Newly-Published Labor and Employment Law Cases

Seifu v. Lyft, Inc. (CA2/4 B301774 3/30/23) Arbitration| PAGA Waiver 

Plaintiff filed suit against Lyft under the Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq., alleging that Lyft misclassified him and other drivers as independent contractors rather than employees, thereby violating multiple provisions of the Labor Code. Under Viking River Cruises, Inc. v. Moriana (2022) ___ U.S. ___ [142 S.Ct. 1906], plaintiff’s individual PAGA claims are subject to arbitration. Based on PAGA and state decisional authority, plaintiff is not stripped of standing to pursue non-individual PAGA claims simply because his individual PAGA claims are compelled to arbitration.

Gregg v. Uber Technologies, Inc. (CA2/4 B302925 3/24/23) PAGA | Arbitration 

In light of Viking River Cruises, Inc. v. Moriana (2022) ___ U.S. ___ [142 S.Ct. 1906], the arbitration provision’s waiver of Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) claims is invalid and must be severed from the arbitration provision. Under the arbitration provision’s remaining terms, plaintiff must resolve his claim for civil penalties based on Labor Code violations he allegedly suffered (i.e., his individual PAGA claim) in arbitration, and his claims for penalties based on violations allegedly suffered by other current and former employees (i.e., his non-individual PAGA claims) must be litigated in court. Under California law, plaintiff is not stripped of standing to pursue his non-individual claims in court simply because his individual claim must be arbitrated. Consequently, his non-individual claims are not subject to dismissal at this time. Instead, under the arbitration provision, they must be stayed pending completion of arbitration.  

Olsen v. State of California (9^th Cir. 21-55757 3/17/23) ABC Test | AB 5 as Amended 

AB 5 codified the “ABC test” adopted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018), to categorize workers as employees or independent contractors for the purposes of California wage orders. AB 5, as amended, includes numerous exemptions. Plaintiffs’ second amended complaint plausibly alleged an equal protection violation because the alleged facts, if true, could show that plaintiffs’ exclusion from the wide-ranging exemptions was based on disfavor of app-based ride-hailing and delivery services. The district court properly dismissed plaintiffs’ claims based on the right to engage in a calling, the contract clause, and bill of attainder. The court remanded for reconsideration of plaintiffs’ motion for a preliminary injunction because plaintiffs’ allegations based on the exemptions to AB 5 were not in the initial complaint that was the basis for the district court’s denial of the injunction.

The Accelerated Schools (PERB Decision No. 2855 3/17/23) Remedy for Violation of Duty to Bargain over Effects of Non-negotiable Decision

The Board clarified that an employer that fails to bargain effects must generally provide back pay from the first date that employees began to experience harm until the earliest of: (1) the date the parties reach an agreement, typically as part of complying with PERB’s effects bargaining order; (2) the date the parties reach a good faith final impasse, including exhaustion of any required or agreed upon post-impasse procedures; or (3) the date the union fails to pursue effects negotiations in good faith. The shorter back pay remedy originating in Transmarine Navigation Corp. (1968) 170 NLRB 389 (where back pay begins when the parties start effects negotiations and continues for the length of those negotiations or for two weeks, whichever is greater) effectuates the purposes of California public sector labor law only if the effects negotiations arose because of a decision to close a facility or cease offering a service. The Board overruled, in part, eight older decisions that had extended Transmarine beyond this scope.

Lopez v. La Casa de Las Madres (CA1/3 A163133 partial pub. 3/16/23) Pregnancy Discrimination 

The elements of a pregnancy discrimination claim under section 12945, subdivision (a)(3)(A) of the Fair Employment and Housing Act (FEHA) are that:  (1) the plaintiff had a condition related to pregnancy, childbirth, or a related medical condition; (2) the plaintiff requested accommodation of this condition, with the advice of her health care provider; (3) the plaintiff’s employer refused to provide a reasonable accommodation; and (4) with the reasonable accommodation, the plaintiff could have performed the essential functions of the job. Here, the trial court properly placed the burden on plaintiff to prove that she had a condition related to pregnancy and that she was able to perform the essential functions of her job with reasonable accommodation, and she was unable to meet that burden.

Forrest v. Spizzirri (9^th Cir. 22-16051 3/16/23) Arbitration 

The panel affirmed the district court’s order granting defendants’ motion to compel arbitration of all claims in an employment law action and dismissing the action without prejudice, rather than staying the action pending arbitration. The panel held that, although the plain text of the Federal Arbitration Act appears to mandate a stay pending arbitration upon application of a party, binding Ninth Circuit precedent establishes that district courts may dismiss when, as here, all claims are subject to arbitration.

Atalla v. Rite Aid Corporation (CA5 F082794, filed 2/24/23, ord. pub. 3/14/23) Sexual Harassment | Offsite & Afterhours Texting between Former Friends 

Summary judgment in favor of Rite Aid affirmed. Atalla and Lund were friends before Atalla was hired at Rite Aid, where Lund was a supervisor. Prior to and during Atalla’s employment, they regularly texted about personal matters. One night outside of work hours Lund texted two lewd photos to Atalla. Rite Aid met its burden to show no triable issue of material fact because the evidence did not support an inference that the text exchange culminating in the inappropriate photos was work-related in that Lund was acting in his capacity as a supervisor, and the conduct was in turn properly imputable to Rite Aid.

Bassett Unified School Dist. v. Super. Ct. (CA2/5 B323528 3/14/23) Judicial Impartiality 

Petition for writ of mandate seeking post-verdict disqualification of the trial judge (Judge 1) denied. Judge 2’s former law firm was representing a party in trial before Judge 1. After an alleged meeting in chambers with Judge 2, Judge 1 reversed a tentative ruling on a pre-hearing evidentiary issue. Judge 2 sat in on part of jury selection until Judge 1 sent him a note to leave. After a multimillion dollar verdict was announced, Judge 2 texted Judge 1: “$25 million!! [Confetti emoji], [confetti emoji.” Judge 1 then disclosed to the parties the text and her other interactions with Judge 2 related to the case. The appellate court found this conduct was not grounds for disqualification of Judge 1 because she did not participate in nor acquiesce in Judge 2’s conduct.

Castellanos v. State of California (CA1/4 A163655 3/13/23) Proposition 22 | Legislature’s Workers Compensation Authority 

Proposition 22, codified at Business and Professions Code sections 7448 to 7467, generally makes “app-based drivers” independent contractors but requires they be provided certain benefits. Under section 7465, the Legislature may amend Proposition 22 only by a statute passed by a 7/8 majority in both houses. Proposition 22 does not violate the Legislature’s plenary authority to establish a workers compensation system nor the single subject rule for voter initiatives. Because they attempt to define what constitutes an amendment to Proposition 22, sections 7465(c)(3) & (4) intrude on the judiciary’s authority to define the meaning of “amendment” in article II, section 10(c) of the California Constitution. And by extending Proposition 22’s article II, section 10(c) shadow to bar legislation on subjects which Proposition 22 does not otherwise directly address, section 7465(c)(4) intrudes on the Legislature’s authority to address a related but distinct area, or a matter that Proposition 22 does not specifically authorize or prohibit. Applying Proposition 22’s severance clause, sections 7465(c)(3) & (4) are invalid but the remainder of Proposition 22 is valid.

Garcia-Brower v. Nor-Cal Venture Group (CA3 C089148 3/9/23) Labor Commissioner Subpoena 

The Labor Commissioner issued a wage citation to Nor-Cal, seeking over $900,000 in penalties and unpaid wages for alleged misclassification of about 40 restaurant managers. Nor-Cal challenged the wage citation in an “informal” adjudicatory hearing, and while that adjudication was pending, the Commissioner issued a subpoena directing Nor-Cal’s “Person(s) Most Knowledgeable” on certain topics to testify at a deposition. While the Commissioner has broad power to issue investigative subpoenas to a company for suspected violations of the law, that broad power ends upon initiation of adjudicative proceedings against the company. Accordingly, the appellate court reversed the trial court’s order compelling Nor-Cal to comply with the Commissioner’s deposition subpoena. 

Winsor v. Sequoia Benefits & Ins. (9^th Cir. 21-16992 3/8/23) ERISA | Standing 

The panel affirmed the district court’s dismissal, for lack of Article III standing, of ERISA plan participants’ putative class action alleging breach of fiduciary duty by the manager of a Multiple Employer Welfare Arrangement. Plaintiffs’ first theory of injury was that Sequoia’s actions allegedly caused them to pay higher contributions for their insurance, and that eliminating Sequoia’s commissions and reducing administrative fees would therefore have lowered plaintiffs’ payments. The panel held, as to this out-of-pocket-injury theory, that plaintiffs failed to establish the injury in fact required for Article III standing because their allegations did not demonstrate that they paid higher contributions because of Sequoia’s allegedly wrongful conduct. Plaintiffs’ second theory of injury was that, as beneficiaries, they retained an equitable ownership in the Tech Benefits Program’s trust fund. The panel held that this theory of standing was barred under Thole v. U.S. Bank N.A., 140 S. Ct. 1615 (2020), which held that participants in a defined-benefit pension plan lacked standing to bring an ERISA claim alleging that the plan’s fiduciaries had violated their duties of loyalty and prudence by poorly investing the plan’s assets.

Piplack v. In-N-Out Burgers (CA4/3 G061098 3/7/23) PAGA | Arbitration Post-Viking River Cruises 

Denial of In-N-Out Burgers’ motion to compel arbitration of plaintiff’s claims under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) reversed in part. Under Viking River Cruises, Inc. v. Moriana (2022) ___ U.S. ___ [142 S.Ct. 1906], plaintiff’s individual PAGA claims must be arbitrated, but under Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, he retains standing to pursue the representative PAGA claims in court.