Newly-Published Labor and Employment Law Cases

Garrabrants v. Erhart (CA4/1 D080136, filed 12/18/23, pub. ord. 12/29/23) Whistleblower | Jury Instruction 

Erhart, an internal auditor, copied, transmitted and retained various documents he claimed showed his employer’s possible wrongdoing. Some of these documents contained personal and confidential information of the employer’s CEO, Garrabrants. A jury returned a verdict in Garrabrants’ favor. The court reversed the judgment, finding the trial court’s jury instructions contained four prejudicial legal errors.

In re Essure Product Cases (CA1/3 A166579 part. pub. 12/22/23) ERISA

LHC, a group benefit plan governed by the Employment Retirement Income Security Act of 1974 (ERISA; 29 U.S.C. § 1001), sued Bayer Corporation seeking damages related to the manufacture and sale of Essure, an allegedly defective birth control device. Even though the plan gave LHC subrogation rights from plan members, its common law negligence claims against Bayer did not reference or relate to the ERISA plan itself. LHC’s state law claims thus were not preempted by ERISA.

Palomar Health v. Nat. Nurses United (CA4/1 D080962 12/18/23) PERB Jurisdiction

Palomar Health sued labor unions representing its workers, alleging trespass and unlawful picketing at its facilities by union organizers. The unions filed an unfair practice charge with the Public Employment Relations Board, claiming Palomar’s actions to keep their organizers from meeting with represented workers, including the lawsuit, violated the unions’ rights under the Meyers-Milias-Brown Act (MMBA; Gov. Code, § 3500 et seq.). Because the issues before the court and PERB were the same, i.e., whether the unions’ conduct was prohibited or protected by the MMBA, Palomar’s state law claims were preempted, and the dispute was subject to PERB’s exclusive jurisdiction.

Dominguez v. Better Mortgage Corp. (9th Cir. 22-55731 12/7/23) FLSA | Communication Restriction 

After the lead plaintiff filed a collective action under the Fair Labor Standards Act seeking unpaid overtime wages, his employer encouraged employees in the plaintiff class to settle their claims individually. The district court nullified the releases signed by these employees because the employer’s communications about the lawsuit were misleading and coercive, and ordered the employer to communicate with current and former employees about wage and hour issues only in writing and with prior court approval. The appellate court affirmed the speech restriction, finding it both justified and properly tailored to the situation created by the employer’s misleading and coercive communications.

City of Whittier v. Everest Nat. Ins. Co. (CA2/1 B321450 par. pub. 12/6/23) Labor Code section 1102.5 Retaliation and Indemnification

Insurance Code section 533 provides that “[a]n insurer is not liable for a loss caused by the willful act of the insured.” The trial court found that the City’s alleged retaliatory discipline of police officers in violation of Labor Code section 1102.5 necessarily involved willful conduct, thus barring indemnification under section 533. The appellate court reversed the grant of summary judgment in favor of the insurers, holding that some Labor Code section 1102.5 claims may “involve conduct more akin to negligence,” and thus it was improper for the trial court to grant summary judgment without a finding that the City’s conduct was willful based on the particular facts of the case.

Velasquez v. Workers’ Comp. Appeals Bd. (CA2/6 B321638 12/5/23) Workers’ Comp. Employer 

The Workers’ Compensation Act excludes from its definition of “employer” a private, nonprofit organization sponsoring a person who, as a condition of sentencing, performs services for the organization. Velasquez worked for the Salvation Army as a condition of his probation, and was injured while working in its warehouse. The court found the Salvation Army was statutorily excluded from being Velasquez’s employer for workers compensation purposes but remanded to the Workers’ Compensation Appeals Board to determine whether the County of Santa Barbara was Velasquez’s employer because of the probation department’s role in placing him in the Salvation Army program.

Beltran v. Hard Rock Hotel Licensing, Inc. (CA4/3 G062736 12/5/23) Sexual Harassment | Summary Judgment 

Effective January 1, 2019, Government Code section 12923 clarified several aspects of California sexual harassment law, including providing a definition of a “hostile work environment,” clarifying that a “single incident of harassing conduct is sufficient to create a triable issue regarding the existence of a hostile work environment,” and instructing that “[h]arassment cases are rarely appropriate for disposition on summary judgment.” The appellate court reversed summary judgment in favor of the employer on Beltran’s sexual harassment claim because the trial court relied on pre-section 12923 case law requiring more than one instance of harassment to establish a hostile work environment. The court also reminded the parties that, under Code of Civil Procedure section 437c(b)(1) and California Rules of Court rule 3.1350(d)(2), a separate statement of material facts “should be limited to facts that address the elements of a cause of action or affirmative defense,” and the opposition “must concede facts that are truly undisputed and only add facts that are material.”

Argueta v. Worldwide Flight Services, Inc. (CA2/8 B306910, filed 11/8/23, pub. 12/5/23) Sexual Harassment | Prejudicial Error

To establish that Argueta had a motive to fabricate sexual harassment allegations against her manager, Worldwide sought to introduce complaints about Argueta that other employees made to her manager. The trial court admitted the complaints into evidence with a short limiting instruction. During her trial testimony, Worldwide’s human resources director read the substance of the complaints to the jury. The appellate court found that, while the fact that complaints had been made was relevant to Argueta’s motive, the substance of the complaints was prejudicial character evidence that should have been excluded.

Sanders v. County of Ventura (9th Cir. 22-55663 11/30/23) FLSA Opt-Out Fees 

The panel affirmed the district court’s grant of summary judgment to the County in an action brought under the Fair Labor Standards Act by employees who opted out of their union- and employer-sponsored health plans. The employees received a monetary credit, part of which was deducted as a fee that was then used to fund the plans from which they had opted out. The employees argued that this opt-out fee should be treated as part of their “regular rate” of pay for calculating overtime compensation under the Act. The panel held that the opt-out fees were not part of the employees’ “regular rate” of pay, but rather were exempted as “contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing” health insurance under 29 U.S.C. § 207(e)(4).

Thomas v. Regents of the University of California (CA1/2 A164550 11/29/23) Sexual Harassment | Civil Code § 51.9

The majority reversed the trial court’s dismissal on demurrer of a college athlete’s sexual harassment claim under Civil Code section 51.9. The court found the first amended complaint sufficiently alleged facts stating a cause of action because the “allegations unquestionably describe pervasive bullying behavior toward the young women on the soccer team that created a hostile environment.” The court affirmed dismissal of Thomas’ negligence, breach of fiduciary duty, fraud, and negligent misrepresentation claims. The dissenting justice found the first amended complaint failed to allege sufficient facts to state a sexual harassment cause of action but would have remanded to grant Thomas leave to amend that claim.

State of Cal. v. Alco Harvest (CA2/6 B327137 11/22/23) H-2A Temporary Agricultural Program | Foreign Workers 

The H-2A Temporary Agricultural Program allows employers to recruit foreign agricultural workers when the domestic labor market cannot meet employers’ needs. The United States Department of Labor (DOL) must certify an employer’s participation in the H-2A program. This process requires the employer, among other things, to submit a “job order” describing “the material terms and conditions” of the jobs for which it seeks foreign workers. An agreement to arbitrate claims arising out of employment is a “material term and condition” of employment that must be disclosed during the H-2A certification process. Because Alco Harvesting failed to disclose the arbitration agreement in its job order, the agreement could not be enforced against Guzman, the H-2A visa holder.

Mattson Technology, Inc. v. Applied Materials, Inc. (CA1/5 A165378M, filed 11/1/23, mod. rehrn. den. 11/20/23) Trade Secrets 

Before leaving his job at Applied Materials to work for Mattson Technology, Canfeng Lai emailed himself several files containing Applied trade secrets. Applied sued Mattson and Lai for violating the Uniform Trade Secrets Act and Lai for breaching his employment contract. The appellate court affirmed the trial court’s grant of Lai’s motion to compel arbitration under his employment contract, its denial of Mattson’s motion to compel arbitration (because Mattson was not a party to the employment contract between Lai and Applied), and its issuance of a preliminary injunction to protect Applied’s confidential information while the arbitration proceedings were pending. The court reversed the trial court’s refusal to stay the litigation against Mattson pending arbitration of Applied’s claims against Lai.

Martin v. Board of Trustees of the Cal. State University (CA2/8 B303509 11/14/23) Wrongful Termination 

Martin was terminated from his position as Communications Director at California State University Northridge after multiple investigations revealed unprofessional conduct and difficulty working with subordinates. Martin brought discrimination and harassment claims under the Fair Employment and Housing Act based on gender, race, color, and sexual orientation. The appellate court affirmed the grant of summary judgment to the University on Martin’s discrimination claims, finding Martin failed to submit evidence that would create a dispute of material fact as to whether the University’s reasons for terminating Martin were pretextual. The court likewise affirmed summary judgment against Martin on his harassment claims because he failed to submit evidence establishing the University created a hostile work environment.