “reasonable grounds” to believe it was not violating FLSA. The panel held that because ESSG’s violations were willful, it could not have acted in good faith. Accordingly, the panel affirmed the award of liquidated damages.
The panel held that there was no indication that Congress intended to create a right to contribution or indemnification for liable employers from another employer under FLSA. The panel further held that no right to contribution or indemnification arose under federal common law.