Newly-Published Labor and Employment Law Cases

May 2024

City of San Jose v. Howard Jarvis Taxpayers Assn. (CA6 H050889 4/29/24) Public Pensions and Municipal Debt Limitation

Article XVI, section 18, subdivision (a) of the California Constitution sets forth the constitutional debt limitation applicable to cities: “No . . . city . . . shall incur any indebtedness or liability in any manner or for any purpose exceeding in any year the income and revenue provided for such year, without the assent of two-thirds of the voters of the public entity voting at an election to be held for that purpose.” The City Council adopted a resolution authorizing the issuance and sale of bonds to address unfunded liabilities in the City’s pension plans. The Taxpayers Association challenged the resolution, claiming it violated the constitutional debt limitation. The court held the City’s action did not trigger the debt limitation because under the resolution bonds may be issued only if they result in savings to the city.

Kime v. Dignity Health, Inc. (CA1/2 A166748, filed 3/29/24, pub. ord. 4/25/24) Staff Privileges

Kime applied for emergency department privileges at two Dignity Health hospitals while a disciplinary proceeding against him was pending before the Medical Board of California. A few days after the Board publicly reprimanded Kime, the hospitals stopped processing his application pursuant to a policy of not considering applicants with disciplinary histories for emergency department privileges. Kime sued for injunctive relief and damages, claiming Dignity violated his statutory and common law rights by denying his applications without offering him a hearing. The court held that Dignity’s eligibility requirements were quasi-legislative and thus application of them to deny privileges did not require a hearing. The court further held that Kime had no right to a hearing because his application was not rejected by a peer review body for medical disciplinary cause or reason.

Vines v. O’Reilly Auto Enterprises (CA2/7 B327821 4/24/24) FEHA Statutory Attorneys’ Fees

In a prior decision, the court of appeal reversed and remanded for the trial court to determine appropriate attorney fees. On remand, the trial court awarded fees and O’Reilly paid the fee award plus postjudgment interest. Vines then sought interest from the date of the first, pre-remand attorney fees award. The trial court awarded the additional interest. The appellate court reversed, holding that because its prior decision was a reversal, not a modification, of the first fee award, interest on the fees ran only from the date of the fee order on remand.

NLRB v. Siren Retail Corp. (9^th Cir. 22-1969 4/24/24) NLRA | Unfair Labor Practices

Due to rising COVID-19 cases in the area, the National Labor Relations Board’s Regional Director ordered a mail ballot election. After the union won the election, Siren Retail refused to recognize and bargain with the union in order to challenge the Regional Director’s decision. The court held that the NLRB’s decision to sever the issue of the appropriate remedy for Siren’s unfair labor practice did not divest the court of jurisdiction because the Board’s order was final and reviewable under 29 U.S.C. section 160(e). On the merits, the court held that the Regional Director did not abuse his discretion in ordering a mail ballot election instead of an in-person election.

LaMarr v. The Regents of the U. of Cal. (CA3 C097235, filed 4/5/24, pub. ord. 4/23/24) Civil Service Demotion | Skelly Hearing

LaMarr’s supervisor was preparing to dismiss her for performance issues. Management instead offered her a temporary position in another department at her existing salary. A few months later, LaMarr was given a choice of staying in the new department at a lower-paying classification, or returning to her prior department where the dismissal proceedings would resume. LaMarr chose to stay in the new department in the lower classification. She then sued the University, claiming she was entitled to a due process hearing under Skelly v. State Personnel Bd. (1975) 15 Cal.3d 194, prior to her demotion. Affirming the trial court, the court found substantial evidence that the University did not violate LaMarr’s due process rights because she was never notified of an intent to terminate and any demotion was voluntary.

Mondragon v. Sunrun Inc. (CA2/7 B328425 4/23/24) PAGA | Arbitration

Mondragon signed an arbitration agreement that covered most disputes relating to his employment with Sunrun but excluded representative claims brought under the Private Attorneys General Act. After his employment ended, Mondragon filed a complaint asserting several PAGA causes of action. The trial court denied Sunrun’s petition to compel arbitration. The appellate court affirmed, finding that the arbitration agreement did not delegate arbitrability decisions to the arbitrator, and the agreement did not require Mondragon to arbitrate his individual PAGA claims.

Mattioda v. Nelson, et al. (9^th Cir. 22-15889 4/22/24) Disability Discrimination | Hostile Work Environment

Mattioda, a scientist for NASA, has physical disabilities that require him to utilize premium-class seating for flights over one hour long. He sued NASA under the Rehabilitation Act of 1973, alleging a hostile work environment due to his need for premium-class seating and discrimination in being passed over for promotion. The court held that a disability-based hostile-work-environment claim is available under the Rehabilitation Act and the Americans with Disabilities Act, and that Mattioda’s complaint alleged sufficiently severe or pervasive harassment to survive NASA’s motion to dismiss. The court affirmed summary judgment for NASA on the discrimination claim, finding that even if Mattioda established a prima facie case of disability discrimination, NSAS established a legitimate, nondiscriminatory reason for not selecting him for a senior scientist position.

Ruelas v. County of Alameda (SC S277120A per curiam 4/22/24) Inmate Labor | Minimum Wage and Overtime

The County contracts with Aramark, a private, for-profit company, to provide meals for inmates and staff at County Sheriff’s facilities, including the County jail. Nonconvicted pretrial detainees at the jail prepare meals and clean the kitchen for Aramark. The detainees are not paid for their work. Under article XIV, section 5 of the California Constitution, public-private inmate work programs at the county level are governed by local ordinances. Alameda County has not adopted a local ordinance governing such programs. Penal Code section 4019.3 allows a county to credit an inmate with up to $2.00 for each eight hours of work in a county jail. In the absence of a local ordinance providing otherwise, Penal Code section 4019.3, not Labor Code section 1194, governs compensation for nonconvicted detainees working in a county jail for a private contractor.

Lugo v. Pixior, LLC, et al. (CA2/8 B324368 4/18/24) Malicious Prosecution | Deleting Employer Data

Pixior reported Lugo, one of its employees, to the police for allegedly deleting its data. The prosecutor dismissed the case against Lugo after discovering a Pixior employee lied under oath at the preliminary hearing. Lugo then sued Pixior for malicious prosecution. Pixior filed an anti-SLAPP motion, which the trial court denied. The appellate court reversed, holding that the police department’s independent investigation of the allegations against Lugo was a superseding cause that insulated Pixior from liability as a matter of law.

Balderas v. Fresh Start Harvesting, Inc. (CA2/6 B326759 4/18/24) PAGA Standing

Balderas filed a complaint for civil penalties under the Private Attorneys General Act alleging Fresh Start did not provide employees with required meal and rest breaks, issued inaccurate wage statements, made untimely wage payments, and failed to pay wages at termination. The complaint alleged she was suing solely in a representative capacity. The trial court ruled Balderas lacked standing because she did not allege an individual PAGA claim. The appellate court, following Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, held that Balderas met the definition of an “aggrieved employee” under PAGA and thus had standing to pursue the representative claims.

Semprini et al. v. Wedbush Securities Inc. (CA4/3 G062622 4/18/24) Arbitration

Semprini’s lawsuit alleged 11 causes of action unique to him, seven putative class claims for alleged wage and hour violations, and a representative cause of action under the Private Attorneys General Act. The parties stipulated that Semprini would arbitrate his personal claims while the remaining causes of action would proceed in the trial court. In March 2023, five months before trial, Wedbush moved to compel arbitration of individual PAGA claims under Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, and of wage and hour claims pursuant to arbitration agreements 24 of the class members had signed in 2022. The court held that Wedbush waived its right to arbitrate by waiting nine months after Viking River, and six months after class members signed arbitration agreements, to move for arbitration, in the meantime propounding discovery and filing motions.

Kuigoua v. Dept. of Veterans Affairs (CA2/8 B323735 4/17/24) Exhaustion of Administrative Remedies

In 2019, Kuigoua filed an administrative charge with the Equal Employment Opportunity Commission alleging he was discriminated against because of his sex and was denied overtime opportunities in retaliation for filing an internal discrimination complaint. The EEOC investigated, found no evidence to support either allegation, and issued Kuigoua a right to sue letter. In 2020, Kuigoua filed a lawsuit under the Fair Employment and Housing Act in which he alleged sexual harassment and harassment based on his race and national origin, and retaliation against him after he lodged internal complaints about the harassment. The lawsuit alleged the perpetrators were different individuals at a different worksite than those named in the EEOC charge. The court affirmed summary judgment in favor of the Department, finding Kuigoua failed to exhaust administrative remedies because his judicial claims were not like, or reasonably related to, the claims in his administrative complaint.

Muldrow v. City of St. Louis (US 22–193 4/17/24) Title VII | Job Transfer

Sergeant Muldrow worked as a plainclothes officer in the St. Louis Police Department’s specialized Intelligence Division for nine years. In 2017, the Department reassigned Muldrow to a uniformed job elsewhere in the Department so the new Intelligence Division commander could replace her with a male police officer. Muldrow’s rank and pay remained the same in the new position, but her responsibilities, perks, and schedule did not. She no longer worked with high-ranking officials on the departmental priorities lodged in the Intelligence Division, she lost access to an unmarked take-home vehicle, and had a less regular schedule involving weekend shifts.

Title VII of the Civil Rights Act of 1964 prohibits discrimination based on sex “with respect to” the “terms [or] conditions” of employment. The trial court and Court of Appeals found Muldrow failed to state a Title VII sex discrimination claim because the transfer did not cause her a “materially significant disadvantage.” The Supreme Court reversed, holding that an employee challenging a job transfer under Title VII must show that the transfer brought about some harm with respect to an identifiable term or condition of employment, but that harm need not be significant.

Bissonnette v. LePage Bakeries Park St., LLC (US 13-51 4/12/24) FAA | Transportation Workers

Section I of the Federal Arbitration Act, the “transportation worker exemption,” exempts from the FAA’s coverage “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Petitioners entered into contracts giving them the right to distribute Respondent’s baked goods in certain parts of Connecticut. The contracts required any disputes to be arbitrated. Petitioners sued Respondent for violating state and federal wage laws. Respondent countered by moving to compel arbitration. The trial court and Court of Appeals found Petitioners were not eligible for the transportation worker exemption from arbitration because they were not workers in the transportation industry. The Supreme Court reversed, unanimously holding that a transportation worker need not work in the transportation industry to be exempt from coverage under FAA Section I.

Ryan S. v. UnitedHealth Group, Inc. (9^th Cir. 22-55761 4/11/24) ERISA | Parity Act

Ryan S. brought a putative class action under the Employee Retirement Income Security Act, alleging that by applying a more stringent standard to mental health and substance use disorder claims than to otherwise comparable medical claims, UnitedHealth violated the Mental Health Parity and Addiction Equity Act (29 U.S.C. § 1185a), breached its fiduciary duty, and violated the terms of his plan. The court reversed the trial court’s dismissal of the Parity Act claim, concluding a plaintiff need not allege a categorical practice by the insurer or differential treatment for their own medical/surgical claims. It is enough for a plaintiff to allege the existence of a procedure used in assessing mental health/substance use claims that is more restrictive that those used in assessing medical/surgical claims. The court also reversed dismissal of Ryan S.’s breach of fiduciary duty claim based on the Parity Act, but affirmed dismissal of his claim that UnitedHealth violated the terms of his plan.

Fli-Lo Falcon, LLC v. Amazon.com, Inc. (9^th Cir. 22-35818 4/10/24) FAA | Transportation Worker Exemption

Section I of the Federal Arbitration Act, the “transportation worker exemption,” exempts from the FAA’s coverage “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Plaintiffs are business entities who entered into Delivery Service Program Agreements with Amazon. Under the Agreements’ terms, all disputes under the Agreement are to be resolved in arbitration. The court held that because plaintiffs were business entities, they were not “workers” eligible for the FAA’s transportation worker exemption. The court also held that the Agreement’s delegation provision was not unconscionable, and thus that any remaining unconscionability arguments must be decided by the arbitrator.

Shah v. Skillz Inc. (CA1/5 A165372 4/8/24) Breach of Employment Contract | Stock Options Are Not Wages

Upon being hired by Skillz, Shah accepted less cash compensation in exchange for options to buy Skillz stock at a predetermined exercise price. Skillz terminated Shah for cause in 2018. In December 2020, Skillz had an IPO. Shah was not able to exercise his stock options in the IPO because he had lost the options when he was terminated. Labor Code section 200(a) defines “wages” as “all amounts for labor performed by employees . . . , whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.” The court held stock options are not wages because they are not ascertainable “amounts” tied to an employee’s labor but rather a contractual right to buy shares of stock. The trial court thus did not err in dismissing Shah’s tort claims for retaliation and wrongful termination.

Silva et al. v. Medic Ambulance Service, Inc. (CA1/1 A167098 4/4/24) Emergency Ambulance Employee Safety and Preparedness Act

Silva filed a class action lawsuit against Medic Ambulance Service alleging it had violated labor laws by requiring that employees remain on call during their breaks. California voters subsequently enacted by ballot proposition the Emergency Ambulance Employee Safety and Preparedness Act (EAESPA) (Labor Code, § 880 et seq.). EAESPA provides that emergency ambulance employees “shall remain reachable” throughout their work shift and is explicit that this provision is retroactive. In Calleros v. Rural Metro of San Diego, Inc. (2020) 58 Cal.App.5th 660, the Fourth District rejected an argument that retroactive application of EAESPA was unconstitutional. Silva nonetheless proceeded with her claims, arguing that Calleros was wrongly decided. The trial court granted Medic’s motion for judgment on the pleadings and imposed a $2000 sanction on Silva’s counsel. The appellate court agreed the state constitution does not preclude retroactive application of EAESPA because the proposition did not change existing law, but only clarified it. The court also concluded the trial court did not abuse its discretion by imposing sanctions on Silva’s counsel.

Vazquez v. SaniSure (CA2/6 B329219 4/3/24) Arbitration

During her onboarding process in 2019, Vazquez signed an agreement to arbitrate all disputes arising out of her employment with SaniSure. Vazquez resigned from SaniSure in May 2021. In September 2021, Vazquez returned to SaniSure but the parties did not discuss whether she would be required to sign arbitration agreements again or whether claims related to her employment would be subject to arbitration. Vazquez left SaniSure a second time in July 2022. She then filed a class action complaint against SaniSure for failure to provide accurate wage statements during her second stint of employment. SaniSure moved to compel arbitration. The trial court denied the motion, finding no agreement by Vazquez to submit claims arising from her second stint of employment to arbitration. The appellate court affirmed, finding no evidence that the parties intended for the arbitration agreement Vazquez signed upon her initial employment to survive her resignation in May 2021 and thus apply to her second stint of employment with SaniSure.