Вы находитесь на странице: 1из 160

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

BULLETIN
Published Monthly EDITOR: CHRISTOPHER BELLO January 2007 Vol. 21, No. 1

RECENT EMPLOYMENT LAW DECISIONS


CALIFORNIA SUPREME COURT
SUPREME COURT WILL REVIEW SECOND DISTRICT DECISION CONCERNING VIDEO SURVEILLANCE OF EMPLOYEES OFFICE
HERNANDEZ v HILLSIDES, INC. On January 3, the Supreme Court announced that it will review the Second Districts decision, filed on September 14, that reversed summary judgment on invasion of privacy claims brought by two employees whose employer, without their knowledge, had placed a video surveillance camera in their office. The Second District held that the success of the employees claims did not depend on whether their pictures had ever actually been observed or recorded by the camera which, according to the employer, had been placed only for the purpose of determining who was using the plaintiffs computer at night to access pornographic websites. The Second Districts opinion appeared at 142 CA4th 1377, 48 CR3d 780, and was summarized in CELA Bulletin, Sep 06, p.4. For plaintiffs: Arnold Kessler and Mark S. Eisenberg. For defendant: Seyfarth Shaw, Laura Wilson Shelby, Holger G. Besch, and Amy C. Chang. Cal SC, 1/3/07; S147552.

CELA FORMS IMMIGRANT EMPLOYMENT RIGHTS COMMITTEEJOIN US!


by Kathryn Dickson What if you learn during discovery that your client is an undocumented worker? What if defense counsel asks about your clients immigration status during his or her deposition? Does your client have to answer? Does defense counsel have any right to ask the question? How will your clients damages be affected by his or her status? What is an H1B visa? What rights do H1B visa holders have in the workplace? Whom do you contact when immigration issues arise in your cases, and do you need an expert for trial? Who would be a good expert on immigration procedures and law? What in the blazes is the Hoffman
(Cont'd on Page 3, IMMIGRANT)

(Cont'd on Page 2, DECISIONS)

CELAS INAUGURAL LOBBY DAY IS SET FOR MAY 23 IN SACRAMENTO


Plan to attend CELAs inaugural Lobby Day on May 23, 2007, when CELA members will convene in Sacramento to meet with key members of the Legislature. The Legislative Committee is working hard to develop legislation to help California workers: Lobby Day will be your opportunity to join the campaign! Send Jean Hyams an email, (jeanhyams@boxerlaw.com), if you would like to participate. We need a BIG turnout to make a difference. (You dont have to make a definite commitment at this point, but we do need a sense of how many folks well be able to turn out.) By joining us you will help fulfill CELAs mission of furthering social justice for Californias employees, by introducing CELAs legislative agenda to our elected officials. This is a great opportunity to meet with your local representative and to hang out with other CELA members. No experience is necessary! We will provide you with the tools to make this day a success. We will meet at a restaurant in the morning, and travel in teams to designated legislators and staffers. After a day of meeting, greeting, and advocating, we will return to be debriefed, possibly to mix with some of our legislators, and to fete our esteemed colleague and resident legislative guru Steve Pingel, who will be celebrating his 39th birthday for the 17th consecutive year. When you contact Jean to indicate your interest in participating, include your residence zip code, and the names of your legislators if you know them. (To find out, you can log on to www.info.ca.gov and click on Your Legislature.) See you in Sacramento! Legislative Committee Co-Chairs Jean Hyams, David Lowe, and Steve Pingel

DECISIONS
(From Page 1)

SUPREME COURT DENIES REVIEW OF SECOND DISTRICT DECISION THAT AFFIRMED $2.95 MILLION JUDGMENT FOR GENDER DISCRIMINATION AND RETALIATION
CONNEY v REGENTS OF UNIVERSITY OF CALIFORNIA. On January 3, the California Supreme Court announced that it will not review the unpublished Second District decision, (2006 WL 2730353; filed 9/26/06), that affirmed an award of $2.95 million in damages plus $415,450 in attorneys fees on gender discrimination and retaliation claims. (A multiplier of two was used in calculating the fee award.) For plaintiff: Pine & Pine, Norman Pine and Beverly Tillet Pine; Michael F. Baltaxe; Shannon M. Foley; James K. Autrey. For defendants: Reed Smith, Paul D. Fogel and Raymond A. Cardoza; Lewis, Brisbois, Bisgaard & Smith and Alan R. Zuckerman. Cal SC, 1/3/07.

which caused her to start missing substantial time from work. Two years later, McKesson fired Roby for abusing its attendance policy, although many of her absences were attributable to her psychiatric disability. The jury threw the book at McKesson. It awarded Roby millions of dollars in compensatory damages for wrongful discharge in violation of public policy, as well as harassment, disparate treatment, and discrimination/failure to accommodate under [FEHA]. The jury rendered a separate verdict finding Robys supervisor, Karen Schoener, liable for harassment. In a second phase of the trial, the jury levied a $15 million punitive damage award against McKesson and $3,000 against Schoener. McKesson does not challenge the verdict insofar as the jury found it liable for wrongful termination, disability discrimination, and disparate treatment. McKesson and Schoener do challenge the harassment verdict as unsupported by substantial evidence. Both defendants also claim that reductions in the compensatory damage award are necessary and that the punitive damage award should be stricken or reduced. We shall conclude that the judgment awards duplicative noneconomic damages based on alternative theories of liability for the same wrong, requiring a downward adjustment. We shall also strike the harassment awards against McKesson and Schoener for insufficiency of the evidence. Finally, while we find the evidence sufficient to support punitive damages, we conclude that a substantial reduction in the size of the award is necessary to comport with constitutional constraints. We shall thus reduce both the compensatory and punitive damage awards and affirm the judgment as modified. The trial court entered judgment for $3,511,000 in compensatory damages against McKesson and $500,000
(Cont'd on Page 3, DECISIONS)

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: Michelle Reinglass 23161 Mill Creek Drive Suite 170 Laguna Hills, CA 92653 Tel: (949) 587-0460 FAX: (949) 587-1004 E-mail: michelle@reinglasslaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Sherman Oaks) Eve Chesbro (Pasadena) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles) Brad Yamauchi (San Francisco)

CALIFORNIA COURTS OF APPEAL


EVIDENCE DID NOT SUPPORT PLAINTIFFS VERDICT ON DISABILITY HARASSMENT CLAIM AND $15 MILLION IN PUNITIVES WAS EXCESSIVE
ROBY v McKESSON HBOC. In an opinion filed on December 26, 2006, the Third District reduced the overall jury award in a disability discrimination and harassment case from $19 million to $3.5 million. The court explained the facts of the case as follows, as well as its reasons for reducing both the compensatory and punitive damage awards: Plaintiff Charlene J. Roby was a stellar employee of defendant McKesson HBOC, Inc. for 25 years [as a customer service support liaison] until she developed panic disorder in 1998,

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

-2-

DECISIONS
(From Page 2)

against Schoener. Defendants motions for new trial and for [JNOV] were denied. However, owing to Robys concession that the jurys award for past economic damages included the future value of the same loss, the order denying defendants posttrial motions included a $706,000 reduction in the verdict... Our analysis shows that, although the trial court consolidated the multiple economic damage awards into single figures, it did not treat any of the noneconomic damage awards as duplicative; itstead it stacked these three awards, such that Roby was awarded a total of $1.6 million in noneconomic damages for the three termination-related torts. [Fn. 4: Because McKesson concedes that harassment in the workplace is a qualitatively different tort for which damages may be independently awarded, the harassment verdict is not implicated in the present analysis.] McKesson argues that by adding the three noneconomic damage awards together, the trial court improperly

allowed Roby to recover treble damages based on a single legal wrong. It contends the trial court should have accepted the highest noneconomic award (i.e., $800,000) and stricken the two lower awards as duplicative. We agree. Roby ... claims that multiple noneconomic damage awards were proper in this case because splitting up the damages among the three alternative legal theories was expressly authorized by the trial courts instructions. According to Roby, the jury simply followed the courts instructions to decide on a single sum for noneconomic compensation and work backwards, apportioning the damages among three different theories of recovery. We reject the argument [although the instructions were not a model of consistency and clarity]. In their briefs, the parties resume their debate over whether the collateral source rule applies to Social Security disability benefits. Apparently, the issue is still unsettled in California. [cites omitted.] We need not delve

into this dispute, however, because, on this record, the jury could reasonably have concluded that defendants did not carry their burden of proof [not merely as to the fact of the offset but also as to its amount]. The jury found both defendants liable for hostile work environment/harassment, awarding $600,000 against McKesson and $500,000 against Schoener. Defendants contend these verdicts are not supported by substantial evidence. [W]e agree. Our review of the record yields the following behavior by Schoener which could conceivably support a claim of disability harassment: (1) she sometimes placed apple pies and small gifts on every subordinates desk except Robys; (2) she made Roby document all her phone calls and made her cover the phones during the office Christmas party; (3) Schoener would often snub her at staff meetings and did not return her good morning greetings; (4) she once made a throat slash gesture when Roby was on the phone with a
(Cont'd on Page 4, DECISIONS)

IMMIGRANT
(From Page 1)

Plastics decision that everyone seems to despise, and what do I need to know about it? Representing foreign national employeeseither undocumented workers or those holding valid visas or green cardsis both challenging and extremely rewarding. If you have cases involving immigration issues or the employment rights of foreign national workers, please consider joining CELAs new Immigrant Employment Rights Committee, which is now up and running. We held our first two teleconference meetings on November 16, 2006 and January 18, 2007. We plan to present a breakout session at the Annual Conference in September, and to conduct a day-long regional seminar later this year. We have discussed a number of additional plans and possible projects,

including the following: Putting together a resources guide Compiling materials and guidance, and considering legislative action regarding Hoffman Plastics and damages issues Collecting and developing pre-trial and trial materials on immigration issues that arise in our cases Developing a case evaluation guide, and a checklist of issues to address with clients in cases involving immigration issues Collecting and disseminating information on the different types of visas Collecting the names of good immigration lawyers who may be able to serve as consultants and experts, and proposing that they attend our conferencesand we theirsto share information Developing information related to -3-

causes of action such as fraud that can be asserted by workers induced to come to the U.S. by promises of visa and green card applications, but who then are not paid or whose visas are not processed Collecting and sharing information on verdicts and settlements involving immigration issues Starting either a sub-list or a section of the Members Only part of the CELA website for immigration/ employment issues This is a vibrant new committee working on cutting edge issues. If you have an interest in joining, please contact me, Kathryn Dickson, at kbdickson@dicksonross.com; (510) 268-1999; or Christina Krasomil, CELAs Administrative Director, at clkrasomil@earthlink.net; (818) 9077895.

DECISIONS
(From Page 3)

client and then loudly reprimanded Roby in front of her coworkers; (5) she referred to Robys job as a no-brainer; (6) she once told Roby her arm digging and heavy sweating [symptomatic of her disability] was disgusting; (7) even though Roby advised her that the unpleasant body odor was related to the medication she was taking for her condition, Schoener showed no compassion, telling her instead that she needed to bathe and shower more frequently; and (8) Roby came to work one morning to find soaps, shampoos and deodorants had been placed on her desk. Application of [the principles of Reno v Baird (1998) 18 C4th 640] mandates the conclusion that most of the alleged harassment here was conduct that fell within the scope of Schoeners business and management duties... While these acts might, if motivated by bias, be the basis for a finding of employer discrimination, they cannot be deemed harassment within the meaning of the FEHA. When Reno-protected conduct is sifted out, what we have left is evidence that Schoener treated Roby with general scorn and contempt and failed to show any sympathy for her disability. This is not sufficient to create liability for harassment based on a hostile work environment. While the evidence showed that Schoener obviously disliked Roby, shunned her, and showed no compassion for her condition, neither cold indifference nor lack of sensitivity toward a disabled employee can be alchemized into a claim of hostile work environment. If such were the case, virtually every case of disability discrimination could be parlayed into a supplementary damage claim for harassment. Roby points to evidence that Schoeners behavior aggravated her symptoms and left her emotionally ravaged. But Roby, already emotionally frail..., was highly susceptible to even the slightest display of antipathy... The reasonable person test is

necessary to protect employers against claims that are frivolous or brought by hypersensitive employees... Concerning punitive damages, the court held, first, that a reasonable jury could find that McKessons conduct consisted of more than a careless failure to investigate absences, and was rather a deliberate plan to rid itself of the inconvenience of accommodating a mentally disabled employee. The imposition of punitive damages is supported by substantial evidence. But the court concluded that the punitive damages award was constitutionally excessive, applying as follows the three United States Supreme Court guideposts: If we simply applied an automatic proportionate reduction of the punitive damage award to reflect [the] same ratio after our modifications to the compensatory damages (now a total of $1,405,000), it would yield a punitive damage award of $6,002,160. However, we do not feel that a 4-to-1 ratio falls within constitutional limits in this case because (1) the original punitive damage award was based on the jurys determination that McKesson was guilty of harassment, a qualitatively different tort, and one for which we have failed to find evidentiary support in the record; (2) more than half the compensatory damage award $800,000represents compensation for emotional distress, humiliation and mental suffering, outrage components that are, to a large extent, duplicated by the punitive damage verdict...; and finally (3) the magnitude of the punitive damage award dwarfs the maximum civil penalties for the same wrongful conduct. Considering the shifting, complex mosaic of elements at play in this case, we conclude that a punitive damage award of $2 million reaches the constitutional frontier. Such a sum yields a ratio ... of approximately 1.42 to 1 or about one-third of the original ratio. Our figure comports with Supreme Court jurisprudence on the subject yet is large enough to have a deterrent effect on future conduct. -4-

For plaintiff: Riegels, Campos & Kenyon and Charity Kenyon; Christopher H. Whelan; David M. deRubertis. For defendants: Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Jerome B. Falk, Jr., Linda Q. Foy, Jason M. Habermeyer; Fitzgerald, Abbott & Beardsley and Sarah E. Robertson. Third Dist, 12/26/06; opinion by Butz with Nicholson and Robie concurring; 2006 DAR 16848, 2006 WL 3775897. [Note: The Respondents Petition for Rehearing in Roby, included as an attachment to a January 11 CELA Listserv message from attorneys Whelan, deRubertis, and Pine, argues, inter alia: (1) there was no duplication of non-economic damages; (2) the opinion omits, misstates, and downplays critical facts that support the harassment verdict; (3) the opinion misapplies Reno v Baird ; (4) the opinions constitutional analysis misapplies the Gore guideposts and misstates material facts; and (5) an absolute appellate reduction of the punitive damages award is improper and the Court should order a conditional remittitur.]

ANTI-SLAPP STATUTE MAY NOT BE USED TO STRIKE CLAIM THAT HAS BEEN FILED ONLY IN PRIVATE ARBITRAL FORUM
SHEPPARD v LIGHTPOST MUSEUM FUND. Reversing an order of the Santa Clara County Superior Court, the Sixth District held that ...Code of Civil Procedure section 425.16 does not authorize a superior court to grant a motion to strike an arbitration claim filed only in an agreed arbitral forum and not asserted by the claimant in any complaint, cross-complaint or petition filed in court. Section 425.16, the anti-SLAPP statute, specifies that [a] cause of action against a person arising from any act of that person in furtherance of the
(Cont'd on Page 5, DECISIONS)

DECISIONS
(From Page 4)

persons right of petition or free speech ... in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim. The Sixth District reasoned that [the] statute was expressly intended to prevent abuse of the judicial process, and its terms are not reconcilable with a legislative intent to extend it to arbitration claims filed only in private nonjudicial forums. The case involves an arbitration claim filed by the employer pursuant to the arbitration provision contained in the plaintiffs employment contract, alleging that the plaintiff had violated the contracts non-disclosure clause following his termination by giving testimony in certain legal proceedings and by writing a book. For employee: J. Joseph Wall, Jr. For employer: Rhonda Cate Canby, Philip T. Darke, Downey Brand. Sixth Dist, 12/29/06; opinion by Mihara with Duffy and McAdams concurring; 2007 DAR 84, 2006 WL 3824896.

trict explained the facts, and its reasons for rejecting the defendants contentions on appeal, as follows: [Defendants] Ridgeback [Ranch] and [Charles] Johnston filed a motion to disqualify attorney Shelley G. Bryant and the law firm of W. J. Smith & Associates from representing plaintiffs in this case... Declarations in support of the motion set forth [that] Ridgeback and Johnston retained the law firm of Jory, Peterson, Watkins, Ross & Woolman to defend them in this case soon after they were served with the complaint in January 2004. Bryant was an associate of the Jory Peterson firm at that time. In April 2005, Bryant informed Jory Peterson that he would resign his employment and shareholder status effective May 11, 2005, and would become associated with Smith... [] The declarations of William J. Smith and Bryant addressed how the Smith firm kept Bryant insulated from plaintiffs cases since he was hired by the firm. Applying the modified substantial relationship test, the superior court found that the targeted attorney had carried his burden of proving that confidential information material to the plaintiffs lawsuit was not imparted to him. Accordingly, the superior court denied the motion... [T]he modified substantial relationship test applies because this case involves (1) no proof that the firmswitching attorney actually obtained confidential information...; (2) the successive representation of clients with adverse interests; and (3) a firm-switching attorney whose prior attorney-client relationship with the moving party was peripheral or attenuated... Under the modified substantial relationship test, a presumption that the attorney knows confidential information applies only where the moving party ... makes an adequate showing that the attorney was in a position visa-vis the client to likely have acquired confidential information material to the current representation. [cite omitted] -5-

Two defendants appeal, claiming (1) the superior courts findings of fact were not supported by substantial evidence, (2) the superior court failed to consider and analyze material facts, (3) the superior court committed legal error in analyzing the firm-switching attorneys opportunity for acquiring confidential information while at his former law firm, and (4) the superior court erroneously denied their request to depose the firm-switching attorney. We conclude (1) the superior courts findings are supported by substantial evidence; (2) the superior court correctly ruled that the modified substantial relationship test, when met, shifts the burden to the targeted attorney to prove that he or she was not exposed to material confidential information (not [to] prove that he or she had no opportunity to acquire confidential information), and (3) the superior court did not otherwise abuse its discretion. Therefore, the order denying the motion to disqualify is affirmed. For employee: William J. Smith. For employer: Caswell, Bell & Hillison and Russell G. VanRozeboom. Fifth Dist, 1/12/07; opinion by Vartabedian with Levy and Gomes concurring; 2007 DAR 584, 2007 WL 80406.

SUPERIOR COURT DID NOT ERR IN DENYING EMPLOYERS MOTION TO DISQUALIFY PLAINTIFFS LAW FIRM BECAUSE OF FIRMSWITCHING ATTORNEY
OCHOA v FORDEL. Relative to employment discrimination and wrongful discharge litigation, the Fifth District affirmed an order of the Fresno County Superior Court denying the defendants motion to disqualify the law firm representing the plaintiffs because that firm had hired an attorney who had previously worked at the law firm representing the defendants. Agreeing with the superior courts use, in applying rule 3310(E) of the California Rules of Professional Conduct, of the modified version of the substantial relationship test, (first referred to in Adams v Aerojet-General Corp . (2001) 86 Cal.App.4th 1324, 1340), the Fifth Dis-

IN UNPUBLISHED DECISION, SECOND DISTRICT UPHOLDS REDUCTION OF FEE REQUEST BUT HOLDS THAT MULTIPLIER WAS PROPER
GONZALEZ v MERCHANTS BUILDING MAINTENANCE. The Second District, Division Eight, affirmed a postjudgment order setting attorneys fees, using a multiplier of two, and denying prejudgment interest. Appellants are among 29 individuals who opted out of a class action settlement, the court explained, and filed individual actions asserting wage and hour, discrimination and retaliation claims... Appellants counsel, Robert J. Younger, represented all 29 individual plaintiffs
(Cont'd on Page 6, DECISIONS)

DECISIONS
(From Page 5)

in substantially identical actions... Prior to trial, appellants accepted offers by Merchants for entry of judgments in the amounts of $30,100 for Gonzalez, $10,000 for Maximo and $10,000 for Quintanilla, plus reasonable attorney fees and costs to be determined by the court... [A]pplying a multiplier of two, Younger requested a total of $135,070 in attorney fees for Gonzalez, $97,085 for Maximo and $102,335 for Quintanilla... [T]he court granted appellants motions for attorney fees in part and denied the motions in part. The court awarded each appellant attorney fees of $20,510, based on a lodestar of $10,255 and multiplier of two, and found all other claimed attorney fees to be unreasonable and unrecoverable. [T]he trial court based the award of attorney fees on the number of hours it determined counsel should have reasonably expended in representing appellants multiplied by $250, the rate the court found to be a reasonable rate ..., obtaining a lodestar figure of $10,255 and doubling that amount. We find no abuse of the courts discretion in reducing the number of hours claimed by appellants counsel. Merchants attached a copy of all written discovery undertaken in the cases and the court was able to gauge first-hand the nature, extent, quality and, particularly, the duplicative nature of counsels efforts... [Defense] expert [John W.] Toothman performed a thorough analysis ... in an attempt to screen out duplicative, unreasonable or otherwise unjustified time entries... Although the court adopted Toothmans ... lodestar figure, the court obviously disagreed with Toothmans conclusion that the duplicative nature of the issues justified the award of only one attorney fee; consequently, the court applied the lodestar figure to each appellant, rather than collectively to all three. We find no abuse of discretion in this approach since each appellant had a separate case and counsel was obliged to separately litigate and tailor discovery responses to each action.

We also find no abuse of discretion in the trial courts applying a multiplier of two... The court particularly noted the risks that appellants counsel had taken in pursuing these three cases. Merchants had settled a class action involving 2,500 other employees, at an average of no more than $29 [for] each claim. The court noted these were not easy cases and the 29 persons who had opted out of the settlement were brave souls and their counsel was even braver... The trial court properly enhanced appellants attorney fees by a multiplier of two in light of the contingency nature of counsels representation, the risk he could obtain no better results than class participants and his skill in achieving a result for appellants many times the value of the class settlement for each claim. [A] postjudgment cost bill is not an appropriate vehicle to request prejudgment interest under [Civil Code] section 3287. [cite omitted] Rather, a plaintiff must timely request prejudgment interest by way of a motion prior to entry of judgment or a motion for a new trial... Appellants further argue that prejudgment interest is not considered an element of damages under Civil Code section 3291 and, once the court ruled on the motions for attorney fees and costs, the court should have determined whether appellants obtained more than the demands they had purportedly made under section 998. We disagree. Appellants sought recovery for contractually based employment claims for wages and wrongful termination. Contractually based claims and claims for wages are not considered claims for personal injury falling under Civil Code section 3291... The trial accordingly did not abuse its discretion in granting the motion to tax costs denying appellants prejudgment interest. For plaintiffs: Robert J. Younger. For defendant: Mark C. Teuton. Second Dist Div Eight, 12/29/06; opinion by Flier with Cooper and -6-

Rubin concurring; 2006 WL 3824940 (unpublished).

DISCLOSURE REQUIREMENTS OF H & S CODE 1363.1 APPLY TO ARBITRATION PROVISIONS IN EMPLOYERNEGOTIATED GROUP HEALTH PLANS EVEN WHERE EMPLOYEE ENROLLS BY SIGNING EMPLOYERS FORM, NOT INSURERS
MEDEIROS v SUPERIOR COURT (HEALTH NET OF CALIFORNIA). In this writ proceeding, the Second District, Division Seven wrote in an opinion filed on January 16, petitioners ... challenge the trial courts order compelling them to arbitrate a dispute with their health insurer, real party in interest Health Net. Medeiros contends the arbitration provision at issue is unenforceable because it does not comply with the disclosure requirements set forth in Health and Safety Code section 1363.1. [Specifically, Medeiros pointed to the fact that the arbitration provision was not prominently displayed and was not located immediately before the signature line as required by the statute.] "Health Net asserts, as a member of a group health plan negotiated between Health Net and Medeiross employer, Medeiros is not entitled to the protection of those disclosures. Moreover, Heath Net argues the requirements of section 1363.1 do not apply to the benefits election form Medeiros signed and submitted to his employer in order to enroll in the group health plan. Health Net claims section 1363.1s disclosure obligation would only have been triggered if it had required Medeiros to sign an enrollment form in order to enroll in the health plan. We reject Health Nets contention [that] consumers who enroll in a group health plan negotiated between their employer and the insurance company, and consumers who sign their
(Cont'd on Page 7, DECISIONS)

DECISIONS
(From Page 6)

employers benefits election form instead of an enrollment form provided by the insurance company, are entitled to some lesser form of disclosure concerning arbitration than consumers who individually subscribe to a health insurance plan. We conclude the disclosure requirements of section 1363.1 are applicable to the arbitration provision Health Net seeks to enforce against Medeiros, and the arbitration provision is unenforceable for failure to comply with these requirements. Accordingly, we direct the trial court to vacate its order requiring Medeiros to arbitrate this dispute with Health Net, and to issue an order denying Health Nets motion to compel arbitration. The plain language of section 1363.1 is clear. If a health plan wants to require employee-subscribers to a group plan to arbitrate disputes, the health plan must make the mandatory disclosures. We can conceive of no reason why employees who sign a document called an enrollment form provided by the insurance company should receive more protection than employees who sign a document called a benefits election agreement provided by their employer. If an employer-prepared form does not provide the health plan with an appropriate vehicle to make the required disclosures then the health plan must provide its own form for this purpose. For employee: Shernoff, Bidart & Darras, Michael J. Bidart, Ricardo Echeverria; Jeffrey Isaac Ehrlich. For real party in interest: Lewis, Brisbois, Bisgaard & Smith, Raul L. Martinez and Elise D. Klein. Second Dist Div Seven, 1/16/07; opinion by Johnson with Perluss and Zelon concurring; 2007 DAR 745, 2007 WL 93170.

NINTH CIRCUIT
LMRA DOES NOT PREEMPT TORT CLAIMS IN CONNECTION WITH FORCE USED BY SECURITY GUARDS IN BREAKING-UP UNION MEETING
WARD v CIRCUS CIRCUS CASINOS, INC. Reversing summary judgment, the Ninth Circuit, in a January 10 opinion by Beezer, held that the district court (D Nevada) erred in concluding that the union-represented plaintiffs state law tort claims were preempted by LMRA 301. The Ninth Circuit explained: During the relevant time period, the Workers were employed by Circus and were members of a labor union... The CBA provided that the union representatives may communicate with employees regarding union business so long as such activities do not interfere with the conduct of the Employers business or with the performance of work by employees... On May 3, 2002, Circus employees including the Workers met during a scheduled work break in the Circus employee dining room. The purpose of the meeting was to distribute leaflets and inform union members of the progress on contract negotiations. After participants began distributing leaflets, employee Al Williams stood on a chair and spoke about union members defending their employment rights. In response, meeting participants began chanting and shouting phrases such as union, yes and we want a contract. Soon after the chanting began, Circus security guards interrupted the meeting and told the participants to leave. The participants instead locked arms in a circle around Williams to prevent the guards from getting near him. The guards pushed through the participants, pulled Williams off the chair and handcuffed him. The Workers alleged that in the process the security guards grabbed, pushed and knocked them down. -7-

In September 2003, the Workers brought an action in Nevada state court, alleging that Circus was liable for (1) assault and battery, (2) false imprisonment, (3) intentional infliction of emotional distress, (4) negligent infliction of emotional distress, (5) negligent entrustment and (6) negligent hiring, training and supervision. Circus removed the action to the United States District court for the District of Nevada. The Workers moved to remand to state court, which the district court denied... The district court granted Circus motion for summary judgment... For each of the Workers claims, the determinative question is whether the state law factual inquiry ... turn[s] on the meaning of any provision of the collective bargaining agreement. [cite omitted] The Workers bring two types of claims based on the alleged physical force used against them... The first type directly challenges the force used... The second type involves Circus alleged negligence... As to both types of claims, Circus argues that the CBA must be interpreted to determine whether the Workers union activity interfered with company business and was in violation of the CBA. The Workers contest the restraint, physical force and threats used against them by Circus security guards. Their claims do not depend on an interpretation of permissible union communications. Even if the Workers activities ... were not permissible under the CBA, Circus may be liable under state law if the facts ... alleged by the Workers are proved. The CBA also does not set forth procedures for employee control or authorize the use of threats, physical force or restraint. CBAs typically do not govern such conduct, and state claims involving physical threats or force used against an employee usually are not preempted. [cites omitted]. Circus contends that its right to direct and control its employees pursuant to the CBA requires interpretation and
(Cont'd on Page 8, DECISIONS)

DECISIONS
(From Page 7)

amounts to consent by the Workers to the challenged conduct. To the contrary, Circus right to direct and control its employees cannot reasonably sanction any level of threats, physical force or restraint, even if the employees activities interfere with company business. As to the Workers negligence based claims, Circus argues that the CBA must be interpreted to determine the particular duties of care owed to the workers. State law negligence claims are preempted if the duty relied on is created by a collective bargaining agreement and without existence independent of the agreement. [cite omitted]... [But] Circus is accused of acting in a way that might violate the duty of reasonable care owed to every person in society. [cite omitted] The Workers negligence claims do not require interpretation of the CBA. For plaintiffs: Romeo R. Perez, Las Vegas. For defendant: Lionel, Sawyer & Collins, Las Vegas. Ninth Circuit, 1/10/07; opinion by Beezer joined by OScannlain and Trott; 2007 DAR 439, 2007 WL 60390.

[The plaintiff] contends that the district court [D Hawaii] made several erroneous evidentiary rulings and used an improper verdict form. We agree that the district court committed a number of errors, mostly due to its failure faithfully to apply our prior decision in this case... Because we are unable to conclude that these errors, taken together, were harmless, we reverse and remand for a new trial. First, we hold that the district court abused its discretion when it prevented Obreys expert witness, James Dannemiller, from testifying about nonselections (that is, instances in which a selection process was initiated but no candidate was chosen) and about noncompetitive selections (that is, instances in which only one candidate applied for and received a job) at the Shipyard. In Obrey I, we held that Dannemillers study was relevant for what it purported to analyze: the race of managers selected at the Shipyard compared to the race of those who applied for managerial positions. Obrey I, 400 F.3d at 696-97. We did not suggest that the district court on remand could exclude a portion of Dannemillers proposed testimony. In any event, it is clear that the district courts reasons for excluding this testimony went to weight rather than admissibility. Second, we hold that the district court abused its discretion when it precluded Obrey from testifying about his reasons for bringing suit and about his relative qualifications for promotion, at least to the extent that Obreys testimony would have been based upon personal observation and experience. This evidence was relevant under Federal Rule of Evidence 401 and was not improper lay opinion under Federal Rule of Evidence 701. Third, we hold that the district court abused its discretion when it refused to permit live testimony from three of Obreys witnesses... Federal Rule of Civil Procedure 43(a), which expresses our strong preference for oral testimony in open court, forecloses the district courts unorthodox procedure. -8-

Fourth, we hold that the district court abused its discretion when it prevented Benjamin Toyama from testifying about budgetary issues within his knowledge and about his discussions with senior Shipyard officials on the subject of racial bias. Fifth, we hold that the district court erred by failing to use a mixed-motive jury verdict form. Here, a rational jury could have concluded that race was a motivating factor in, but not the sole cause of, the challenged employment decision. [cite omitted] The jury instructions imperfectly conveyed the mixed-motive standard, and the verdict form did not convey the standard at all. We hold that these errors, taken together, were prejudicial to Obrey. In Obrey I, we clarified that we begin with a presumption of prejudice, which may be rebutted by a showing that it is more probable than not that the jury would have reached the same verdict even if the evidence had been admitted. Obrey I, 400 F.3d at 701. Given that the trial would have been quite different had these significant errors not been made, we are reluctant to usurp the jurys function by concluding that the verdict would have remained unchanged. Obrey also argues that the district judge in this case is biased. The test for proving judicial bias is a demanding one ... and it has not been met here. However, we are troubled by the district judges apparent unwillingness to implement our decision in Obrey I. In order to preserve the appearance of justice, we exercise [our] supervisory power under 28 U.S.C. 2106 to reassign this case to a different district court judge on remand. [cite omitted]. For plaintiff: Clayton C. Ikei, Jerry P. S. Chang, Honolulu. Ninth Circuit, 12/26/06; memorandum opinion by Trott, Wardlaw, and W. Fletcher; 2006 WL 3825350 (unpublished).
(Cont'd on Page 9, DECISIONS)

FOR SECOND TIME, NINTH CIRCUIT REVERSES JUDGMENT ON DEFENSE VERDICT IN TITLE VII RACE DISCRIMINATION ACTION, AND ORDERS REPLACEMENT OF TRIAL JUDGE ON REMAND
OBREY v ENGLAND. In an unpublished sequel to its March 2005 opinion in Obrey I, (400 F3d 691; summarized in CELA Bulletin, Mar 05, p.5), the Ninth Circuit again reversed a judgment on a jury verdict for the defense in a Title VII action by a civilian employee of the Pearl Harbor Naval Shipyard who alleged that the navy had engaged in a pattern or practice of discriminating against qualified candidates of Asian Pacific ancestry in favor of white applicants for senior management positions. The court wrote:

DECISIONS
(From Page 8)

REVERSING DENIAL OF MOTION TO COMPEL ARBITRATION, NINTH CIRCUIT HOLDS THAT UNCONSCIONABLE COSTS PROVISION COULD BE SEVERED
MARTIN v TELETECH HOLDINGS, INC. In an unpublished decision filed on December 19, the Ninth Circuit reversed a Central District order denying the employers motion to compel arbitration of a former employees FLSA and pendent state law claims. The court wrote: The arbitration agreement was procedurally unconscionable because it was imposed as a condition of employment and there was no opportunity to negotiate. See Armendariz... The feesharing provision renders the agreement substantively unconscionable because it requires the arbitrators fees to be paid equally by the parties and requires each party to post its portion of the anticipated fee prior to commencement of the arbitration. [cites omitted] Nonetheless, the fee sharing provision is easily severable from the remainder of the arbitration agreement. [cites omitted] Although it is true that the agreement requires the employee to arbitrate all of his or her claims but does not similarly require TeleTech to arbitrate its claims against the employee, Martins argument that the agreement is invalid for lack of mutuality was not raised in the district court. TeleTech accordingly has not had the opportunity to present evidence regarding business reasons for the provision. We accordingly reverse the order of the district court denying TeleTechs motion to compel arbitration and remand for further proceedings. On remand, TeleTech may renew its motion to compel arbitration and Martin may raise any applicable defenses, including lack of mutuality. If any issue of unconscionability is raised, TeleTech shall be afforded the opportunity to present evidence on the issue...

For plaintiff: Guy Patrick Glazier, Los Angeles; George A. Hanson, Kansas City, Mo. For defendant: John S. Battenfeld, Morgan, Lewis & Bockius, Los Angeles; Rebecca Eisen, Morgan, Lewis & Bockius, San Francisco; Richard G. Rosenblatt, Morgan, Lewis & Bockius, Princeton, NJ. Ninth Circuit, 12/19/06; memorandum opinion by Siler, Tashima, and Bea; 2006 WL 3794324 (unpublished).

only thirteen percent of its managers. Unlike most of its competitors, the lawsuit alleges, Costco neither posts openings for managers nor accepts applications, but instead relies on an informal word of mouth system that favors men over women. [Note: Judge Patels order was included as an attachment to a January 11 CELA Listserv message from Kathryn Dickson.] For plaintiffs: The Impact Fund; Lieff, Cabraser, Heimann & Bernstein; Davis, Cowell & Bowe. For defendant: Seyfarth Shaw, Los Angeles. USDC ND Cal, 1/11/07; C O4-03341 MHP.

UNITED STATES DISTRICT COURTS


JUDGE PATEL GRANTS MOTION FOR CLASS CERTIFICATION IN GENDER DISCRIMINATION ACTION AGAINST COSTCO
ELLIS v COSTCO WHOLESALE CORP. On January 11, Judge Marilyn Hall Patel of the Northern District granted a motion for class certification in a Title VII action by current and former Costco employees alleging gender discrimination in the companys promotion and management practices. The class is alleging that Costcos promotion system has a disparate impact on female employees, that Costcos management discriminates against women in promotions, and that the company has retaliated against persons seeking redress for discrimination. The plaintiffs, who are also asserting pendent FEHA claims, successfully sought certification of a nationwide class consisting of more than 700 current and former Costco employees who, since January 3, 2002, were denied promotion to General Manager, Assistant General Manager, or certain Senior Staff positions. In an article in the January 12 New York Times , lead counsel Brad Seligman was quoted as stating that Costco has a blind spot in its employment policies, which has allowed a glass ceiling to fester. The plaintiffs assert that women make up almost half of Costcos total workforce, but -9-

CALIFORNIA SUPERIOR COURTS


PENA v J & M ASSOCIATES. On January 12, the San Diego County Superior Court, (Judge Richard E. Strauss, Dept. 75), granted certification to a class of well over 1,000 workers hired by J & M Associates and assigned to work at the National Ship Building Company, (NASSCO), which is being sued as a joint employer. The class consists of all J & M workers who were required to undergo a day of inhouse training without pay. The plaintiffs are seeking lost wages and statutory waiting time penalties equal to 30 days pay for each worker, and private attorney general penalties. Total estimated wages and penalties are in excess of $6 million. For plaintiffs: Stephen Danz and Marcus Jackson, San Diego. For defendant J & M Associates: James F. Holtz, Gil Abed, Stutz, Artiano, Shinoff & Holtz, San Diego. For defendant NASSCO: Gordon E. Krischer, Larry A. Walraven, OMelveny & Myers, Newport Beach. San Diego County Superior Court, No. GIC833973; Judge Richard E. Strauss.

JUDITH VLADECK: 1923-2007


Judith Vladeck, an employment law and womens rights pioneer, died on January 8 in Manhattan. She was a NELA member, and a partner in Vladeck, Waldman, Elias & Engelhard. Her New York Times obituary, published on January 11, read in part as follows: Judith P. Vladeck, a prominent labor lawyer and ardent advocate of womens rights in the workplace, particularly on college campuses, died on Monday in Manhattan. She was 83. Proud of her courtroom contentiousness, Ms. Vladeck brought a combination of showmanship and detailed analysis of salary histories and job performance to her cases. She took on potent opponents like major Wall Street investment firms, the Union Carbide Corporation and the City University of New Yorkand usually won, or settled for millions. As the womens movement gained footing, Ms. Vladeck turned her attention to workplace discrimination. In 1975, she represented Val Winsey, a professor at Pace University who had been denied tenure. When the universitys lawyers argued that Professor Winsey was a troublemaker who devoted too much of her time to challenging the system, Ms. Vladeck responded: The only way women are tolerated is if they are supine, silent and submissive. Winsey was reinstated with back pay and received her tenure. In the City University case, filed in 1973, Ms. Vladeck traced salary histories for more than 5,000 female faculty members. The judge ruled that the university had discriminated for 15 years. When The New York Times asked Ms. Vladeck in 1983 whether she thought the multimillion-dollar settlement had been fair, she gave an answer that appeared as the papers quotation of the day: If we were to calculate the real back pay in this case, theyd have to take Brooklyn College and City College and auction them off to pay the damages. Ms. Vladeck did not represent only women. In the Union Carbide case, in 1983, she argued successfully that John Whittlesley, a labor lawyer, should not have been forced to retire at 65. Asked if she had ever represented an employer, Ms. Vladeck once told a reporter: Are you kidding? Never. The results of an Attorney Profile search on Westlaw include a list of the staggering number of cases Judith Vladeck litigated, as well as the citations of law review articles she published on issues such as the glass ceiling and the concept of comparable worth. In a NELAnet message on January 11, Janice Goodman wrote as follows: Every time we bring a discrimination case, particularly a sex or age claim, lets remember that Judy was one of the people who helped establish the laws that make our practice possible. She will be missed. In tribute, NELA would like to honor her story by putting together a book of reminiscences. Many of you may have worked with Judy, met her at conferences, heard her speak, or received help or advice from her. If you did, please share with us (by posting here) your favorite Judy story, to be incorporated in our album.

COMING

E V E N TS

March 16-17, 2007 NELA SEMINAR Representing Workers in Whistleblower & Retaliation Actions (Co-sponsored by Government Accountability Project and National Whistleblowers Center) The Renaissance Chicago Hotel Chicago, Illinois May 11, 2007 CELA WAGE & HOUR CLASS ACTION TRIAL PLANNING SEMINAR El Segundo May 23, 2007 CELA LOBBY DAY Sacramento (See page 1 for details) June 27-30, 2007 NELA's EIGHTEENTH ANNUAL CONVENTION San Juan, Puerto Rico

-10-

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

Published Monthly

BULLETIN
EDITOR: CHRISTOPHER BELLO February 2007 Vol. 21, No. 2 reversed by the Seventh Circuit, (274 FS2d 1010), had ruled in the plaintiffs favor. [Note: The accounting details of cash balance plans, their history, the reasons for their adoption, and ongoing legal challenges, was thoroughly discussed in an article by Mary Williams Walsh of The New York Times, reprinted in the Daily Journal of January 18, 2007, at p.5: Supreme Courts IBM Ruling Casts Doubt on Pensions, Age-Bias Issue.] USSC, 1/16/07; 2007 WL 91579 (Mem).

RECENT EMPLOYMENT LAW DECISIONS


UNITED STATES SUPREME COURT
SUPREME COURT WILL NOT REVIEW SEVENTH CIRCUIT DECISION THAT REJECTED AGE DISCRIMINATION CHALLENGE TO IBMS CASH BALANCE PENSION PLAN
COOPER v IBM PERSONAL PENSION PLAN. On January 16, the Supreme Court denied certiorari, letting stand a Seventh Circuit decision, (457 F3d 636), that rejected the argument that IBMs cash-balance defined benefit pension plan violates ERISAs age discrimination provisions. The district court, in a decision

CELA-SPONSORED BEREAVEMENT AND MOURNING LEAVE BILL WILL BE INTRODUCED IN STATE LEGISLATURE
The following appeared as a CELA Listserv message from CELA Legislative Committee Co-Chair Jean Hyams (Oakland) on January 29. (As soon as the proposed Bereavement and Mourning Leave bill is out of the Legislative Counsels office, its text will be posted on CELAs website, www.celaweb.org.) CELAs Legislative Committee is proud to announce that Senator Ellen Corbett (D-San Leandro), Chair of the Senates Judiciary Committee, has agreed to carry a CELA-sponsored bill
(Cont'd on Page 3, LEAVE BILL)

(Cont'd on Page 2, DECISIONS)

REPORT FROM THE DIVERSITY COMMITTEE


by Toni Jaramilla Diversity outreach efforts are truly a labor of love. We have accomplished so much, but we still have much more to do. To give some background, the Diversity Committee was formed to help accomplish CELAs goal of encouraging persons of color, women, people with disabilities, LGBTs, and others from traditionally under-represented communities to become employment lawyers committed to advocating the rights of workers. For several years now, the Commit-

tee has awarded Diversity Scholarships for full or partial waiver of our CELA Annual Conference fee. Recipients are usually law students or new attorneys who have demonstrated a passion for helping victims of employment discrimination and harassment, and who have shown a deep commitment to giving back to their communities. If you could only read their applicationsthey are all so inspiring! Almost all of our scholarship recipients have become CELA members or have worked for other CELA members as practicing employment attorneys, making our scholarship program a huge success. In 2005, we had our first Diversity Luncheon during the Annual Conference, and we brain-stormed with many of you. You gave us great ideas about

how to accomplish the goals of increasing diversity among our membership, our Board, and the legal profession. We listened, took many of your wonderful ideas to heart, and have begun to implement many of them.
(Cont'd on Page 5, DIVERSITY)

REMINDERS
A nomination form for the 2007 Joe Posner Award is enclosed with this issue of the CELA Bulletin. Remember to sign-up ASAP for CELA Lobby Day in Sacramento, May 23, 2007. Contact Legislative Committee Co-Chair Jean Hyams, jhyams@boxerlaw.com. (Include residence zip code and names of your legislators.)

DECISIONS
(From Page 1)

CALIFORNIA SUPREME COURT


SUPREME COURT REJECTS SECOND DISTRICTS RESTRICTIVE RULE CONCERNING COUNSELS ACCESS TO CONTACT INFORMATION FOR MEMBERS OF PUTATIVE CLASS
PIONEER ELECTRONICS (USA), INC. v SUPERIOR COURT (OLMSTEAD). In a consumer class action, the California Supreme Court reversed a Second District decision, (128 CA4th 246, 27 CR3d 17), which had vacated a trial court discovery order relating to plaintiffs attorneys access to information about injured consumers. The Supreme Court wrote in part as follows, in a unanimous January 25 opinion by Chin. Purchasers of possibly defective DVD players communicated with the seller, expressing their discontent and relating their identifying information (names, addresses, etc.). We consider here the extent to which Californias right to privacy protects these purchasers from having their identifying information disclosed to the plaintiff during civil discovery proceedings in a consumers rights class action against the seller. The named plaintiff in the action assertedly needs this information from the seller to facilitate communication with potential class members. We focus on the requisite notice and opportunity to assert a privacy right which should accompany a precertification communication to members of the putative class before such disclosure may occur. The Court of Appeal ruled that trial courts in such cases must assure not only that all prospective or potential class members receive actual notice of their right to grant or withhold consent to the release of their personal identifying information, but also that such consent must be exhibited by each potential class members own positive act of agreeing to disclosure,

rather than by their mere passive failure to object. Because this ruling is overprotective of the purchasers privacy rights, inconsistent with established privacy principles, and likely to cause adverse consequences in future cases, we will reverse. The record shows that the trial court, reconsidering its earlier order requiring receipt of an affirmative authorization from Pioneer customers before disclosure could occur, carefully balanced the competing interests and expressly found that there are minimal privacy interests involved here... The proposed letter which the Court now adopts does allow anyone who does not wish to be bothered to say so, and they will not be contacted. As we explain, we find no abuse of discretion. From the standpoint of fairness to the litigants..., Pioneer would possess a significant advantage if it could retain for its own exclusive use and benefit the contact information of those customers who complained regarding its product. Were plaintiff also able to contact these customers and learn of their experiences, he could improve his chances of marshaling a successful class action against Pioneer, thus perhaps ultimately benefitting some, if not all, of those customers. It makes little sense to make it more difficult for plaintiff to contact them by insisting they first affirmatively contact Pioneer as a condition to releasing the same contact information they already divulged long ago. Additionally, adoption of the Court of Appeals constitutionally based rule ... could have potentially adverse effects in cases brought to redress a variety of social ills... For all the foregoing reasons, we think the trial court properly evaluated the alternatives, balanced the competing interests, and permitted disclosure of contact information ... unless, following proper notice to them, they registered a written objection. These customers had no reasonable expectation of any greater degree of privacy, and
(Cont'd on Page 3, DECISIONS)

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: Michelle Reinglass 23161 Mill Creek Drive Suite 170 Laguna Hills, CA 92653 Tel: (949) 587-0460 FAX: (949) 587-1004 E-mail: michelle@reinglasslaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Sherman Oaks) Eve Chesbro (Pasadena) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles) Brad Yamauchi (San Francisco)

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

-2-

DECISIONS
(From Page 2)

no serious invasion of their privacy interests would be threatened by requiring them affirmatively to object to disclosure. For plaintiffs: Lange & Koncius, El Segundo; Milberg, Weiss, Bershad & Schulman, Los Angeles; Robert I. Lax, Los Angeles. Amici for plaintiffs: Jocelyn D. Larkin, Brad Seligman; CELA (Jeff Winikow and Matt Kaufman); Asian Law Caucus; Disability Rights Advocates; Disability Rights Education and Defense Fund; Equal Justice Society; Equal Rights Advocates; The Impact Fund; Legal Aid Society Employment Law Center; Lawyers Committee for Civil Rights of the San Francisco Bay Area; Mexican American Legal Defense and Education Fund; Public Counsel; Western Center on Law and Poverty; The Sturdevant Law Firm, San Francisco; Mark T. Johnson and Sylvia Sokol, San Francisco, for Consumer Attorneys of California. For Pioneer: Hughes, Hubbard & Reed, William T. Bisset, Charles Avrith, David A. Lombardero and Ali-

cia D. Mew, Los Angeles. Cal SC, 1 /25/07; unanimous opinion by Chin; 150 P3d 198, 53 CR3d 513, 2007 WL 176215. [Note: In a January 25 CELA Listserv message, Jeff Winikow wrote concerning the Pioneer Electronics decision: We emphasized in our [amicus] brief that the balancing of third party privacy rights applies to single plaintiff cases as well as class actions, and that a ruling for the defense could curb civil rights enforcement. The Impact Fund made a similar pitch, emphasizing how the discovery rule could affect civil rights class actions. We were more worried about highlighting a slippery slope than in trying to actually expand discovery rights, but the opinion can be used to short-circuit a lot of the privacy mishegas we all face when trying to identify witnesses.]

SUPREME COURT WILL NOT REVIEW OR DEPUBLISH SECOND DISTRICT DECISION THAT HELD THAT RETALIATION PLAINTIFF ADEQUATELY PLEADED ADVERSE EMPLOYMENT ACTION UNDER EITHER YANOWITZ OR BURLINGTON STANDARD
TAYLOR v CITY OF LOS ANGELES DEPT. OF WATER AND POWER. On February 14, the Supreme Court announced that it will not review or depublish the Second Districts November 20 decision that reversed the dismissal of FEHA claims for retaliation and failure to prevent retaliation brought by a city employee who had opposed race discrimination against a subordinate. Although the Second Districts opinion leaves unclear the relationship between the Yanowitz and Burlington standards for identifying an adverse employment action, the court held that the plaintiffs allegations were
(Cont'd on Page 4, DECISIONS)

LEAVE BILL
(From Page 1)

that will provide California employees with up to four days of job-protected leave for bereavement and mourning upon the death of a loved one. The bill prohibits discrimination or retaliation against any employee who takes bereavement leave, and authorizes a private right of action. The bill seeks to amend the Labor Code to allow employees to take up to four days off work following the death of a spouse, child, parent, sibling, grandparent, grandchild, registered domestic partner, or child of a registered domestic partner. (The bill specifies that the leave will be unpaid, except that an employee may utilize accrued vacation, personal leave, or compensatory time off for purposes of the authorized absence.) Currently, California employees have no right to bereavement leave under federal or state law. While the FMLA and the CFRA provide employees

with protected leave in order to care for an ailing family member, the protected leave ends upon that family members death. Without legislation providing the right to bereavement leave, an employer may legally discharge an employee for taking any leave of absence to prepare or attend the funeral of a loved one. This bill corrects this injustice. The Bereavement Leave bill is the culmination of months of work by members of CELAs Legislative Committee, with the full support of CELAs Executive Board. Particular thanks go to Peter Rukin and Zach Cincotta, who took the laboring oar in drafting the proposed bill and the white paper explaining its significance. And, of course, Sacramento-savvy Steve Pingel connected us to key legislators who will help to bring about the bills passage. Although we have much work still to -3-

do, the introduction of this bill already shows the success CELA members can achieve when we work together. In the coming months, we will be looking to all CELA members for help in getting this and other CELA-sponsored legislation enacted. There are many ways to participate: write an op-ed piece, or a letter-to-the-editor; tape a public service announcement for your local radio station; call and write your legislators; help us locate people who have suffered from the absence of bereavement leave protection. And, of course, join CELA in Sacramento on May 23 for our inaugural Lobby Day. If you are interested in joining the Legislative Committee, please send an email message to CELAs Administrative Director, Christina Krasomil, (clkrasomil@earthlink.net), and she will add you to the very-active Legislative Committee Listserv.

DECISIONS
(From Page 3)

sufficient under either standard. The court also held that a supervisor can be held personally liable for retaliation under 12940(h), and that 12940(k) permits a claim for failure to prevent or investigate discrimination even when the only cause of action at issue is retaliation. The Second Districts decision appears at 144 CA4th 1216, 51 CR3d 206, and was summarized in CELA Bulletin, Nov 06, p.1. For plaintiff: Jill B. Shigut. Cal SC, 2/14/07; 2007 DAR 2139.

ing the principal issues, the Fourth District wrote in part as follows: McRae Is [McRae v Department of Corrections (2005) 127 CA4th 779, 25 CR3d 911] holding that a plaintiff may seek redress through the courts only for final employment actions that are not subject to reversal or modification through internal review processes is inconsistent with Yanowitzs totalityof-the-circumstances approach to determining whether a plaintiff has suffered adverse employment action, which is presumably why the California Supreme Court granted review in McRae I and transferred the case to the Court of Appeal for reconsideration in light of Yanowitz. The trial court here expressly based its finding of no adverse employment action on McRae Is overly restrictive definition of that term. Thus, the court applied an incorrect standard for determining whether the evidence sufficiently supported the jurys finding of adverse employment [action] for purposes of ruling on the JNOV motions. [fn.15: We recognize that ... the court did not have the benefit of Yanowitzs clarification of the meaning of that term...] [W]e conclude the evidence was sufficient to support the jurys finding that Jones suffered adverse employment action... There was evidence that when Jones sent Weiss a memorandum asking him to refrain from making unprofessional [homophobic and sexist] remarks, Weiss responded with a tirade and physically intimidated Jones by crumpling his memorandum and throwing it at him. The day after Jones met with [Human Relations Director] Fulks to complain about sexual orientation discrimination and harassment..., he received the first of a series of employee warning notices from Weiss this one concerning his absence from work the previous day (at Fulkss direction) as a result of being too emotional to work after discussing the harassment he had endured... About a week and a half later, Jones was summoned to meet with Weiss and Fulks and was presented with Weisss extensive memorandum charging him with deficient work performance in a num-4-

ber of areas. Jones viewed the memorandum as a 30-day notice for poor work performance based on false charges, and the jury could reasonably have taken the same view. Weiss stopped talking to Jones and began excluding him from weekly LTP management meetings. Weiss and Steen continued to use offensive language in the workplace and Jones overheard Steen threaten to punch the faggot in the mouth. Although Jones made it clear during his disability leave that he wanted to return to his job at LTP and would not take a demotion, when his leave expired, Fulks placed him on paid administrative leave until the issue of where he would return to work was resolved. Fulks and the general manager of LTP told Jones he could return to LTP but he was still on his 30-day probation and his sudden disability leave had burn[ed] a bridge with LTPs management. When Jones told Fulks he had met with a representative of DFEH, Fulks accused him of blackmailing the hotel. After Jones returned to work at LTP, he continued to be excluded from meetings and was warned by a coworker to watch his back. There was evidence that during a meeting Weiss said, Weve got to get Scott Jones out of here. After Jones filed his complaint with DFEH, he was excluded from an important coordination meeting... Jones received four employee warning notices from Weiss for what Jones characterized as stupid stuff or little mistakes that other employees would not get written up for. Based on this evidence and the evidence that Jones was harassed by Weiss and Steen based on his sexual orientation, the jury could reasonably conclude that Jones suffered adverse treatment in the form of a series of damaging injuries that would be reasonably likely to impair a reasonable employees job performance or prospects for advancement or promotion i.e., actions that threatened to derail his career. (Yanowitz, supra, 36 Cal.4th
(Cont'd on Page 5, DECISIONS)

CALIFORNIA COURTS OF APPEAL


REINSTATING JUDGMENT FOR PLAINTIFF ON SEXUAL ORIENTATION HARASSMENT AND RETALIATION CLAIMS, FOURTH DISTRICT HOLDS THAT TRIAL COURT APPLIED ERRONEOUS McRAE STANDARD RE ADVERSE EMPLOYMENT ACTION
JONES v THE LODGE AT TORREY PINES PARTNERSHIP. In an opinion filed on February 5, the Fourth District, Division One, reversed JNOV that had been granted by San Diego County Superior Court Judge Richard E. Strauss. The Court of Appeal reinstated a judgment on a jury verdict for the plaintiff, a former restaurant manager, on FEHA sexual orientation harassment and retaliation claims, and an award of $1,395,000. The plaintiff appealed the JNOV and the order granting a new trial on the grounds: (1) that the trial court applied an incorrect standard in assessing whether an adverse employment action had been taken; (2) that the trial court abused its discretion in granting a new trial on the ground of excessive damages; and (3) that the trial court erred in granting JNOV in favor of the defendant supervisor on the ground that a supervisor cannot be held liable for retaliation under FEHA. Concern-

DECISIONS
(From Page 4)

at pp. 1054-1055, 1060.) In accordance with the ... instruction it was given, the jury reasonably could have based its adverse employment action finding on evidence that Jones experienced significantly diminished material responsibilities (e.g., exclusion from management ... meetings) and unwarranted probation. Accordingly, the court erred in granting defendants motions for JNOV on the ground there was insufficient evidence of adverse employment action. We [also] agree with Jones that the court erred in granting JNOV in favor of Weiss on the ground a supervisor cannot be held liable for retaliation under FEHA... [] We agree with Walrath [v Sprinkel (2002) 99 CA4th 1237] and Taylor [v City of Los Ange-

les Dept. of Water & Power (2006) 144 CA4th 1216] that an individual supervisor can be held liable for retaliation under section 12940, subdivision (h). [Note: see p.3 concerning the Supreme Court's February 14 denial of review in Taylor.] Jones contends that the court erred in granting a new trial on the ground of excessive damages as to The Lodge. The courts order on that point states: [T]he Court ... finds the verdict of $1.5 million is excessive as it bears no relationship to the special damages or facts in this case. The jurys award effectively amounts to an award of punitive damages, which were not available in this case. We asked the parties to submit supplemental letter briefs on the issue of whether the trial

court sufficiently complied with the requirement under Code of Civil Procedure section 657 that it specify its reasons for granting a new trial on the ground of excessive damages, citing the parties to Stevens v. Parke, Davis & Co. (1973) 9 Cal.3d 51, 59-63. We conclude the court did not sufficiently comply with that requirement. [T]he statement ... that the verdict is excessive and bears no relationship to the special damages or facts in this case is essentially a statement of ultimate fact that does not go beyond stating the ground of excessive damages. The courts excessive damages determination was more likely based on its conclusion there was no adverse employment action under McRae (an
(Cont'd on Page 6, DECISIONS)

DIVERSITY
(From Page 1)

For instance, in 2006 CELA presented its first-ever joint program and mixer with the John Langston Bar Association, one of the largest African American bar associations in California. Our panel topic was You Can Do ItBecoming and Succeeding as a Plaintiffs Employment Lawyer. Dolores Leal, Bernard Alexander, and I were speakers, and the session was moderated by Langston Bar President Rupert Byrdsong. Many of you showed your support by attending, and it was a great opportunity for us to catch up with each other, and to welcome the new CELA members who signed up because of the program. This year we hope to present more joint programs with other multi-cultural bar organizations, with some perhaps in Northern California. Last year, CELAs 19th Annual Conference focused on the theme Two Decades of Advancing Workplace Rights and Diversity. We were all very proud of this conference and the wonderful speakers and topics that were presented, which included a look at crosscultural issues. We also had our first keynote speaker at our Diversity Luncheon, Law Professor Marjorie M. Shultz of Boalt Hall School of Law, the

co-author of Whitewashing Race: The Myth of a Color-Blind Society. Professor Shultz spoke about a major empirical study that she and her colleagues are conducting with the goal of designing a new kind of law school admission test that will assess abilities relevant to effective lawyering, rather.than focusing almost exclusively on academic skills. She and her colleagues believe that a new testing mechanism of this kind would increase race diversity in law school admissions. The Diversity Committee has many more ideas and projects to work on. We continue to maintain a strong CELA presence at multi-cultural bar dinners with the idea of building strong liaisons with the multi-cultural community. We also want to strengthen liaisons with law school employment law clinics and professors. And we would love to create a job fair, to benefit law students and CELA members who are looking for employees who share their passion for our area of law. Also, throughout the year, Diversity Committee members and Law School Outreach Chair Noah Lebowitz attend the State Bar Swearing-In ceremonies to recruit the wide-eyed and big -5-

hearted new lawyers who want to join in our battle against workplace injustice. I am currently working on a Recruitment Board to display at these events: it will depict what CELA is all about, with powerful and moving images of Joe Posner and his fellow CELA founders, of our many members who have achieved incredible trial and appellate victories for workers, of civil rights and labor rights heroes like Cesar Chavez and Thurgood Marshall, and of others who embody CELAs fighting spirit and soul. We have so many ideas and hopes, but so little time, and we need to expand the Diversity Committees membership. (Currently, the Committee is comprised of Dolores Leal, Jean Hyams, Virginia Keeny, Michelle Reinglass, and myself.) If you are interested in becoming a member of the Diversity Committee, please contact me directly, either by phone (310) 551-3020 or e-mail: toni@tjjlaw.com. All are welcome to help, and we are looking for both Northern and Southern California volunteers. I guarantee that you, like me, will feel fulfilled and proud to work on projects relating to CELAs crucial diversity goals.

DECISIONS
(From Page 5)

erroneous application of the law) than on the sufficiency of Joness emotional distress evidence to support the noneconomic component of the damages award. We find no basis to affirm the courts order granting a new trial or to reverse the original judgment... [] The judgment entered notwithstanding the verdict and the order granting a new trial are reversed. The judgment previously entered on February 28, 2005, in favor of Jones and against The Lodge and Weiss is reinstated and affirmed. Jones is awarded his costs on appeal. For plaintiff: Scott H. Toothacre and Rod M. Toothacre. For defendants: Horvitz & Levy LLP, Barry R. Levy and Nina E. Scholtz; Wilson, Petty, Kosmo & Turner LLP, Regina A. Petty, Michael S. Kalt, and Jessica A. Chasin. Fourth Dist Div One, 2/8/07; opinion by Benke with McConnell and McDonald concurring; 2007 DAR 1611, 2007 WL 314804, as modif. 2/ 8/07, 2007 WL 416692.

ing to overturn the hearing officers decision. At issue is whether the hearing officer and the trial court committed legal error by failing to apply Business and Professions Code section 2056, which declares it a violation of public policy for employers to penalize physicians principally for advocating for medically appropriate health care. The record shows that both the hearing officer and the trial court considered and properly applied section 2056 and that substantial evidence supports the trial courts conclusion that Dr. Sarka was discharged for insubordination. Accordingly, we affirm the judgment. The record contains substantial evidence to support the trial courts conclusion, after exercising its independent judgment, that the weight of the evidence before the IPR [Independent Party Reviewer] supported its finding that Dr. Sarka was not terminated principally for advocating for medically appropriate health care but for refusing to modify his practice in response to SHS requests, to perform as a primary care physician and to be less wasteful of health service resources and of student time. For petitioner: Sherry Bahrambeygui; Karen G. Sarames. For respondents: James E. Holst and Michael R. Goldstein. On behalf of California Medical Assn as amicus for petitioner: Catherine I. Hanson and Gregory M. Abrams. Second Dist Div Three, 12/28/06; opinion by Aldrich with Croskey and Kitching concurring; 146 CA3d 261, 52 CR3d 810.

and FEHA age and disability discrimination claims by a BART supervisor who alleged that he had been suspended in connection with a false accusation that he had caused a work stoppage. (An initial decision to discharge him had been rescinded.) In the published portion of its decision, concerning BARTs immunity in connection with the Tameny tort allegations, the First District wrote in part as follows: Ross contends that [Gov Code] section 815.2, subdivision (b) provides immunity to a public entity only for its vicarious liability for the wrongs of its employees, but not for its own direct liability. According to Ross, the common law torts of discrimination or wrongful termination in violation of public policy create direct employer liability that, in the case of a public entity employer, is unaffected by sections 815.2 or 821.6... In our view, Rosss analysis fails to recognize a fundamental distinction between common law tort claims such as those pleaded in his first and fourth causes of action, and the statutory FEHA violation claims alleged in his second and third causes of action. BART can have no direct liability except as provided by statute... Since a public entity has no direct liability for its acts or omissions except as provided by statute ( 815.2, subd. (a)), it follows that in the case of a Tameny claim against a public entity, the entity is liable, if at all, only vicariously, and that it is immune from liability to the extent that its employees are immune. In our view, Rosss tort claims ... fall under the general rubric of malicious prosecution [cite omitted] as discussed in Hardy [v Vial (1957) 48 C2d 577], Kemmerer [v County of Fresno (1988) 200 CA3d 1426], and Shoemaker [v Myers (1992) 2 CA4th 1407]. The gravamen of his claims is that, acting out of discriminatory and retaliatory motives, BART employees initiated and prosecuted administrative proceedings
(Cont'd on Page 7, DECISIONS)

UCLA STUDENT HEALTH SERVICE PHYSICIAN WAS DISCHARGED FOR WASTING RESOURCES NOT FOR ADVOCATING FOR MEDICALLY APPROPRIATE HEALTH CARE
SARKA v THE REGENTS OF THE UNIVERSITY OF CALIFORNIA. Petitioner George Sarka, M.D. was employed as a primary care physician at the student health services ... at [UCLA]. He filed a grievance challenging the Universitys decision to discharge him for repeatedly refusing to follow the directions of his superior to modify his approach to patient care to be more in accord with his SHS colleagues [by being less wasteful of resources and relying less on diagnostic testing and more on optimal clinical judgment]. The administrative hearing officer upheld the termination. Dr. Sarka appeals from the trial courts judgment that denied his petition for writ of administrative mandate ... seek-

FIRST DISTRICT AFFIRMS SUMMARY JUDGMENT ON TAMENY TORT AND FEHA AGE AND DISABILITY CLAIMS
ROSS v SAN FRANCISCO BAY AREA RAPID TRANSIT DISTRICT. In an opinion filed on January 24, the First District, Division One, affirmed summary judgment on Tameny tort -6-

DECISIONS
(From Page 6)

to discipline or discharge Ross based on accusations they knew to be false. Such acts by employees are immune from liability under sections 821.6, and therefore BART is immune from liability under section 815.2. In unpublished portions of the opinion, the First District held, inter alia: (1) with respect to his age discrimination claim, the plaintiff failed to show that an adverse employment action had been taken against him; and (2) the plaintiff had failed to exhaust his administrative remedies as to BARTs alleged failure to accommodate his disability. The plaintiffs age discrimination claim was based on allegations that he had been punished for acts that were not punished when committed by younger workers; that his position had been filled by younger, less qualified individuals; and that the defendant had tried to force him to retire by spreading rumors that he had retired or intended to retire. And the plaintiff alleged that BART had failed to reasonably accommodate his stress-related disability by conditioning his return to work on proof that he could perform his old job and refusing to negotiate accommodations; by convening a hearing during his disability leave; and by refusing to stay his 45-day suspension. Concerning the age discrimination claim, the court wrote in part as follows: The facts here simply do not rise to the level of a constructive discharge... Ross resigned rather than have to serve a 45-day suspension without pay, even though he was entitled to arbitrate the suspension and would have received a full back-pay award if he prevailed in it. As BART correctly points out, if a demotion with a cut in pay does not satisfy the Turner [v Anheuser-Busch, Inc. (1994) 7 C4th 1238] standard, neither does a 45-day suspension with potentially no loss in pay. Assuming no constructive discharge, Ross argues in the alternative that he can sustain an age discrimination claim

under FEHA limited to the emotional distress damages he alleges he incurred as a result of BARTs shortlived decision to discharge him... [] Ross correctly points out that adverse treatment that is reasonably likely to impair a reasonable employees job performance or prospects for advancement or promotion can support a FEHA claim. (Yanowitz v. LOreal USA, Inc. (2005) 36 Cal.4th 1028, 1054-1055...) On the other hand, FEHA has no application to [m]inor or relatively trivial adverse actions... [cite omitted]. [] In our view, BARTs quickly-abandoned decision to discharge Ross falls into the latter category. With respect to the alleged failure to accommodate, the court reasoned as follows: Ross contends that his notation on the FEHA complaint that he was 36.5% disabled created a triable issue of material fact over whether he exhausted his administrative remedies... We disagree. [] Simply inserting a notation that he was 36.5% disabled, without checking the spaces provided to state a failure to accommodate claim, did not as a matter of law provide adequate notice of such claim to the DFEH. For plaintiff: Joan Wolff; Michael Couzens. For defendant: Office of the General Counsel, San Francisco BART, Thomas C. Lee. First Dist Div One, 1 /24/07; opinion by Margulies with Stein and Swager concurring; 53 CR3d 715, 2007 WL 171988. [Note: In a February 14 CELA Listserv message, Paul Glusman responded as follows to the question: Does Ross really say no more WTVPP against public entities? Not quite. But it does prohibit WTVPP claims based on the acts of employees which are privileged under 815.2. Apparently, you still can sue for WTVPP if the employee whose actions are at issue could have been sued personally. But that would only include such things as harassment and retaliation. I dont think the court weighed at all the -7-

public policies which support WTVPP and are embodied in laws which would outweigh the immunity granted under 815.2. Suppose a teacher is fired for political speech outside of employment. Section 815.2 would seem to grant immunity. The public policy embodied in LC 1102 would counterbalance that, as would the public policy in the State Constitution in Article I section 2, and the First Amendment to the U.S. Constitution.]

HARASSMENT CLAIM AGAINST UC DAVISS HEARING OFFICER WHO DENIED EMPLOYEES SEXUAL HARASSMENT GRIEVANCE SHOULD HAVE BEEN STRICKEN UNDER ANTISLAPP STATUTE
VERGOS v McNEAL. Plaintiff Randy Vargas, who alleges he was sexually harassed in his employment at the University of California at Davis (UCD), filed a civil rights claim against the manager who denied his administrative grievancesdefendant Julie McNeal (acting director of UCDs Facilities Services Department). McNeal appeals from the trial courts order denying her motion to strike plaintiffs third cause of action (alleging violation of civil rights) as a strategic lawsuit against public participation (SLAPP) under Code of Civil Procedure section 425.16. McNeal contends her statements and conduct as a hearing officer denying plaintiffs grievances are protected by the anti-SLAPP statute. We agree and shall reverse the order and remand to the trial court to determine an award of attorneys fees for McNeal. In a footnote, the Third District wrote: In Olaes v Nationwide Mutual Insurance Company [(2006) 135 CA4th 1501, 38 CR3d 467], we recently held a private companys sexual harassment grievance protocol did not constitute an official proceeding authorized by law. Olaes is obviously distinguishable since, as we have explained, the Regents protocol is equivalent to a state statue.
(Cont'd on Page 8, DECISIONS)

DECISIONS
(From Page 7)

For plaintiff: Geraldine Armendariz; James A. Michel. For defendant: Porter, Scott, Weiberg & Delehant and Brendan J. Begley, Michael W. Pott, and George A. Acero, Sacramento. Third Dist, 1 /23/07; opinion by Sims with Hull and Cantil-Sakauye concurring; 146 CA4th 1387, 53 CR3d 647.

diligence, and this will determine whether the impracticability exception applies here. For plaintiff: Wilcoxen, Callahan, Montgomery & Deacon; Haley & Bilheimer; Montague & Viglione. For defendant: DLA Piper, Rudnick, Gray, Cary. Third Dist, 1/31/07; opinion by Davis with Nicholson and Morrison concurring; 2007 DAR 1475, 2007 WL 259825.

the reasonable attorney fees under the lodestar adjustment method. In the present case, the trial court arrived at the amount of the attorney fee award by ... consider[ing] the following: (1) the relationship between the amount of fees sought and the amount of damages recovered; (2) Lavis difficulty [in] framing the pleadings; (3) only one of the four causes of action alleged was submitted to the jury; (4) the case was a garden variety hostile environment case with no novel issues; (5) the only issue was the compensation owed to Scott for her pain and suffering; and (6) [t]he only obstacle to proceeding to trial was the difficulty surrounding the production of Deputy Austins personnel records. Although some of those factors are appropriate to consider..., the courts conclusion ... is contrary to the Supreme Courts mandate that the trial court apply the lodestar adjustment method to ensure that the attorneys are compensated for all the hours reasonably spent litigating the case. [cite omitted.] For plaintiff: Lavi & Ebrahimian, Joseph Lavi and N. Nick Ebrahimian, Beverly Hills. For defendants: Raymond G. Fortner, Jr., County Counsel; Lester J. Tolnai, Assistant County Counsel; Donna Bruce Koch, Deputy County Counsel. Second Dist Div Four, 1/17/07; No. B192591; opinion by Willhite with Epstein and Manella concurring; 2007 WL 102856 (unpublished).

DISMISSAL ON TIMELINESS GROUNDS WAS ERRONEOUS WHERE ILL PLAINTIFF HAD


SATISFIED TWO ELEMENTS OF IMPRACTICABILITY TOLLING AND SHOULD BE GIVEN OPPORTUNITY TO SATISFY THIRD DUE DILIGENCE ELEMENT ON REMAND TAMBURINA v COMBINED INSURANCE COMPANY OF AMERICA. The Third District reversed the dismissal of claims for age discrimination and tortious interference with stock option contracts in a case in which the parties had entered into five stipulations, with accompanying orders, to continue the trial date because of illnesses suffered first by the plaintiff and then by the plaintiffs attorney. The trial court had granted the defendants motion to dismiss the action for failure to bring it to trial within the five-year statutory period. The Third District explained that [w]e disagree with the trial court and conclude that Tamburina has cleared two of the three hurdles required to apply the impracticability (tolling) exception to the five-year [statutory period of Code Civ Proc 583.310, 583.360]: (1) he has shown a circumstance of impracticability (lengthy illness) that (2) has a causal connection to his failure to move the case to trial. ( 583.340, subd. (c); [cites omitted]. The trial court has yet to determine whether Tamburina cleared the third and final hurdle: was he reasonably diligent in prosecuting the case at all stages of the proceedings? Consequently, we reverse and remand for the trial court to consider the issue of

TRIAL COURT ABUSED DISCRETION IN ARBITRARILY LIMITING FEE AWARD TO AMOUNT OF DAMAGES AND FAILING TO USE LODESTAR ADJUSTMENT METHOD
SCOTT v COUNTY OF LOS ANGELES. In an unpublished opinion filed on January 17, the Second District, Division Four, wrote in part as follows: A jury found that plaintiff and appellant Keisha Scott had been subjected to a hostile work environment due to sexual harassment by defendant Craig Austin, and awarded her damages of $100,000 against Austin and defendants County of Los Angeles and the Los Angeles County Sheriffs Department. Scott moved for $456,425 in attorney feesa lodestar of $228,212.50, with a multiplier of two... Finding compelling justification for limiting fees to no greater than the monetary [damages] award given by the jury, the trial court awarded Scott attorney fees in the amount of $100,000. Scott appeals from the order ... on the ground that the trial court abused its discretion by limiting the attorney fee award to the amount of the damages award. [T]he California Supreme Court has mandated that the exercise of [the trial courts discretion] be based on the lodestar adjustment method... The trial court in this case did not follow that method, and therefore abused its discretion. Accordingly, we reverse the order awarding attorney fees and remand the matter for a determination of -8-

NINTH CIRCUIT
NINTH CIRCUIT AFFIRMS ORDER CERTIFYING CLASS OF OVER TWO MILLION CURRENT AND FORMER WAL-MART EMPLOYEES ON SEX DISCRIMINATION CLAIMS
DUKES v WAL-MART INC. On February 6, the Ninth Circuit decided, in an opinion by Pregerson joined by
(Cont'd on Page 9, DECISIONS)

DECISIONS
(From Page 8)

Hawkins with Kleinfeld dissenting, that several current and former Wal-Mart employees may represent all female employees who worked at Wal-Mart any time since December 26, 1998 in a nationwide sex discrimination lawsuit. The plaintiffs assert that WalMart discriminates against women in pay and promotions. The Ninth Circuits opinion described the case as involving the largest certified class in history. (It is estimated that the class includes in excess of two million women.) In upholding Northern District Judge Martin Jenkinss certification ruling, (see CELA Bulletin, June 04, p.9), the Ninth Circuit held that the plaintiffs expert opinions, factual evidence, statistical evidence and anecdotal evidence present significant proof of a corporate policy of discrimination, and support plaintiffs contention that female employees nationwide were subjected to a common pattern and practice of discrimination. For plaintiffs: Brad Seligman and Jocelyn D. Larkin, The Impact Fund; Christine E. Webber, Cohen, Milstein, Hausfefld & Toll, Washington DC. Amici: Marissa M. Tirona, NELA; Terri L. Ross, McDermott, Will & Emery, NYC; Ann Elizabeth Reesman, McGuiness, Norris & Williams, Washington DC; Michael Foreman, Lawyers Committee for Civil Rights Under Law; Daniel B. Kohrman, AARP; Jeffrey A. Berman, Sidley, Austin, Brown & Wood, Los Angeles; Bill Lan Lee, Lieff, Cabraser, Heimann & Bernstein, San Francisco; Richard A. Stamp, Washington Legal Foundation; Evelyn L. Becker, OMelveny & Meyers, Washington DC. For defendant: Theodore J. Boutrous, Gibson, Dunn & Crutcher, Los Angeles. Ninth Circuit, 2/6/07; opinion by Pregerson joined by Hawkins with Kleinfeld dissenting; 2007 DAR 1665, 2007 WL 329022.

CLASS-OF-ONE THEORY OF EQUAL PROTECTION DOES NOT APPLY IN CONTEXT OF PUBLIC EMPLOYMENT ENGQUIST v OREGON DEPARTMENT OF AGRICULTURE. Plaintiff Anup Engquist brought suit alleging violations of federal antidiscrimination law, constitutional law, and state tort law against her former employer, the Oregon Department of Agriculture and John Szczepanski and Joseph Hyatt. A jury found the individual defendants liable for constitutional violations of equal protection and substantive due process, and for intentional interference with contract... We hold that Engquists constitutional claims are invalid as a matter of law, and remand the case to the district court to adjust Engquists damages and attorneys fees awards in light of that holding... In her complaint, Engquist alleged claims under Title VII..., 42 U.S.C. 1981, equal protection, procedural and substantive due process, and intentional interference with contract... Defendants moved for summary judgment on all the claims. The district court granted the motion as to the sexual harassment and procedural due process claims, and denied it with respect to the remaining claims. Defendants made a second motion for summary judgment, specifically challenging Engquists use of the class-of-one theory of equal protection. The court denied the motion, concluding that the claim was viable. This case presents several issues of first impression in this circuit, the first of which is whether the class-of-one theory of equal protection is applicable to public employees. The jury concluded that Defendants were liable on the equal protection claim because Defendants intentionally treat[ed] the plaintiff differently than others similarly situated with respect to the denial of her promotion, termination of her employment, or denial of bumping rights without any rational basis and solely for arbitrary, vindictive, or malicious reasons. Defendants contend -9-

that Engquists claim fails as a matter of law, because the class-of-one theory is not applicable to the claims of public employees. [] [W]e hold that the classof-one theory of equal protection is not applicable to decision made by public employers. Based on [Village of Willowbrook v] Olech [(2000) 528 US 562] we have applied the class-of-one theory in the regulatory land-use context to forbid government actions that are arbitrary, irrational, or malicious. [cites omitted]. Other courts of appeals have chosen to apply Olechs class-of-one theory to public employment decisions. [cites omitted] Courts, however, have struggled to define the contours of the class-of-one cases because, unless constrained, the class-of-one theory of equal protection claim could provide a federal cause of action for review of almost every executive or administrative government decision. [cite omitted]. [W]hen a public employee is subjected to unequal treatment at work for arbitrary reasons, the need for federal judicial review under equal protection is especially thin given the number of other legal protections that public employees enjoy. A judicially-imposed constitutional proscription of arbitrary public employer actions would also upset longstanding personnel practices... The power of employers to discharge employees for reasons that may appear arbitrary, unless constrained by contract or statute, is well-established under the common law of at-will employment... In addition to significantly altering traditional personnel practices, applying the class-of-one theory to public employment would also generate a flood of new cases... The theory would apply not only to discharges, but also to other employment actions, such as promotions, disciplinary actions, and decisions about pay, benefits and transfers.
(Cont'd on Page 10, DECISIONS)

DECISIONS
(From Page 9)

JUDITH VLADECK: 1923-2007


people in the industry. In addition, Engquist presented evidence that she was having much difficulty finding a job in the same field in Oregon, and that such difficulty would likely continue. Engquist, however, did not demonstrate that Defendants actions caused her job search difficulties... Instead, it appears that Engquist works in a highly specialized field, and there simply are not many jobs available in that field in Oregon. Reinhardt filed a dissenting opinion, arguing that the class-of-one equal protection theory should be recognized as in the context of public employment. For plaintiff: Stephen L. Brischetto, Portland. Ninth Circuit, 2/8/07; opinion by Tashima with Graber concurring and Reinhardt dissenting; 2007 DAR 1836, 2007 WL 415249. Northern District of California. Akal is a private contractor that provides CSOs at federal courthouses within the Ninth Circuit by contract with the USMS. The contract requires that Akal employees for CSO positions meet certain USMS physical requirements. Based on the USMSs determination that Walton did not meet the USMSs audiological standards, the USMS medically disqualified her from employment as a CSO and Akal terminated her employment. Walton does not allege that she is actually disabled; rather she alleges that she ... was regarded as disabled... [] [I]n order to state a regarded as claim a plaintiff must establish that the employer believes that the plaintiff has some impairment, and provide evidence that the employer subjectively believes that the plaintiff is substantially limited in a major life activity. If the plaintiff does not have direct evidence of the employers subjective belief that the plaintiff is substantially limited in a major life activity, the plaintiff must further provide evidence that the impairment imputed to the plaintiff is, objectively, a substantially limiting impairment. [cite omitted]. Walton alleges that she was regarded as substantially limited in the major life activities of (1) hearing, (2) working, and (3) localizing sound. Walton fails to raise a genuine issue of material fact that the USMS regarded her as disabled with respect to any of these activities. Walton argues that the following paragraph in [her experts] report raises a genuine issue of material fact that the inability to localize sound is an impairment that substantially limits the major life activity of hearing: [The employers examining physician] states that the plaintiff is unable to localize the direction of sound. The ability to localize sound is ...essential to the condition or manner under which an individual can... use the sense of hearing. Thus being able to localize sound severely/significantly restricts ones hearing as compared to how
(Cont'd on Page 11, DECISIONS)

This case also presents a novel due process issue for this circuit: what showing is required in a substantive due process claim based on the right to pursue a particular profession. The jury concluded that Defendants were liable on the substantive due process claim because they subject[ed] plaintiff to arbitrary and unreasonable government actions causing plaintiff to be unable to pursue her profession. [] We hold that Engquist has stated a valid claim... We conclude, however, that Engquists claim fails as a matter of law because she did not present sufficient evidence that Defendants actions were responsible for her inability to pursue her profession. As we have already recognized the right to pursue a chosen profession is protected by substantive due process in the legislative context, we believe that the right should also be protected in the public employment context. Therefore, we hold that there is substantive due process protection against government employer actions that foreclose access to a particular profession to the same degree as government regulation. We have not previously articulated how much interference with someones job prospects constitutes a denial of the right to pursue a profession. On this question, we find useful the Seventh Circuits standard that ... a plaintiff must show that the character and circumstances of a public employers stigmatizing conduct or statements are such as to have destroyed an employees freedom to take advantage of other employment opportunities. Bordelon v. Chi. Sch. Reform Bd. Of Trs., 233 F.3d 524, 531 (7th Cir. 2000). It is not enough that the employers stigmatizing conduct has some adverse effect on the employees job prospects; instead, the employee must show that the stigmatizing actions make it virtually impossible for the employee to find new employment in his chosen field. Id. In this case, Engquist presented evidence that Defendants made defamatory statements to two or three other

US DISTRICT COURT SECURITY OFFICER DISCHARGED FOR HEARING DEFICIENCY FAILED TO RAISE FACT ISSUES ON REHAB ACT CLAIM
WALTON v U.S. MARSHALS SERVICE. Affirming the Northern Districts grant of summary judgment, the Ninth Circuit wrote as follows in an opinion filed on February 9: Naomi Walton sued the U.S. Marshals Service under the Rehabilitation Act of 1973 alleging that the USMS unlawfully discharged her because of her hearing impairment. She appeals from the district courts grant of summary judgment in favor of the USMS, arguing that the district court erred in ruling that she failed to demonstrate a genuine issue of material fact concerning whether she was disabled within the meaning of the [Rehab Act and the ADA]. We have jurisdiction under 28 U.S.C. 1291, and we affirm. Walton was employed by Akal Security, Inc. as a Court Security Officer at the United States District Court for the -10-

DECISIONS
(From Page 10)

unimpaired people normally hear in everyday life. This paragraph is insufficient to raise a genuine issue of material fact. Dr. Sweetow does not state a factual basis for his opinion: the conclusion appears to be drawn from the second sentence, but the second sentence references no facts and instead contains an unattributed quote. Waltons only other evidence ... is a draft report prepared by Dr. Lynn Cook for the United States Immigration and Naturalization Service... Cook states that auditory localization is necessary for the performance of certain activities... [] However, Dr. Cooks report also discusses compensatory measures, which must be taken into account in judging whether an individual possesses a disability. Albertsons, Inc. V. Kirkingburg, 527 U.S. 555, 565 (1999)... [Concerning the major life activity of working], Walton ... relies solely on Dr. Cheltons letter, Dr. Sweetows expert report and Dr. Cooks report on auditory localization, none of which expresses any opinion about relevant labor markets or Waltons particular training, knowledge, skills or abilities. Walton further alleges that the USMS regarded her as disabled in the major life activity of localizing sound. We decline to consider whether localizing sound could be an additional major life activity because Walton failed to raise this argument before the district court. For plaintiff: Edith J. Benay, San Francisco. For defendant: Eric Fleisig-Greene, United States Department of Justice, Washington DC. Ninth Circuit, 2/9/07; opinion by Smith with Goodwin and Fisher concurring; 2007 DAR 1905, 2007 WL 430426.

FOLLOWING PLAINTIFFS VERDICT ON GENDER DISCRIMINATION AND HARASSMENT CLAIMS BY AIR FORCE SURGEON, DISTRICT COURT ABUSED DISCRETION IN REDUCING LODESTAR AMOUNT FOR LIMITED SUCCESS
VELEZ v WYNNE. In an unpublished memorandum filed on January 29, the Ninth Circuit held that Magistrate Judge Edward M. Chen (Northern District) abused his discretion in reducing the lodestar amount in the plaintiffs attorneys fee request by twenty-five percent for limited success. The appeal related to gender discrimination and harassment claims asserted against the Secretary of the Air Force by a Veterans Administration surgeon employed at Travis Air Force Base. Following an eight-day trial in January and February of 2004, a unanimous jury awarded the plaintiff $505,623 in non-economic damages, later reduced to $300,000, Title VIIs statutory maximum. The district court then awarded the plaintiff $613,192.79 in fees and costs. The Ninth Circuit wrote in part as follows: Velez argues that the district court abused its discretion by reducing the lodestar amount by 25% based upon its finding that she did not obtain a total victory or complete vindication, and by not treating the lodestar amount as presumptively reasonable. We agree. Although the district court cited to Hensley v. Eckerhart, 461 U.S. 424, 433 (1983), it failed to properly apply the process required to determine attorneys fees. Where the prevailing party was only partially successful, and the unsuccessful and successful claims are related, the district court must focus on whether the hours spent in litigation were reasonably necessary to obtain the relief that was ultimately obtained. Dang v. Cross, 422 F.3d 800, 813 (9th Cir. 2005). The district court found that Velez had limited success because the main focus of the trial was Velezs claim that the -11-

abeyance and reviews leading up to it were discriminatory, yet Velez lost her disparate treatment claim. In making this finding, however, the district court did not discuss whether winning the hostile work environment claim and receiving the maximum statutory amount allowed justified the expenditure of over 2,000 hours of attorney time. Specifically, the district court failed to identify any fees that had been factored into the lodestar that were unnecessary to the pursuit of Velezs successful hostile work environment claim. The district court could have discussed all the evidence introduced (not just the abeyance and reviews leading up to it) and determined which evidence possibly could have contributed to the verdict. The district court could have then attempted to approximate the percentage of time spent on developing and introducing the evidence that possibly supported a hostile work environment claim and separated those events from the events that could have only supported the losing claims. Instead, the district court reduced the total number of hours as being excessive before calculating the lodestar, and then reduced the lodestar amount without discussing the relationship between the relief obtained and the hours spent and without an explanation of the exceptional circumstances requiring such a reduction. In other words, the district court did not analyze whether any of the hours used to calculate the lodestar amount were unnecessary to win the hostile work environment claim. Velez also argues that the district court abused its discretion by not affording sufficient weight to the declarations she submitted, and by requiring the declarations to contain information regarding discounted rates. We agree. We find that the district court has placed an unrealistic standard of precision that is not required. The declarations submitted provided much more information than the identity of the
(Cont'd on Page 12, DECISIONS)

DECISIONS
(From Page 11)

practice area, as stated by the district court. For example, Barry Goldstein, Steven Zieff, Kathryn Dickson, and Mary Dryovage outlined their education and professional experience; highlighted their area of specialty, set forth special recognition and achievements, and discussed cases they handled and/ or the percentage of time spent litigating employment cases. Moreover, the declarations which set forth a current hourly rate confirmed that that hourly rate was the rate that the attorney actually charged and billed to clients, and the rate that clients paid... [] Accordingly, the district court abused its discretion in requiring the declarations submitted by Velez to contain more information to compare attorneys, and information concerning discounted rates. In addition, to the extent the court considered write-offs in determining an hourly rate, the court abused its discretion, as write-offs reflect certain hours not billed, and do not reflect a discounted hourly rate or otherwise shed light on a reasonable hourly rate. As the district court found that the survey evidence submitted by the opposing party did not establish that the requested hourly rate of $475 was unreasonable, Velezs evidence was not rebutted, and therefore, the district court erred by not finding Velezs evidence sufficient to carry her burden of demonstrating the prevailing market rate. Since Velezs evidence established the prevailing market rate, it was unnecessary for the district court to engage in its own review of recent fee awards and accord substantial weight to such awards. For plaintiff: John Ota, Minami, Lew & Tamaki, San Francisco; Richard M. Pearl, Berkeley. For defendant: Claire T. Cormier, Office of United States Attorney, San Jose. Ninth Circuit, No. 04-17425; 1 /29/ 07; unpublished memorandum before Wallace, Thomas, and Ezra, with Wallace concurring and dissenting in part; 2007 WL 295502.

[Note: Plaintiffs attorney Jack W. Lee wrote as follows concerning the Velez decision in a January 29 CELA Listserv message: This is a good Ninth Circuit decision for the fortunate plaintiffs lawyers who prevail at trial but are not completely successful. Among the significant holdings: (1) Complete vindication or total victory are not the correct standards for awarding a fully compensatory fee to a prevailing plaintiff; (2) Once the lodestar is determined, it is presumptively reasonable and adjustments should be made only in rare and exceptional circumstances; (3) Rare and exceptional circumstances justifying adjustments must be explained by the court; (4) The court needs to focus on the successful issues, not the issues lost, to determine whether the plaintiff obtained significant relief; (5) The plaintiff need not receive all the relief requested, (in this case, economic damages and injunctive relief), to show excellent results and receive a fully compensatory fee; (6) Failure to receive all relief requested should not be considered a significant factor in the lodestar, absent a determination of whether substantial relief was obtained; (7) The court may not engage in an independent review of fee awards and hourly rates if the plaintiffs declarations on prevailing market hourly rates are unrebutted; (8) The court may not consider write-offs or discounted hourly rates in determining prevailing hourly rates; and (9) In the present case, the court mischaracterized the fees declarations submitted by the plaintiff and required an idealized degree of precision which is unnecessary for such declarations.]

JUELL v FOREST PHARMACEUTICALS, INC. In a Memorandum and Order filed on September 26, 2006, Eastern District Judge Frank C. Damrell, Jr., denied motions for summary judgment directed at FEHA claims for age discrimination and harassment, failure to prevent harassment, and Tameny tort. The plaintiff, a former Manager of Specialty Markets involved in the sale of prescription pharmaceuticals, alleged ...that defendant discriminated against him based upon his age as evidenced by derogatory age-related comments [by his supervisor], a heavier workload than younger employees, a corporate ageist culture, and eventual replacement by a younger employee. Plaintiff contents that defendants conduct made it psychologically impossible for him to continue working in his position, and that he was forced to demote himself and then eventually to take a disability leave... Plaintiff spoke to Forests Senior Director of Human Resources ... approximately five times ... and told [him] that he felt like he was the target of age discrimination. Plaintiff was never contacted ... concerning any investigation into his complaints. The court held, inter alia: (1) a triable issue as to constructive discharge was raised despite the fact that the plaintiff had not resigned but rather had demoted himself; (2) there were triable issues as to whether the plaintiffs workload had or had not been commensurate with those of other MSMs; (3) the fact that the plaintiff had been able to competently perform his job and meet expectations did not prevent him from asserting that his working conditions were intolerable; (4) an issue of fact was raised as to the objectively intolerable nature of the plaintiffs working conditions by evidence concerning an unmanageable workload, in combination with evidence that his supervisor regularly made degrading comments about his agein person, during sales calls, in peer group situations, and in social settings; (5) the
(Cont'd on Page 13, DECISIONS)

UNITED STATES DISTRICT COURTS


AGE DISCRIMINATION CLAIMS SURVIVED SUMMARY JUDGMENT ON BASIS OF EVIDENCE OF UNMANAGEABLE WORK LOAD AND SUPERVISORS AGE-BIASED REMARKS
-12-

DECISIONS
(From Page 12)

harassing supervisors participation in recommending the plaintiff for a promotion did not warrant invocation of a version of the same actor inference; (6) even if the same actor inference were applicable, the plaintiff presented sufficient evidence to overcome it; (7) a rational trier of fact could find that the employers proffered legitimate explanations were pretextual and that its actions had been taken for discriminatory reasons, and this conclusion was supported by evidence of a corporate culture hostile to older workers; (8) a single instance in which the plaintiff had made a comment about his supervisors age did not demonstrate mutual bantering; and (9) because the plaintiff raised triable issues of fact regarding his FEHA claims, his Tameny tort claim similarly survived summary judgment. For plaintiff: Bushnell, Caplan, Fielding & Maier. USDC ED Cal, No. CIV S-05-0378 FCD/GGH; 9/12/06; Judge Frank C. Damrell, Jr.; 456 FS2d 1141.

PETITION FOR REVIEW IS FILED IN ROBY v McKESSON HBOC


On February 5, attorneys for the plaintiff filed a petition asking the California Supreme Court to review the Third Districts December 26, 2006, decision that reduced the overall jury award in a disability discrimination and harassment case from $19 million to $3.5 million, drastically reducing both compensatory and punitive damages. (The Third Districts opinion appears at 146 CA4th 63, and was summarized in CELA Bulletin, Jan 07, p.2. The Petition for Review is posted at celaweb.org, under Disability Discrimination in the public Brief Bank.) Representing the plaintiff are Christopher Whelan, Norman Pine, David deRubertis, and Charity Kenyon. In a February 13 CELA Listserv message, David deRubertis explained the issues and the significance of the Roby decision as follows: The Third District used language in Reno v Baird (1998) 18 C4th 460, (which discussed individual supervisor liability for discrimination), to hold that any conduct that has an arguable connection to necessary management duties cannot support a harassment claim. Worse yet, the Court of Appeal decision makes the question of what constitutes necessary management action in this context a question of law for a reviewing court, not one of fact for a jury, (despite the fact that the jury was instructed on this point). I believe that this decision will devastate disability harassment cases if it remains the law. Disability harassment often manifests itself in supervisor antagonism toward the plaintiffs disability or accommodation needs. According to this decision, any time a supervisor berates an employee about an accommodation need or constantly questions restrictions, those acts cannot be used to support a harassment claim because they are arguably part of necessary management. And while this is probably worst for disability harassment, it will greatly affect other types of harassment claims. For example, in the sexual favoritism case Miller v Department of Corrections -13(2005) 36 C4th 446, many of the acts that support the harassment claim denial of job opportunities, undue management scrutiny, etc.bore an arguable connection to management. Under the Roby decision, none of this can support a harassment claim. Also troubling is the way that the court dealt with punitive damages in the unpublished portion of the decision. First, it speculated that the jury must have punished the defendant in connection with the reversed harassment claim, despite the fact that three other claims supported punitive damages. From that speculation, it assumed that a drastic reduction was warranted. It then struck down as unconstitutional the ratio of a little more than 4:1 between punitives and compensatories. It then amazingly said that the constitutional maximum was a 1.4:1 ratio. Second, despite its speculation that the jury punished in connection with the reversed harassment claim, it denied us the right to a conditional new trial with a remittitur. Instead, it reduced the punitives outright at the appellate level and gave us no choice to retry the amount of punitives. This creates a new level of appellate intellectual dishonesty, allowing courts to substitute their view for the jurys, even in situations like this where the amount that the appellate court selects is not necessarily the true constitutional maximum. Were asking anyone who is willing, to send Amicus letters supporting review, either individually or in the name of any organization that has an interest in this. The Petition for Review was filed February 5, 2007, and the Supreme Court has 60 days, (unless it extends that to 90 days), to decide whether or not to grant review.

IBM OVERTIME CLASS ACTION SETTLES FOR $65 MILLION


ROSENBURG v IBM. On January 3, Northern District Judge Phyllis J. Hamilton gave preliminary approval to a $65 million settlement of overtime class action claims by certain current and former IBM employees within IBMs Technical Services Professional and Information Technology Specialist job categories. The settlement had been announced by the parties on November 22. For plaintiffs: James A. Finberg USDC ND Cal, 1/3/07; No. C-06-0430; Judge Phyllis J. Hamilton.

COMING

E V E N TS

March 16-17, 2007 NELA SEMINAR Representing Workers in Whistleblower & Retaliation Actions (Co-sponsored by Government Accountability Project and National Whistleblowers Center) The Renaissance Chicago Hotel Chicago, Illinois May 11, 2007 CELA WAGE & HOUR CLASS ACTION TRIAL PLANNING SEMINAR Hacienda Hotel El Segundo May 23, 2007 CELA LOBBY DAY Sacramento June 27-30, 2007 NELA's ANNUAL CONVENTION San Juan, Puerto Rico September 27-29, 2007 CELA's 20th ANNUAL CONFERENCE The Fairmont Hotel San Jose

NOMINATION for the 2007 JOE POSNER AWARD On November 14, 2000, we lost our beloved founder and icon, Joe Posner. Today, Joe is with us in spirit! Joe will forever remain in our hearts and minds. In Joes honor and memory, CELA established the JOE POSNER AWARD. This award is given each year to that individual who has best demonstrated one or more of Joes inspiring qualities. The qualities we believe best represent Joe include: Tireless commitment to the betterment of the plight of workers and the expansion of the their rights Selfless services to the employee rights community Promotion of collegiality amongst the employment bar Unwavering efforts to further the education of his/her colleagues, opposing counsel and the judiciary

The first Joe Posner Award in 2001 was bestowed upon Bill Quackenbush. Thereafter, our honorees have been Cliff Palefsky, Janet Koehn, Brad Seligman, Dan Stormer and Nancy Bornn. This year we encourage and invite you to nominate the next recipient, someone whom you believe is deserving of the 2007 Joe Posner Award. You may do so by completing this form: I, , hereby nominate: to receive the 2007 Joe Posner Award. I believe this nominee exemplifies the qualities deserving of the Joe Posner award because:

(Use back side or additional sheets) PLEASE RETURN BY APRIL 30, 2007 TO: Dolores Y. Leal Allred, Maroko & Goldberg 6300 Wilshire Blvd. Ste 1500 Los Angeles, CA 90048 Fax (323) 653-1660 or via e-mail to: dleal@amglaw.com

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

BULLETIN
Published Monthly EDITOR: CHRISTOPHER BELLO March 2007 Vol. 21, No. 3

RECENT EMPLOYMENT LAW DECISIONS


CALIFORNIA SUPREME COURT
SUPREME COURT WILL REVIEW SECOND DISTRICT DECISION THAT ENFORCED ARBITRATION AGREEMENTS CLASS ACTION PRECLUSION
KONIG v U-HAUL COMPANY OF CALIFORNIA. On February 28, the California Supreme Court announced that it will review the Second District decision that enforced an arbitration agreements class action preclusion on the ground that the plaintiffs, alleging wage and hour violations, had failed to carry their Discover Bank burden of establishing that the action involved predictably small amounts of damages. (The Second Districts decision appeared at 52 CR3d 244, and was summarized in CELA Bulletin, Dec 06, p.2.) The Supreme Court announced that further action in the matter would be deferred pending consideration of a related issue in Gentry v Superior Court (Circuit City Stores), S141502. In Gentry, also a wage and hour class action, the Second District distinguished Discover Bank on several grounds, including the presence of an opt-out provision and the availability of substantial damages on individual claims. (Gentry appeared at 37 CR3d 790, and was summarized in CELA Bulletin, Jan 06, p.5; review in Gentry was granted on April 26, 2006.) For plaintiffs: Joseph Antonelli and Janelle Carney. Cal SC, No. S149883; 2/28/07; 2007 DAR 2926.

A MESSAGE FROM THE CELA CHAIR


We would like to thank all of you for your 2007 CELA Membership and contribution to the organization. We will strive to continue to serve your needs as an employee rights practitioner. We would also like to thank this years Sustaining Members for their gracious support: Nancy L. Abrolat, Lawrance A. Bohm, Carl A. Botterud, Roger R. Carter, Scott Edward Cole, William M. Crosby, Allan H. Cutler, David M. deRubertis, Kathryn Burkett Dickson, Lee R. Feldman, Shannon Foley, Carol L. Gillam, John A. Girardi, J. Gary Gwilliam, Jean K. Hyams, Marvin E. Krakow, Dolores Y. Leal, Rita MirandaMorales, Stephen M. Murphy, Alicia Olivares-Uyeda, Michelle A. Reinglass, Robert C. Robinson, Douglas N. Silverstein, Mark R. Thierman, Douglas N. Thomason, Iris Weinmann, and Brad Yamauchi. Sustaining Membership dues are used to support CELAs many activities, including the Online List, website, education, amicus, and legislative advocacy programs. CELA Website Update. The Members Only Brief Bank on celaweb.org has expanded rapidly over the last few months. We now have over 1,100 documents and 52 categories, and documents continue to be added. Upcoming Seminar. Mark your calendars for CELAs upcoming Getting To and Through a Class Action Trial seminar on Friday, May 11, 2007, at the Hacienda Hotel in El Segundo. You wont want to miss this full-day, advanced-level seminar on wage and hour law, focusing on class actions. In addi(Cont'd on Page 3, CHAIR)

CALIFORNIA COURTS OF APPEAL


STATE EMPLOYEE WAS COLLATERALLY ESTOPPED FROM BRINGING CIVIL TORT ACTION WHERE SHE HAD NOT REQUESTED HEARING AFTER RECEIVING ADVERSE NOTICE OF FINDINGS FROM SPB
STATE BOARD OF CHIROPRACTIC EXAMINERS v SUPERIOR COURT (ARBUCKLE). Carole M. Arbuckle sued her employer ... and its executive director ... alleging adverse employment actions were taken against her in retaliation for her whistleblower reports, specifically her allegation that a member of the Board allowed the members own chiropractic license to expire but improperly continued to act as a Board member. Arbuckle first filed a complaint with the State Personnel Board (SPB) but did not request a hearing after receiving an adverse Notice of Findings... She then filed this civil tort suit. The Board unsuccessfully moved for summary judgment, arguing this suit was barred for her failure to exhaust administrative and judicial remedies. After the Board petitioned this court for a writ of mandate, we issued an alternative writ and stayed the proceedings. The adverse notice of findings was deemed to be the final decision of the SPB when it went unchallenged. Had Arbuckle requested a hearing the SPB would either have granted it, resulting in a new SPB decision which could be challenged by a writ of administrative
(Cont'd on Page 2, DECISIONS)

DECISIONS
(From Page 1)

mandamus, or the SPB would have denied it, and adopted the notice of findings as its own decision, which similarly could be challenged. The fact that the SPB has discretion whether to grant a further hearing does not give a claimant the right to abort the administrative remedies and proceed to court. The statute and pertinent regulations governing whistleblower claims contemplate a civil suit may be filed after the SPB finds in favor of the claimant or fails to issue findings, not where the SPB finds against the claimant and the claimant fails to set that finding aside. The unchallenged notice of findings, deemed to be the SPB decision, is a quasijudicial decision that no retaliation occurred: It bars Arbuckles suit under principles of issue preclusion (collateral estoppel). Accordingly, the Board was entitled to summary judgment and we shall issue a writ so ordering. For Real Party in Interest Arbuckle: Gaspar Garcia, Sacramento. For Petitioners: Bill Lockyer, Attorney General, Jacob Appelsmith, Senior Assistant Attorney General, Alicia M. B. Fowler, Lyn Harlan and Noreen P. Skelly, Deputy Attorneys General. Third Dist, 2/28/07; opinion by Morrison with Scotland and Nicholson concurring; 2007 WL 602934. [Note: Aspects of the same issues were recently addressed in Spencer v Department of Water Resources, 2007 WL 678726, an unpublished Third District decision filed on March 7.]

caseload crisis in the Los Angeles County juvenile courts. The court wrote in part as follows: In 1999, Hall filed a class action against ALS [Auxiliary Legal Services, Inc.], County Counsel, and the County, alleging ... that the three defendants [were] joint employers or a single enterprise, and that ALS was merely a payrolling scheme that enables County Counsel to maintain a two-tier [attorney] work force notwithstanding that all lawyers did the same work under the same working conditions. As characterized by Hall, her lawsuit is a federal and state equal pay act and ... sex discrimination case brought on behalf of about 200 women attorneys channeled by the County into the predominantly female [ALS] unit while receiving substantially less pay and benefits than the predominantly male ... official [County Counsel] employee unit. Hall contends County Counsel is her common law employer and that, therefore, the appropriate comparator is male County Counsel lawyers who earn more than she does. We agree with the County that, even assuming Hall is viewed as an employee of County Counsel, she is using the wrong comparator and that the appropriate comparator is male ALS lawyers. Because undisputed evidence establishes that, at any given time, ALS and County Counsel both employed a substantial number of women and that, within ALS, women were paid the same as men, there is no basis for Halls use of a male County Counsel lawyer as a comparator. For this reason alone, Halls claims fail as a matter of law... Assuming that Hall could justifiably compare ALS female lawyers to County Counsel male lawyers, summary judgment was proper because the undisputed evidence establishes that the wage disparity between ALS and County Counsel was based on an acceptable business reason, which is a recognized factor other than sex. [cites omitted]

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: Michelle Reinglass 23161 Mill Creek Drive Suite 170 Laguna Hills, CA 92653 Tel: (949) 587-0460 FAX: (949) 587-1004 E-mail: michelle@reinglasslaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Sherman Oaks) Eve Chesbro (Pasadena) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles) Brad Yamauchi (San Francisco)

SECOND DISTRICT AFFIRMS SUMMARY JUDGMENT ON WAGE DISCRIMINATION CLAIMS BY CLASS OF LAWYERS SUBCONTRACTED TO WORK IN JUVENILE COURT
HALL v COUNTY OF LOS ANGELES. In a decision filed on February 22, the Second District affirmed summary judgment on class action claims of genderbased wage discrimination brought by lawyers who had been hired as independent contractors in response to a

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

(Cont'd on Page 3, DECISIONS)

-2-

DECISIONS
(From Page 2)

The Countys undisputed evidence established that County Counsels use of independent contractors was authorized by the Countys charter as a gender-neutral cost-saving measure... [] [T]he two-tier wage and benefits system is not discriminatory because there was a legitimate and non-discriminatory cost-savings purpose for ALSs existence... Accordingly, summary judgment was proper on this ground. Hall contends her FEHA claims for sex-based wage discrimination raise disparate treatment and disparate impact issues that were not properly resolved by summary judgment. We disagree. Hall did not establish a prima facie case of disparate treatment or disparate impact because she did not present any evidence to show that the County created ALS because of its effect on female lawyers (or even that the County was aware that the use of independent contractors would lead to adverse consequences for female lawyers), or any evidence to show that the creation of ALS had a disproportionate adverse effect on women. If we nevertheless assume for the sake of argument that Hall had made the required showing, it was met with the Countys undisputed evidence of a legitimate and gender-neutral business reason for its actions (cost savings). Halls claim that she showed pretext is not borne out by the record. Although her expert opined ... that the disparity in hiring between women into ALS versus [County Counsel] is so significant that it can only be explained by external factors, i.e., bias, there was no evidence that ALSs lawyers (male or female) were precluded from applying to County Counsel for posted positions..., and no evidence to suggest that ALSs contract or compensation decisions were the result of gender bias. For plaintiffs: Blumenthal & Markham, Norman B. Blumenthal, David R. Markham, Kyle R. Nordrehaug; Clark & Markham, R. Craig Clark, David R.

Markham; The Lewis Law Firm and Murray Lewis. For County of Los Angeles and Office of County Counsel: Jones Day, Elwood Lui, Philip E. Cook; Greenberg Traurig, Scott D. Bertzyk, Karin L. Bohmdoldt; Bergman & Dacey, Inc. And Gregory M. Bergman. For Auxiliary Legal Services: Charles H. Goldstein. Second Dist Div One, 2/22/07; opinion by Vogel with Mallano and Jackson concurring; 2007 DAR 3062, 2007 WL 529963.

declared the wage order invalid because it was not accompanied by a sufficient statement of the basis, was not properly published, and contained an unworkable definition of given craft, which made the order unreasonable, arbitrary, capricious, and unfair. We disagree and grant the petition. In 1999, the Legislature enacted Assembly Bill 60 ... known as the EightHour Day Restoration and Workplace Flexibility Act of 1999. (Lab Code, 500 et seq.) ... AB 60 restored the eight-hour workday and mandated overtime pay for all nonexempt employees in all industries for work in excess of eight hours in a workday. It allowed, however, an exception for employees working an alternative work schedule... An alternative workweek schedule is deemed adopted only if it receives approval in a secret ballot election by at least two-thirds of affected employees in a work unit. ( 511, subd. (a).) AB 60 also required the IWC to adopt orders ... consistent with its terms, including regulations regarding elections to adopt and repeal alternative workweek schedules. ( 517, subd. (a).) Wage Order No. 16-2001 ... became
(Cont'd on Page 4, DECISIONS)

FOURTH DISTRICT UPHOLDS VALIDITY OF IWC WAGE ORDER REGULATING ALTERNATIVE WORKWEEK ELECTIONS
SMALL v SUPERIOR COURT (BRINDERSON CONSTRUCTORS, INC.). Petitioners ... seek extraordinary relief from the trial courts order declaring invalid [Wage Order 16] promulgated by the California Industrial Welfare Commission (IWC), the Fourth District wrote in a February 28 opinion. The wage order regulates the hours, wages, and working conditions of California employees engaged in on-site construction, drilling, logging, and certain mining operations. The trial court

CHAIR
(From Page 1)

tion to an update on new developments in wage and hour law, the program will address trial plans and procedures for wage and hour class action litigation. Seasoned veterans will discuss strategies and share their experiences, presenting trial plans and class proof including surveys, sampling, statistical analysis, and expert testimony. This is a high-quality program designed to help plaintiffs attorneys create and execute effective and manageable class action trial plans. The seminar brochure and registration form are available on celaweb.org. Save the Date. CELAs Annual Conference is only six months away. This years conference will be held Septem-3-

ber 27-29, 2007, at The Fairmont Hotel, in San Jose. California Supreme Court Justice Carol Corrigan will be our keynote speaker at the luncheon on Friday, September 28. We will also be presenting the Joe Posner Award at this event. On Saturday, September 29, Justice Cruz Reynoso has agreed to be our Diversity Luncheon keynote speaker. This is a conference not to be missed. A Conference Brochure with further details will be mailed in a few months. We look forward to seeing all of you in September. Sincerely, Michelle A. Reinglass CELA Executive Board Chair

DECISIONS
(From Page 3)

effective January 1, 2001... Among other things, it requires a new alternative workweek schedule election whenever the number of employees that are employed for at least 30 days in the work unit that has adopted an alternative workweek schedule increases by 50% above the number who voted to ratify the employer proposed alternative workweek schedule... Petitioners are construction workers [who] sued Brinderson for unpaid overtime wages allegedly owed for working over eight hours in a day while working an alternative workweek schedule. The basis of the claim is that, although its employees voted in December 1999 to adopt a four 10-hour day alternative workweek schedule, Brinderson did not conduct further alternative workweek schedule elections after January 1, 2000, when AB 60 became effective. Petitioners also sought an extra hour of pay for each day they were not provided with a meal or rest period as required by Wage Order 16, as well as wages for unpaid travel time. After a hearing on [cross-motions for determination of a preliminary legal issue], the court ... concluded Brinderson had properly adopted an alternative workweek schedule in December 1999 and that Wage Order 16 did not invalidate the alternative workweek schedule or require another election... Petitioners contend the trial court erred in concluding Wage Order 16 lacked the required adequate statement as to the basis, was not properly published, and was unreasonable, arbitrary, capricious, and unfair. We agree. The petition is granted. Let a writ of mandate issue directing the superior court to vacate its March 9, 2006 order ruling Wage Order 16 invalid... For employee petitioners: Ellyn Moscowitz. For real party: Atkinson, Andelson, Loya, Ruud & Romo. For amicus Employers Group on behalf of real party: Sidley Austin and Jeffrey A. Berman.

Fourth Dist Div Three, 2/28/07; opinion by Rylaarsdam with Aronson and Ikola concurring; 2007 WL 603064.

federal immigration policy, as expressed in IRCA. Defendants argue Hoffman would prohibit plaintiffs action for unpaid prevailing wages because there is no basis to restrict its reasoning to back pay... The dissent in Hoffman noted the IRCA does not address the enforcement of other state laws. [cite omitted.] [] [W]e are persuaded that Hoffman does not prohibit plaintiffs from having standing to raise claims for prevailing wages as those claims are ... for work already performed. Because legislation providing for the payment of prevailing wages comes under the historic police powers of the state, the presumption is that legislation is not superseded by the IRCA. Defendants do not cite any provision in the IRCA preempting state wage and hour legislation... Defendants argue the post-Hoffman California statutes are in direct conflict with Hoffman as they prevent or frustrate the accomplishment of federal objectives. We conclude there is no actual conflict between the IRCA and the prevailing wage law... [] Allowing employers to hire undocumented workers and pay them less than the wage mandated by statute is a strong incentive for the employers to do so, which in turn encourages illegal immigration. The fact an employer pays a worker less than the prevailing wage suggests the employer knew the worker was undocumented. Moreover, it is not the public which benefits from the savings... In Hoffman, the undocumented worker obtained employment by using false authorization documents; the court determined the award of back pay violated the IRCA because it provided wages for work not performed and for work that could not have been performed without violating the IRCA... In contrast to Hoffman, the work at issue in the case at bar had already been performed... Allowing employers to hire undocumented workers and pay them less than the prevailing wage would ... sub(Cont'd on Page 5, DECISIONS)

DISTINGUISHING HOFFMAN PLASTICS, SECOND DISTRICT HOLDS THAT UNDOCUMENTED WORKERS ARE NOT PRECLUDED FROM ASSERTING CLAIMS FOR VIOLATIONS OF CALIFORNIAS PREVAILING WAGE LAW
REYES v VAN ELK, LTD. Plaintiffs ... were employed ... on allegedly public works projects which were subject to Californias prevailing wage law. (Lab. Code, 1720-1861.) Plaintiffs sued Van Elk and others for failing to pay prevailing wages. The Superior Court [Los Angeles County, Judge William F. Fahey] granted summary judgment in favor of defendants on the grounds undocumented workers were precluded by the federal Immigration Reform and Control Act of 1986 ... and Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 137 from asserting such claims. The superior court also found the Supremacy Clause preempted California statutes declaring immigration status irrelevant to claims under Californias labor, employment, civil rights and employee housing laws. Plaintiffs contend the IRCA and Hoffman do not preclude undocumented workers from asserting such claims and the California statutes are not preempted... We reverse the judgment and order the superior court to enter an order denying the motion for summary judgment. [A]s presented to this court, this case does not involve a situation where undocumented workers submitted false work authorization documents to a prospective employer... [T]he issue of whether Hoffman requires that a wage claim be denied if an employee submitted false authorization documents is not before this court. In Hoffman, the court concluded that allowing the NLRB to award backpay to illegal aliens would unduly trench upon explicit statutory prohibitions critical to -4-

DECISIONS
(From Page 4)

vert the IRCA by condoning and encouraging future violations by employers. Moreover, such awards do not condone future unauthorized work; rather they make it clear that employers should not be allowed to profit from employing undocumented workers and then exploiting them. In conclusion, we hold that Hoffman and their undocumented status did not prohibit plaintiffs from having standing to raise their prevailing wage claim and that the prevailing wage law and the post-Hoffman statutes are not preempted by the IRCA. Accordingly, we reverse the judgment and the order granting summary judgment and direct the superior court to enter an order denying the motion for summary judgment. For plaintiffs: Herb Fox, Richard E. Donahoo. For CLRA as amicus on behalf of plaintiffs: Cynthia L. Rice, Julie Montgomery, Amanda Perez, Jennifer Ambacher. For National Immigration Law Center, Asian Pacific American Legal Center of Southern California, Bet Tzedek Legal Services, CRLA, Legal Aid Foundation of Los Angeles, and Legal Aid SocietyEmployment Law Center as amici on behalf of plaintiffs, Karen C. Tumlin and Marielena Hincapie. For defendants: Andrew C. Muzi and Dana L. Harris. Second Dist Div Seven, 3/14/07; opinion by Woods with Perluss and Johnson concurring; 2007 DAR 3435, 2007 WL 755405.

State University, (Gov Code 8547.12). The point of contention involved the inclusion of a never previously construed phrase contained in 8547.12, subd (c) that is absent from the otherwise similar provision, ( 8547.10), which applies to employees of the University of California. The Fourth District wrote in part: We recognize the legislative history of section 8547.12 subdivision (c) states the CSU whistleblower protection statute should track section 8547.10, subdivision (c), which applies to employees of [the University of California]... Although section 8547.12, subdivision (c) is almost identical to section 8547.10, subdivision (c), Ohton and amicus point out section 8547.12, subdivision (c) differs in one significant regardit alone contains the provision that the complainant may seek a remedy if the university has not satisfactorily addressed the complaint. Therefore, the cases CSU relies upon that interpret section 8547.10, subdivision (c) are not dispositive. For these reasons, we agree with Ohton that the court erred in concluding that CSU had timely addressed the complaint, and Ohton was therefore barred from pursuing a civil remedy for damages. David Ohton, a strength and conditioning coach at SDSU ... filed an internal administrative complaint alleging that the head football coach , Tom Craft, and other members of the athletic department retaliated against him in violation of the California Whistleblower Protection Act (CWPA) (Government Code 8547 et seq.) because he reported to a university auditor information critical of various athletic department personnel and practices. The Board of Trustees of California State University (CSU) investigated Ohtons complaint and timely issued a final decision. Ohton subsequently filed a civil action against CSU and six individually-named defendants and sought economic, non-economic damages according to proof, and punitive damages as provided by law. The defendants moved for summary judgment, arguing Ohton was prohibited from bringing the civil action be-5-

cause (1) CSU timely addressed his complaint under section 8547.12, subdivision (c); (2) Ohton failed to challenge CSUs decision through a writ of mandate; and (3) he failed to exhaust administrative remedies. The court granted the motion on the sole basis that CSU timely addressed Ohtons complaint. Ohton contends he was entitled to bring the civil action because, notwithstanding CSUs timely administrative decision, his claim of retaliation was not satisfactorily addressed within the meaning of section 8547.12, subdivision (c); he was not required to challenge CSUs decision through a writ of mandate because CSUs proceedings were not conducted in good faith and did not provide him with adequate due process; and he was not required to exhaust the administrative remedy before alleging new acts of retaliation in the civil lawsuit... We agree with Ohton that the court erred in finding that CSU satisfactorily addressed his complaint. We reverse and remand the matter with instructions. The term satisfactorily addressed is not defined in the statute. To begin, we reject CSUs interpretation of the term ... which it purports to base on legislative history. CSU claims the term must be interpreted as simply requiring that the complaint be addressed and a decision reached under the applicable administrative procedures within 18 months. Under this interpretation, in effect, the words satisfactorily addressed are read out of the statute, and instead, the narrow focus is on CSUs timely completion of the investigation. There is no reason to conclude either from the words of the statute or its legislative history that the words satisfactorily addressed signaled a departure from well established mandamus standards and procedures... [] The standard of review used in an ordinary writ case is abuse of discretion. We reject Ohtons contention that he was not required to challenge the CSU proceeding and final decision by filing a
(Cont'd on Page 6, DECISIONS)

FOURTH DISTRICT CONSTRUES UNIQUE EXHAUSTION PROVISION OF SECTION OF WHISTLEBLOWER PROTECTION ACT THAT COVERS EMPLOYEES OF CAL STATE UNIVERSITY
OHTON v BOARD OF TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY. The Fourth District reversed the dismissal of a civil action filed under the provisions of the California Whistleblower Protection Act that are specifically applicable to employees of the California

DECISIONS
(From Page 5)

petition for writ of mandate. There is no indication from the statute or its legislative history that an exception to the requirement for a writ of mandate was contemplated when section 8547.12 was enacted. This court has the inherent power to remand this matter back to the trial court to give Ohton an opportunity to seek leave to amend to add a petition for writ of mandate. [cite omitted] We believe it is appropriate under the unusual circumstances of this case to remand. This is the first case arising under section 9547.12, subdivision (c). The term satisfactorily addressed has not been previously interpreted and its application has proved troublesome to both parties and the trial court. Although CSU claims Ohton can only challenge its actions by writ of mandate, it prevailed below by convincing the court to read the words satisfactorily addressed out of the statute. Under this approach, the issue is resolved not by writ of mandate, but by consulting a calendar. Ohtons objective good faith standard hints at the standards applicable under mandate. Indeed, the final pages of Appellants opening brief read like a memorandum of points and authorities in support of a petition for writ of mandate. Whether Ohton may amend cannot be determined at this stage of the proceedings because Ohton had not yet filed a motion for leave to amend... To avoid prejudicing the trial courts decisions, we will not attempt to render an advisory opinion on a motion Ohton has not yet filed. The judgment is reversed and remanded. The trial court shall give Ohton an opportunity to seek leave to amend to add a petition for writ of mandate and decide all issues arising from the same. For plaintiff: Schoville & Arnell, Dennis A. Schoville, Louis G. Arnell, James S. Iagmin; Ross, Dixon & Bell, Jon R. Williams and Lindsay J. Reese. For California Faculty Assn as amicus on behalf of plaintiff: Rothner, Segall & Greenstone, Glenn Ellis Rothner and

Bernhard Rohrbacher. For defendants: Gordon & Rees, Christopher B. Cato and Eric M. Volkert. Fourth Dist Div One, 3/16/07; opinion by ORourke with McConnell and Huffman concurring; 2007 DAR 3600, 2007 WL 777860.

plaintiffs FEHA claims, the court engaged in an extended discussion of the continuing violation doctrine, referred repeatedly to the plaintiffs inappropriate factual presentation in this appeal, and wrote as follows concerning the plaintiffs harassment causes of action: The trial court properly ruled that plaintiffs claims are not viable under the prohibition in the FEHA against harassment based on race or disability... [] Plaintiff alleged harassment based on his termination, and on the written warnings, suspensions, job evaluation, and counseling memo he received. However, those things are personnel management actions, and although they may be found to be discriminatory, personnel management decisions do not support a claim of harassment. (Reno v. Baird (1998) 18 Cal.4th 640, 645-647.) Harassing actions are the types of conduct not necessary for the performance of a supervisory job or the management of the employers business. (Ibid.) For plaintiff: Mark Weidmann and Lee Franck. For defendants: Lewis, Brisbois, Bisgaard & Smith, Allan Zuckerman and Keri Lynn Bush. Second Dist Div Three, 2/28/07; opinion by Croskey with Kitching and Aldrich concurring; 2007 WL 602982 (unpublished).

UNPUBLISHED COURT OF APPEAL DECISIONS


SECOND DISTRICT AFFIRMS SUMMARY JUDGMENT ON FORMER UCLA EMPLOYEES FEHA CLAIMS
INGRAM v REGENTS OF THE UNIVERSITY OF CALIFORNIA. In an unpublished opinion filed on February 28, the Second District, Division Three, affirmed summary judgment on FEHA claims by a former UCLA accounting assistant, an African American, who alleged that he was discharged because of his race, his disability, and because he had requested medical leave. According to the employer, the plaintiff was discharged because he would not accept supervision and office rules, and because he could not be trusted. The court wrote in part: This is plaintiffs second appeal. In the earlier appeal, we held the trial court erred when it granted defendant a summary judgment that was based on plaintiffs not having filed a petition for a writ of mandate to challenge adverse findings made in a grievance procedure taken pursuant to his collective bargaining agreement. However, we also determined that plaintiffs causes of action for wrongful termination, which he based on public policy concerning medical leave, disability, race/national origin, and lunch breaks, are not viable because they are common law judicially created torts, and claims against public entities must be authorized by statute. Our decision left standing five causes of action. [Note: the earlier decision, also unpublished, was filed on March 11, 2004, and appears at 2004 WL 440197.] In affirming summary judgment on the -6-

EMPLOYER WAS SUBJECT TO STRICT LIABILITY, THIRD DISTRICT HOLDS, WHERE SUPERVISORS HARASSING CONDUCT WAS NOT COMPLETELY PRIVATE AND WAS NOT UNCONNECTED WITH EMPLOYMENT
MYERS v TRENDWEST RESORTS, INC. Reversing summary adjudication on FEHA sexual harassment causes of action, while affirming summary adjudication on several related common law claims, the Third District summarized its reasoning in part as follows, in an unpublished opinion filed on February 28:
(Cont'd on Page 7, DECISIONS)

DECISIONS
(From Page 6)

[T]he trial court granted summary adjudication of the FEHA claims because the incidents took place outside the workplace, were not work-related, and [the harassing supervisor] was acting for his own personal interests rather than Trendwests interests. The trial court erred because, in order for the employer to avoid strict liability for the supervisors actions under the FEHA, the harassment must result from a completely private relationship unconnected with the employment. Otherwise, the employer is strictly liable for the supervisors actions regardless of whether the supervisor was acting as the employers agent. (State Dept. of Health Services v. Superior Court (2003) 31 Cal.4th 1026 at p.1041 and fn.3.) Count two of plaintiffs complaint alleged failure to take reasonable steps to prevent sexual harassment as required by the FEHA... [W]e agree with plaintiff that summary adjudication of count two was precluded by the existence of a triable issue as to whether Trendwest complied with its statutory obligation ( 12950) to inform plaintiff of remedies available through the DFEH and FEHC. Plaintiff argues the trial court erred in granting summary adjudication as to the common law claims of sexual battery (count three), false imprisonment (count six), and intentional infliction of emotional distress (count four). We disagree. Applying Farmers [Ins. Group v County of Santa Clara (1995) 11 C4th 992] to the case before us, we conclude Damlakhis sexual conduct towards plaintiff was outside the scope of employment as a matter of law, motivated by personal reasons unrelated to his job duties and in violation of the employers sexual harassment policy... As in Farmers, we consider it significant that Trendwest is already subject to strict liability under the FEHA for conduct of Damlakhi as plaintiffs supervisor. Thus, common law liability is not needed to advance the respondeat superior policy justifications. Trendwest failed to establish entitle-

ment to summary adjudication regarding punitive damages... [] [W]e agree with Trendwest that Damlahki was not a corporate officer, director, or managing agent within the meaning of Civil Code section 3294 [but] Damlakhis status alone does not resolve the question of punitive damages. [] [K]nowledge by upper management that Damlakhi was unfit might provide a basis for punitive damages under Civil Code section 3294, and this basis was not addressed in Trendwests separate statement of facts concerning punitive damages. For plaintiff: Stephen C. Williams, Walnut Creek. For defendant: Charles M. Louderback, Payne & Fears, San Francisco. Third Dist, 2/28/07; opinion by Sims with Davis and Cantil-Sakauye concurring; 2007 WL 603501 (unpublished).

satisfied disclosure requirements, affirm the order denying the petition to vacate the arbitration award, and deny the petition for writ of mandate. For petitioner: Michael S. Duberchin. Second Dist Div Three, 2/28/07; opinion by Kitching with Klein and Aldrich concurring; 2007 WL 603101 (unpublished).

ARBITRATION WAS NOT REQUIRED WHERE CBA MADE NO EXPRESS REFERENCE TO FEHA RIGHTS AND CONTAINED NO EXPLICIT WAIVER OF RIGHT TO JUDICIAL REDRESS OF FEHA VIOLATIONS
PUNLA v TERMINAL MAINTENANCE COMPANY. Relative to a union-represented employees assertion of a number of FEHA claims, the First District, Division Five, denied the employers motion to compel arbitration pursuant to a collective bargaining agreement. The court summarized its reasoning as follows in an unpublished opinion filed on March 5: The cases ... teach us that a clear and unmistakable waiver of statutory rights does not arise from general language in a collective bargaining agreement banning discrimination, or calling for the arbitrability of disputes. Instead, such a waiver only arises where there is a specific, explicit and unambiguous incorporation of a specific statute banning discrimination, and a clear waiver of the right to pursue those claims outside the arbitration context. [cites omitted] In the present case, there is no explicit reference in the collective bargaining agreement to FEHA rights, nor any explicit waiver of employee rights to file a lawsuit under the terms of FEHA. Therefore, Punlas statutory FEHA claims were not waived, and the petition to compel arbitration was properly denied. For plaintiff: William Chi-Shing Kwong, Minami Tamaki LLP, San Francisco.
(Cont'd on Page 8, DECISIONS)

SECOND DISTRICT HOLDS THAT DISCLOSURE REQUIREMENTS OF ETHICAL STANDARDS WERE MET EVEN THOUGH DISCLOSURE WAS MADE BY ARBITRATION SERVICE NOT BY ARBITRATOR PERSONALLY
HOFFMAN v SUPERIOR COURT (MERRITT). Although an order denying a petition to vacate an arbitration award is not appealable, the Second District, Division Three wrote in a February 28 unpublished decision relative to a medical malpractice claim, we treat this appeal as a petition for writ of mandate. Petitioners sole claim is that an arbitrators failure to personally make written disclosure required by the California Arbitration Act (Code Civ. Proc., 1280 et seq.) and the Ethics Standards for Neutral Arbitrators in Contractual Arbitration ... violates section 1281.9 and requires vacation of the arbitration award pursuant to section 1286.2. An arbitration service made complete disclosure on behalf of the neutral arbitrator, and there was no claim or evidence that this disclosure misrepresented or omitted material matters which should have been disclosed. We hold that this disclosure -7-

DECISIONS
(From Page 7)

For defendants: Gary A. Angel, San Francisco. First Dist Div Five, 3/5/07; opinion by Miller with Jones and Simons concurring; 2007 WL 645743 (unpublished).

NINTH CIRCUIT
INSTALLMENT PAYMENTS ON PRE-1996 SETTLEMENT OF DEFAMATION CLAIMS THAT WERE RECEIVED AFTER EFFECTIVE DATE OF 1996 AMENDMENT TO 26 USC 104 WERE TAXABLE AS ORDINARY INCOME
POLONE v COMMISSIONER OF INTERNAL REVENUE. In a March 12 decision by Thomas, amending a nowwithdrawn opinion that had been on filed June 5, 2006, (449 F3d 1041), the Ninth Circuit wrote in part as follows: This appeal presents the question of whether payments received after the effective date of amendments to 26 U.S.C. 104(a)(2) based on a defamation settlement agreement executed prior to the effective date can be excluded from gross income. We conclude that the amendments apply to payments received after the effective date of the amendment, and we affirm the judgment of the Tax Court. Gavin Polone worked as a talent agent at United Talent Agency... After terminating Polone, UTA spoke with various entertainment industry trade publications, and made statements about Polones termination. Specifically, UTA alleged that Polone was terminated for inappropriate behavior. On April 24, 1996, Polone filed a complaint in the Los Angeles County Superior Court alleging, among other things, wrongful termination and defamation. Polone and UTA settled both claims on May 3, 1996. Polone received $2 million as settlement of the wrongful termination claim,

which is not at issue in this case. As part of the settlement of the defamation claim, UTA issued a press release retracting its previous statements about Polones termination, and paid Polone $4 million. The $4 million was paid in four installments of $1 million, which Polone received on May 3, 1996, November 11, 1996; May 5, 1997; and November 11, 1998. In May 1996, when Polone and UTA settled, 26 U.S.C. 104 exempted the amount of any damages received ... on account of personal injuries or sickness from a taxpayers gross income... The term personal injuries in 104 had been interpreted to include damages from settlements of defamation claims. [cite omitted] Congress amended 104 in August 1996 so that it exempted the amount of any damages ... received on account of personal physical injuries or physical sicknesses. The effective date of the amendments was August 20, 1996, but there was an exception to the amendment for amount[s] received under a written binding agreement, court decree, or mediation award in effect on (or issued before) September 13, 1995. Here, the Tax Court held that preamendment 104 applied to Polones May 1996 payment from UTA, but that post amendment 104 applied to the November 1996, May 1997, and November 1998 payments... Applying the plain language of 104, the Tax Court properly held that the November 1996, May 1997, and November 1998 payments were taxable... For appellant: James M. Harris, Edwin L. Norris, Jonathan M. Brenner, Sidley Austin Brown & Wood LLP. For CIR: Bridget M. Rowan, Kenneth L. Greene, Eileen J. OConnor, U.S. Dept. of Justice. Ninth Circuit, 3/12/07; opinion by Thomas joined by Farris and Schiavelli; 2007 DAR 3321, 2007 WL 725736.

FEHA AND IMPLIED CONTRACT CLAIMS WERE NOT PREEMPTED BY IRCA WHERE, RATHER THAN DISCHARGING UNWANTED EMPLOYEE, EMPLOYER COULD HAVE PLACED HIM ON LEAVE WHILE EXPEDITIOUSLY RESOLVING HIS VISA PROBLEM
INCALZA v FENDI NORTH AMERICA, INC. We consider whether, in this case, the Immigration Reform and Control Act of 1986 (IRCA) preempts California labor laws that forbid employers from firing an employee without good cause. We also consider whether the [Central District] abused its discretion in denying defendants motions for a new trial. In both instances, our answer is No. Incalza filed an action in California Superior Court claiming that he was wrongfully terminated 1) in violation of an implied contract that he would be fired only for good cause, and 2) because of his Italian heritage, in violation of [FEHA]. Fendi removed the case to federal court on the basis of diversity jurisdiction, and filed a motion for summary judgment. It argued that Incalzas claims lacked merit because it was compelled by IRCA to terminate him when it discovered that his E-1 visa was no longer valid. It further argued that California law, to the extent it required a different result, was preempted. The district court denied the motion. A four-day jury trial followed. The jury found for Incalza on the implied contract claim, but for Fendi on the discrimination claim. It awarded Incalza $1,088,440. The jury was instructed that Fendi could discharge an employee in good faith and for a fair reason, but that it should find for Incalza if it found that the stated reason was simply a pretext... [The plaintiff presented evidence that the employer could have obtained an H1-B visa for the plaintiff when his E-1 visa became invalid, but had chosen not to do because his supervisor wanted him replaced.]

(Cont'd on Page 9, DECISIONS)

-8-

DECISIONS
(From Page 8)

The parties agree that there is no conflict between California law and IRCA as applied to an employer who is required to terminate an employee by IRCA and does so in order to comply with statute. Under such circumstances, the employer can obey both laws because compliance with IRCA provides good cause, as defined by California law, for terminating unauthorized aliens. The point of contention that primarily divides the parties is whether federal and state law conflict when employer who is required by federal law to terminate an unlawful alien does so, not because of IRCA, but for reasons that are unlawful under state law, and is required to pay damages for the violation of state law. The district court agreed with Incalza and held that state and federal law do not conflict under such circumstances because California law requires only that the employer pay damages for the violation of state law, not that it employ an alien in violation of federal law. Thus, the district court ruled, the employer can obey both laws by terminating the employee, as required by federal law, and, where the motive for termination is contrary to state law, paying damages, as required by such law. We need not reach the question decided by the district court, however. There is no conflict in the case before us for a narrower reason. Here, not only was Incalza not discharged because of his unauthorized employment status, but Fendi could lawfully have taken action other than discharge, and been in compliance with IRCA. That Fendi itself recognized that discharge was not required is evidenced by its decision to continue to employ Graziani [another employee] while obtaining an H1-B visa for him. Hoffman [Plastic Compounds v. NLRB (2002) 535 US 137] did not address the question of terminating employees whose work authorization problems could be expeditiously resolved by renewing an expired application or changing the form of an existing permit... In sum, we hold that Fendi was not required by IRCA to terminate Incalza because it could have suspended him or placed him on leave without pay for a reasonable period while he was obtaining a change in work authorization to

which he was entitled. For plaintiff: Carney R. Shegerian and Donald Conway, Beverly Hills. For defendant: Gene C. Schaerr, Winston & Strawn LLP, Washington DC, and Laura R. Petroff and Jennifer Rappoport, Winston & Strawn LLP, Los Angeles. Ninth Circuit, 3/6/07; opinion by Reinhardt joined by Brunetti and Kozinski; 2007 WL 656355.

finding $250 to be a reasonable rate. This reduced rate was based on the district courts finding [t]here is no evidence that Plaintiffs counsel ever collects $375 or $400 per hour from paying clients except as part of an award of attorneys fees issued by a court; the courts belief that Kantor & Kantors hourly rates have been inflated to include a contingency multiplier; and the courts consideration of the relevant market rates in the community for this type of matter. We conclude that the district court clearly erred. Welch satisfactorily bore her burden of demonstrating that $375 to $400 per hour is in line with the prevailing market rate by submitting two pieces of evidence: (1) rate determinations in other cases litigated by the Kantor & Kantor firm awarding fees at rates between $300 and $375 per hour; and (2) declarations from comparable ERISA lawyers attesting that the market sustains a rate above $400 per hour. We do not quarrel with the district courts authority to reduce hours that are billed in block format... [] Nonetheless, the district court clearly erred in applying a 20 percent reduction to all of Welchs requested hours. In fact, barely more than half of all hours submitted by Welchs counsel were block billed... The district court reasonably concluded that Kantor & Kantors practice of billing by the quarter-hour resulted in a request for excessive hours... Having reviewed the firms summary time sheet, the court found the hours were inflated because counsel billed a minimum of 15 minutes for numerous phone calls and e-mails that likely took a fraction of the time... The district court reduced Welchs requested hours by 5.75 hours for time spent in intra-office conferences, by 5 hours for preparation of a case analysis memorandum, by 4 hours for time spent conducting discovery-related activities, and by 9 hours for preparation of Welchs motion for attorneys fees. We affirm all of these reductions... [] We decline Welchs invitation to nitpick ... because she has presented insufficient evidence to convince us that the district courts
(Cont'd on Page 10, DECISIONS)

NINTH CIRCUIT AGREES WITH SOME BUT NOT ALL OF CENTRAL DISTRICTS REASONS FOR SHARPLY REDUCING FEE AWARD IN ERISA CASE
WELCH v METROPOLITAN LIFE INSURANCE COMPANY. Plaintiff-Appellant Vicki Welch appeals the [Central Districts] order awarding her attorneys fees under 29 U.S.C. 1132(g)(1). She disputes the district courts decisions to award fees at an hourly rate of $250, to apply across-the-board reductions in the number of hours requested because Welchs attorneys block billed and billed in quarter-hour increments and to disallow time incurred for discrete tasks such as attorney conferences. We affirm the district courts fee award in most respects but reverse in part, holding that the district court erred in setting Welchs counsels hourly rate at $250 and in imposing a 20 percent acrossthe-board reduction for block billing. We remand for a new determination of the courts fee award. Welch sued [MetLife] under [ERISA], alleging that MetLife improperly denied her benefits under a long-term disability plan... Six months after Welch filed suit, MetLife agreed to honor Welchs claim. Thereafter, Welch moved for an award of costs and attorneys fees..., requesting $39,112 in fees for 11.5 hours of work at $375 per hour and 87 hours of work at $400 per hour (for work after January 1, 2004)... [] The courts reductions resulted in a final award of $10,762 in attorneys fees to Welch. The district court denied Welchs fee request for reimbursement at the rates of $375 and $400 per hour, instead -9-

DECISIONS
(From Page 9)

determination was a clear error of judgment. For plaintiff: Lisa S. Kantor and Glenn R. Kantor, Northridge. For defendants: Eric R. McDonough and Lawrence E. Butler, Seyfarth Shaw LLP, Los Angeles. Ninth Circuit, 3/6/07; opinion by Fisher joined by Callahan and Collins; 2007 DAR 3079, 2007 WL 656390.

the Washington law claim was required, the Ninth Circuit held. For plaintiff: Michael C. Subit and Sean M. Phelan, Seattle. Ninth Circuit, 3/8/07; opinion by Shadur joined by Goodwin and Kozinski; 2007 DAR 3208, 2007 WL 686350.

were regularly seen leaving work earlier than minority drivers. In denying summary judgment and summary adjudication of the plaintiffs claims, Judge Freeman conscientiously applied the Yanowitz totality of the circumstances approach to adverse action analysis; emphasized that the alleged non-ultimate actions could be found actionably adverse by a jury; and noted that the defendants had not addressed all of the alleged instances of improper conduct, and had not shown that each alleged action failed the materiality test. Judge Freeman found triable issues of fact with respect to the allegation that plaintiff Ginn suffered an adverse action when he was forced to take stress leave, particularly in light of his allegation of lost wages. Judge Freeman also rejected the argument that the terminations of two of the plaintiffs were noncognizable simply because they had been upheld by Teamsters Local 278. Judge Freeman wrote: It can be inferred that there was a concerted effort to pile up warnings and discharge notices in an effort to fire Rivera based upon his protected activity. Freeman also reasoned that the filing of union grievances alleging discrimination and/ or harassment constituted protected activity even though the words race or racial were not used. With respect to punitive damages, Judge Freeman stated that manager Leongs act of hiding packages and then disciplining drivers was outrageous, assuming that it could be proved. She also refused to base summary adjudication on the self-serving declarations of managers Meyer and Leong, finding them insufficient to pass the managing agent test under White v Ultramar, Inc., or the burdens imposed by CCP 437. For plaintiffs: Spencer C. Young, Oakland. For defendants: Paul Hastings Janofsky & Walker, San Francisco. San Mateo County Superior Court, Nos. CIV 440973, CIV 441592, and CIV 441593; information provided by counsel.

CALIFORNIA SUPERIOR COURTS


UPS DRIVERS BEAT SUMMARY JUDGMENT IN SAN MATEO COUNTY ON FEHA RACE DISCRIMINATION, DISABILITY DISCRIMINATION, AND RETALIATION CLAIMS
GINN, MORALES and RIVERA v UPS. In three separate cases last month, San Mateo County Superior Court Judge Beth L. Freeman denied summary judgment on FEHA claims for race discrimination, disability discrimination, and retaliation brought against United Parcel Service by current and former UPS package car delivery drivers at the companys Menlo Park facility. The plaintiffs allege that, since the arrival in 2002 of Northern District Division Manager Ron Meyer and Center Manager Frank Leong, they have been subjected to excessive overtime, excessive and unjustified discipline, denial of assistance when requested, disparate levels of scrutiny, and retaliation for the filing of union grievances. A motion to consolidate trial was scheduled for March 20, and trial was set for April 2, 2007. The plaintiffs allege that Manager Ron Meyer, widely known as the blue-eyed devil because of his treatment of minority drivers, threatened plaintiff Mike Ginn in a hallway during a union grievance proceeding. Manager Frank Leong was detected hiding packages and then disciplining the plaintiffs and other drivers for missed deliveries. On a daily basis, union stewards and drivers observed blacks, Hispanics, and drivers who had filed Workers Compensation claims or union grievances in Meyers and Leongs offices for discipline. White drivers were disciplined less frequently, if at all, and -10-

NINTH CIRCUIT REJECTS CLAIMS OF INSTRUCTIONAL ERROR ON FMLA CLAIMS BUT ORDERS NEW TRIAL ON DISABILITY CLAIM UNDER WASHINGTON STATUTE
GAMBINI v TOTAL RENAL CARE, INC. Rejecting the plaintiffs arguments concerning instructional error on FMLA claims, the Ninth Circuit affirmed the denial of the plaintiffs motions seeking judgment as a matter of law or a new trial, following a defense verdict in the United States District Court for the Western District of Washington. The plaintiff contended that an instruction concerning her FMLA interference claim had failed to instruct the jury accurately that the employer had the burden of proving that her federallyprotected leave had not been a factor in the termination decision. The evidence was undisputed, the Ninth Circuit emphasized, that the employer would have terminated the plaintiff for her conduct regardless of whether she had taken her FMLA leave, and a jury verdict is not tainted by an erroneous instruction on a burden of proof where the prevailing partys evidence was undisputed. A similar assertion of instructional error relative to a failure-to-reinstate claim was rejected by the Ninth Circuit on the basis of the same reasoning. The Ninth Circuit agreed with the plaintiff however, that the district court had erred in refusing to give the following instruction, relative to a disability discrimination claim under the Washington Law Against Discrimination: Conduct resulting from the disability ... is part of the disability and not a separate basis for termination. A remand for a new trial on

F EBRUARY CELA/DFEH MEETING JUDITH VLADECK: 1923-2007


by Eve Chesbro Note: As this issue was going to press, news was received that Suzy Ambrose is leaving her position as DFEH Director. Eve Chesbro wrote as follows in a March 17 CELA List message: At last weeks CELA/DFEH meeting, Suzy Ambrose told us that she is leaving her job as Director of the DFEH effective May 1, although the transition is going on now. Interestingly, she will become the Executive Director of the State Personnel Board. She does not know who the new Director will be. She also does not know who any interim Acting Director will be. This means that CELA will no longer be holding monthly CELA/ DFEH meetings, at least until such time as the organization may be able to establish a new relationship with the new Director. I believe this also means that many of the initiatives by CELA with Suzy which have not been completed will become moribund until and unless a new Director picks them up. Suzys relationship with our organization was, in my experience, unique. Although Suzy insists that she will make every effort before she leaves to have her successor carry on the CELA relationship, the future is unknown. Our lively and interesting February 27 meeting with DFEH Director Suzy Ambrose was attended by Kent Van Koughnet, Enrique Martinez, Gina Browne, Olivia Saunders, and Eve Chesbro. CELA To Work With DFEH To Revise Complaint Forms. Eve had reported to Suzy on several serious problems involving the failure of DFEH district offices to check boxes that reflect the underlying complaint. Suzys response waslets figure out what needs to be changed on the complaint forms to alleviate these problems. Suzy said that the DFEH consultants have been thoroughly trained in boxchecking, but obviously the problems continue and proliferate. Suzy confirmed that it is equally or more important to check sufficient boxes on a complaint accepted for investigation as on a rightto-sue complaint. The problems include not checking any boxes, not checking all the boxes reflecting the underlying complaint, and not specifying retaliation in the other box. In addition, the categorization of the boxes is confining and misleading in several instances. For example, the box for CFRA denial does not on its face cover a wide variety of CFRA violations, including CFRA interference. The discussion was wide-ranging on this topic, and included Suzys suggestion of the possibility that the boxes might be completely eliminated from the complaint forms. The potential pitfalls of that approach were discussed. There was also serious discussion of conforming the DFEH practice to EEOC practice, so that the complaint would include all jurisdictional allegations but the agency would make clear that only certain allegations are being investigated. The issue then arises as to when a RTS is issued as to all allegations, investigated or not. This approach holds promise for a revision in DFEH practice. Suzy requested that CELA give her ideas for revising the complaint forms, particularly on the boxes issue, and Suzy will continue to work on it from her end. Gina and Eve will be submitting ideas for revisions from CELA. Suzy To Follow-Up On Oakland RTS Delays. In light of CELA members complaints about delays of three or four weeks or more in processing RTS requests out of the Oakland/SF office, Suzy will look into the problem there. Comments On Revisions To Sex Harassment Regulations. Suzy said that she will be considering further comments to the further revisions in the proposed sex harassment regulations. CELA through Eve will be submitting its own comments, and Eve has asked for assistance in that project. All DFEH Directives Are Now On The DFEH Website. This is a DFEH action which has been requested by CELA for some time and which Suzy has now accomplished. A link to all DFEH Direc-11tives can be found on the DFEH website on the left side DFEH Policy and Procedures. Automatic RTS On Website To Be Tested In September. Suzy has been pursuing this idea (her own) for a year and a half, including budgeting for a consultant to design a website automatic RTS. Once the funds for the consultant were approved by the Legislature, a consultant contract went out for bid, and the chosen consultant has been developing the concept for the DFEH website. Suzy is still unclear about the details of how the automatic RTS will operate, although she knows she wants it to be as clear and easy as possible so that, hopefully, users of the website can print out their own RTS. She will continue to keep CELA updated. Enhanced And Intensive Training Of DFEH Staff. Eve had raised with Suzy that it is apparent from consultant feedback at the complainant level that the consultants often have a deep misconception of how to do a basic discrimination analysis. For example, consultants have been dismissing pretext evidence as merely wrongful termination support, rather than further evidence of discrimination. Suzy confirmed that this concern has been conveyed to Terry Fee, whom Suzy has arranged to be on loan from her regular agency. (Fee is currently an AJ at the EDD but has extensive, credible and in-depth background in the FEHA). Fee has begun including that focus in her training, including a week-long training of all new consultants, and a weekly training of all staff at each DFEH district office. Suzy will keep CELA updated about the content and progress of the training as she learns it from Fee. 14-Day Letter Language To Be Revised. In another CELA initiative, Suzy has now agreed to work with suggestions from Eve to work up revisions to the language of the 14 day letters that are sent to complainants after the em(Cont'd on Page 12, DFEH)

DFEH
(From Page 10)

ployer has mounted its defense in a DFEH investigation. The letters ostensibly ask the complainant for further information, but in fact are often drafted so as to convey a mind set adverse to the merits of the complainants allegations. These 14 day letters are later used by the dark side, who can get them through a request for the DFEH file after the investigation is closed, to undercut the credibility of the complainant in litigation or attempted pre-litigation negotiation. Proposal To Split The LA District Office. In the newest DFEH budget proposal, Suzy wants to propose splitting the LA District Office into three separate offices. It is unlikely that the

spin-off offices will actually be in Ventura or San Bernardino, where two offices were closed in budget cutting several years ago, but they will probably be part way between LA and those two locations. DFEH Staff Attorney Involvement In District Office Investigation. Suzy confirmed that its possibleand Eve urgedthat CELA attorneys get the DFEH staff attorney assigned to a district office involved in the investigation as soon as possible. The staff attorney becomes involved if the District Administrator so directs the consultant: this can be accomplished either by asking the consultant to involve the attorney, and/or by asking the District Director to

initiate that process. Having a staff attorney involved significantly elevates the sophistication of the investigation and the likelihood of a favorable outcome. Deadline Extended For Comments On Draft DFEH Manual Chapters. Suzy has extended the deadline for CELA comments on the draft DFEH manual chapters on pregnancy, CFRA and religion. Despite the importance of that manuals direction on those key claims, only one CELA member has so far responded to our request for comments. I will be sending the draft chapters to the List again and very much hope that more members will take a little time to submit their invaluable comments.

C O M I N G

E V E N T S

April 24, 2007 NELA SPRING LOBBY DAY Washington DC (see www.nela.org for details) May 11, 2007 CELA WAGE & HOUR CLASS ACTION TRIAL PLANNING SEMINAR Hacienda Hotel El Segundo (see www.celaweb.org for brochure and registration form) May 17, 2007 IMPACT FUNDS 14th ANNIVERSARY RECEPTION St. Francis Hotel San Francisco (see www.impactfund.org for details) May 23, 2007 CELA LOBBY DAY Sacramento June 27-30, 2007 NELA's ANNUAL CONVENTION San Juan, Puerto Rico September 27-29, 2007 CELA's 20th ANNUAL CONFERENCE The Fairmont Hotel San Jose

-12-

LEGISLATIVE UPDATE
SB 549 Last months issue discussed the CELAsponsored Bereavement and Mourning Leave Bill. (See CELA Bulletin, Feb 07, p.1.) On March 14, the following message appeared on the CELA List from CELA Legislative Committee member Peter Rukin. A CELA-sponsored bill has just been introduced by California State Senator Ellen Corbett. It provides all employees with the right to take up to four days off upon the death of a close family member. We now need your help. We must submit letters of support in connection with the hearings on the bill. If you know of any circumstance where an employee has been denied time off upon the death of a family member, or been punished for requesting or taking such time off, please contact Jean Hyams, Steve Pingel, or myself ASAP. The letters of support can come from the employee or the attorney, and need to discuss the relevant specifics. You can obtain a copy of the bill by going to Senator Corbetts website http:// dist10.casen.govoffice.com/ and clicking on legislation. AB 1043 On February 23, CELA Legislative Committee Co-Chair David Lowe sent the following message to the CELA List. CELAs bill to stop employers from stripping workers of the protection of California law or forcing them to litigate their claims in other states was introduced by Labor Committee Chairman Sandre Swanson. The bill is AB 1043. There are four ways that you can help advance this bill. (1) Contact me (dal@reztlaw.com) if you have any examples of California workers being disadvantaged by a choice-of-law or choiceof-forum provisionwe may need folks to testify at a hearing in March or April; (2) Volunteer to research legal issues if they are raised in opposition to the bill; (3) Identify and contact ally organizations for letters of support; and (4) Participate in CELAs Lobby Day on May 23. H.R. 1540 On March 15, NELA distributed the following information concerning the Civil Rights Tax Relief Act of 2007. (Developments concerning employment lawrelated legislation in Washington are regularly tracked in On The Hill: NELAs Washington Report, current and back issues of which are posted on NELAs website: www.nela.org.) NELA is pleased to announce that today Representative John Lewis (D-GA) introduced the Civil Rights Tax Relief Act of 2007 (CRTRA) to end unfair taxation of noneconomic damages by those who have suffered unlawful discrimination or other violations of their employment rights. It will also reduce the taxes employees pay on monies awarded as back-pay in lump sums by allowing them to average the damages over the years in which they would have earned them so that they pay taxes at fair and realistic marginal rates. Mr. Lewis was joined by a bipartisan group of original co-sponsors, including Representatives Deborah Pryce (R-OH), Sander Levin (D-MI), Jim Ramstad (RMN), Xavier Becerra (D-CA), and Phil English (R-PA). The bill number is H.R. 1540. In addition to having bipartisan support in Congress, the CRTRA is supported by employer and employee groups alike. For employers, the CRTRA will significantly reduce the costs of employment and civil rights-related litigation. More cases will be settled before trial, and it will be less expensive for employers to settle them. For employees who have to sue to vindicate their rights, the CRTRA will limit their taxable income only to the economic components of their awards. The CRTRA has been NELAs top legislative priority for years. We succeeded in eliminating the double taxation of attorneys fees in 2004, one of the three elements of the original CRTRA. Were ready to finish the job. H.R. 985 The Whistleblower Protection Enhancement Act passed the House on March 14 by a vote of 331-94. As explained in the February 22 issue of NELAs on-line Washington DC newsletter, On The Hill, the WPEA would significantly improve both substantive and procedural protections for federal employee whistleblowers. It would, inter alia: (1) allow whistleblowers federal jury trials, with compensatory damages available, if the MSPB fails to issue a timely final decision; (2) remove the Federal Circuits monopoly on whistleblower appeals; (3) reverse the judge-made requirements of irrefragable proof that the whistleblower was the original source of the report of a violation, and of immediate reporting of the violation; (4) protect reports made as part of job duties, (thus reversing Garcetti v Ceballos for federal employees); (5) expand whistleblower and other employment protections to employees of federal contractors, the TSA, and other agencies previously excluded; and (6) recognize denial of a security clearance as an adverse employment action.

-13-

-14-

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

BULLETIN
Published Monthly EDITOR: CHRISTOPHER BELLO April 2007 Vol. 21, No. 4 the additional, but related, wage claims during the de novo trial. Accordingly, we reverse the contrary judgment of the Court of Appeal. On October 16, 2002, Murphy filed a wage claim with the Labor Commissioner. Murphy used the check-thebox form to raise claims for unpaid overtime and waiting time penalties, but did not know he could make a claim for rest and meal period and itemized pay statement violations... [] The Labor Commissioner issued a decision in Murphys favor on July 14, 2003, finding that KCP failed to establish that Murphy was an exempt employee and awarding unpaid overtime, interest, and waiting time penalties. [] On August 6, 2003, KCP filed a notice for de novo review.
(Cont'd on Page 2, DECISIONS)

RECENT EMPLOYMENT LAW DECISIONS


CALIFORNIA SUPREME COURT
IN UNANIMOUS OPINION, SUPREME COURT HOLDS THAT PAYMENTS FOR MEAL AND REST PERIOD VIOLATIONS ARE WAGES, NOT PENALTIES, AND ARE THEREFORE SUBJECT TO THREE-YEAR LIMITATIONS PERIOD
MURPHY v KENNETH COLE PRODUCTIONS, INC. In a unanimous opinion by Moreno filed on April 16, the Supreme Court wrote in part as follows: This case presents two issues: first, whether the one additional hour of pay provided for in Labor Code section 226.7 constitutes a wage or premium pay subject to a three-year statute of limitations (Code Civ. Proc., 338) or a penalty subject to a one-year statute of limitations (Code Civ. Proc., 340); second, whether a trial court, conducting a de novo trial, can consider additional wage claims not presented in the administrative proceeding before the state Labor Commissioner. We conclude that the remedy provided in Labor Code 226.7 constitutes a wage or premium pay and is governed by a three-year statute of limitations and that the trial court properly considered

JOIN US IN SACRAMENTO ON LOBBY DAY, MAY 23: A DAY TO PROTECT CALIFORNIA WORKERS
by Jean Hyams, David Lowe, and Steve Pingel CELA Legislative Committee Co-Chairs On behalf of CELAs Legislative Committee, we strongly urge you to join us on May 23, 2007A Day To Protect California Workerswhen CELA members from around the state will converge on Sacramento for CELAs inaugural Lobby Day. Well meet with legislators to talk about the reality of our clients lives, and about legislation to make their lives better. CELA is the proud sponsor of two bills currently before the legislature: SB 549, to create job-protected bereavement leave; and AB 1043, to prohibit out-of-state choice of law and choice of forum clauses in employment agreements. [See page ___, and CELA Bulletin, March 07, p.13.] We know that you fight every day to help ensure that California workers are treated justly under existing law, and to hold the line against employers who are trying to chip away at existing protections. Were asking you to take one day out of the year to make change in another way, by lobbying the California legislature to enact CELAs legislative agenda. Participating in Lobby Day is easy, (and there is no cost to participate): all you need to do is to get yourself to Sacramento. Over breakfast at the Sterling Hotel from 8 to 10am we will provide you with training about lobbying, and introduce you to the legislators who are carrying our billsAssembly Labor Committee Chair Sandre Swanson (AB 1043), and Senate Judiciary Committee Chair Ellen Corbett (SB 549). Well handle the logistics of scheduling you to meet in small groups with legislators at the Capitol. After a day of lobbying meetings, well all reconvene for a reception at the hotel from 5 to 7pm, with legislators and key staffers also in attendance. It will be a chance to de-brief and to engage with other CELA members and legislators in an informal setting. A Day To Protect California Workers promises to be a full and rewarding opportunity. Please RSVP, or address any questions to Jean Hyams at jhyams@boxerlaw.com.

DECISIONS
(From Page 1)

In May 2004, the trial court filed its statement of decision and a judgment awarding Murphy unpaid overtime, payments for missed meal and rest periods, penalties for failing to furnish itemized pay statements, waiting time penalties and prejudgment interest. The court, applying the three-year statute of limitations ... awarded payments for meal and rest period violations dating from October 2000. The court subsequently granted Murphys motion for attorney fees and costs. KCP appealed from the judgment of the trial court, arguing that the court erred in addressing claims ... that had not been previously raised before the Labor Commissioner. KCP also contended that the payments ordered for the meal and rest period violations were penalties, and thus subject to the one-year statute of limitations... The Court of Appeal affirmed in part and reversed in part, holding that Labor Code section 226.7 payments ... are penalties ... and that claims may not be raised for the first time on de novo appeal... We granted plaintiffs petition for review. [The First Districts opinion appeared at 134 CA4th 728, 36 CR3d 418, and was summarized in CELA Bulletin, Dec 05, p.7.] While the language of section 226.7 ... appears to indicate the additional hour of pay ... is a wage ..., the language is also reasonably susceptible of an interpretation that the hour of pay is a penalty... As a result we look to extrinsic sources, such as the ostensible objectives to be achieved by the statute, the evils to be remedied, the legislative history, public policy, contemporaneous administrative construction and the statutory scheme of which the statute is a part. We conclude that the administrative and legislative history of the statute indicates that, whatever incidental behavior-shaping purpose section 226.7 serves, the Legislature intended section 226.7 first and foremost to compensate employees for their injuries. This conclusion is consistent with our prior holdings that statutes regulating condi-

tions of employment are to be liberally construed with an eye to protecting employees. [cites omitted.] [] We conclude that neither the behavior-shaping function of section 226.7 nor the lack of a perfect fit between the pay remedy and the injury compel classifying the remedy as a penalty. Finally, we recognize that the primary purpose of the statutes of limitation is to prevent plaintiffs from asserting stale claims once evidence is no longer fresh and witnesses are no longer available... Because employers are required to keep all time records, including records of meal periods, for a minimum of three years ... employers should have the evidence necessary to defend against plaintiffs claims. The [second] issue presented here, whether the trial court properly permitted additional related wage claims in the de novo trial that were not first considered by the Labor Commissioner, appears to be one of first impression... [] [But] our previous decisions suggest that a trial courts power to hear a wage dispute extends to the consideration of related issues not reached by the Labor Commissioner. [Post v. Palo/Haklar & Associates (2000) 23 C4th 942; Smith v Rae-Venter Law Group (2002) 29 C4th 345.] Permitting trial courts to exercise jurisdiction over the entire wage dispute ... is consistent with trial courts broad discretion in adjudicating claims at trial. [cite omitted.] [] Trial courts are equipped to weigh the various considerations, e.g., whether the claims are sufficiently related, whether the interests of judicial economy will be served, and whether the employer will be prejudiced. [F]orcing Murphy to file an original civil action to raise the additional claims would appear inconsistent with the legislative purpose under Labor Code section 98 of providing an expeditious resolution of wage claims... (Post, supra, 23 Cal.4th at p. 951.) It is unclear what interest would be served by allowing trial courts to consolidate claims con(Cont'd on Page 3, DECISIONS)

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: Michelle Reinglass 23161 Mill Creek Drive Suite 170 Laguna Hills, CA 92653 Tel: (949) 587-0460 FAX: (949) 587-1004 E-mail: michelle@reinglasslaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Sherman Oaks) Eve Chesbro (Pasadena) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles) Brad Yamauchi (San Francisco)

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

-2-

DECISIONS
(From Page 2)

tained in a civil action with those at issue in a de novo trial, but prohibiting trial courts from exercising their discretion to permit employees to raise additional wage-related claims at the de novo trial. Furthermore, the Court of Appeals conclusion ... undermines the legislative policy of encouraging employees to use the Berman process. Finally, allowing trial courts to exercise their discretion ... is consistent with the Legislatures intent to discourage frivolous and unmeritorious appeals from the commissioners awards. [cite omitted.] A party who appeals a Labor Commissioner award does so at its own peril. If the employer appeals, and the employee obtains representation, it is likely that the employees attorneys will uncover additional, related facts and claims not thoroughly examined at the administrative level when the claimant was unrepresented. Just as an employer is not bound by the defenses it raised in the Berman process, but rather is entitled to abandon, change, or add defenses..., so may an employee raise additional wage-related claims in the de novo trial. We hold that section 226.7s plain language, the administrative and legislative history, and the compensatory purpose of the remedy compel the conclusion that the additional hour of pay is a premium wage, not a penalty. We further hold that the trial court properly exercised its discretion in deciding to consider the additional, but related, wage claims during the de novo trial. The contrary judgment of the Court of Appeal is reversed. For employee: Hastings Civil Justice Clinic, Donna M. Ryu, Nancy M. Stuart, and Miye A. Goishi. For CELA, among numerous amici on behalf of employee: Cohelan & Khoury and Michael D. Singer. Cal SC, 4/16/07; unanimous opinion by Moreno; 2007 DAR 4981, 2007 WL 1111233.

SUPREME COURT WILL REVIEW THIRD DISTRICT DECISION THAT DRASTICALLY REDUCED JURY AWARDS ON DISABILITY DISCRIMINATION AND HARASSMENT CLAIMS
ROBY v McKESSON HBOC. On April 18, the California Supreme Court announced that it will review the Third District decision that reduced the overall jury award on disability discrimination and harassment claims from $19 million to $3.5 million. The Third District held, inter alia, that the evidence did not support the verdict for the plaintiff on the harassment claim, and that $15 million in punitives was excessive: an award of $2 million in punitives reached the constitutional frontier. (The Third Districts December 26, 2006 decision appeared at 146 CA4th 63, 53 CR3d 558, and was summarized in CELA Bulletin, Jan 07, p.2.) [In their Petition for Rehearing, plaintiffs attorneys David deRubertis, Charity Kenyon, Norman Pine, and Christopher Whelan argued: (1) there was no duplication of non-economic damages; (2) the Third District omitted, misstated, and downplayed critical facts supporting the harassment verdict; (3) the opinion misapplied Reno v Baird in reasoning that any conduct with an arguable connection to management duties cannot support a harassment claim; (4) the opinions constitutional analysis misapplied the Gore guideposts and misstated material facts; and (5) an absolute appellate reduction of the punitive damages award was improper and the court should have ordered a conditional remittitur. (The Petition for Review is posted on the CELA website, www.celaweb.org, in the Public Brief Bank section, and was summarized in CELA Bulletin, Feb 07, p.13.)] For plaintiff: David M. deRubertis, Charity Kenyon, Norman Pine, Christopher H. Whelan. For defendants: Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Jerome B. Falk, Jr., Linda Q. Foy, Jason M. Habermeyer; Fitzgerald, Abbott & Beardsley and Sarah E. -3-

Robertson. Cal SC, No. S149752; 4/18/07; 2007 DAR 5380.

SUPREME COURT TRANSFERS PROP 64 RETROACTIVITY CASE TO SECOND DISTRICT FOR RECONSIDERATION IN LIGHT OF MERVYN'S AND BRANICK
CONSUMER ADVOCACY GROUP v KINTETSU. On March 21, the Supreme Court transferred Kintetsu to the Second District, Division Eight, with directions to vacate its decision and to reconsider in light of Californians for Disability Rights v Mervyns, LLC (2006) 39 C4th 223, and Branick v Downey Savings and Loan Assn, (2006) 39 C4th 235. In its May, 2005 decision, the Second District took the position that the voters did not intend Proposition 64 to apply to pending litigation. The decision appeared at 129 CA4th 540, 28 CR3d 775, and was summarized in CELA Bulletin, May 05, p.5. Review was granted on 9/28/05. (Mervyn's held that Prop 64s amendments to the UCLs standing requirements do apply to cases pending at the time the amendments took effect, but Branick held that Prop 64 did not preclude the amendment of a UCL complaint to add a plaintiff who satisfies the new standing requirements.) Cal SC, 3/21/07; 2007 DAR 3848, 2007 WL 1063863.

NINTH CIRCUIT
DEFENDANTS FAILED TO MEET CAFA STANDARD OF LEGAL CERTAINTY AS TO AMOUNT IN CONTROVERSY IN SEEKING REMOVAL OF WAGE AND HOUR CLASS ACTION
LOWDERMILK v UNITED STATES BANK NATIONAL ASSN. In this case, a Ninth Circuit panel wrote in a March 2 opinion by Bybee, we are called upon to resolve a question of first impression:
(Cont'd on Page 4, DECISIONS)

DECISIONS
(From Page 3)

Under the Class Action Fairness Act of 2005 (CAFA), Pub. L. 109-2, 119 Stat. 4 (2005), when the plaintiff has pled damages less than the jurisdictional amount, what must the defendant prove in order to remove the case to federal court? We reserved this question in Abrego Abrego v The Dow Chemical Co., 443 F.3d 676, 683 n.8 (9th Cir. 2006) (per curiam). [See CELA Bulletin, Apr 06, p.5.] We answer that the party seeking removal must prove with legal certainty that the amount in controversy is satisfied., notwithstanding the prayer for relief in the complaint. We conclude that the defendant in this case failed to meet this burden, and we affirm the judgment of the District Court [D Oregon]. Willene Lowdermilk filed a complaint in Oregon state court on March 28, 2006, on behalf of herself and a class of employees who worked for U.S. Bank as hourly employees in the past six years. Plaintiff sought relief for two alleged violations of Oregon law. First, she claimed U.S. Bank denied her full compensation for the hours she worked because Defendant had a policy of rounding actual hours worked down to the nearest tenth of an hour... Second, plaintiff alleged that Defendant failed to promptly pay her wages upon termination... In addition to damages and penalty wages, Plaintiff sought costs, attorneys fees, and interest, a sum Plaintiff alleged in her prayer for relief was in total, less than five million dollars. On August 16, 2006, the district court held that it was bound by the complaint as to the amount in controversy unless plaintiffs prayer is determined to have been made in bad faith. It held that Defendant had not proved that Plaintiffs allegation was made in bad faith nor had it met its burden of establishing jurisdiction under CAFA. Consequently, the district court remanded the case to state court. Defendant has provided some evidence that the Plaintiffs actual claims necessarily exceed $5,000,000. Additionally, Defendants argue that we should count potential attorneys fees toward the amount in controversy.

Although defendant bears the burden of proving that the Plaintiffs suit meets the requirements of 28 U.S.C. 1332(d), we must consider what level of proof the Defendant must meet... [] We think the familiar legal certainty standard best captures the proof the defendant must produce. We are joined in this judgment by the Third Circuit ... [in] Morgan v. Fay ... 471 F.3d at 474. By adopting legal certainty as the standard of proof, we guard the presumption against federal jurisdiction and preserve the plaintiffs prerogative, subject to the good faith requirement, to forgo a potentially larger recovery to remain in state court... Because the relevant Oregon statutes provide for the payment of attorneys fees, we include the fees in the amount in controversy. Defendant asserts that Plaintiffs claim for late payment of wages upon termination is worth more than $13,000,000 ... [but] ... provides thin support for how it arrived at these numbers... [] Until the parties are able to more definitively ascertain the potential size of the class or the extent of the damages, we cannot base our jurisdiction on Defendants speculation and conjecture. Even if we include attorneys fees in the calculation, Defendant is no closer to carrying its burden because we simply have no basis for estimating the claims of the individual class members... We acknowledge that strict construction of our jursidiction creates the potential for manipulation of the jurisdictional rules by plaintiffs... CAFA mitigates some of the potential for abuse by eliminating the one-year removal limitation... Defendant points out ... that even though a CAFA-qualified case may be removed at a later date, critical decisions related to class certification, discovery, and trial procedures may be made in state court before the case can be removed. Such gamesmanship is possible under our rules... [but] [t]here are casesas the instant case provesin which the plaintiffs cannot anticipate from the outset the value of their case. They are not obligated to overstate their damages to -4-

satisfy the defendants interest in a federal forum, but may plead conservatively to secure a state forum... For plaintiffs: Jacqueline L. Koch, Portland. For defendants: Timothy R. Volpert, Portland. Ninth Circuit, 3/2/07; opinion by Bybee joined by Thompson and Kleinfeld; 479 F3d 994.

COMPANY WHOSE TRUCK DRIVERS WERE LURED AWAY SUFFICIENTLY STATED UCL AND COMMON LAW CLAIMS AGAINST COMPETITOR
CRST VAN EXPEDITED, INC. v WERNER ENTERPRISES, INC. This case calls on us to decide whether, under California law, a corporations allegations that its competitor lured away employees who had signed employment contracts, sufficiently states two common law tort claims and one state statutory claim. Appellant ... sued Werner Enterprises, Inc. claiming Werner had intentionally interfered with CRSTs employment contracts by soliciting and hiring away truck driver employees whom CRST had trained at its expense. CRST additionally claimed Werner violated California Business and Professions Code 17200 et seq., also known as the Unfair Competition Law (UCL), and had interfered with CRSTs prospective economic advantage... The district court [Central District] granted Werners ... 12(b)(6) motion to dismiss ... without reasoned analysis or explanation... The court also granted Werners motion for attorneys fees for CRSTs bad faith filing of the [subsequently withdrawn] trade secret claim. We now reverse in full the district courts dismissal of CRSTs complaint. We affirm the district courts award of attorneys fees to Werner.

(Cont'd on Page 5, DECISIONS)

DECISIONS
(From Page 4)

We emphasize the circumscribed reach of our holdings. Our starting point is that CRST adequately alleged ... intentional interference with contract. Under the California Supreme Courts interpretation of the UCL, an adequate claim for relief from a tortious business act or practice effects a violation of the UCL because the UCL is a borrowing statute; hence, CRST adequately alleged a violation of the UCL. It borrows a common law wrong to constitute a statutory unlawful business practice. In turn, having adequately alleged a violation of the UCL, CRST has adequately alleged that Werners acts were independently wrongful so as to support a claim for intentional interference with economic advantage. [] Finally, we express no opinion on the merits of CRSTs claims. For plaintiff: Barry Levenstam, Scott T. Schutte, Kathy A. Karcher, Jenner & Block LLP, Chicago. For defendant: Robert M. Waxman, Andres Quintana, Ervin, Cohen & Jessup LLP, Beverly Hills. Ninth Circuit, 3/15/07; opinion by Bea joined by Tashima and Ikuta; 479 F3d 1099.

for insubordination, patient abandonment, and the harassment of another registered nurse when she refused the order of a nurse supervisor to work in the emergency room. Detabali filed suit against St. Lukes in San Francisco Superior Court, alleging common law claims under the FEHA for breach of contract, breach of the covenant of good faith and fair dealing, and claims under the FEHA for discrimination on the basis of her race and national origin, retaliation, and harassment. She denied St. Lukes claim that her refusal to work in the emergency room constituted insubordination because under the cluster provision of the governing collective bargaining agreement, intensive care unit nurses are not required to report to the emergency room unit. St. Lukes removed the action to federal court ... alleging that Detabalis contractual claims were preempted by 301 of the LMRA. Detabali filed a first amended complaint with the district court, omitting the previous claims for breach of contract, fraud, and breach of the covenant of good faith and fair dealing, but alleging claims for employment discrimination, retaliation, and harassment in violation of the FEHA, failure to prevent discrimination, and tortious termination. The district court granted St. Lukes motion to dismiss..., ruling that her FEHA discrimination and retaliation claims were preempted by 301... The district court also held that Detabali failed to support her harassment claim with allegations that she was harassed based on her race, national origin, or age. Although the district court gave Detabali leave to amend ... to plead federal claims..., the court instructed Detabali not to replead the preempted claims, and to replead her harassment claim with facts demonstrating that she was harassed based on her membership in a protected class. Detabali filed a second amended complaint, in which she repled the FEHA claims. Detabali also failed to plead additional factual allegations in support of her harassment claim. The district court granted St. Lukes motion to dismiss Detabalis second amended complaint and personally sanctioned -5-

[plaintiffs attorney Charles J.] Katz in the sum of $1,000. The viability of Detabalis FEHA claims depends on whether she was legitimately terminated for refusing to work outside her cluster. In order to make this determination, the court will have to refer to the cluster provision of the [CBA]. However, because there is no dispute over the meaning of any terms within the agreement, resolution of the central issuewhether St. Lukes discriminated against Detabali in applying the agreementdoes not depend on interpretation of the [CBA]. We see no need to depart from a long line of cases holding that FEHA employment discrimination claims are not ipso facto preempted by 301 of the LMRA. [cites omitted.] We hold that the district court erred in finding that Detabalis FEHA discrimination and retaliation claims were preempted..., and in dismissing these claims for failure to exhaust the grievance procedure... Because Detabalis claims were not preempted by 301 of the LMRA, the district court lacked jurisdiction over her case and, therefore, we also reverse the district courts dismissal of her FEHA harassment claim. Detabali argues that the district court abused its discretion in imposing sanctions against Katz. St. Lukes asserts that we lack jurisdiction to review the imposition of sanctions against Katz because Detabali lacks standing to appeal an order imposing sanctions against her attorney and Katz was not a named party in the notice of appeal. We disagree with St. Lukes... [] Like counsel in Retail Flooring [Dealers of America, Inc. v Beaulieu of America, LLC (9th Cir 2003) 339 F3d 1146], Katz prepared, signed , and filed Detabalis notice of appeal. Although Detabalis notice of appeal differs from the notice of appeal filed in Retail Flooring in that it challenges the district courts dismissal of the FEHA claims in addition to the order imposing sanctions, Katzs intent to appeal is clear from the face of the appeal...
(Cont'd on Page 6, DECISIONS)

NORTHERN DISTRICT ERRED IN FINDING THAT NURSES FEHA CLAIMS WERE PREEMPTED BY LMRA 301
DETABALI v ST. LUKES HOSPITAL. In an opinion by Milan D. Smith filed on April 16, the Ninth Circuit, reversing dismissal, held that Northern District Judge Phyllis J. Hamilton erred in concluding that FEHA claims by a Filipina nurse were preempted by 301 of the LMRA. The Ninth Circuits opinion reads in part as follows: Lorraine Detabali, a 57-year-old Filipina woman, was employed as an intensive care unit nurse at St. Lukes. She also served as a union representative and had been instrumental in negotiating provisions of the collective bargaining agreement concerning certain measures to insure quality of care, patient safety, and minimize liability exposure for nurses. St. Lukes terminated Detabali

DECISIONS
(From Page 5)

We hold that the district court abused its discretion in imposing sanctions on Katz. Katzs repleading of Detabalis FEHA claims preserved them for this appeal and our decision in this case demonstrates the merits of his decision. We believe it would be perverse to uphold an award of sanctions against counsel for taking actions that ultimately preserved his clients right to proceed with her case. For plaintiff: Charles J. Katz, Millbrae. For defendants: Alex Hernaez, Kauff, McClain & McGuire, San Francisco. Ninth Circuit, 4/16/07; opinion by Smith joined by Gould and Covello; 2007 DAR 5025, 2007 WL 1112679.

CALIFORNIA COURTS OF APPEAL


SECOND DISTRICT REVERSES JURY VERDICT THAT AWARDED $42 MILLION TO L.A. COUNTY POLICE OFFICERS WHO ALLEGED THAT RACE DISCRIMINATION CAUSED PAY DISPARITY COMPARED TO SHERIFFS DEPUTIES
FRANK v COUNTY OF LOS ANGELES. This is a race discrimination class action brought by a class of minority officers of the Los Angeles County Police against the County of Los Angeles... The County appeals from a judgment finding it liable for back pay and other relief to all County police officers, including nonminority officers, who were employed when the class was certified... We conclude that the jurys liability verdict on the theories of disparate impact and disparate treatment racial discrimination must be reversed. Plaintiffs failed to establish a basis for a disparate impact claim as a matter of law, and the jurys verdict on disparate treatment is not supported by the evidence... In summary, plaintiffs established that some 70 percent of officers in the County police classification are minority members and 30 percent are Caucasian, while in the sheriffs department, where officers are better paid, the percentages are reversed. That differentiation, by itself, does not establish racial discrimination, and plaintiffs failed to present evidence that the pay disparity is the product of racial discrimination. We conclude that the jurys special verdict on the disparate impact theory must be reversed because plaintiffs failed to establish a prima face case of racial discrimination. As in Wards Cove [Packing Co. v Atonio (1989) 490 US 642] and Carter [v CB Richard Ellis, Inc. (2004) 122 CA4th 1313], there was no showing that the Countys policies had a disproportionate adverse impact on the class members because they are minorities and thus members of a pro-6-

tected group. Instead, the evidence established that the Countys policies were to pay the class members, Caucasian and minority alike, less because they were members of the County police rather than the LASD. Plaintiffs presented no evidence that the County established policies which worked as a barrier or deterrent to minority application to and hiring by the LASD. Plaintiffs also alleged the County intentionally discriminated against them in the establishment of their salary and benefits, based on race. They argue, correctly, that racial animus may be proven by indirect or circumstantial evidence, and direct evidence of racial discrimination is rarely available. [] [But] we find no evidence from which the jury could reasonably infer that County police officers were paid less than the LASD deputies because of intentional racial discrimination. Plaintiffs presented expert testimony by Dr. [James] Ginger comparing the compensation of County police officers with that of LASD deputy sheriffs. He concluded that their work was functionally equivalent... We conclude that Dr. Gingers study did not adequately take into consideration the various functions performed by each department and the number of officers assigned to those functions. In addition, his field depositions gathered information about types of incidents dealt with by radio patrol officers, but failed to take into account the critical factor of the frequency with which the officers dealt with these situations. We are not told whether the number of respondents was statistically reliable. In light of these issues, we conclude that the jury could not reasonably rely on Dr. Gingers conclusion that the duties of County police officers and LASD deputies were functionally equivalent or comparable. This evidentiary omission in plaintiffs case undermines the rest of their experts testimony because the other experts assumed that the duties of the officers were comparable. Since plaintiffs did not show that
(Cont'd on Page 7, DECISIONS)

NINTH CIRCUIT WILL NOT REHEAR CASE IN WHICH IT HELD THAT ALL MEMBERS OF CLASS OF CLAIMS ADJUSTERS ARE EXEMPT FROM FLSAS OVERTIME REQUIREMENT
In re FARMERS INSURANCE EXCHANGE v MILLER. On March 30, the Ninth Circuit amended its October 26, 2006 opinion and denied petitions for rehearing and rehearing en banc. In the panel decision, (466 F3d 853, summarized in CELA Bulletin, Oct 06, p.3), the Ninth Circuit ordered entry of judgment in favor of Farmers on overtime claims by a class of claims adjusters, holding that all of the adjusters in the plaintiff class were exempt. For plaintiffs: Steven G. Zieff, Kenneth Sugarman, Rudy, Exelrod & Zieff, San Francisco; James M. Finberg, Eve H. Cervantez, Lieff Cabraser Heimann & Bernstein, San Francisco; Michael Rubin, Peder J. V. Thoreen, Altshuler, Berzon, Nussbaum, Rubin & Demain, San Francisco. For defendants: Theodore J. Boutrous, Jr., Deborah J. Clarke, Elisabeth C. Watson, Gibson, Dunn & Crutcher, Los Angeles; Barnes H. Ellis, James N. Westwood, Stoel Rives LLP, Portland. Ninth Circuit, 3/30/07; 2007 DAR 4429, 2007 WL 943982.

DECISIONS
(From Page 6)

they are, they cannot establish their basic premise: that they performed equal work but were paid less because of racial discrimination. Plaintiffs argue that they established that race was a motivating factor in establishing their salary and benefits. [After examining] each category of evidence upon which they rely... [] [we conclude that] plaintiffs claim of racial intent is not supported by the record. It may be that the County police officers should be better compensated as a class. That abstract issue is not before us. The question is whether the pay disparity was the product of intent to discriminate based on race. We conclude that the jury could not reasonably infer such intent from the record. Without it, the special verdict on disparate treatment must be reversed. Plaintiffs had a full opportunity to present their evidence, which was insufficient as a matter of law. No new trial is warranted and the County is entitled to judgment in its favor. [ Note: Plaintiffs attorney Patricia Bellasalma (Moorpark) was quoted in the Daily Journal of April 13 as insisting that the Second District panel had cherry-picked the evidence. I have no kind words for three people I believe have no judicial integrity whatsoever, she said. But am I surprised? Am I shocked at a results-oriented court? No.] For plaintiffs: Patricia Bellasalma, J. L. ODonnell, Jr., Jennifer Kramer, Gerald M. Serlin and Douglas G. Benedon. For County: Jones Day, Elwood Lui, Scott D. Bertzyk, Jeffrey B. Krzner; Gutierrez, Preciado & House and Calvin House. Second Dist Div Four, 4/12/07; opinion by Epstein with Willhite and Suzukawa concurring; 2007 DAR 4922, 2007 WL 1082287.

IN WAGE AND HOUR CLASS ACTION, OPT-OUT NOTICE ADEQUATELY PROTECTED PRIVACY RIGHTS OF FORMER EMPLOYEES DURING PRECERTIFICATION DISCOVERY
BELAIRE-WEST LANDSCAPE, INC. v SUPERIOR COURT (RODRIGUEZ). Real parties ... filed a putative class action lawsuit against their former employer ... alleging wage and hour violations. During precertification discovery, the trial court granted a motion to compel Belaire-West to provide the names and contact information of all current and former Belaire-West employees and adopted a proposed notice to those individuals that would have required them to object in writing in order to prevent information about them from being disclosed to the real parties in interest. Applying Pioneer Electronics (USA), Inc. v. Superior Court, 40 Cal.4th 360, we conclude the opt-out notice adequately protects the privacy rights of the current and former employees involved. We deny the writ. [Note: The Pioneer Electronics decision was filed on January 25, 2007, and was summarized in CELA Bulletin, Feb 07, p.2.] The Pioneer analysis leads us to conclude that opt-out notices will also suffice here. The contact information ... deserves privacy protection. In fact, the privacy concerns here are more significant than those in Pioneer, where the complaining customers voluntarily disclosed their information to the company in hope of gaining some relief for their allegedly defective DVD players. While it is unlikely that the employees anticipated broad dissemination of their contact information when they gave it to Belaire-West, that does not mean that they would wish it to be withheld from a class action plaintiff who seeks relief for violations of employment laws... [C]urrent and former Belaire-West employees [can] reasonably be expected to want their information disclosed to a class action plaintiff who may ultimately recover for them unpaid wages that they are owed.

[T]he trial court implicitly found that no serious invasion of privacy would result... That implicit finding is reasonable and supported by the facts... Disclosure of the contact information with an opt-out notice would not appear to unduly compromise either informational privacy or autonomy privacy in light of the opportunity to object to the disclosure, as the court specifically found that there was no evidence of any actual or threatened misuse of the information. While our conclusion that there is no serious invasion of privacy ... obviates any need to engage in further analysis, we nonetheless observe that the balance of interests also supports the trial courts order... The balance of opposing interests here tilts even more in favor of the courts disclosure order than it did in Pioneer, because at stake here is the fundamental public policy underlying Californias employment laws. [Note: The Second District, Division 7, issued another decision on April 9 this one unpublishedreaching the same conclusion as that reached in Belaire-West. See Swissport Corporation v Superior Court (Battles) (2007) 2007 WL 1040987, involving a class action alleging meal and rest break violations. (William D. Becker for Real Party in Interest).] For employees: Nava Law Firm, Cesar H. Nava, Santos Gomez, Stanley J. Hodson; Cullen & Associates and Paul T. Cullen. For employer: Atkinson, Andelson, Loya, Ruud & Romo, Robert R. Roginson and Christopher S. Milligan. Second Dist Div Seven, 4/9/07; opinion by Zelon with Perluss and Woods concurring; 2007 DAR 4611, 2007 WL 1039547.

(Cont'd on Page 8, DECISIONS)

-7-

DECISIONS
(From Page 7)

IN WAGE AND HOUR ACTION, TRIAL COURT DID NOT ABUSE DISCRETION IN DECERTIFYING SUBCLASS OF ACCOUNT MANAGERS WHO EMPLOYER CLAIMED FIT WITHIN OUTSIDE SALESPERSON EXEMPTION
WALSH v IKON OFFICE SOLUTIONS, INC. Plaintiffs ... appeal from an order decertifying one of several subclasses... Appellants contend: (1) the order is erroneous because it fails to identify sufficiently the courts reasons for decertification; (2) the evidence does not support the trial courts conclusion; and (3) IKONs motion was untimely and procedurally defective in its failure to comply with local rules of the San Francisco Superior Court. We affirm the order. Appellant Walsh and another former IKON employee filed this action in their individual capacities, and on behalf of other similarly-situated IKON employees ... alleging that IKON ... required certain employees to work in excess of eight hours per day, and in excess of 40 hours per week, without paying overtime wages... In addition, it was alleged, IKON failed to compensate employees for work without meal and break periods..., unlawfully deducted costs and expenses from wages..., and failed to pay commission wages... Based on these statutory violations, IKON allegedly perpetrated unlawful, unfair, and fraudulent business practices (Bus. & Prof. Code, 17200) and was thus liable for civil penalties under Labor Code section 2698. Five subclasses were proposed, the fourth of which is most important for purposes of this appeal: ... (4) IKON LDS Account Managers employed in California between March 8, 2000, to the present... By written order on January 11, 2006, the trial court decertified the Account Manager Subclass with the following explanation: Common issues of and fact do not predominate ... as the circumstances of each class members employment differs significantly from

every other member of the class. As a result, individual hearings on both liability and damages are required for each of the 150 or so class members, as well as the two class representatives... In context, the trial courts explanation was not so vague that we are unable to determine whether substantial evidence supports the decision. Appellants challenge to the order on this ground is unavailing... We next consider whether the trial courts conclusion ... was supported by substantial evidence... [] IKON classified all members of the Account Manager Subclass under the outside salesperson exemption, alleged this exemption as an affirmative defense, and relied upon it in arguing that common questions of law and fact do not predominate... IWC Wage Order 4-2001 defines an outside salesperson as [A]ny person ... who customarily and regularly works more than half the working time away from the employers place of business selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities. The outside salesperson exemption turns on how the employee actually spends his or her time as well as the employers realistic expectations of the job and the extent to which the employee diverges from them. [cite omitted.] IKON presented evidence from deposition testimony ... that the performance of [Account Managers common] tasks varied significantly from individual to individual and from office to office, based on the account managers territory, number of customers and job orders, support from customer service representatives, and the personal approach of each account manager to the job and customers. [] Other evidence supported IKONs contention of a variation in work performance among account managers... Our Supreme Court in Ramirez [v Yosemite Water Co., (1999) 20 C4th 785] anticipated that the adjudication of the outside salesperson exemption could -8-

result in this very type of individualized factual examination. In the final analysis, there was a sufficient evidentiary basis from which the trial court could reasonably infer that commonality was lacking due to the differences in the subclass members work circumstances and how they approached their jobs... Appellants contend that the decision in Sav-On [Drug Stores, Inc. v Superior Court (2004) 34 C4th 319] held that the existence of factors relevant to proving the outside salesperson exemption under Ramirez did not preclude class certification. We disagree... [] [T]he point [in Sav-On] was that defendants could not preclude certification per se merely because there were factual circumstances that might require individual proof; the Sav-On court did not strip the trial court of its discretion to conclude that, in light of the factual variations among individual employees, the class action device would not be a superior mechanism... Appellants contend it was error to decertify the Account Manager Subclass, even if individualized proof of a subclass members work was required ... because appellants pursued their overtime wage claim in part on a theory of deliberate willful misclassification. ... Because this deliberate misclassification is common to all Account Manager Subclass members, appellants argue, common questions predominate over individual issues. We disagree... Appellants cannot recover under Labor Code section 1194 unless the Account Manager Subclass members were not, in fact, subject to the outside salesperson exemption; that determination requires consideration of the individual circumstances of each Account Manager Subclass member... [] [Sav-On] does not suggest that employers could be liable for classifying an employee without regard to the law or facts if the employees turned out to be classified correctly.

(Cont'd on Page 9, DECISIONS)

DECISIONS
(From Page 8)

[Note: On April 16, the California Supreme Court issued an opinion in a consumer class action that addresses a number of issues concerning the criteria for class certification. Fireside Bank v Superior Court (Gonzalez) 2007 WL 1112020.] For plaintiffs: Daniel H. Qualls, Robin G. Workman. For defendant: Seyfarth Shaw, Gilmore F. Diekmann, Jr., Catherine Dacre, Eric E. Hill, Alfred L. Sanderson, Jr., Francis J. Ortman, III, Joel M. Van Parys. First Dist Div Five, 3/1/07; opinion by Gemello with Jones and Simons concurring; 2007 DAR 4328, 2007 WL 615714.

NO FUNDAMENTAL PUBLIC POLICY WAS VIOLATED BY DISCHARGE OF TEACHER WHO REPORTED THAT FOOTBALL COACH HAD ADVISED STUDENT TO TAKE PROTEIN DRINK CONTAINING CREATINE
CARTER v ESCONDIDO UNION HIGH SCHOOL DISTRICT. James T. Carter sued his employer ... claiming that EUHSD wrongfully terminated his employment in violation of public policy. At trial, Carter supported his allegations by presenting evidence that EUHSD declined to reelect him to his probationary teaching position because, while employed as a teacher at another school district, Carter informed the athletic director there that the football coach had recommended a nutritional supplement to a student. After the jury found that Carters report to the athletic director had been a motivating reason for EUHSDs adverse job action and that Carter was entitled to damages of over $1,000,000, the trial court entered judgment against EUHSD. As discussed in more detail below, we are required by controlling precedent to reverse. For an employer to be liable for the tort of wrongful discharge in violation of public policy, the employers conduct must violate a public policy that is

fundamental, well established and carefully tethered to a constitutional or statutory provision. (Gantt v. Sentry Insurance (1992) 1 Cal.4th 1083, 1090, 1095.) The public policy upon which EUHSDs liability was based in the instant casecharacterized by Carter on appeal as the policy against teachers recommending weight-gaining substances to studentsfails to satisfy these requirements. There may be sound policy reasons to bar football coaches from recommending weight gaining substances to high school students, but as there is currently no law that does so, any such prohibition must be enacted explicitly by the Legislature, not implicitly by the courts. Thus, while EUHSDs decision to terminate Carter may have been arbitrary, misguided and petty, it was not prohibited by law or in contravention of well-established public policy, and thus provides no basis for liability under California law. Carter argues that the pertinent public policy ... is found in Education Code section 49423 [restricting school employees from assisting in the taking of most medications under most circumstances], plus California Code of Regulations, sections 601 and 604 which, he argues, establish the policy against teachers recommending weight-gaining substances to students. Section 49423 does not support EUHSDs liability in the instant case because the public policy it establishes was not violated by Carters termination. [] Section 49423 by its terms does not prohibit any conduct. Instead, it is expressly permissive, delineating a circumstance under which the school nurse may assist in the administration of medication to a student during the school day... This absence of any explicit prohibition of any conduct and the omission of any sanctions for noncompliance strongly suggest that section 49423 does not establish a fundamental public policy that could support a wrongful termination claim. [E]ven if the statute is intended to implicitly prohibit the actions it describes absent written parental authorization, those actions would not include Coach -9-

Carberrys suggestion that a student could improve his college football recruitment prospects if he consumed a protein drink at some unspecified time in the future. [] The implementing regulations of the Department of Education do not alter this analysis. We also reject Carters implicit argument that the judgment against EUHSD is supported by Californias general whistle-blower statute, Labor Code section 1102.5... [] Carters conduct ... is not protected by section 1102.5. First, as explained above, the information disclosed by Carter did not disclose a violation of state or federal statute, or a violation or noncompliance with a state or federal rule or regulation... Second, Carters conversation with [the athletic director] was not motivated by his belief that a law had been broken... Third, even if Carter subjectively believed that Carberry had violated a statute or regulation..., the record is devoid of anything that would support a conclusion that his belief was reasonable. Protein shakes containing creatine are not unlawful under either state or federal law. For plaintiff: Ross, Dixon & Bell and Jon R. Williams. For amicus on behalf of plaintiff: Beverly Tucker and Priscilla S. Winslow. For defendant: Stutz, Artiano, Shinoff & Holtz, Daniel R. Shinoff, Jeffery A. Morris and Paul V. Carelli, IV. Fourth Dist Div One, 3/21/07; opinion by Irion with McConnell and Benke concurring; 2007 DAR 3753, 2007 WL 841257.

FACT THAT PLAINTIFF IN ACTION FOR UNPAID WAGES WAS SALARIED EXECUTIVE DID NOT PRECLUDE HIS RECOVERY OF ATTORNEYS FEES UNDER LABOR CODE 218.5
ON-LINE POWER, INC. v MAZUR. Cross-complainant David Mazur appeals from an order denying his motion for attorneys fees after settling his action for unpaid wages pursuant to a
(Cont'd on Page 10, DECISIONS)

DECISIONS
(From Page 9)

statutory offer of compromise. (Code Civ. Proc., 998.) Because the trial court erred in ruling that Labor Code provisions ensuring an employees right to payment of wages did not apply to salaried corporate executives, we reverse and remand for further proceedings. David Mazur sued his former employer for unpaid wages... [fn.1. Mazurs action was a cross-complaint filed in response to OLPs action against Mazur and others for stealing OLPs trade secrets. Mazur was granted summary judgment in that action, which we recently affirmed...] [] On August 2, 2005, OLP mailed to Mazur a statutory offer to compromise... [] Mazur ... brought a motion to enforce the section 998 offer, have judgment entered, and recover his attorneys fees pursuant to Labor Code section 218.5, along with his costs... [T]he trial court issued a minute order finding that Mazur was entitled to seek his costs because the section 998 offer was silent on that point. However, the court found that Mazur was not entitled to recover his attorneys fees under Labor Code section 218.5 because that section was designed to protect workers who received an hourly wage, not those who were compensated by salary pursuant to a written employment contract. Mazur has appealed the order denying his request for attorneys fees. OLP contends Mazur was not entitled to recover his attorneys fees because its section 998 offer called for the complete resolution of all of Mazurs claims and should therefore be read under general contract principles to exclude such fees. However, when a section 998 offer is silent about attorneys fees and costs, it cannot reasonably be interpreted to exclude their recovery and the prevailing party may seek them. [cites omitted.] Taken as a whole, [Labor Code sections 200 through 204] indicate that for purposes of the Labor Code, the salaries of executives are protected wages, and that a cause of action for nonpayment of such wages falls under Labor

Code section 218.5. OLP contends that the trial court was correct because Mazurs action was essentially one for breach of contract, and the employment contract did not include an attorneys fee provision. To the extent the trial court ruled that Mazurs concurrent breach of contract cause of action precluded his resort to the Labor Code, it also erred. For employee: Henry J. Josefsberg For employer: Faryan A. Afifi. Second Dist Div Eight, 4/17/07; opinion by Rubin with Cooper and Boland concurring; 2007 DAR 5231, 2007 WL 1128874.

trary, and we therefore decide the issue as a matter of law. Empire contends that the arbitration clause ... is not governed by Armendariz ... We agree. [] In this case, Giuliano argues that his statutory wage claim is an unwaivable Tameny claim because the right to be paid wages earned is part of the public policy of the State of California and is not waivable. But Giulianos contract claim for a $5 million to $8 million bonus and a $500,000 severance payment is distinguishable from the statutory overtime or minimum wage claims that were at issue in the cases cited by Giuliano. Empire contends that the arbitration clause is not ambiguous and that the related entities are subject to arbitration. We agree. In support of the order denying arbitration, Giuliano contends that the arbitration clause ... should be stricken as a vague, unintelligible, unconscionable, and invalid contract of adhesion. We disagree. Giuliano also contends that the arbitration clause is procedurally unconscionable because it does not provide for discovery, does not require a written arbitration award, and does not require the employer to pay for fees and costs unique to arbitration. These are procedural requirements set forth in Armendariz. As we have concluded that Armendariz does not apply to this case, Giulianos claim of procedural unconscionability fails. For plaintiff: Dempsey & Johnson, Michael D. Dempsey and Arlene M. Turinchak. For defendant: Beck, De Corso, Daly, Kreindler & Harris. Second Dist Div Four, 3/26/07; certified for publication 4/19/7; opinion by Suzukawa with Epstein and Willhite concurring; 2007 DAR 5413, 2007 WL 891315.

SECOND DISTRICT REVERSES DENIAL OF MOTION TO COMPEL ARBITRATION OF CONTRACT CLAIMS BY DISCHARGED EXECUTIVE
GIULIANO v INLAND EMPIRE PERSONNEL, INC. In this breach of contract action, defendant employer appeals from the denial of its motion to compel arbitration pursuant to plaintiffs employment contract. Defendant contends that plaintiffs right to a judicial forum for his unpaid wages claim under Labor Code section 229 is preempted by section 2 of the Federal Arbitration Act..., which mandates the enforcement of arbitration clauses in contracts involving interstate commerce... Defendant also argues that plaintiffs garden variety breach of contract action is not subject to the minimum requirements for arbitration set forth in Armendariz... which applies to unwaivable claims that are carefully tethered to statutory or constitutional provisions [cite omitted] such as discrimination in violation of [FEHA] or wrongful discharge in violation of public policy... We reverse the order denying the motion to compel arbitration. [T]he interstate nature of Giulianos employment [as corporations executive vice president and chief financial officer] was undisputed, notwithstanding Giulianos contention to the con-10-

(Cont'd on Page 11, DECISIONS)

DECISIONS
(From Page 10)

JUDITH VLADECK: 1923-2007 UNPUBLISHED COURT OF der. We now turn to a consideration of ON REMAND FROM SUPREME the cases referenced by our high court. COURT, FIRST DISTRICT APPEAL DECISIONS
These two cases, when read in conjunction, lead to the following conclusion: CDR is a party aggrieved by entry of judgment against it and thus has standing to appeal the judgment even if CDR has no authority to maintain its suit in superior court...; and if CDR succeeds in its effort to reverse the judgment on appeal, it may seek leave in superior court to amend its complaint to substitute a plaintiff who meets the Proposition 64 standing requirement. Mervyns ignores the import of these two cases and continues to argue against substitution of plaintiff on appeal. While the right to substitution on appeal was CDRs long-held position, it has now changed position after receiving new guidance from the Supreme Court. CDR observes that, [a]s is made plain by the Supreme Courts order and the holdings in both cases, the issue facing this Court now is whether to consider the merits of the appeal, not whether to allow the plaintiff to substitute a new plaintiff prior to a merits determination. We shall consider the merits of the appeal. Proposition 64 does not compel dismissal of the appeal given CDRs appellate standing as an aggrieved person... [] Our previous decision dismissing the appeal is vacated and respondents motion to dismiss the appeal is denied. Respondents brief on the merits shall be filed within 30 days after this opinion is final. For plaintiff: Holly Macleish Baldwin, Sanford Jay Rosen, Rosen, Bien & Galvan, LLP, Daniel Mason, Zelle, Hoffman et al., Monique Oliver, The Sturdevant Law Firm, San Francisco, Sidney Wolinsky, Disability Rights Advocates, Berkeley. For defendant: Gloria Young Eun Lee, Morrison & Foerster, San Francisco, David Frank McDowell, Jr., Morrison & Foerster, Los Angeles. First Dist Div Four, 4/17/07; opinion by Sepulveda with Ruvolo and Reardon concurring; 2007 WL 1139693 (unpublished).

[Note: the cases summarized below are a selection of the unpublished Court of Appeal decisions filed during the past month.]

FIRST DISTRICT ISSUES ANOTHER OPINION CONCERNING PROCEDURE FOR SUBSTITUTION OF PLAINTIFF WITH PROP 64 STANDING
CALIFORNIANS FOR DISABILITY RIGHTS v MERVYNS. This case has had a strange procedural history on appeal. We denied Mervyns motion to dismiss the appeal, and the Supreme Court reversed. We then granted Mervyns motion to dismiss the appeal, and the Supreme Court reversed. This odd result is largely a product of the difficulty of applying Proposition 64 which is silent about its intended effect on pending casesto particular cases in various stages of litigation. The result is also the product, in part, of the way the parties framed the issues. The parties initial focus was on whether Proposition 64s standing requirements applied to pending cases. After the Supreme Court found the measure applicable and remanded the case to us, the parties focus shifted to the allowable means and manner of substituting a plaintiff with standing. CDR never asked to continue the appeal in its own name but, instead, sought to substitute a new plaintiff on appeal. We accepted the issue as framed by CDR... Finding no authority for substitution on appeal, we granted the motion to dismiss. CDR renewed its claimed right to substitution on appeal in its petition for review in the Supreme Court. The Supreme Court granted review and transferred the matter to us for reconsideration in light of two cases, United Investors [Life Ins. Co. v Waddell & Reed (2005)] 125 Cal.App.4th 1300, and Branick [ v Downey Savings & Loan Assn. (2006)] 39 Cal.4th 235. CDR never cited United Investors to this court previous to the Supreme Courts grant and transfer or-

REJECTS ARGUMENTS AIMED AT CIRCUMVENTING MEDIATION CONFIDENTIALITY IN CONNECTION WITH ARBITRATION PROVISION IN SETTLEMENT AGREEMENT

FAIR v BAKHTIARI. On appeal from the trial courts denial of plaintiffs motion to compel arbitration, we reversed the judgment on the ground that the document in question satisfied a statutory exception to the inadmissibility of written or oral communications made during mediation. We also concluded that the document contained a valid agreement between the parties to arbitrate all disputes. (Fair v. Bakhtiari, Oct. 12, 2004, A100240). The California Supreme Court granted review and reversed our decision. (Fair v. Bakhtiari (2006) 40 Cal.4th 189 [summarized in CELA Bulletin, Nov 04, p.4]). It held that the document did not satisfy the statutory exception to the inadmissibility of communications made during mediation and remanded to this court for further proceedings. The First District, Division 2, rejected all three of the plaintiffs contentions that remained for decision, namely: (1) the contention that the settlement terms document was admissible under a statutory exception (Ev Code 1123(a)) similar to the one ( 1123(b)) found inapposite by the Supreme Court; (2) the contention that the defendants were judicially estopped from invoking mediation confidentiality due to their repeated representations to the trial court that the case settled in mediation; and (3) the contention that the defendants repeated disclosure of mediation communications waived their right to claim mediation confidentiality. For plaintiff: Gilbert R. Serota, Howard, Rice, Nemerovski, Canady, Falk & Rabkin, San Francisco. For defendants: Arthur J. Shartsis, San Francisco; Ronald Fox Garrity, South San Francisco.
(Cont'd on Page 12, DECISIONS)

-11-

DECISIONS
(From Page 11)

First Dist Div Two, 4/6/07; opinion by Kline with Haerle and Richman concurring; 2007 WL 1031708 (unpublished).

ARBITRATOR DID NOT FAIL TO MAKE REQUIRED DISCLOSURES IN CONNECTION WITH HIS ACCEPTANCE OF NEW CASE INVOLVING CURRENT COUNSEL WHILE ARBITRATION WAS PENDING
MARKMAN v OHARE. Relative to a contract dispute involving a sale of real estate, the Fourth District rejected the argument that the JAMS arbitrator, retired Judge James L. Smith, had failed to make required disclosures when he accepted employment in another case involving one of the defense firms in the instant case. The court wrote: Plaintiff ... appeals from a judgment affirming an award of arbitration after she moved to vacate it because the arbitrator was biased and failed to make required disclosures. We conclude there was no actual or apparent bias on the part of the arbitrator nor improper conduct in accepting a new matter with counsel in the pending arbitration and affirm... We also reject plaintiffs suggestion that the arbitrator taking a new case involving current counsel while an arbitration is pending should be an automatic disqualifying event. For plaintiff: Law Offices of Ian Herzog, Evan D. Marshall, Ian Herzog, and Amy Ardell. For defendants: Wentworth, Paoli & Purdy and Jeanine A. Scalero. Fourth Dist Div Three, 3/28/07; opinion by Rylaarsdam with Sills and Bedsworth concurring; 2007 WL 915108 (unpublished).

MALAIS v LOS ANGELES CITY FIRE DEPARTMENT. The Second District, Division One, affirmed summary judgment on FEHA disability discrimination claims by a fire department captain who had been denied his desired reassignment after he lost a leg in a work-related accident. Malais contends, the court wrote, that the trial court erred in finding that because the Department offered him other positions with comparable pay and promotion opportunities, he did not suffer an adverse employment action. We reject the contention and affirm the judgment. In Yanowitz..., our Supreme Court reviewed what constitutes an adverse employment action in a factually different but analytically similar context of an employment discrimination lawsuit... [] Applying these principles to the ... facts before us, we conclude that the court properly found that Malais did not suffer an adverse employment action by being limited to special duty assignments. Although so limited, Malais continued to receive promotions after his injury until he reached the top of the Captain II range. Moreover, although he was not sure that he wanted to pursue them, Malais had equal opportunities for promotion to higher positions. For plaintiff: Knapp, Petersen & Clarke, Andre E. Jardini and Gwen Freeman. For defendant: Claudia McGee Henry, Assistant city Attorney, and Kim Rodgers Westhoff, Deputy City Attorney. Second Dist Div One, 3/29/07; opinion by Rothschild with Vogel and Jackson concurring; 2007 WL 926611 (unpublished).

HEALTH PLAN, INC. The First District, Division 5, affirmed summary judgment on an age discrimination claim brought by a 54-year-old attorney who had unsuccessfully applied for a position with Kaisers labor and employment group. The court cited EEOC v Insurance Co. of North America (9th Cir 1995) 49 F3d 1418 for the proposition that an employers decision not to hire an applicant who is overqualified does not constitute age discrimination. The court distinguished Taggart v Time, Inc. (2d Cir 1991) 924 F2d 43, where the Second Circuit concluded that the term overqualified was a euphemism for too old. In Taggart, the Ninth Circuit emphasized, the defendants criterion amounted to a labeloverqualified without any objective content... Here, by contrast, [the decision-makers] deposition testimony showed she was concerned about appellants overqualification for an objective reason: Someone with the range of experience that appellant possessed might find the entry level job that Kaiser had available to be boring. For plaintiff: Edwin Lamar Bradley II, San Francisco. For defendant: Deborah Jean Broyles, Seth Lewis Neulight, and Thomas Edward Hill, Thelen Reid Brown Raysman & Steiner. First Dist Div Five, 4/6/07; opinion by Jones with Simons and Gemello concurring; 2007 WL 1032306 (unpublished).

SECOND DISTRICT IMPORTS YANOWITZ ANALYSIS TO CONTEXT OF SUBSTANTIVE DISABILITY DISCRIMINATION AND FINDS NO ADVERSE EMPLOYMENT ACTION

AFFIRMING SUMMARY JUDGMENT, FIRST DISTRICT HOLDS THAT EXPLANATION THAT 54-YEAR-OLD APPLICANT WAS REJECTED BECAUSE HE WAS OVER-QUALIFIED WAS NOT DIRECT EVIDENCE OF AGE DISCRIMINATION
REEVES v KAISER FOUNDATION -12-

SECOND DISTRICT DENIES WTVPP PLAINTIFFS MOTION TO STRIKE AS SLAPP SUIT EMPLOYERS COUNTERCLAIM FOR CONVERSION, MISAPPROPRIATION, AND BREACH OF CONFIDENTIALITY
PLANNED PARENTHOOD LOS ANGELES v GONZALEZ. Planned Parenthood Los Angeles terminated P. Victor Gonzalez from his position as vice-president of finance and administration in 2004. Gonzalez sued for wrong(Cont'd on Page 13, DECISIONS)

DECISIONS
(From Page 12)

ful termination in violation of public policy, claiming his termination was in retaliation for identifying illegalities in PPLAs administrative procedures and operations. Gonzalez attached over 200 pages of internal PPLA documents and files to his first amended complaint. During discovery, PPLA learned that Gonzalez was in possession of additional PPLA writings, which it claimed were confidential and proprietary. PPLA filed a cross-complaint for conversion, misappropriation and breach of confidentiality. Gonzalez moved to strike the crosscomplaint ... as a strategic lawsuit against public participation (SLAPP). Gonzalez appeals the trial courts denial of his anti-SLAPP motion... The order is affirmed. For employee: Schuler & Brown, Jack M. Schuler, Sam D. Ekizian, and Maurice S. Newman. For employer: Fields & Israel, Gary D. Fields, Arlette B. Bolduc; Munger, Tolles & Olson, Kathleen M. McDowell and Freya K. Russell. Second Dist Div Two, 4/12/07; opinion by Doi Todd with Boren and Ashmann concurring; 2007 WL 1087292 (unpublished).

no liability as a matter of law, the court properly sustained their demurrer. The complaint alleged causes of action for breach of contract, professional negligence, intentional infliction of emotional distress, and interference with contract. For plaintiff: Lounsbery Ferguson Altona & Peak, Erick R. Altona, Judith Hartwig, and Alena Shamos. For defendant: Vogt & Resnick and Charles C. McKenna. Fourth Dist Div Three, 4/12/07; opinion by Ikola with Rylaarsdam and Fybel concurring; 2007 WL 1087574.

determined that the Basic Skills Test was not a valid measure of job success and could be replaced by a nondiscriminatory test. With monetary payments of about $54.9 million, the settlement is believed to be among the top ten discrimination verdicts historically in United States courts. The total figure includes $15 million for attorneys fees and costs, unspecified claims administration costs, and up to $360,000 for class representatives and members who gave declarations. Finberg credited Hunter R. Hughes III of Rogers & Hardin in Atlanta, Georgia, for successfully mediating the case, which was scheduled to go to trial in early May. For plaintiffs: James Finberg; John Burris; Waukeen McCoy; Kay McKenzie Parker; Lieff, Cabraser, Heimann & Bernstein; Schneider & Wallace; Barry Goldstein. For defendant: In-house counsel and Gilmore Diekmann, Jr., Seyfarth Shaw. USDC ND Cal, No. 03-2659; Judge Susan Illston; information reported in Daily Journal, 4/12/07.

VERDICTS AND SETTLEMENTS


FEDERAL EXPRESS SETTLES RACE DISCRIMINATION CLASS ACTION FOR $55 MILLION
SATCHELL v FEDEX EXPRESS. On April 10, after several months of negotiations, the parties agreed to settle a race discrimination class action for nearly $55 million. The company will also overhaul its pay, discipline, and promotion practices. The settlement awaits final approval by Northern District Judge Susan Illston. James Finberg of Altshuler Berson was lead counsel for a class of some 20,000 hourly employees and low-level operations managers who have worked in the companys western regional facilities since October 1999. The suit was originally filed in state court in 2002, and was removed to federal court the following year. The class was certified in 2005. The plaintiffs alleged that Fed Ex Express, a unit that performs overnight deliveries, had a culture of hostility toward people of color, and allowed racial bias to infect its human resources division. As part of the agreement, FedEx agreed to stop using as a prerequisite for promotion a Basic Skills Test that had sharply differential pass rates for whites and minorities. The plaintiffs presented the expert testimony of a UC Berkeley psychology professor who -13-

EMPLOYERS CORPORATE COUNSEL COULD HAVE NO LIABILITY AS MATTER OF LAW IN CONNECTION WITH AGE DISCRIMINATION AND CONTRACT CLAIMS BY DISCHARGED MANAGER
BECK v RESNICK. Gerald V. Beck appeals from a judgment dismissing his complaint after the court sustained ... demurrers ... without leave to amend. Becks second amended complaint alleged he was victim of age discrimination, and was wrongfully terminated by his fellow shareholders in JBZ, Inc. in violation of an employment contract. Beck named Resnick and the law firm based solely on their role as JBZs corporate counsel. We affirm, concluding the trial court correctly decided Becks complaint did not pass muster and could not be amended to do so... [] Because Resnick and the law firm have

CITY EMPLOYEES RETALIATION AND WRONGFUL TERMINATION CLAIMS SETTLE FOR $3.6 MILLION
POLLARD v CITY OF EMERYVILLE. On March 8, a $3.6 million settlement was announced in a case involving retaliation and wrongful termination claims brought by a 27-year-old planning technician for the City of Emeryville. The total includes a $950,000 cash settlement, 13 years of paid administrative leave with benefits, and $1.3 million in attorneys fees and costs. Leslie Pollard was terminated in April of 2005 following a psychiatrists report that she was unfit for duty. Throughout her employment with the City, Pollard had challenged what she perceived to be racially discriminatory and unfair
(Cont'd on Page 14, DECISIONS)

DECISIONS
(From Page 13)

treatment by City management. The complaint alleged that the fitness for duty examination was unwarranted and that psychiatrist Stephen Raffle aided and abetted the City and individual defendants in retaliation against Pollard for her years of anti-discrimination advocacy on behalf of herself and others. The complaint sought punitive damages against Raffle and the other individual defendants, (although the City, as a public entity, was shielded from such a claim). Pollard, who was chief union steward at the time of the firing, was one of two African-Americans who, in the mid 1990s, had pursued and won a union arbitration involving racial discrimination by the City. In early 2004, Pollard and others raised new complaints of racial harassment, this time involving comments, drawings, and hostile behavior by a co-worker. After Pollard complained that the City was doing nothing to investigate the problem, and stated that she was going to take the matter out of the Citys hands, the city manager and the director of human resources treated Pollards statement as a threat and ordered the psychiatric exam. The City hired Dr. Stephen Raffle, providing him with a chronology of Pollards recent complaints which the City managers characterized as unfounded. After a two-and-a-half hour interview and a few written tests, Raffle diagnosed Pollard as suffering from a personality disorder so severe that she could no longer work. Pollards manager acknowledged in deposition that Pollard was performing her job satisfactorily, and the City refused her request that she be seen by a neutral psychiatric examiner. The City conducted a reasonable accommodation meeting, transcribed by a court reporter, during which the City refused to even identify the claimed psychological disorder. After the lawsuit was filed, Pollards attorneys discovered evidence that Raffle had withheld his report until the City agreed to indemnify him against any claims based on his diagnosis of Pollard, and to pay him for his time in any

resulting lawsuit. Raffle admitted in deposition that his conclusion that Pollard suffered from a personality disorder was based in part on her history of filing union grievances, including allegations of race discrimination. In addition to filing her civil suit, Pollard pursued union grievances that resulted in an arbitrators ruling in December of 2006 that the City had violated the CBA because the evidence did not support the Citys justification for ordering the fitness for duty exam. The arbitrator also concluded that Raffles medical opinion was inconsistent with Pollards job performance, and ordered her reinstated with back pay and full benefits. Pollard returned to work in late December, 2006, just two months prior to the trial date. Between Pollards termination and her reinstatement she suffered a wage loss of approximately $80,000, which was included in the settlement amount. For plaintiff: Leslie F. Levy, Darci Burrell, Jean K. Hyams, Boxer & Gerson, Oakland. For defendants: Kathleen Maylin, John Cowden, Jackson Lewis LLP, San Francisco. Mediator: Mark S. Rudy, San Francisco. Alameda County Superior Court, No. RG05228855; information provided by counsel.

STATUS OF AB 1043 and SB 549


The following updates were provided by CELA Legislative Committee Co-Chairs David Lowe and Steve Pingel. (See last months CELA Bulletin for additional information on these two CELA-sponsored bills.)

AB 1043
CELA is sponsoring AB 1043, which declares unconscionable and unenforceable any agreement imposed as a condition of employment that would have the effect of forcing an employee to litigate outside of California, or under another states laws, claims that arose from employment in California or the seeking of employment in California. The bill was introduced by Assembly Member Sandre Swanson, Chair of the Assembly Labor and Employment Committee. AB 1043 passed the Assembly Labor Committee on April 18. (An aye vote by influential business democrat Cathy Galgiani was a good sign that bodes well for the bills eventual passage.) The next hurdle will be the Assembly Judiciary Committee on May 1. CELA Legislative Committee Co-Chair David Lowe testified in support of the bill on April 18, and will do so again on May 1. Consumer Attorneys of California (CAOC) and the California Labor Federation, AFL CIO, have provided invaluable support, advice, and assistance in moving AB 1043 forward, and have lobbied legislators and other organizations on the bills behalf. (Special thanks to Nancy Peverini of CAOC, and to Caitlin Vega and Angie Wei of Cal Labor Fed.) They have also written letters of support, as have the Legal Aid Society of San Francisco-Employment Law Center, the East Bay Community Law Center, and other organizations. So far, only the Civil Justice Association of California, (a pro-business tort reform group), has written in opposi(Cont'd on Page 16, AB1043)

-14-

C O M I N G

E V E N T S

May 11, 2007 CELA WAGE & HOUR CLASS ACTION TRIAL PLANNING SEMINAR Hacienda Hotel El Segundo (See www.celaweb.org for brochure and registration form) May 17, 2007 IMPACT FUNDS 14th ANNIVERSARY RECEPTION St. Francis Hotel San Francisco (See www.impactfund.org for details) May 23, 2007 CELA LOBBY DAY Sacramento (See page 1 for details) June 27-30, 2007 NELA's ANNUAL CONVENTION San Juan, Puerto Rico September 27-29, 2007 CELA's 20th ANNUAL CONFERENCE The Fairmont Hotel San Jose

-17-

CELA'S INAUGURAL LOBBY DAY A DAY TO PROTECT CALIFORNIA WORKERS

WEDNESDAY, MAY 23, 2007 SACRAMENTO

YOUR PARTICIPATION IS CRITICAL!


Please RSVP or address any questions to: Jean Hyams (jhyams@boxerlaw.com) or Christina Krasomil (clkrasomil@earthlink.net)

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

BULLETIN
Published Monthly EDITOR: CHRISTOPHER BELLO May 2007 Vol. 21, No. 5

RECENT EMPLOYMENT LAW DECISIONS


CALIFORNIA SUPREME COURT
COURT MAY NOT DENY PETITION TO COMPEL ARBITRATION ON GROUND THAT STATUTE OF LIMITATIONS HAS RUN ON UNDERLYING CLAIMS
WAGNER CONSTRUCTION CO. v PACIFIC MECHANICAL CORP. In a unanimous opinion by Werdegar filed on May 21, the California Supreme Court reversed the Second District in holding that a court may not deny a petition to compel arbitration on the ground that the statute of limitations has run on the claims the parties agreed to arbitrate. The case involved a subcontractors breach of contract claims against a contractor. The Supreme Court wrote in part: When the parties to an arbitrable controversy have agreed in writing to arbitrate it and one has refused, the court under [Code Civ Proc] section 1281.2, must ordinarily grant a petition to compel arbitration. Exceptions to this rule are recognized by statute and judicial decision. That the statute of limitations has run on the underlying claims, however, is not among the legislatively or judicially recognized justifications for denying a petition to compel. Delay in demanding or seeking to compel arbitration can, indeed, justify denying a motion to compel. But the rules that enforce the requirements of timely demands and petitions have nothing to do with the statutes of limitation that create affirmative defenses to the claims the parties have agreed to arbitrate. A petition to compel arbitration must be brought within four years after the party to be compelled has refused to arbitrate. [cite omitted] This rule has nothing to do with the statute of limitations on the underlying claims... [] This does not mean that a party may postpone arbitration indefinitely by delaying the demand... [T]he Code of Civil Procedure expressly permits a court to deny a petition to compel arbitration on the ground that [t]he right to compel arbitration has been waived by the petitioner... ( 1281.2, subd. (a).) When no time limit for demanding arbitration is specified, a party must still demand arbitration within a reasonable time. [cite omitted]... [] Although Wagner may have delayed unreasonably in seeking to compel arbitration, the superior court expressly declined to reach the issue because it erroneously concluded the statutes of limitations on Wagners contractual and statutory claims barred the petition to compel... [T]he superior court did not undertake the factual inquiry necessary to determine whether Wagner has waived its right to compel arbitration... We will therefore remand the case for further proceedings, during which the superior court may conduct whatever additional factual and legal inquiries are necessary to decide the issue of waiver. Cal SC, 5/21/07; unanimous opinion by Werdegar; 2007 DAR 7142, 2007 WL 1461900.

FUENTES METHOD REMAINS CORRECT WAY TO APPORTION WORKERS COMP BETWEEN CAUSES OF DISABILITY
BRODIE v WORKERS COMPENSATION APPEAL BOARD. These consolidated cases present the following question: When a worker suffers an industrial injury that results in permanent disability, how should the compensation owed based on the current level of permanent disability be discounted for either previous industrial
(Cont'd on Page 2, DECISIONS)

THREE NEW MEMBERS JOIN CELA EXECUTIVE BOARD


CELA is proud to announce the appointment of three new Board members. The size of the Board was temporarily reduced to sixteen with the resignations of Rene Barge and Cliff Palefsky (who joined the CELA Advisory Board). At the recent Board Retreat, (a more complete recap of the Retreat will appear in next months Bulletin), the Board voted to increase the number of seats to nineteen, and to appoint three new Board members: Wilmer Harris, Cynthia Rice, and David DeRubertis. Wilmer Harris practices with the firm of Schonbrun, De Simone, Seplow, Harris & Hoffman LLP, in Pasadena. Cynthia Rice is Director of Litigation, Advocacy & Training with California Rural Legal Assistance, Inc. in San Francisco. David DeRubertis has his own practice in Woodland Hills. Please WELCOME all of the new Board members.

DECISIONS
(From Page 1)

injury or nonindustrial disabilities? The issue was originally settled by this court in Fuentes v. Workers Compensation Appeal Bd. (1976) 16 Cal.3d 1, but the 2004 omnibus reform of Californias workers compensation scheme created doubt as to whether the apportionment formula we adopted in Fuentes had been superceded and a different formula should now be employed. We conclude it has not been superceded and the Fuentes formula remains the correct one to apply in apportioning compensation between causes of disability. [Note: for a discussion of this major victory for insurers and business interests, and other recent developments in the workers comp area, see www.workerscompzone.com, the blog of Julius Young, a workers comp attorney with Boxer & Gerson in Oakland.] Cal SC, 5/3/07; unanimous opinion by Werdegar; 2007 DAR 6181, 2007 WL 1288365.

mary judgment with respect to the plaintiffs CFRA claims. Portlands papers below and on appeal, the court explained, focus on Fausts alleged noncompliance with an employees obligations under the CFRA. Portlands basic premise is that Faust was insubordinate in taking an unauthorized leave of absence and in failing to respond to [the human resource managers] inquiries. However, Portlands papers fail to address the threshold issue of an employers obligations under section 12945.2 and the implementing regulations... [T]here is nothing among the 207 facts in the separate statements of undisputed facts to indicate Portland posted notice or gave notice to Faust of his rights under the CFRA. The separate statements establish that Andersen, Portlands human resource manager, admitted she never informed Faust of any right he may have to leave under the CFRA or FMLA. (2) Because Portland admitted as much in the plaintiffs requests for admissions, the undisputed evidence established that Faust adequately notified Portland of his need for CFRA leave. The remaining issue in this regard, the court wrote, is Portlands contention that Faust unreasonably failed to respond to Portlands follow-up inquiries regarding his condition... On this record, it cannot be said as a matter of law that Faust unreasonably refused to respond to [Portlands] questions seeking necessary information that would have assisted [Portland] in determining if Faust was seeking a CFRA-qualifying leave. The record ... supports a conflicting inference, namely, that it was Portland which unreasonably refused to communicate with any of Fausts representatives. That issue is for the jury. (3) A physician is not the only health care provider who can certify a serious health condition under the CFRA, and the plaintiffs chiropractor was not necessarily precluded from doing so. (4) A triable issue was established as to the plaintiffs cause of action alleging retaliation for the exercise of CFRA
(Cont'd on Page 3, DECISIONS)

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: Michelle Reinglass 23161 Mill Creek Drive Suite 170 Laguna Hills, CA 92653 Tel: (949) 587-0460 FAX: (949) 587-1004 E-mail: michelle@reinglasslaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Sherman Oaks) Eve Chesbro (Pasadena) David DeRubertis (Woodland Hills) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Wilmer Harris (Pasadena) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Cynthia Rice (San Francisco) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles) Brad Yamauchi (San Francisco)

CALIFORNIA COURTS OF APPEAL


SECOND DISTRICT REVERSES SUMMARY JUDGMENT ON CFRA, TAMENY TORT, AND DISABILITY DISCRIMINATION CLAIMS
FAUST v CALIFORNIA PORTLAND CEMENT. The Second District, Division Three, reversed summary judgment in an action in which a union-represented mechanic asserted disability discrimination, CFRA, and Tameny tort claims. The plaintiff experienced severe anxiety and resulting physical symptoms in connection with hostile treatment by co-workers after they learned that he had given the plant manager information concerning internal theft and misconduct. The court held: (1) Portlands failure to establish that it complied with its obligations to give notice to Faust of his right to medical leave precluded it from obtaining sum-

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

-2-

DECISIONS
(From Page 2)

rights. Faust made out a prima facie case by presenting evidence that he was entitled to leave under the CFRA, he availed himself of that right, and was terminated for taking the leave to which he was entitled. Portland asserts it legitimately discharged Faust for failing to respond to ... repeated inquiries. However, Portlands refusal to communicate with any of Fausts representatives, particularly his workers compensation attorney, undermines Portlands contention... (5) An interference claim under the FMLA (and thus under the CFRA) does not involve the burden-shifting analysis articulated by the United States Supreme Court in McDonnell Douglas... As stated in Bachelder v. America West Airlines, Inc. (9th Cir. 2001) 259 F.3d 1112, 1131, there is no room for a McDonnell Douglas type of pretext analysis when evaluating an interference claim under this statute. A violation of the FMLA simply requires that the employer deny the employees entitlement to FMLA leave. (Xin Liu v. Amway Corp. (9th Cir. 2003) 347 F.3d 1125, 1135.) (5) Because Faust has viable claims for violation of the CFRA, it necessarily follows that a triable issue exists with respect to the fourth cause of action for wrongful termination in violation of public policy. (6) With respect to the claim of disability discrimination, Portland moved for summary judgment on the grounds that, at the time of Fausts termination..., he did not have a disability within the meaning of of the FEHA, it did not know whether Faust had an alleged disability, it did not perceive him as a qualified individual with a disability, and Faust was not discharged because of an alleged disability. Further, it had a legitimate, nondiscriminatory business reason for terminating Faust and Faust could not establish that Portlands reasons were false and pretextual. These arguments are unavailing. Faust presented evidence that Portland was aware of his orthopedic con-

dition at the time it terminated his employment... Dr. Andalibs work status report ... advised Portland that Faust was unable to perform regular job duties...' [] Portlands proffered legitimate, nondiscriminatory reason... is that Faust was insubordinate for failing to communicate with [human resources]. We have already discussed the so-called failure to communicate and it is unnecessary to reiterate that discussion here. For plaintiff: Horton & Lines, Horton & DeBolt and Laura L. Horton. For defendant: Jackson Lewis, Robert D. Vogel and Joanie L. McGuire. Second Dist Div Three, 5/10/07; opinion by Klein with Croskey and Aldrich concurring; 2007 DAR 6613, 2007 WL 1365776.

FAA... In anticipation of Giulianos claim that the arbitration clause is unenforceable under Armendariz, Empire argued that the arbitration clause was not invalid because both parties were on equal footing, with equal rights to arbitration by a neutral arbiter in accordance with the rules of the American Arbitration Association or Judical Arbitration and Mediation Services, both of which comply with the Armendariz standard. The trial court denied Empires motion to compel arbitration on the grounds that: (1) the arbitration clause was vague and unintelligible as to which parties were bound by the agreement; (2) the FAA did not preempt Giulianos wage claim because his employment contract did not involve interstate commerce; and (3) the arbitration clause was unconscionable and invalid under Armendariz. [T]he interstate nature of Giulianos employment was undisputed, notwithstanding Giulianos contention to the contrary, and we therefore decide the issue as a matter of law... Significantly, Giuliano alleged in his complaint that Empire was engaged in business throughout Arizona and California. Empire contends that the arbitration clause contained in Giulianos employment agreement is not governed by the requirements set forth in Armendariz... We agree... [] We distinguish ... cases [that involve] unwaivable statutory claims for federally mandated overtime and minimum wage payments, whereas this case involves a breach of contract claim... [] Armendariz does not apply to this case because it is not based on the FEHA or a fundamental public policy that is tied to a constitutional or statutory provision. Empire contends that the arbitration clause is not ambiguous and the related entities are subject to arbitration. We agree... [] On this record, the only reasonable inference to be drawn is that all the affiliated Empire entities are bound by the employment contracts arbitration clause.

SECOND DISTRICT REVERSES ORDER THAT DENIED MOTION TO COMPEL ARBITRATION OF EXECUTIVES BREACH OF CONTRACT CLAIMS
GIULIANO v INLAND EMPIRE PERSONNEL, INC. The Second District, Division Four, reversed the denial of an employers motion to compel arbitration of a former executives claim for non-payment of a $5 million to $8 million profit-sharing bonus and a $500,000 severance payment. The court wrote: In this appeal, Empire seeks to enforce the ... arbitration clauses contained in the: (1) employment agreement that Giuliano had signed and initialed upon accepting the offer of employment; (2) the employee handbook that was mentioned in the employment contract; and (3) the employee bonus plan that Giuliano had signed upon accepting the offer of employment. The complaint alleged that the employment contracts arbitration clause was invalid and unenforceable under Labor Code section 229, which provides a judicial forum for statutory wage claims. Empire moved to compel arbitration, contending that Labor Code section 229 was preempted by section 2 of the -3-

(Cont'd on Page 4, DECISIONS)

DECISIONS
(From Page 3)

In support of the order denying arbitration, Giuliano contends that the arbitration clause in the various agreements should be stricken as a vague, unintelligible, unconscionable, and invalid contract of adhesion. We disagree. In finding the arbitration clause in Lagatree [v Luce, Forward, Hamilton & Scripps (1999) 74 CA4th 1105] was not unconscionable, the court noted that, as Gilmer and its progeny make clear, the compulsory nature of a predispute arbitration agreement does not render the agreement unenforceable on grounds of coercion or for lack of voluntariness. (74 Cal.App.4th at p. 1129.) Giuliano also contends that the arbitration clause is procedurally unconscionable because it does not provide for discovery, does not require a written arbitration award, and does not require the employer to pay for fees and costs unique to arbitration. These are procedural requirements set forth in Armendariz. As we have concluded that Armendariz does not apply to this case, Giulianos claim of procedural unconscionability fails. For plaintiff: Dempsey & Johnson, Michael D. Dempsey and Arlene M. Turinchak. For defendants: De Corso, Daly, Kreindler & Harris, Charles L. Kreindler and Edward E. Alon. Second Dist Div Four, 3/26/07; publication ordered 4/19/07; 2007 DAR 5413, 2007 WL 891315.

appointments, while permitting workers with non-industrial injuries to use sick leave for that purpose. Section 132a provides in pertinent part: It is the declared policy of this state that there should not be discrimination against workers who are injured in the course and scope of their employment. The anti-discrimination provisions of section 132a are not limited to protecting only its enumerated rights, such as workers compensation ratings or awards, the Second District held. An employer action that in any manner ... discriminat[es] against an industrially injured employee to the detriment of his or her receipt or exercise of employment rights is compensable under section 132a. [cite omitted.] For employee: Allan S. Ghitterman, Russell R. Ghitterman, and Benjamin P. Feld. For city: Goldman, Magdalin & Krikes and Rolla Norton, Jr. Second Dist Div Six, 4/19/07; opinion by Coffee with Gilbert and Perren concurring; 2007 DAR 5403, 2007 WL 1153010.

ment, contending that it is unconscionable under California law. The merits of the underlying claims in her complaint are not at issue here. Because the arbitration agreement is unconscionable under California law, we reverse and remand. [I]n a very real sense the DRP was take it or leave it. The DRPs terms took effect three months after they were announced regardless of whether the employee liked them or not. An employees option was to leave and work somewhere else. OMelveny concedes that its employees were not given an option to opt out and preserve a judicial forum... But, OMelveny arguesand the district court agreedthat the three months of notice nevertheless satisfies the concern of oppression behind this [Armendariz] factor. It relies on a marketplace alternatives theory used in cases outside the employment context. It is impossible, however, to square such reasoning with explicit language from Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1172 (9th Cir. 2003) (Ingle I) and Ferguson [v Countrywide Credit Industries, Inc.] 298 F3d at 784, specifically rejecting the argument that a take it or leave it arbitration provision was procedurally saved by providing employees time to consider the change... [] In short, the DRP is procedurally unconscionable. Davis challenges the DRPs notice provision. It allows one year within which to give notice from when any claim is known to the employee or with reasonable effort ... should have been known to him or her. Davis contends that this notice provision is a substantively unconscionable shortened statute of limitations and that it deprives her of potential application of a continuing violation theory. The challenged provision covers more than merely notice; it also requires a demand for mediation within a year... Under the DRP, then, mediation is a
(Cont'd on Page 5, DECISIONS)

NINTH CIRCUIT
OMELVENY & MYERS ARBITRATION AGREEMENT CONTAINED MULTIPLE ARMENDARIZ DEFECTS THAT COULD NOT BE SEVERED
DAVIS v OMELVENY & MYERS. In an action by a paralegal asserting violations of FLSA and California Labor Code requirements relating to overtime pay and meal and rest periods, a Ninth Circuit panel wrote as follows in a unanimous opinion by District Judge Samuel P. King (D Hawaii) sitting by designation. Plaintiff Jacqueline Davis appeals from the [Central Districts] order dismissing her action and compelling arbitration under 9 U.S.C. 4 based upon an arbitration agreement with her former employer... On appeal, Davis challenges the enforceability of the arbitration agree-4-

CITY OF SANTA BARBARA VIOLATED LAB CODE 132a BY REQUIRING INDUSTRIALLYINJURED EMPLOYEES TO USE VACATION TIME FOR MEDICAL APPOINTMENTS
ANDERSEN v WORKERS COMPENSATION APPEAL BOARD. The City of Santa Barbara violated Labor Code 132a, it was held by the Second District, Division Six, by following a written policy that required industrially-injured workers to use earned vacation time rather than sick leave to attend medical

DECISIONS
(From Page 4)

mandatory prerequisite to arbitration. The one-year notice provision thus functions as a statute of limitations. Because mediation precedes the arbitration, the notice provision requires the whole claim to be filed within a year. One cannot, for example, give written notice within a year, but otherwise file a claim later under a longer statute of limitations. In short, if the claim is not filed within a year of when it should have been discovered, it is lost... Under Ingle I, [Circuit City Stores v] Adams [(9th Cir 2002) 279 F3d 889], and [Circuit City Stores v] Mantor [(9th Cir 2003) 335 F3d 1101] (and the subsequent California appeals court decision in Martinez [v Master Protection Corp.

(2d Dist 2004) 118 CA4th 707, 12 CR3d 663]), the DRPs one-year universal limitation period is substantively unconscionable when it forces an employee to arbitrate employment-related statutory claims. Next, Davis challenges the confidentiality provision. She argues that it is overly broad and therefore substantively unconscionable under Ting v. AT & T, 319 F.3d 1126 (9th Cir. 2003)... [] Here, the DRPs confidentiality clause as written unconscionably favors OMelveny. The clause precludes even mention to anyone not directly involved in the mediation or arbitration of the content of the pleadings, papers, orders, hearings, trials, or awards in the arbitration

or even the existence of a controversy and the fact that there is a mediation or an arbitration proceeding. Such restrictions would prevent an employee from contacting other employees to assist in litigating (or arbitrating) an employees case. An inability to mention even the existence of a claim to current or former OMelveny employees would handicap if not stifle an employees ability to investigate and engage in discovery... As written, the terms are too broad and implicate Tings concerns. Davis also challenges the DRPs nonmutual provision exempting OMelveny from arbitration for claims by the Firm for injunctive and/or other equitable relief for violations of the attorney-client
(Cont'd on Page 6, DECISIONS)

ANTI-PLAINTIFF CLASS ACTION BILL AB 1505 FAILS IN COMMITTEE ON MAY 8


Concerning CAOCs efforts in defeating AB 1505, CELA Member Tracee Lorens (San Diego) wrote as follows in a May 8 CELA List message: David Lowe, Steve Pingel and I went to Sacramento a couple of weeks ago to meet with CAOC President Ray Boucher and their amazing lobbyists, Nancy Peverini, Nancy Drabble, and Lee-Ann Traton to ask for their help in killing this bill. As many of you know, the bill would have decimated class action practice in California. Thanks to CAOC, the bill died in committee today. The tort reformers and Nicole Parra could not even get a second when a motion was made to call the vote. I want to personally thank all who helped in this effort and to remind everyone that even though we dont always hear about CAOCs hard work, they are warriors for us all and we appreciate their support. On May 8, CAOC issued the following press release. Consumer Attorneys of California is pleased to announce that after successful lobbying, the class action lawsuit bill, AB 1505 by Assembly Member Nicole Parra (D-Hanford), did not pass the Assembly Judiciary Committee today and is effectively dead for this year. Brad Seligman of The Impact Fund and Caitlin Vega of the California Labor Federation, as well as other labor groups, seniors, and CAOC President-Elect Don Ernst, provided powerful testimony against the bill. Assembly Member Van Tran (R-Costa Mesa) moved the bill but it failed to receive a second and therefore failed without a vote. As you may also be aware, the Civil Justice Association of California (CJAC) has raised the threat of an initiative on this issue. Be assured, (as in connection with the past three initiative threats on attorney fees, construction defect/ ADA litigation, and punitive damages), the CAOC will remain vigilant in protecting your rights. We are investigating the extent of the threat while building our offense. In a press conference on April 25, Asm. Parra claimed that AB 1505 would have done nothing to prevent legitimate class cases from being brought. She said that she was only trying to prevent lawyers from gaining large verdicts involving little compensation to plaintiffs, and that AB 1505 was an attempt to align state law with federal law. In fact, AB 105 was an attempt to undermine the civil justice -5system by effectively killing the ordinary citizens right to bring a class action lawsuit in California, and to deprive of their day in court hundreds of thousands of economically injured or abused Californians. The most glaringly anti-consumer provisions of AB 1505 would have: (1) Required each individual class member to prove his or her claim and extent of damages, and required trial evidence on both the plaintiff and defense side to be substantially the same for everyone a provision which if applied literally would have eliminated class actions as a tool for obtaining justice; (2) given the defendant the unprecedented right to bypass class counsel and communicate directly with class members to make a settlement offer; (3) stayed discovery directed to the merits until the class was certified, thus creating a catch-22 by prohibiting plaintiffs from collecting the evidence necessary to prove the viability of their claims in the certification process.

DECISIONS
(From Page 5)

privilege or work product doctrine or the disclosure of other confidential information. It may be that a provision allowing a law firm immediate access to a court for a limited purpose of seeking injunctive relief to protect confidential attorneyclient information could constitute a legitimate business justification because such relief would fit into an unarbitrable category of public injunctiona proposition of California state law which ... has not been addressed in a published California opinion and which we need not decide here. Even assuming such an injunction were not arbitrable, however, the DRPs provisions are not so limited... As written, then, the DRPs non-mutual exception allowing it a judicial remedy to protect confidential information ... is one-sided and thus substantively unconscionable. [cite omitted.] Davis challenges as void against public policy the DRPs prohibition against most administrative actions... [] Even if the DRP does not preclude the Department of Labor or California Labor Commissioner from instituting independent actions, the DRP precludes any individual complaint or notification by an employee to such agencies. By not allowing employees to file or to initiate such administrative charges, the DRP is contrary to the same public policies relied upon in Gilmer and Armendariz... Therefore, the DRPs prohibition of administrative claims is void. [T]he DRP is procedurally unconscionable and contains four substantively unconscionable or void terms... These provisions cannot be stricken or excised without gutting the agreement... [] The arbitration agreement is unconscionable under California law. We reverse and remand for proceedings not inconsistent with this opinion. For plaintiff: Peter M. Hart, Los Angeles. For defendant: Adam P. Koh-Sweeney, Scott H. Dunham, and Anne E. Garrett, OMelveny & Myers, Los Angeles. Ninth Circuit, 5/14/07; opinion by King joined by McKeown and

Berzon; 2007 DAR 6741, 2007 WL 1394530.

JAPAN FCN TREATY DID NOT PREEMPT LAB CODE 1102.5 WHISTLEBLOWER CLAIMS AGAINST JAPAN AIR LINES
VENTRESS v JAPAN AIRLINES. The Ninth Circuit reversed judgment on the pleadings entered by a federal district court in Hawaii on claims under Lab Code 1102.5(b) brought by two United States citizens formerly employed by a Hawaii corporation, (HACS), to provide flight crews to Japan Air Lines. The complaint alleged that the plaintiffs were harassed and had their assignments to JAL cancelled after they filed a complaint against JAL and HACS in the Central District of California alleging that JAL had required a seriously ill pilot to fly in June 2001, in violation of U.S. and Japanese aviation laws as well as JALs own operations manual. At issue was the scope of article VIII(1) of the Friendship, Commerce, and Navigation Treaty between the United States and Japan, which provides: Nationals and companies of either Party shall be permitted to engage, within the territories of the other Party, accountants and other technical experts, executive personnel, attorneys, agents and other specialists of their choice. The Ninth Circuit wrote: [T]he district court erred by construing article VIII(1)to confer on Japanese employers blanket immunity from state employment law. In the district courts view, JALs immunity was sufficiently broad that judgment was appropriate even though the pleadings were silent on whether the plaintiffs were replaced by Japanese citizens. In other words, the district court believed that JAL has a treaty right to ignore domestic employment law even for personnel decisions that involved only non-Japanese citizens. Taken to its logical conclusion, such an expansive construction of article VIII(1) would lead to absurd results, such as exempting foreign employers from collective bargaining laws...

"As the circuits that have addressed the question have uniformly found, the main purpose of article VIII(1) is to guarantee the ability of each signatorys companies the ability to staff critical managerial and technical positions overseas with their fellow citizens. Californias whistleblower protection laws merely prevent JAL from retaliating against employees for reporting and resisting the employers domestic law violations; the laws in no way conflict with JALs limited treaty right to discriminate in favor of Japanese citizens. In the absence of conflict, there can be no preemption. For plaintiffs: Martin Ventress, pro se; Charles H. Brower, Shawn A. Luiz, Honolulu. Ninth Circuit, 4/24/07; opinion by Goodwin joined by Beezer and Tallman; 2007 DAR 5592, 2007 WL 1192010.

ON DE NOVO REVIEW OF DENIAL OF DISABILITY PENSION BENEFITS, DISTRICT COURT ABUSED DISCRETION IN ADMITTING EVIDENCE EXTRINSIC TO ADMINISTRATIVE RECORD
OPETA v NORTHWEST AIRLINES PENSION PLAN FOR CONTRACT EMPLOYEES. Ioane John Opeta appeals the district courts judgment that he is not totally and permanently disabled [by a back injury], and therefore ineligible for a disability pension under the Northwest Airlines Pension Plan for Contract Employees, which is administered by Northwest Airlines and regulated by ... ERISA. We must determine whether the district court, in conducting a de novo review of the Plans denial of benefits, abused its discretion by admitting evidence extrinsic to the administrative record. We hold that because the circumstances did not clearly establish that the evidence was necessary to the district courts review, Friedrich v. Intel Corp., 181 F.3d 1105, 110-11 (9th Cir. 1999), the district court abused its discretion by admitting the
(Cont'd on Page 7, DECISIONS)

-6-

DECISIONS
(From Page 6)

evidence. Therefore, we reverse the district courts judgment and remand for a grant of benefits under the Plan. During opening statements, over Opetas objection, the district court allowed Northwest to read a textual description of a previously undisclosed surveillance videotape of Opeta... [] The videotape depicted Opeta doing yard work for approximately two hours and thirty minutes... [] [O]n crossexamination Northwest surprised Dr. Gold [an orthopedic specialist who performed an Independent Medical Examination and made a final and binding determination] by playing the videotape. Dr. Gold then testified that if he had been provided with the videotape at the time of his ... evaluation, he would not have concluded that Opeta was totally and permanently disabled. While de novo is the correct standard of review in this case, the district court abused its discretion by failing to conduct the proper analysis before admitting extrinsic evidence...[] In Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan [(9th Cir 1995) 46 F3d 938] ... we held that extrinsic evidence could be considered only under certain limited circumstances. We cited with approval the rule ... that the district court should exercise its discretion to consider evidence outside the administrative record only when circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review. [cite omtted.] Here, the district court admitted several pieces of extrinsic evidence, including the videotape ... without conducting the proper analysis... Because we conclude that none of the extrinsic evidence was necessary to conduct an adequate de novo review, we hold that the district court abused its discretion in admitting the evidence... [B]ased on the plain terms of the Plan and binding nature of Dr. Golds pretrial opinion, the district court erred as a matter of law by awarding a judgment in Northwests favor. We therefore reverse the district courts judgment and re-

mand for an award of benefits under the Plan consistent with this opinion. For plaintiff: Lisa S. Kantor, Glenn R. Kantor, Northridge; Russel G. Petti, La Canada. For defendant: Thomas B. Ackland, Jason Orlandi, Barger & Wolen LLP, Los Angeles. Ninth Circuit, 5/7/07; opinion by Wardlaw joined by Wallace and McKeown; 2007 DAR 6381, 2007 WL 1309742.

and its ruling that those claims were subject to complete preemption under LMRA 301. After the expiration of a CBA, the Ninth Circuit explained, a labor dispute arose between a group of employers and their employees, who were members of the United Food & Commercial Workers International Union. The employers had previously formed a mutual aid pact whereby all signatories would lockout their employees in the event of a strike. After the Union called a strike against one of the signatory-employers, Ralphs Grocery Company and Albertsons, Inc. pursuant to the mutual pact, initiated a lockout of their employees. Appellees did not give their employees 60 days notice of the lockout. On October 14, 2003, the Union filed a lawsuit against Appellees alleging that they violated the Cal WARN Act by failing to provide employees with 60 days notice of a mass layoff. On February 27, 2004, the Union and Appellees simultaneously entered into a new CBA and a Labor Dispute Settlement Agreement. This agreement required the Union to waive, release, and dismiss all claims pertaining to the labor dispute... The Union accordingly dismissed the Cal-WARN claim. On October 12, 2004, Appellants, as individuals of a putative class of grocery store employees subjected to the mass layoff by Appellees, filed their own CalWARN claims against Appellees in state court. Appellees removed these claims to federal court based on 301 preemption. The district court denied Appellants motion to remand and granted Appellees motion for dismissal pursuant to Rule 12(b)(6)... Appellants timely appealed the ruling of preemption and dismissal. Like the plaintiffs in Cramer [v Consolidated Freightways, Inc. (9th Cir 2001) 255 F3d 683], Appellants base their claims on rights conferred by a California statute, not a CBA. The Cal-WARN Act grants the right to 60 days notice of a mass layoff regardless of whether an
(Cont'd on Page 8, DECISIONS)

REHEARING EN BANC IS ORDERED IN CASE IN WHICH PANEL HELD THAT UPS FAILED TO ESTABLISH BUSINESS NECESSITY DEFENSE TO ADA CLAIMS BY DRIVERS WHO FAILED TO MEET HEARING STANDARD
BATES v UNITED PARCEL SERVICE, INC. On April 24, the Ninth Circuit ordered rehearing en banc in the case in which a three-judge panel held that UPS failed to establish a business necessity defense to ADA claims by a class of drivers denied employment because they were unable to meet a Department of Transportation hearing standard that did not apply to the category of vehicles in question. The panel decision by Berzon, joined by B. Fletcher and Gibson, appeared at 465 F3d 1069, and was summarized in CELA Bulletin, Oct 06, p.1. Ninth Circuit, 4/24/07; 2007 WL 1228781.

CAL-WARN CLAIMS BY GROCERY WORKERS IN CONNECTION WITH LOCKOUT WERE NOT SUBJECT TO LMRA 301 PREEMPTION
DALL v ALBERTSONS, INC. In an unpublished decision filed on May 14, the Ninth Circuit reversed the Central Districts judgment dismissing California WARN Act claims with prejudice -7-

DECISIONS
(From Page 7)

employee works subject to a CBA. Because the Settlement Agreement or any CBA in the present case did not provide a right to 60 days notice of a mass layoff there is no federal claim under 301 that would supplant Appellants state law claim. [A] defendant cannot, merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law... The Settlement Agreement in this case is only relevant to Appellees asserted defenses of waiver, release, and duty to arbitrate... [] [A] 301 issue arises only because of Appellees defense, and not from the face of the complaint. As such, the ... district court lacked removal jurisdiction. Therefore, we REVERSE and REMAND to the district court with instructions to remand the case to state court and to determine if an award of attorneys fees for improper removal is appropriate in this case. For plaintiffs: Steven J. Kaplan, Beverly Hills; David M. DeRubertis, Woodland Hills. For defendants: Lawrence J. Gartner, Kauff, McClain & McGuire LLP; David L. Bacon, Linda S. Husar, David N. Buffington, Thelen, Reid, Brown, Raysman & Steiner, LLP, Los Angeles. Ninth Circuit, 5/14/07; Judges Farris, Gould, and Duffy (Memorandum Opinion); 2007 WL 1423727 (unpublished).

ment on claims of race discrimination, retaliation, Tameny tort, and negligent supervision, but affirmed summary judgment on a harassment claim that it held was untimely. The Santa Clara County Superior Court had granted summary judgment on the grounds that the harassment claim was time-barred, the retaliation claim was barred by the plaintiffs failure to exhaust administrative remedies, and the remaining claims were not supported by evidence sufficient to withstand adjudication as a matter of law. Defendants ... supplied evidence that economic conditions, rather than racial hostility, accounted for the lack of work offered to plaintiff in 2002 and early 2003. Defendants also provided evidence supporting their assertion that plaintiff was terminated because he was thought to have abandoned his job. Plaintiff responded to this showing, however, with specific evidence of [supervisor] Kincaids strong racial animus against African Americans. He disputed Kincaids estimate of the number of calls he received about work availability. He provided a different set of employees with whom he was comparing his assigned hours... And he presented declarations and deposition testimony ... supporting his account of Kincaids racial slurs and Kincaids use of the word nigger. [] Other employees testified to more general indications of Kincaids racial animus. From this evidence ... we conclude that plaintiff produced substantial responsive evidence that Kincaids proffered reasons for reducing and then terminating plaintiffs work hours were false or pretextual. Defendants asserted that plaintiff had failed to exhaust his administrative remedies for any acts occurring before December 19, 2002, because he received his right-to-sue letter from DFEH on December 19, 2003. On appeal, defendants apply this argument to the second and third causes of action, for harassment and retaliation. Defendants primary challenge to this cause of action was that Kincaid did not -8-

make any harassing comments within the one-year period permitted by the FEHA. Plaintiff responded that the harassment claim encompassed the reduction and termination of his hours... [] Harassment, however, is distinct from discrimination... [] We agree with the trial court that the allegation based on [the alleged racial remarks] was untimely. [] Moreover, plaintiff did not allege harassment in [his DFEH] complaint. Plaintiff argues that the harassing remarks were part of a continuing violation of the FEHA... [] [W]e agree with the trial court that the reduction in work assignments and termination of employment were not sufficiently similar to the disparaging racial remarks that occurred outside the limitations period... The trial court correctly adjudicated this cause of action as a matter of law. [However] we agree with plaintiff that the alleged acts of retaliationcutting plaintiffs hours, unjustifiably criticizing his performance on the job, and terminating himwere sufficiently related to the earlier discrimination as to be encompassed in the DFEH complaint. The claim of negligent supervision, [though not the claims of negligent hiring and negligent training], withstands summary adjudication. Plaintiffs evidence suggests that Kincaid was unrestrained in his racial invective... If plaintiff can prove discrimination at trial, he may be able to show that SASCO was liable for failing to prevent such conduct by adequate supervision. For plaintiff: S. John Ota, Minami Tamaki LLP, San Francisco, Robert L. Rusky, San Francisco. For defendant: Simon Anthony Mazzola, Quadros & Johnson LLP, San Mateo. Sixth Dist, 5/16/07; opinion by Elia with Rushing and Premo concurring; 2007 WL 1431862 (unpublished).

UNPUBLISHED COURT OF APPEAL DECISIONS


[Note: only a selection of the unpublished Court of Appeal decisions filed during the past month are briefly summarized below.]

SUMMARY JUDGMENT IS REVERSED ON RACE DISCRIMINATION AND RELATED CLAIMS


PRESTON v SASCO ELECTRIC. The Sixth District reversed summary judg-

(Cont'd on Page 9, DECISIONS)

DISASTER PREPAREDNESS: WHAT WE NEED TO BE DOING NOW


by Jeffrey K. Winikow Disasters come in all shapes and forms, man-made and natural. The question in California is not whether a disaster will occurearthquake, flood, fire, potential terrorismbut when. While we cant predict the specifics, we can predict with relative certainty that within the next five years there will be some event that will dramatically affect the personal and professional lives of many of our members. The purpose of this article is to initiate a discussion into the ways that CELA can help our members mitigate the devastating affects of local and/or regional disasters in California. While large law firms have vast resources at their disposal, we only have one another. And if we do not begin to think about disaster-related issues now, it may be too late. There are many lessons to be learned from the aftermath of 9/11 and Katrina. Due to space limitations, this article will highlight only a few of the things that we all need to be thinking about. Off-Site Backup for Data. A disaster does not need to completely destroy your office building in order to cripple your law practice: a building may be yellow-tagged or red-tagged for months at a time. In planning for disaster-related contingencies, little purpose is served by maintaining your offices backup system at the same site as all of your other records. Keeping back-up at home may be helpful, though in the case of a regional disaster like Katrina you may be shut out of your home for as long as you are shut out of your office. Keeping Blackberry PINs of Staff and Colleagues. In a disaster, communication systems will be pushed beyond their breaking point, especially in the first couple of days. One of the things that helped large firms navigate through the early days of Katrina was
(Cont'd on Page 12, DISASTER)

DECISIONS
(From Page 8)

CLASS CLAIMS BELONGED IN COURT AND WERE NOT SUBJECT TO NASD ARBITRATION
CLARK v FIRST UNION SECURITIES. The Second District, Division Three, agreed with the Superior Court that the plaintiff stock brokers class UCL claims were not subject to NASD arbitration. The court wrote: The [Form U-4] arbitration agreement before us did not include an agreement to arbitrate all claims. Rather, it specifically made inarbitrable putative class and class action causes of action. Rule 10301(d) specifically states that claims submitted as a class action shall not be eligible for arbitration under this Code at the Association. [] ... Any claim filed by a member or members of a putative or certified class action is also ineligible for arbitration... (Rule 10301(d)(1)(2)...) As the SEC approval order confirmed, Rule 10301(d) was designed to put class and putative class actions into the forum that could handle themthe court. As the 1992 approval order states, the NASD Codes arbitration requirement was never meant to apply to putative or certified class actions. Enter-

taining such claims through arbitration at the NASD would be difficult, duplicative and wasteful. For plaintiffs: Knapp, Petersen & Clarke and Stephen M. Harris. For defendant: Reed Smith LLP, Margaret M. Grignon, Alisa M. Chevalier, Michele J. Beilke and Zareh Jaltorossian. Second Dist Div Three, 5/9/07; opinion by Aldrich with Klein and Croskey concurring; 2007 WL 1346188 (unpublished).

the court held, to support the conclusion that the rules had been changed and a second exam had been conducted specifically to favor a white employee who been excluded from the first exam, but there was insufficient evidence to support the conclusion that the City had favored the white employee because of his race. All of the evidence indicates that the decision was made for reasons other than Carlsons race or the race of the individuals remaining on the register of eligibles at the time the decision was made, the court concluded. Sufficient evidence did, however, support the jury verdict in favor of one of the plaintiffs on a retaliation claim, the court held. The plaintiff had reasonably believed that the promotion procedure had been racially discriminatory, and sufficiently proved a causal connection between his complaints and his discharge. Citing Wasti v Superior Court (2006) 140 CA4th 667, the court wrote as follows concerning an issue relating to the exhaustion of administrative remedies. Plaintiff McMillian did not personally or by certified mail serve the
(Cont'd on Page 10, DECISIONS)

INSUFFICIENT EVIDENCE SUPPORTED JURY VERDICTS IN FAVOR OF THREE AFRICANAMERICAN EMPLOYEES ON CLAIMS OF RACIALLY DISCRIMINATORY NONPROMOTION
McMILLIAN v CITY OF LOS ANGELES. The Second District, Division Three, reversed a judgment on a jury verdict for three African-American city employees on their claims of racially discriminatory failure to promote. The plaintiffs presented sufficient evidence, -9-

DECISIONS
(From Page 9)

defendants with his retaliation DFEH complaints. Defendants argue this constitutes a failure to exhaust... We disagree... [] In this case, plaintiff McMillian sought only right-to-sue letters, not a DFEH investigation. As such, he was not required to personally serve defendants with his DFEH retaliation complaints, and his failure to do so presents no bar to his recovery. The case was remanded for a new trial on damages. For plaintiffs: David Peter Cwiklo. For defendants: Gerald M. Sata, Deputy City Attorney. Second Dist Div Three, 4/24/07; opinion by Croskey with Klein and Kitching concurring; 2007 WL 1196543 (unpublished).

not disabled as a matter of law and thus was not entitled to an accommodation. The trial court ... apparently agreed with one or both of these arguments. This was error. To be sure, the complaint itself is barely adequate... Yet there is little question that the complaint put Nike on notice of the failure-to-accommodate claim... If Nike wished to clarify those allegations, its obligation was to do so, either in a demurrer challenging the complaints sufficiency or in discovery prior to making its motion for summary judgment/summary adjudication. Nikes failure to address this claim in its moving papers is not salvaged by its reply... Having failed to address this claim in its moving papers, the motion should have been denied without regard to arguments made either in the opposition or the reply. For plaintiff: Gary B. Ross and Andrew B. Morrison. For defendant: Kirkpatrick & Lockhart, Nicholson Graham, Paul W. Sweeney, Jr., Christopher J. Kondon, and Myra B. Villamor. Second Dist Div Seven, 4/18/07; opinion by Perluss with Johnson and Zelon concurring; 2007 WL 1140421 (unpublished).

Bruns DFEH charge never mentioned harassment or retaliation, the court wrote. Brun ... argues that we should ignore his failure ... because the form lacked boxes to check harassment and retaliation as grounds for his claim. The selection of the type of discrimination alleged, i.e. the selection of which box to check, is in reality nothing more than the attachment of a legal conclusion to the facts alleged. [cite omitted.] [T]he factual statement is the crucial element of the charge. [cite omitted.] Here, the factual statement made no mention of harassment or retaliation. We also reject Bruns claim, made for the first time on appeal, that he exhausted his administrative remedies as to the individual defendants by securing right-to-sue notices as to each defendant after he filed his civil action in superior court. The California Tort Claims Act ... generally exempts public entities from common law tort liability... Bruns admitted failure to file a tort claim for wrongful termination in violation of public policy barred his civil action for damages on that cause of action. For plaintiff: Robert V. Cohune, Truckee; Jeffrey K. Winikow, Los Angeles. For defendants: Carl L. Fessenden, Porter, Scott, Weiberg & Delahant, John D. Adkisson, Hanson, Bridgett, Marcus, Vlahos & Rudy, Sacramento. Third Dist, 4/26/07; opinion by CantilSakauye with Davis and Hull concurring; 2007 WL 1219691 (unpublished).

SUMMARY JUDGMENT IS AFFIRMED ON RACE AND GENDER DISCRIMINATION AND HARASSMENT CLAIMS, BUT REVERSED ON CLAIM FOR FAILURE TO ACCOMMODATE PREGNANCY
KOBBERVIG-HARRELL v NIKE, INC. The Second District, Division Seven, reversed summary judgment on a former salespersons claim that Nike had failed to accommodate the plaintiffs pregnancy, but the court affirmed summary judgment on race and gender discrimination and harassment claims. Concerning discrimination, the court held that the plaintiff had failed to raise an issue of pretext concerning Nikes contention that the plaintiff had been discharged because of customer complaints and unethical conduct. In addition to her other claims of FEHA violations, the court wrote, KobbervigHarrell alleged Nike committed unlawful employment practice(s) ... by failing to make all reasonable accommodations [for her pregnancy]. Nike failed to address that claim in its motion for summary judgment... Nike [subsequently] argued a failure-to-accommodate claim had not been pleaded or, in the alternative, Kobbervig-Harrell was

ADMINISTRATIVE REMEDIES WERE NOT EXHAUSTED WHERE DFEH CHARGE FAILED TO MENTION HARASSMENT AND RETALIATION
BRUN v TRUCKEE-TAHOE AIRPORT DISTRICT. The Third District affirmed summary judgment on harassment, retaliation, and Tameny tort claims brought by an airport employee who had suffered an epileptic seizure while off duty and had returned to work after negotiating a mutually acceptable accommodation agreement, but who had subsequently been subjected to a series of actions by supervisors that resulted in his termination.

DEFAMATION CLAIM AGAINST CO-WORKER WAS BASED ON PETITIONING ACTIVITY AND TRIAL COURT THEREFORE ERRED IN DENYING SLAPP MOTION
VALLE v AGUILAR. Elio Antonio Valle sued [his co-worker] Yolanda Aguilar for defamation. Aguilar filed a special motion pursuant to Code of Civil Procedure section 425.16, known as the anti(Cont'd on Page 11, DECISIONS)

-10-

DECISIONS
(From Page 10)

JUDITH VLADECK: 1923-2007


cordingly, the judgment is reversed. For plaintiff: A. Thomas Hunt; Jonathan W. Biddle. For defendant: Seyfarth Shaw, LLP, Ann Kotlarski, Catherine A. Evans, Timothy L. Hix. Second Dist Div Three, 5/2/07; opinion by Aldrich with Klein and Croskey concurring; 2007 WL 1267514 (unpublished). For plaintiff: Joseph M. Lovretovich, D. Aaron Brock. Second Dist Div Six, 5/2/07; opinion by Coffee with Yegan and Perren concurring; 2007 WL 1276903 (unpublished).

SLAPP ... statute, to strike Valles defamation claim. The trial court denied the motion and Aguilar appeals. We conclude that the conduct underlying the defamation claim is protected under the anti-SLAPP statute and that the statute of limitations prevents Valle from establishing a probability of prevailing on his claim. We therefore reverse the judgment... [] [T]he principal thrust of Valles defamation claim is based on [Aguilars] petitioning activity [in obtaining a TRO against Valle and petitioning for an injunction prohibiting civil harassment.] For plaintiff: Alan B. Bayer and Heather Elizabeth Borlase, San Francisco. For defendant: Daniel Patrick Hoffer, Manhattan Beach. First Dist Div Two, 5/3/07; opinion by Lambden with Kline and Haerle concurring; 2007 WL 1290899 (unpublished).

SUMMARY JUDGMENT WAS CORRECTLY GRANTED ON ETHNIC DISCRIMINATION AND HARASSMENT CLAIMS BY SENIOR FINANCIAL ANALYST OF EGYPTIAN DESCENT
LEVSEY v CALLEGUS MUNICIPAL WATER DISTRICT. Appellant Salwa Levsey appeals a summary judgment ... on her employment discrimination action under ... FEHA. Born in Egypt and of Egyptian ethnic descent, she asserted causes of action for ethnic discrimination and hostile work environment... The trial court ruled that Levsey did not suffer an adverse employment action and that there was no evidence of harassment sufficiently severe and pervasive to constitute a hostile work environment. We agree and affirm. The Second District held that changes in her department that reduced her duties did not materially affect the terms and conditions of her employment. [I]t would be unreasonable to conclude that those changes were likely to impair Levseys job performance or prospects for advancement, the court wrote. Moreover, the court added, [n]o evidence links [a co-workers] ethnic hostility with the changes implemented... Concerning harassment, the court wrote: In this case, Boyd, a receptionist, made sporadic racial remarks to Levsey, a senior financial analyst. Boyds remarks were utterances of ethnic epithets which engendered offensive feelings in Levsey, but were not sufficient to establish a hostile environment.

SUMMARY JUDGMENT WAS CORRECTLY GRANTED ON TAMENY TORT CLAIM AND RETALIATION CLAIM UNDER LAB CODE 1102.5
SIDOCK v CITY OF CHULA VISTA. The Fourth District, Division One, affirmed summary judgment on retaliation and Tameny tort claims brought by an administrative office assistant in the Citys police department. The court held: (1) the Yanowitz materiality test for assessing an adverse employment action applies to claims for retaliation under Labor Code 1102.5; (2) the conduct at issue here differed in degree from the conduct at issue in Yanowitz: none of the conduct alleged hereheightened scrutiny, personal slights, and poor office demeanor suggested that the plaintiffs job was in jeopardy, and it wasnt clear that the plaintiff had been singled out for negative treatment; and (3) the plaintiff did not allege a cognizable public policy for purposes of her Tameny tort claim: her reporting to the police of a technical battery committed against her at the workplace did not affect the public at large. For plaintiff: James M. Mangione, Wingert, Grebing, Brubaker & Ryan, San Diego. For defendant: Phillip L. Kossy, Luce, Forward, Hamilton & Scripps, San Diego; Office of the City Attorney, Chula Vista. Fourth Dist Div One, 5/11/07; opinion by Aaron with Nares and McIntyre concurring; 2007 WL 1378385 (unpublished).

TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT ON CLAIM THAT PLAINTIFF WAS DISCHARGED FOR SAFETY COMPLAINTS IN VIOLATION OF PUBLIC POLICY EXPRESSED BY CAL-OSHA
ROMERO v LA POWER JOINT VENTURE. Plaintiff Al Romero ... brought the instant action seeking damages for wrongful termination in violation of public policy. Romero alleges he was fired from his position with defendants, the Los Angeles Power Joint Venture et al. in retaliation for making numerous complaints about the safety and effectiveness of a control and monitoring system for a power plant that defendants were renovating... Romero appeals from the dismissal of the action after the trial court granted defendants motion for summary judgment. We hold that Romero has demonstrated numerous triable issues of material fact precluding summary adjudication of his cause of action for wrongful termination against public policy based on Californias Occupational Safety and Health Act (CalOSHA), Labor Code section 6310. Ac-

(Cont'd on Page 15, DECISIONS)

-11-

DISASTER
(From Page 9)

the ability to communicate with one another through Blackberry PINs, as opposed to going through a server or using cell phones. Lawyers in New Orleans kept lists of their staff members Blackberry PIN numbers, and this proved to be one of the only effective means of communication during that disaster. Keeping lists of Blackberry PINs at your office will do very little good, however, if you cant get to the office. Again, proper planning requires off-site access to information. Alternative Office Space Compacts. In New York, there is a compact among fifty or so law firms to provide space for firm management in the event of another disaster that closes one or more office buildings. There is no reason we couldnt do something similar. We might want to consider developing a plan where each CELA member could have one local and one non-local member to call on in the event of a disaster for temporary space, the use of a computer, and other things that might be necessary to keep a practice up and running. An attorney in Century City might want to have arrangements with two different lawyers, for example, one in the San Fernando Valley and one in San Francisco, to cover a situation in which a disaster is so significant that it shuts down the entire city of Los Angeles for a period of time. Warehousing of Computers. Personally, I think that joint warehousing of computers is too ambitious a project for CELA to undertake, though New Orleans firms that actually warehoused old computers were better able to resume operations than other firms that had to scramble to find whatever supplies they could in other areas of the country. The one thing that people should consider, however, is holding on to their old computers instead of just giving them away. One option would be for people to send their old computers to CELA, which can store them in a remote area and make them available to members on an as-needed basis in the event of a disaster. (Its easy to use a home computer for office-related purposes, but your home may also be

affected by the disaster.) Insurance Information and Coverage. One of the things that helped lawyers weather the storm after Katrina was Business Interruption Insurance. Given that most of us earn a large percentage of our income from contingency fees, however, we would have to anticipate more than our share of hassles with insurance companies. People may want to explore whether to obtain this type of insurance, or whether there may be a role for a CELA group policy. With respect to health insurance, everyone should be able to access information relating to the plans out of network provisions. If you provide insurance to your staff, you should make sure that you have an effective means of distributing this information to staff members in the event of a disaster that requires people to relocate. Basic Business-Related Disaster Planning. It is important to at least begin thinking about a number of other basic types of preparation, including having a three day supply of food and water in the office for yourself and staff; keeping flashlights at the office; and having information about mail and phone re-routing. Basic Personal-Related Disaster Planning. Everyone should make an effort to organize and safeguard personal records. You may want to keep duplicate sets in different locations. One set can be maintained at home in a fireproof and waterproof container that is easily transportable in the event of an emergency. One set can be kept in a local safe deposit box. And another set can be kept in a safe deposit box out of state that will be relatively easy to access in the event of a disaster, e.g., in Las Vegas or Phoenix. These records should include, at a minimum: birth certificate/adoption papers; marriage license; social security cards; passports; will; powers of attorney; prior years tax return; property tax statement; bank statements; investment account information; mortgage statement; utility bills; loan payment infor-

mation; property insurance information; and health insurance cards. And all three sets of records should be updated at least once a year. This article is intended to be only the first step in any disaster plan, and its primary value is to stimulate thought rather than to provide answers. If you believe that CELA can be of any assistance in coordinating disaster plans, or if you have ideas to propose, please do not hesitate to speak up. Through our collective strength, hopefully we will be able to weather any storm that arises.

-12-

CELA FILES AMICUS BRIEF IN EDWARDS v ARTHUR ANDERSON


On May 13, CELA filed an amicus brief with the California Supreme Court in Edwards v Arthur Anderson (2006) 142 CA4th 603, 47 CR3d 788, the case in which the Second District rejected any narrow restraint exception to the prohibition of non-compete agreements contained in Business and Professions Code 16600. The brief was written by Jeff Winikow, with contributions by Barry Wolf, Cliff Palefsky, Tim Kolesnikow, and Jim Stoneman. The briefs Summary of Argument reads as follows: The questions raised in this case affect legal rights and policy issues far broader than those simply arising from Business and Professions Code Section 16600. While CELA fully concurs with the points and authorities presented by Mr. Edwards in his Answering Brief, CELA submits this amicus brief to highlight the legal and practical impact that restrictive covenants may have on workers involuntarily displaced from their jobs. In the wrongful termination context it is often difficult to reconcile a common law duty to mitigate damages with a covenant not to compete with ones former employer. Indeed, the duty to mitigate only extends to ones obligation to seek and accept substantially similar employment, yet employers who promulgate restrictive covenants seek to subject workers to suit if they do just that, i.e., accept employment too similar to their former jobs. To suggest that a narrow restraint only affects some portion of the array of potential employment opportunities is to ignore that the narrow universe of jobs affected by a restrictive covenant is often the very same narrow universe of jobs to which a mitigation duty attaches. Indeed, in this very case, Arthur Anderson has plead failure to mitigate, while at the same time it has argued for an expansive right to prevent former employees from working for others. Moreover, from a policy standpoint, recognizing a narrow restraint exception to Business and Professions Code Section 16600 impacts both the interests of the State and the interests of an aging workforce. The State should be concerned whenever there is an underutilization of resources, especially in Californias rural counties where the market for skilled personnel like physicians may not be as plentiful as in other areas of the State. And individuals especially older workersneed to be concerned about obtaining jobs should they become involuntarily displaced from their current ones. When older workers have to compete for jobs outside of the arena where their specialized skill and knowledge makes them most marketable, then the so-called narrow restraint becomes more like an untenable straight-jacket. Finally, in cases where a company retaliates against an employee for not signing a so-called standard form agreement, liability is premised upon the conscious decision to retaliate and not upon the companys draftsmanship. When an employer compels its workforce to sign form agreements, then the employer better make sure that its agreements are lawful as written. This is not a particularly onerous burden to bear, especially when Arthur Anderson carved out some, but not all, nonwaivable claims from its otherwise comprehensive release. Companies which promulgate over-reaching agreements should act at their own peril when they exercise their considerable power over the worker because the worker refused to sign the over-reaching agreement. Whether or not Arthur Anderson intended to chill the exercise of statutory rights, such as the right to indemnification under Labor Code Section 2802, it has done just that. In refusal to sign cases, the court should construe agreements from the prospective of a reasonable worker reading it.

C O M I N G

E V E N T S

June 27-30, 2007 NELA's ANNUAL CONVENTION San Juan, Puerto Rico September 27-29, 2007 CELA's 20th ANNUAL CONFERENCE The Fairmont Hotel San Jose

-13-

PROFILES
(From Page 14)

DECISIONS
(From Page 11)

Among her most memorable professional moments, Pam lists winning an $11.2 million verdict against Mary Kay, and, on a scarier note, once delivering a settlement check to a client who threatened her with a gun. Pam loves her cairn terrier Ruby, and her adopted niece, a high school senior whose family is from Russia and who now works in Pams officean experience which has apparently dissuaded her, at least for the time being, from pursuing a legal career. She nonetheless brightens up Pams life, and undoubtedly Pam brightens hers.

SLAPP MOTION WAS CORRECTLY GRANTED TO STRIKE DEFAMATION CLAIM ARISING FROM SEXUAL HARASSMENT INVESTIGATION
SERRATO v CITY OF CARSON. Plaintiff Joseph Serrato appeals from an order granting defendants special motion to strike plaintiffs second cause of action for defamation. He contends the granting of the motion was contrary to the purpose of Code of Civil Procedure section 425.16, the anti-SLAPP statute. He further contends that granting the motion was improper, in that he demonstrated a probability of prevailing on the merits... We disagree and affirm the order Plaintiffs first cause of action, against the City, was for constructive termination. His second cause of action, for defamation, was against all defendants. His third cause of action, against the City, was for race, age and handicap discrimination... Plaintiff argues (1) that the anti-SLAPP statute only applies to causes of action arising out of a defendants exercise of the right to free speech; (2) California has traditionally found defamatory speech to be unprotected under the Constitution; (3) California courts have found statutes prohibiting knowingly false reports to be constitutional; therefore (4) denying defendants anti-SLAPP protection would comport with the purpose of the anti-SLAPP statute. Plaintiffs argument is without merit. The anti-SLAPP statute applies to causes of action for defamation. [cites omitted.] [] Additionally, the antiSLAPP statute applies to statements such as those at issue here, made in the course of an official investigation into allegations of [sexual harassment]... Moreover ... plaintiff cannot establish a probability of prevailing on the merits. Defendants statements, made within the course of an official investigation into allegations of misconduct, were privileged [cites omitted], and defen-

dants are immune from tort liability for those statements. For plaintiff: Joel A. Spivak. For defendants: Aleshire & Wynder, Colin J. Tanner and Anthony R. Taylor. Second Dist Div One, 4//2/7/07; opinion by Jackson with Mallano and Rothschild concurring; 2007 WL 1229395 (unpublished).

LEGISLATIVE UPDATE
ASSEMBLY PASSES CELAS BILL TO PROHIBIT MANDATORY FORUM SELECTION AND CHOICE-OF-LAW PROVISIONS
AB 1043. On May 17, the California Assembly passed CELAs bill which declares unconscionable and unenforceable any agreement imposed as a condition of employment that would have the effect of forcing an employee to litigate outside of California, or under another states laws, claims that arose from employment in California or the seeking of employment in California. CELA Legislative Committee Co-Chair David Lowe sent the following message to the Listserv: All Dems voted for the bill; all Repubs voted against. Please join me in thanking the Assembly Democrats and the bills author, Assembly Member Sandre Swanson. Please also join me in thanking CAOC and the California Labor Federation for their crucial support and assistance. Next stop: the Senate. Assuming all goes well there, we will be working hard to get the governors support.

-15-

FAREWELL LETTER FROM OUTGOING DFEH DIRECTOR SUZY AMBROSE


The following message was received by Eve Chesbro and forwarded to the CELA List on May 1, 2007. I wanted to let you know that I have officially left DFEH as Director and, effective today, I am the newly appointed Executive Officer of the State Personnel Board. It has been a pleasure collaborating with you over the last three years. Though it will never be the right time for me to leave DFEH, I feel that DFEH is, at least, moving in a positive direction. Though there is still much to do, in looking back I am amazed that we were able to make so many improvements in such a short time with very limited resources. I credit not only the extremely hard-working and dedicated DFEH staff, but also our many partners such as you. Without getting into our many legal victories, a few of the more significant accomplishments include: Upgrades to the Communication Center equipment and training for the Communication Center staff, resulting in a decrease in caller wait time to less than one minute on both the English and Spanish lines. Comprehensive investigator training in all of our district offices. Revisions to the disability, CFRA, pregnancy, religion, and sexual harassment chapters of the Case Analysis Manual, which are finalized and in the process of being reproduced and distributed to the staff. Development of an on-line complaintfiling and appointment-scheduling system so that complainants will have automated access 24 hours a day, 7 days a week. This project is well into development and is projected to be operational by October 2007. Establishment of a volunteer mediation program. Establishment of an intake center in San Bernardino. Establishment of an intake center at the EEOC offices in San Francisco. Opening on May 4, 2007 of an intake center in Ventura at the Center for Dispute Settlement. The addition of fifteen new positions in July of 2006, and a current budget proposal to add another seventeen positions in July of 2007. I feel so fortunate to have been given the opportunity to play a small part in this very important cause over the last twenty years. Its been a privilege to work with my colleagues at DFEH and with you and your organization. Thank you for your support.

-16-

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

BULLETIN
Published Monthly EDITOR: CHRISTOPHER BELLO June 2007 Vol. 21, No. 6

RECENT EMPLOYMENT LAW DECISIONS


UNITED STATES SUPREME COURT 5-4 DECISION REJECTS PREVAILING VIEW THAT EACH PAYCHECK INFECTED BY PAST DISCRIMINATION IS SEPARATE TITLE VII VIOLATION THAT INITIATES NEW 180-DAY CHARGE FILING PERIOD
LEDBETTER v THE GOODYEAR TIRE & RUBBER CO. Affirming an Eleventh Circuit decision, (421 F3d 1169), the Supreme Court wrote in part as follows, in a 5-4 opinion by Alito filed on May 29, (with Stevens, Souter, and Breyer joining Ginsburgs dissent): The District Court granted summary judgment in favor of Goodyear on several of Ledbetters claims, including her Equal Pay Act claim, but allowed others, including her Title VII pay discrimination claim, to proceed to trial. In support of this latter claim, Ledbetter introduced evidence that during the course of her employment several supervisors had given her poor evaluations because of her sex, that as a result of these evaluations her pay was not increased as much as it would have been if she had been evaluated fairly, and that these past pay decisions continued to affect the amount of her pay throughout her employment... [T]he jury found for Ledbetter and awarded her backpay and damages.
(Cont'd on Page 2, DECISIONS)

REPORT ON CELAS MAY 11 WAGE & HOUR SEMINAR


by Steven Pearl CELA held its Third Annual Advanced Wage and Hour Seminar, Getting To and Through a Class Action Trial, on May 11, at the Hacienda Hotel in El Segundo. The seminar featured many of the leading authorities on California wage and hour class actions.
(Cont'd on Page 3, W & H SEMINAR)

MESSAGE FROM THE JOE POSNER AWARD COMMITTEE


Dear CELA Members: We thank all of you who submitted nominations for this years Joe Posner Award. Ours was a difficult task. All of the nominees were outstanding! However, one in particular stood out as having demonstrated all of those qualities that made Joe so special. It is with great pleasure that we announce that the Joe Posner Award this year will be given to our long-time CELA member Jeff Winikow. Jeff has devoted himself tirelessly to raising the profile of the plaintiffs bar in the eyes of the public and the judiciary. He has brought new levels of erudition to CELAs appellate work. He has been a voice of reason tempering our internal debates. And hes a damn smart lawyer who we should be glad is on our side. We look forward to honoring Jeff in San Jose. (Please remember to add your congratulatory notes to Jeff in this years Conference Journal!) In Solidarity, Nancy Bornn, Dolores Leal, Cliff Palefsky, Jim Stoneman

FIRST ANNUAL CELA LOBBY DAY IS A SMASHING SUCCESS


by Laura L. Horton On May 23, 2007, the 34 participants in our First Annual CELA Lobby Day fulfilled Phil Horowitzs dream of political activism, (and incidentally celebrated Steve Pingels birthday), when we converged on Sacramento to lobby for CELA-supported legislation. The result was a warm reception, (well, at least from the Democrats), and increased visibility for CELAs power. At the top of the agenda was SB 549, the Bereavement Leave bill, which, when passed, will allow an employee to take up to four days of leave following the death of a close family member. Even the Republican legislators were hard-pressed to offer up any real criticism. In fact, most of the legislators and staffers we spoke to were surprised to learn that current law provides no such protection, and we gave them real-life examples of discharged or disciplined workers. (Special thanks to the following CELA members, for their extraordinary efforts in getting this legislation off the ground: Jean Hyams, Alexis McKenna, Lisa Maki, Steve Pingel, David Lowe, Curt Surls, Peter Rukin, and Zachary Cincotta.) We also lobbied intensively for AB 1043, the California Law for California Workers bill, to make void and unenforceable any agreement imposed as a condition of employment that would
(Cont'd on Page 5, LOBBY DAY)

DECISIONS
(From Page 1)

On appeal, Goodyear contended that Ledbetters pay discrimination claim was time barred with respect to all pay decisions made prior to September 26, 1997that is, 180 days before the filing of her EEOC questionnaire. And Goodyear argued that no discriminatory act relating to Ledbetters pay occurred after that date. The Eleventh Circuit reversed, holding that a Title VII pay discrimination claim cannot be based on any pay decision that occurred prior to the last pay decision that affected the employees pay during the EEOC charging period. The Court of Appeals then concluded that there was insufficient evidence to prove that Goodyear had acted with discriminatory intent in making the only two pay decisions that occurred within that time span, namely a decision made in 1997 to deny Ledbetter a raise, and a similar decision made in 1998. Ledbetter ... sought review of the following question: Whether and under what circumstances a plaintiff may bring an action under Title VII ... alleging illegal pay discrimination when the disparate pay is received during the statutory limitations period, but is the result of intentionally discriminatory pay decisions that occurred outside the limitations period. In light of disagreement among the Courts of Appeals as to the proper application of the limitations period in Title VII disparate-treatment pay cases, compare 421 F.3d 1169 [Ledbetter below], with Forsyth v. Federation Employment & Guidance Serv., 409 F.3d 448 (C.A.D.C. 2005), we granted certiorari... In addressing the issue whether an EEOC charge was filed on time, we have stressed the need to identify with care the specific employment practice that is at issue. [National Railroad Passenger Corp. v.] Morgan, 536 U.S. at 110-111, 122 S.Ct. 1061. Ledbetter points to two different employment practices as possible candidates. Primarily, she urges us to focus on the paychecks that were issued to her during the EEOC charging period..., each of

which, she contends, was a separate act of discrimination. Alternatively, Ledbetter directs us to the 1998 decision denying her a raise, and she argues that this decision was unlawful because it carried forward intentionally discriminatory disparities from prior years. Both of these arguments fail because they would require us to jettison the defining element of the legal claim on which her Title VII recovery was based. The instruction provided by [United Airlines, Inc. v.] Evans [431 US 553], [Delaware State College v.] Ricks [449 US 250], Lorance [v. AT & T Technologies, Inc., 490 US 900], and [National Railroad Passenger Corp. v.] Morgan, [536 U.S. 101] is clear. The EEOC charging period is triggered when a discrete unlawful practice takes place. A new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects resulting from the past discrimination. [Ledbetter] argues simply that Goodyears conduct during the charging period gave present effect to discriminatory conduct outside of that period... But current effects alone cannot breathe life into prior, uncharged discrimination. Bazemore [v Friday (1986) 478 US 385] stands for the proposition that an employer violates Title VII and triggers a new EEOC charging period whenever the employer issues paychecks using a discriminatory pay structure. But a new Title VII violation does not occur ... when an employer issues paychecks pursuant to a system that is facially nondiscriminatory and neutrally applied. Lorance, 490 U.S., at 911. The fact that precharging period discrimination adversely affects the calculation of a neutral factor (like seniority) that is used in determining future pay does not mean that each new paycheck constitutes a new violation and restarts the EEOC charging period. Ledbetter places significant weight on
(Cont'd on Page 3, DECISIONS)

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: Michelle Reinglass 23161 Mill Creek Drive Suite 170 Laguna Hills, CA 92653 Tel: (949) 587-0460 FAX: (949) 587-1004 E-mail: michelle@reinglasslaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Sherman Oaks) Eve Chesbro (Pasadena) David DeRubertis (Woodland Hills) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Wilmer Harris (Pasadena) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Cynthia Rice (San Francisco) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles) Brad Yamauchi (San Francisco)

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

-2-

DECISIONS
(From Page 2)

the EPA which ... prohibits paying unequal wages for equal work because of sex... Stating that the lower courts routinely hear [EPA] claims challenging pay disparities that first arose outside the limitations period, Ledbetter suggests that we should hold that Title VII is violated each time an employee receives a paycheck that reflects past discrimination. The simple answer to this argument is that the EPA and Title VII are not the same. In particular, the EPA does not require the filing of a charge with the EEOC or proof of intentional discrimination... Ledbetter originally asserted an EPA claim, but that claim was dismissed by the District court and is not before us. If Ledbetter had pursued her EPA claim, she would not face the Title VII obstacles that she now confronts. [FN9: The Magistrate Judge recommended dismissal of Ledbetters EPA claim on the ground that Goodyear had demonstrated that the pay disparity resulted from Ledbetters consistently weak performance... The Magistrate Judge also recommended dis-

missing the Title VII disparate-pay claim on the same basis... Ledbetter objected to the Magistrates disposition of the Title VII and EPA claims, arguing that the Magistrate Judge had improperly resolved a disputed factual issue... The District Court sustained this objection as to the disparate pay claim, but without specifically mentioning the EPA claim... While the record is not entirely clear, it appears that at this point Ledbetter elected to abandon her EPA claim...] Ledbetters policy arguments for giving special treatment to pay claims find no support in the statute and are inconsistent with our precedents. [FN11: Ledbetter argues that the EEOCs endorsement of her approach in its Compliance Manual and in administrative adjudications merits deference. But we have previously declined to extend Chevron deference to the Compliance Manual..., and similarly decline to defer to the EEOCs adjudicatory positions. The EEOCs views in question are based on its misreading of Bazemore...]

In dissent, Ginsburg wrote in part as follows: Ledbetter charged, and proved at trial, that within the 180-day period, her pay was substantially less than the pay of men doing the same work. Further, she introduced evidence sufficient to establish that discrimination against female managers..., not performance inadequacies on her part, accounted for the pay differential... That evidence was unavailing, the Eleventh Circuit held, and the Court today agrees, because it was incumbent on Ledbetter to file charges year-by-year, each time Goodyear failed to increase her salary commensurate with the salaries of male peers. Any annual pay decision not contested immediately (within 180 days), the Court affirms, becomes grandfathered, a fait accompli beyond the province of Title VII ever to repair. The Courts insistence on immediate contest overlooks common characteristics of pay discrimination. Pay disparities often occur, as they did in Ledbetters
(Cont'd on Page 4, DECISIONS)

W & H SEMINAR
(From Page 1)

The day started with a welcome from the seminars organizer, Aaron Kaufman (Walnut Creek), and a presentation by CELA Executive Board member Mika Spencer (San Diego) acknowledging and thanking Donna Ryu of the Hastings Civil Justice Clinic. Donna was lead counsel for the plaintiff in Murphy v Kenneth Cole Productions, Inc., 40 C4th 1094, 56 CR3d 880 (the case holding that payments for meal and rest period violations are wages not penalties). Steve Pingel (Long Beach) spoke briefly on legislative efforts underway in Sacramento, including plans for CELAs first annual Lobby Day, (see page 1). The first panel of the day focused on developments of the past year, and things to watch for in the year to come. Steve Pearl (Encino) moderated the panel with Aashish Desai (Irvine) and Anne Stevason of the Division of Labor Standards Enforcement. Donna Ryu sat in on the panel, giving further insight

on Murphy. David Borgen (Oakland) then moderated a panel on class action trial planning, with Eve Cervantez (San Francisco), Retired Alameda County Superior Court Judge Ronald Sabraw, and Michael Singer (San Diego). The panel gave excellent advice on the use and impact of trial plans at both the class certification and trial stages. I found particularly interesting Judge Sabraws comments on his decision to deny certification in Dunbar v. Albertsons, and what made that a difficult case that could have gone either way. Several well-known experts formed the next panel, moderated by Steve Zieff (San Francisco). Professor of Statistics Richard Drogin addressed strategies for taking useable statistical samples. U.C.L.A. Professor David Lewin, an authority on human resources and management practices, spoke on the use of survey evidence and observa-3-

tional studies. And Karen Jo Koonan, a consultant with the National Jury Project and past National President of the National Lawyers Guild, spoke on framing wage and hour issues at trial. The last panel of the day focused on war stories from attorneys (and one judge) who have actually taken a wage and hour case through trial. Aaron Kaufmann moderated the panel, joined by Los Angeles County Superior Court Judge Stephen Czuleger, Jessica Grant (San Francisco), Matt Righetti (San Francisco), and Steve Zieff. CELA provided an excellent book of materials that includes a survey of postSav-On class certification decisions; an update of recent important decisions; sample motions, declarations, trial plans, motions in limine, and jury instructions; and articles written by the seminars experts.

DECISIONS
(From Page 3)

case, in small increments; cause to suspect that discrimination is at work develops only over time. Comparative pay information, moreover, is often hidden from the employees view... Small initial discrepancies may not be seen as meet for a federal case, particularly when the employee, trying to succeed in a nontraditional environment, is averse to making waves. It is only when the disparity becomes apparent and sizable ... that an employee in Ledbetters situation is likely to comprehend her plight and, therefore, to complain. Her initial readiness to give her employer the benefit of the doubt should not preclude her from later challenging the then current and continuing payment of a wage depressed on account of her sex. Our precedent suggests, and lower courts have overwhelmingly held, that the unlawful practice is the current payment of salaries infected by a genderbased (or race-based) discrimination a practice that occurs whenever a paycheck delivers less to a woman than to a similarly situated man. See Bazemore v. Friday, 478 U.S. 385, 395 (1986) (Brennan, J., joined by all other Members of the Court, concurring in part). In light of the significant differences between pay disparities and discrete employment decisions of the type identified in Morgan, the cases on which the Court relies hold no sway. Congress never intended to immunize forever discriminatory pay differentials unchallenged within 180 days of their adoption. This assessment gains weight when one comprehends that even a relatively minor pay disparity will expand exponentially over an employees working life if raises are set as a percentage of prior pay. A clue to congressional intent can be found in Title VIIs backpay provision. The statute expressly provides that backpay may be awarded for a period of up to two years before the discrimination charge is filed... This presumption indicates that Congress contemplated challenges to pay discrimination com-

mencing before, but continuing into, the 180-day filing period. In tune with realities of wage discrimination, the Courts of Appeals have overwhelmingly judged as a present violation the payment of wages infected by discrimination. [cites omitted.] This is not the first time the Court has ordered a cramped interpretation of Title VII, incompatible with the statutes broad remedial purpose... Once again, the ball is in Congress court. As in 1991, the Legislature may act to correct this Courts parsimonious reading of Title VII. [Note: On May 30, the day after the decision was issued, Senators Kennedy, Harkin, Clinton, and Mikulski announced their intention to introduce legislation to overrule Ledbetter. And Representatives Rosa DeLauro, George Miller, and Eleanor Holmes Norton announced that they will introduce companion legislation in the House. On June 12, Lilly Ledbetter testified before the House Education and Labor Committee, along with Wade Henderson of the Leadership Council for Civil Rights, and Deborah Brake of the University of Pittsburgh Law School. [On June 14, NELA conducted an online seminar, (or webinar), entitled Fighting Back: Litigating Discrimination Cases After Ledbetter v. Goodyear, with a panel that included Alice W. Ballard, Paul W. Mollica, Prof. Eric Schnapper, and Richard T. Seymour. Contact NELA for information about accessing the webinar and obtaining the papers prepared by the panelists.] For plaintiff: Kevin K. Russell, Amy Howe, Howe & Russell, Washington DC; Pamela S. Karlan, Stanford Law School, Supreme Court Litigation Clinic; Robert L. Wiggins, Jr., Jon C. Goldfarb, Wiggins, Childs, Quinn & Pantazis, Birmingham, Alabama. For employer: Glen D. Nager. USSC, 5/29/07; opinion by Alito joined by Roberts, Scalia, Kennedy, and Thomas; dissenting opinion by Ginsburg joined by Stevens, Souter, and Breyer; 127 S Ct 2162.

SUPREME COURT AFFIRMS VALIDITY OF DOL REGULATION THAT EXEMPTS AGENCYEMPLOYED COMPANIONSHIP SERVICES PROVIDERS FROM FLSAS MINIMUM WAGE AND OVERTIME PROVISIONS
LONG ISLAND CARE AT HOME, LTD. v COKE. The syllabus of a unanimous opinion by Breyer filed on June 11 reads in part as follows: The Fair Labor Standards Amendments of 1974 exempted from the minimum wage and maximum hours rules of the [FLSA] persons employed in domestic service employment to provide companionship services for individuals unable to care for themselves. 29 U.S.C. 213(a)(15). Under a Labor Department regulation ... the exemption includes those companionship workers employed by an ... agency other than the family or household using their services.' 29 CFR 552.109(a). However, DOLs General Regulations also define the statutory term domestic service employment as services of a household nature performed by an employee in or about a private home ... of the person by whom he or she is employed. 552.3 (emphasis added). Respondent, a companionship services provider to the elderly and infirm, sued petitioners, her former employer Long Island Care and its owner, seeking minimum and overtime wages they allegedly owed her. The parties assume the FLSA requires the payments only if its companionship services exemption does not apply to workers paid by third-party agencies such as Long Island Care. The District Court dismissed the suit, finding the third-party regulation valid and controlling. [267 FS2d 332]. The Second Circuit found the regulation unenforceable and set the judgment aside. [376 F3d 118]. Held: The third-party regulation is valid and binding. [] The regulation does not exceed the DOLs delegated authority. Given the DOLs expertise, satisfactory
(Cont'd on Page 5, DECISIONS)

-4-

DECISIONS
(From Page 4)

answers to [the set of complex questions raised] may well turn upon its thorough knowledge of the area and ability to consult at length with affected parties. It is therefore reasonable to infer that Congress intended its broad grant of definitional authority to the DOL to include the authority to answer such questions. USSC, 6/11/07; unanimous opinion by Breyer; 2007 DAR 8508, 2007 WL 1661472.

MANAGEMENT COMPANY. On June 11, the Supreme Court announced a grant of certiorari to review a Tenth Circuit decision, (466 F3d 1223), that reversed a judgment on a jury verdict for the employer in an ADEA action on the ground that the district court should not have excluded the testimony of other older employees who alleged similar discrimination in the same RIF. Such testimony was relevant to the question of the employers discriminatory intent, the Tenth Circuit held, and its probative value was not outweighed by the danger of prejudice. The district court had erred, the court held, in accepting the employers argument that under the same supervisor rule of Aramburu v The Boeing Co. (10th Cir 1997) 112 F3d 1398, any reference to alleged discrimination by any supervisor other than the plaintiffs was irrelevant. That rule has no application, the court held, where, as here, the plaintiff

claimed to have been a victim of a company-wide discriminatory RIF. USSC, No. 06-1221; 6/11/07; 2007 WL 736557 (Mem).

U.S. SUPREME COURT WILL REVIEW SECOND CIRCUIT ADEA DECISION THAT HELD THAT INTAKE QUESTIONNAIRE AND AFFIDAVIT CONSTITUTED EEOC CHARGE
HOLOWECKI v FEDERAL EXPRESS CORP. On June 4, 2007 the United States Supreme Court granted certiorari to review a Second Circuit decision in an ADEA action, (440 F3d 558), that held: (1) an Intake Questionnaire and accompanying verified affidavit constituted an EEOC charge that fulfilled ADEAs exhaustion requirements and
(Cont'd on Page 6, DECISIONS)

CERTIORARI IS GRANTED IN ADEA CASE IN WHICH TENTH CIRCUIT HELD THAT DISTRICT COURT SHOULD HAVE ADMITTED TESTIMONY OF OTHER EMPLOYEES WHO ALLEGED DISCRIMINATION IN SAME RIF
MENDELSOHN v SPRINT/UNITED

LOBBY DAY
(From Page 1)

force an employee to litigate outside of California, or under another states laws, claims that arose from employment in California. Reaction to this bill seems to be divided along party lines. (Thanks are due to Steve Pingel, David Lowe, and Scot Bernstein for their efforts in connection with AB 1043.) CELA members also discussed and urged support for other employee rights bills, such as AB 537, which would expand the CFRAs narrow definition of family members whom an employee may take leave to care for; AB 1707, which would provide a definitive statement of an employees right to inspect and copy personnel files; AB 220, which would apply to firefighters and firstresponders the same Procedural Bill of Rights that currently applies to police officers; and AB 500 and AB 1264, which would provide attorneys the option to make certain court appearances telephonically, and eliminate unnecessary court appearances. After our busy day of lobbying, John Vaclavik and The James Street Group

sponsored a cocktail reception where participants decompressed and swapped stories of the day. Curt Surls encounter with a Fox News broadcaster clone was enlightening as to how certain legislators evaluate pending legislationthey regurgitate information from the Chamber of Commerce web site! Janet Koehn appreciated the sole Democrat she spoke with, since she was otherwise cast adrift in a sea of Republicans. Overall, the participants were encouraged at the amount of support our bills received and the welcoming attitude of many legislators and their staffs. CELA Lobby Day is an important benefit of CELA membership, and something that we should all be involved with. We have an incredible opportunity to present a powerful presence in Sacramento, develop and steer worker-friendly legislation, and possibly to open the minds of legislators who havent considered the effects of a proposed bill on their constituents. Special thanks to Christina Krasomil for -5-

providing excellent and well-organized notebooks for each participant, and to Lisa Maki for taking on the Herculean task of making the telephone calls necessary to arrange all the meetings with legislators. Our Legislative Committee, including its co-chairs Jean Hyams, Steve Pingel, and David Lowe, should receive huge accolades for laying the groundwork, coordinating the event, and making this amazing opportunity available to CELA members. And thanks also, of course, to the 34 participants: George Allen, Scot Bernstein, Robert Bowman, Zachary Cincotta, William Crosby, Kathryn Dickson, Gail Glick, Joan Herrington, Phil Horowitz, Laura Horton, Jean Hyams, Rebecca Kagin, Janet Koehn, David Lowe, Alexis McKenna, Lisa Maki, Enrique Martinez, Noreen Mazelis, Moira McQuaid, Larry Organ, Steve Pingel, Pam Pitt, Michelle Reinglass, Peter Rukin, Jean Schaefer, Sarah Schlehr, Mika Spencer, Jim Stoneman, Curt Surls, Jill Telfer, Elisa Ungerman, Richard Vaznaugh, Jack Vetter, and Stephan Wattenberg.

DECISIONS
(From Page 5)

satisfied the EEOCs interpreting regulations specifying a charges required content; and (2) an EEOC charge filed by a fellow employee was sufficient to permit other employees who never filed EEOC charges to take advantage of the single filing or piggybacking rule. USSC, No. 06-1322; 6/4/07; 2007 WL 989595 (Mem).

PARTNERSHIP. On June 13, the Supreme Court announced that it will review the Fourth Districts February 8 decision that appeared at 147 CA4th 475, 54 CR3d 379. (See CELA Bulletin, Feb 07, p.4.) The issue to be briefed and argued is limited to the following: Whether an individual may be held personally liable for retaliation under FEHA. The Fourth District, Division One, reversed JNOV that had been granted by San Diego County Superior Court Judge Richard E. Strauss, and reinstated a judgment on a jury verdict for the plaintiff, a former restaurant manager, on claims for sexual orientation harassment and retaliation. On the individual liability issue, the Fourth District wrote: We agree with Walrath [v Sprinkel (2002) 99 CA4th 1237] and Taylor [v City of Los Angeles Dept. of Water & Power (2006) 144 CA4th 1216] that an individual supervisor can be held liable for retaliation under section 12940, subdivision (h). (The Supreme Court denied review in Taylor on February 14, 2007.) (Another principle issue in Jones involved the meaning of adverse employment action for purposes of a retaliation claim: the Fourth District held that the trial court erred in applying the overly restrictive definition endorsed in McRae I, (McRae v Department of Corrections (2005) 127 CA4th 779, 25 CR3d 911)a definition that the Fourth District pointed out was inconsistent with the Yanowitz totality of the circumstances approach.) For plaintiff: Scott H. Toothacre. For defendant: Theresa Osterman Stevenson of Wilson, Petty, Kosmo & Turner. Cal SC, 6/13/07; 2007 DAR 8858.

SUPREME COURT WILL DECIDE WHETHER ERISA ALLOWS INDIVIDUAL EMPLOYEE TO SUE EMPLOYER OVER LOSSES IN RETIREMENT ACCOUNT
LaRUE v DeWOLFF, BOBERG & ASSOC., INC. On June 18, the United States Supreme Court granted certiorari to review a Fourth Circuit decision, (450 F3d 570), that held that a claim by a participant in a 401(k) plan, that his employer/administrator had failed to follow his directions for making changes to investments in his plan account, resulting in losses, was not cognizable under ERISAs breach-of-fiduciary-duty civil enforcement subsection. Recovery under that subsection, the Fourth Circuit held, has to inure to the benefit of the plan as a whole, not to a particular person. Nor, the Fourth Circuit held, was the claim cognizable under ERISAs other appropriate equitable relief subsection, given the absence of allegations of unjust enrichment, unlawful possession, or self-dealing on the employers part. USSC, No. 06-856; 6/18/07; 2007 WL 1730445 (Mem).

Supreme Court ordered the matter transferred to the Second District with directions to vacate its decision and to reconsider in light of Murphy v Kenneth Cole Productions (2007) 40 C4th 1094. In its January 2006 decision in Mills, the Second District held that payments specified by Labor Code 226.7 for missed meal and rest breaks are penalties, not wages. The opinion appeared at 38 CR3d 497, and was summarized in CELA Bulletin, Feb 06, p.4. Review was granted 4/12/06. Cal SC, 5/23/07; 2007 DAR 7479, 2007 WL 1695191.

CALIFORNIA COURTS OF APPEAL


FOURTH DISTRICT REVERSES DEFENSE VERDICT BECAUSE MISCONDUCT OF JUDGE JAMES BROOKS DEPRIVED PLAINTIFFS OF FAIR TRIAL
HALUCK v RICOH ELECTRONICS. In a June 1 opinion by Rylaarsdam, the Fourth District, Division Three, reversed a judgment for the employer on the grounds that the trial judges misconduct so infected the proceedings that the plaintiffs were deprived of a fair trial. The panel condemned Judge James Brooks for, inter alia, having improper ex parte contract with defense counsel, using handmade signs to overrule objections, using a red card system to discourage attorneys from talking, and creating a circus atmosphere that included the overruling of an objection to defense counsels singing of the Twilight Zone theme music to mock the plaintiffs arguments. [In November of 2006, James Brooks, a judge in Orange County since 1987, was publically admonished for similar behavior by the California Commission on Judicial Performance. See www.cjp.ca.gov.] The Fourth District wrote in part: Plaintiffs ... appeal from a judgment in favor of defendants ... on their complaint
(Cont'd on Page 7, DECISIONS)

CALIFORNIA SUPREME COURT


SUPREME COURT WILL ADDRESS QUESTION WHETHER INDIVIDUAL MAY BE HELD PERSONALLY LIABLE FOR RETALIATION UNDER FEHA
JONES v LODGE AT TORREY PINES

SECOND DISTRICTS PENALTIES NOT WAGES DECISION IS TRANSFERRED BACK FOR RECONSIDERATION IN LIGHT OF MURPHY
MILLS v SUPERIOR COURT (BED, BATH & BEYOND). On May 23, the -6-

DECISIONS
(From Page 6)

for employment discrimination on the ground the trial judges misconduct so infected the proceedings they were deprived of a fair trial. We conclude the trial judges conduct was sufficiently egregious and pervasive that a reasonable person could doubt whether the trial was fair and impartial and reverse on that ground. On remand, the case shall be assigned to a different judge. Because we reverse, the motion for sanctions is denied. As to defendants cross-appeal, the court properly found the [Japanese Friendship, Commerce and Navigation Treaty of 1953] did not bar the action... Based on the nature of this appeal, few of the underlying facts are relevant. Plaintiffs ... sued Ricoh and certain of its employees for damages for statutory and common law discriminatory employment practices, claiming they were passed over for promotions, and Litton ultimately wrongfully terminated, because they were Caucasian and complained about racial discrimination. After a 30-day plus trial, the jury returned a defense verdict. For plaintiffs: Michelle A. Reinglass, Marjorie G. Fuller. For defendants: Callahan & Blaine and Jim P. Mahacek. Fourth Dist Div Three, 6/1/07; opinion by Rylaarsdam with Sills and Bedsworth concurring; 2007 DAR 8154, 2007 WL 1589424.

in his favor for unpaid overtime compensation, along with prejudgment interest and attorneys fees. On appeal from the judgment, ABI asserts Eicher was an exempt administrative employee and was not entitled to overtime compensation. ABI also asserts the trial courts award was excessive and the court erred in awarding attorneys fees pursuant to Labor Code section 1194. We shall conclude (1) ABI did not carry its burden of establishing that Eicher was an exempt employee; (2) the damage award was excessive; and (3) the attorneys fee award was authorized. We shall reverse the judgment with directions. We shall affirm the order awarding attorneys fees and remand for the trial court to determine the amount of attorneys fees for this appeal. Eicher filed a claim with the Labor Commissioner for overtime compensation... After a hearing, the Labor Commissioner found in favor of ABI... [] Eicher appealed to the superior court for a trial de novo... The trial court entered judgment in favor of Eicher for $56,353. ABI filed a notice of appeal from the judgment. On Eichers motion, the trial court awarded him $40,000 in attorneys fees pursuant to section 1194, as well as $16,503.60 in prejudgment interest (on the overtime compensation) and $420.12 in costs. ABI filed a notice of appeal from this post-judgment order. Eichers duties were comparable to those of the claims representatives in Bell [v Farmers Ins. Exchange (2001) 87 CA4th 805]... [] In summary, Eicher was an employee who engaged in the core day-to-day business of ABI. He had no personal effect on the policy or general business operations of ABI or its customers. We therefore conclude the trial court did not err in determining that ABI failed to carry its burden of establishing that Eicher was an exempt administrative employee. For the purpose of billing customers, ABI kept track of Eichers time. Eicher was required to account for at least 40 hours per week. This included, however, paid time off (PTO). Therefore, -7-

ABIs billing system record of Eichers hours was not necessarily the time he worked... [] On appeal, ABI renews its argument that the trial court improperly included as hours worked the time that Eicher was off with pay. We find merit in this argument and will order the damages reduced accordingly... [] By subtracting $9,735.75 from the award..., we arrive at the highest amount of unpaid overtime pay ($46,617.25) supported by the evidence and reasonable inferences drawn from the evidence. The award, therefore, must be reduced to that amount. The trial court awarded $40,000 in attorneys fees to Eicher pursuant to section 1194, which allows a prevailing employee to recover attorneys fees in a civil action for unpaid overtime compensation. ABI contends the trial court was without authority to award attorneys fees, because section 1194 does not apply to section 98.2 appeals from administrative decisions, and section 98.2 does not authorize fees in this case. We shall conclude section 1194 authorizes an award of attorneys fees for fees incurred in the trial court when an employee prevails in the trial court in a section 98.2 appeal from an administrative decision. [Note: In a June 13 message on the CELA Listserv, Matthew Goldberg, Staff Attorney at the Legal Aid Society-Employment Law Center, wrote concerning the Eicher decision: A fee award pursuant to 1194.2 trumping 98.2for an employees affirmative appeal of a Labor Commissioner ODA is great news. For those of us who routinely toil in the morass of Labor Commissioner Berman hearings (and de novo appeals), this is a big victory. Absolutely changes the dynamic with respect to employee de novo appeals.] For plaintiff: Guenard & Bozarth, B. Ross Bozarth and Galen T. Shimoda. For defendant: Downey Brand, Daniel J. Coyle and Cassandra M. Ferrannini. Third Dist, 6/12/07; opinion by Sims with Nicholson and Robie concurring; 2007 DAR 8675, 2007 WL 1678244.
(Cont'd on Page 8, DECISIONS)

LABOR CODE 1194 AUTHORIZES AWARD OF ATTORNEYS FEES INCURRED IN TRIAL COURT WHEN EMPLOYEE PREVAILS IN 98.2 APPEAL FROM ADMINISTRATIVE DECISION
EICHER v ADVANCED BUSINESS INTEGRATORS, INC. In a trial de novo in the superior court after an unsuccessful claim to the Labor Commissioner, the Third District wrote in a June 12 opinion, Michael J. Eicher, a former employee of Advanced Business Integrators, Inc. (ABI), obtained judgment

DECISIONS
(From Page 7)

RETALIATION PLAINTIFF FAILED TO RAISE ISSUE OF PRETEXT RE EXPLANATION THAT SHE HAD BEEN DISCHARGED FOR SPENDING COMPANY TIME ON OUTSIDE BUSINESS
LOGGINS v KAISER PERMANENTE INTERNATIONAL. Affirming summary judgment that had been granted by the San Diego County Superior Court on FEHA retaliation and Tameny tort claims, the Fourth District, Division One, wrote in part as follows in an opinion filed on May 14 and certified for publication on June 7: Plaintiff Dianne Loggins filed this action against her former employer ... alleging her employment was terminated in retaliation for her complaint that her supervisor had discriminated against her because of her race. Kaiser contended Logginss employment was terminated because Kaisers investigation confirmed Loggins had devoted excessive work time and work resources to furthering her outside personal business, in violation of Kaisers policies. Loggins, an African-American, was employed by Kaiser for 24 years. During her tenure, she made numerous complaints that Kaiser had subjected her to harassment and discrimination because of her race. These complaints apparently had no adverse effect on her promotions and pay increases. Her penultimate complaint, filed with the DFEH in January 2003, asserted she was denied equal pay bonuses. Three months later, with this 2003 charge pending, Loggins received the highest performance rating she had received in three years, and received a 4 percent pay increase. On August 8, 2003, Kaiser received an anonymous telephone call ... concerning Loggins. The caller reported that, since 2002, Loggins had been using Kaisers office facilities, materials and resources for work related to Logginss privately owned boarding home business, the Kelloggs Care & Group Home (Kelloggs)... On August 18, 2003, [Human Resources manager] Sampson

informed Loggins that, pending further investigation, she would be placed on administrative leave... Loggins claimed that on August 11, one week before she was informed of her suspension, she telephoned KPCCs hotline ... and complained that [her supervisor] Murnane was harassing and discriminating against her because of her race. However, Kaisers business records contain no record of her August 11 complaint... [Human Resources representatives] James and Evans concluded, based on their investigation, that Loggins had engaged in an unacceptable use of Kaiser resources... On November 10, 2003, they informed Loggins of her employment termination... Murnane did not participate in the decision... The trial court ... granted the motion for summary judgment. The court ruled that, under Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 615, the January 2003 DFEH claim was too remote in time to support her retaliation claims and therefore only her August 11, 2003 complaint to the KPCC hotline could potentially support her claim. However, there was no record confirming that complaint was made and, even had she made the complaint, the only competent evidence showed the investigative action that led to her employment termination began ... earlier..., thereby precluding any inference that the adverse action was in retaliation for the alleged August 11 complaint. Finally, the court concluded that, even ignoring these deficiencies in Logginss effort to establish a prima facie case, Kaisers evidence showed its actions were based on legitimate, nondiscriminatory considerations ... and Loggins had not produced any evidence of pretext... Although Logginss alleged August 11 hotline complaint is uncorroborated ...we may not decide factual issues on summary judgment... Logginss averment raises a factual issue of whether she engaged in protected conduct that was temporally close to and preceding the adverse employment action, which -8-

sufficed to shift the burden to Kaiser under the McDonnell Douglas framework, and the trial courts contrary conclusion was erroneous. Loggins asserts that California Fair Employment & Housing Com. v. Gemini Aluminum Corp. (2004) 122 Cal.App.4th 1004, quoting dicta from Hanson v. Lucky Stores, Inc. (1999) 74 Cal.App. 4th 215, holds an employer does not satisfy its burden to articulate a nondiscriminatory reason for the termination unless the employer satisfies the additional affirmative burden of showing the procedure by which the employee was terminated was validly and fairly devised and administered. Loggins argues that, because there were issues of fact whether Kaiser fairly administered the procedure ... Kaiser did not satisfy its burden in the second step of the McDonnell Douglas framework. However, we disagree with Geminis suggestion... [T]he quoted language from Martin, while permitting an employee to show the employer unfairly administered its procedures as part of the employees evidentiary presentation in support of the employees claim of pretext, does not support the principle that an employer has an additional burden (as part of the second phase of the McDonnell Douglas framework) to prove the legitimacy of its termination procedures to negate a discrimination presumption. We conclude Kaiser provided sufficient evidence showing a legitimate reason for Logginss employment termination, thereby shifting to her the obligation to produce substantial responsive evidence from which a trier of fact could find Kaisers articulated reason untrue and pretextual. We agree with McRae [v. Department of Corrections and Rehabilitation (2006) 142 Cal.App.4th 377] that temporal proximity, although sufficient to shift the burden to the employer ... does not, without more, suffice also to satisfy the secondary burden borne by the employee to show a triable issue of fact on whether the employers articulated reason was untrue and pretextual.
(Cont'd on Page 9, DECISIONS)

DECISIONS
(From Page 8)

Loggins asserts she raised a triable issue of fact on the issue of pretext because there was evidence other similarly situated employees who also engaged in extracurricular business activities at work did not suffer adverse employment action... However, there was no evidence her coworkers devoted substantial time and resources to pursuing their own business during work, and it was undisputed below that Kaiser investigated her allegations about coworkers extracurricular business activities and found the activities were de minimus... [] We conclude that ... the trial court correctly granted Kaisers motion for summary judgment. For plaintiff: Joel C. Golden. For defendants: Thelen, Reid, Brown, Raysman & Steiner, Deborah J. Broyles and Ellen M. Papadakis. Fourth Dist Div One, 5/14/07, certified for publication, 6/7/07; opinion by McDonald with Huffman and Irion concurring; 2007 DAR 8371, 2007 WL 1395393.

On appeal from the dismissal order, we hold that plaintiffs allegations are sufficient to state a claim for wrongful termination based on the public policies that require employers to provide a safe and secure workplace and encourage employees to report credible threats of violence in the workplace. We therefore reverse the dismissal order. Labor Code section 6400 et seq. and Code of Civil Procedure section 527.8, when read together, establish an explicit public policy requiring employers to provide a safe and secure workplace, including a requirement that an employer take reasonable steps to address credible threats of violence in the workplace. Defendants further contend that the policies upon which plaintiff relies are not predicated on any duties that would benefit the public at large... That is not a reasonable interpretation of plaintiffs allegations... [P]laintiffs conduct inured to the benefit of the public... [] Plaintiffs allegations ... involve both the public interest in a safe workplace at issue in Hentzel [v Singer Co. (1982) 138 CA3d 290], and the public interest in a crimefree workplace at issue in Collier [v Superior Court (1991) 228 CA3d 1117]... Accordingly, the allegations ... satisfy the public benefit requirement... For plaintiff: Mark Weidmann and Lee K. Frank. For defendants: Seyfarth Shaw LLP, Eric M. Steinert and Michael D. Mandel. Second Dist Div Five, 5/24/07; opinion by Mosk with Turner and Kriegler concurring; 2007 DAR 7509, 2007 WL 1501711.

marized as follows in a June 10 CELA Listserv message from Rene Barge: The gist of the opinion is that the prevailing defendant was not entitled to attorneys fees where the plaintiffs main claim was based on alleged violations of elder abuse statutes which provide for one-way fee-shifting for plaintiffs only. But further, the court also held that the defendant was not even entitled to attorneys fees in connection with the plaintiffs tort and contract claims because they 'arose from the same transaction.' This could be a great case for wage and hour claims, where the main statutory claim has a one-way fee-shifting provision. You can pile on related tort and contract and other claims without a fear of the defense getting attorneys fees under 218.5, so long as the claims arise from the underlying protected claim, (usually for overtime or minimum wages). For plaintiff: William B. Steinmeyer and Thomas M. Roth. For defendant: Nordman, Cormany, Hair & Compton, and Meghan B. Clark. Second Dist Div Six, 6/7/07; opinion by Gilbert with Yegan and Coffee concurring; 2007 DAR 8421, 2007 WL 1636442.

SECOND DISTRICT REVERSES DISMISSAL OF TAMENY TORT CLAIM AGAINST EMPLOYER WHO TERMINATED PLAINTIFF WHEN HE COMPLAINED TO POLICE OF CO-WORKERS THREATS OF VIOLENCE
FRANKLIN v MONADNOCK COMPANY. Plaintiff and appellant Calvin Franklin filed a first amended complaint ... alleging a single cause of action for wrongful termination of employment in violation of public policy. Plaintiff alleged that a coworker in the workplace had threatened to have plaintiff and three other employees killed, that defendants did nothing in response to his complaint to them about the threats, that the coworker thereafter assaulted him with a screwdriver, that plaintiff reported the assault to the police, and that plaintiff was terminated ... as a result of his complaints to defendants and the police. The trial court sustained defendants demurrer ... without leave to amend and entered a dismissal order.

SECOND DISTRICT HOLDS, INTER ALIA, THAT EQUITABLE TOLLING IS POTENTIALLY AVAILABLE TO PLAINTIFF WHO FILES LATE DFEH CHARGE
McDONALD v ANTELOPE VALLEY COMMUNITY COLLEGE DISTRICT. Plaintiffs, John McDonald, Sylvia Brown, and Sallie Stryker, appeal after the summary judgment motions of defendant ... were granted. The summary judgment motions were granted on the sole ground the plaintiffs administrative complaints were not filed with the DFEH within the one-year time period specified in Government Code section 12960, subdivision (d)... We reverse the order granting summary judgment against Mr. McDonald and Ms. Brown. However, we
(Cont'd on Page 10, DECISIONS)

SECOND DISTRICT REJECTS PREVAILING DEFENDANTS ENTITLEMENT TO ATTORNEYS FEES WHERE PRINCIPAL CLAIM IS UNDER STATUTE WITH ONEWAY FEE-SHIFTING PROVISION
WOOD v SANTA MONICA ESCROW COMPANY. The significance of this June 7 opinion by the Second District in a non-employment context was sum-9-

DECISIONS
(From Page 9)

affirm the order granting summary judgment as to Ms. Stryker." As to plaintiff McDonald, the Court of Appeal explained that a series of discriminatory acts had been alleged, culminating in an act of retaliation just prior to his filing of the administrative charge. Since McDonald thus alleged at least one FEHA violation occurring less than a year prior to the charge, summary judgment should not have been granted. We need not discuss the parties remaining contentions as they relate to Mr. McDonald, the court wrote. Concerning plaintiff Brown, the Court of Appeal applied the doctrine of equitable tolling, since during most of the period between the dates of the discriminatory actions and the filing of the FEHC charge, she had been pursuing internal remedies with school administrators. After an extended discussion of the legislative history and relevant case law, the court rejected the defendants contention that traditional equitable tolling principles do not apply to the section 12960(d) one-year statute of limitations to file an administrative complaint with the DFEH. [W]e conclude, the court wrote, this case is materially different from Lantzy [v Centex Homes (2003) 31 C4th 363], and equitable tolling is potentially available to a discrimination plaintiff who files an administrative complaint more than one year after an act of unlawful discrimination. With respect to plaintiff Stryker, however, summary judgment was properly granted, the Court of Appeal held, because her allegations in the civil court action differed substantially from those alleged in the administrative charge. The second amended complaint, the court wrote, bears absolutely no relationship to the claim raised in the November 15, 2002 administrative complaint of failure to promote on May 15, 2001. None of the allegations in the second amended complaint refer to the failure to promote on May 15, 2001. For plaintiffs: Gregory W. Smith; Bradley C. Gage. For defendant: Carpenter, Rothans & Dumont, Steven J. Rothans and Justin

Reade Sarno. Second Dist Div Five, 6/1/07; opinion by Turner with Armstrong and Kriegler concurring; 2007 DAR 8211, 2007 WL 1575511.

Resources Department in May 2001. She claimed Kelly Services did nothing in response, and Kelly Services pointed to no evidence in the record indicating otherwise. Noyes then filed an administrative charge of discrimination with the [DFEH] in August 2001. In December 2002, Noyes filed this action, alleging claims for: (1) employment discrimination in violation of 42 U.S.C. 1981a3 and 42 U.S.C. 2000e2 (Title VII), (2) employment discrimination in violation of ... Cal. Govt Code 12940, (3) failure to promote in violation of public policy, (4) breach of employment contract, (5) breach of the covenant of good faith and fair dealing, and (6) intentional infliction of emotional distress. The district court granted summary judgment as to the Title VII claims, and dismissed the state law claims for lack of subject matter jurisdiction after declining to exercise supplemental jurisdiction under 28 U.S.C. 1367. Although we have not previously outlined the precise contours of a prima facie showing of reverse religious discrimination, the district courts application of Godwin [v Hunt Wesson, Inc. (9th Cir 1998) 150 F3d 1217] was appropriate. The district court concluded that Noyes evidence was sufficient to make out a prima facie case of disparate treatment..., and Kelly Services does not challenge that conclusion on appeal. Of course, the protected class element is not comparable because Noyes does not claim she was part of a protected class... [] We recognize, as did the district court, that it is appropriate to tailor the elements of a prima facie showing according to the particular circumstances of each case... Kelly Services offered several pieces of evidence in support of its selection of Jilesen rather than Noyes... This evidence meets Kelly Services burden to articulate a legitimate, nondiscriminatory reason for its employment decision...

NINTH CIRCUIT
EASTERN DISTRICT APPLIED ERRONEOUS HEIGHTENED STANDARD IN FINDING EVIDENCE OF PRETEXT INSUFFICIENT TO RAISE FACT ISSUE AT SUMMARY JUDGMENT STAGE
NOYES v KELLY SERVICES. In this employment discrimination case, we address the plaintiffs burden to raise a triable issue of fact as to pretext under the familiar McDonnell Douglas burdenshifting regime in the context of a less familiar claim of reverse religious discrimination. Lynn Noyes alleges that a supervisory employee at her former employer ... was a member of a small religious group, the Fellowship of Friends, and that he repeatedly favored and promoted other Fellowship members. Noyes claims that she was passed over for a promotion because she does not adhere to the religious beliefs of the Fellowship, and that a Fellowship member was promoted instead. She appeals the [Eastern Districts] order granting summary judgment ... on her Title VII disparate treatment claim and dismissing her state law claims for lack of subject matter jurisdiction. We reverse the grant of summary judgment as to Noyes disparate treatment claim because the district court misapplied the applicable standard on summary judgment and because genuine issues of material fact exist as to pretext. We also reverse the dismissal of Noyes state law claims and remand with instructions to the district court to consider whether it may exercise diversity or supplemental jurisdiction over those claims. Noyes lodged a verbal complaint about Heinzs discriminatory employment practices with Kelly Services Human -10-

(Cont'd on Page 11, DECISIONS)

DECISIONS
(From Page 10)

JUDITH VLADECK: 1923-2007


raised a triable issue of fact such that summary judgment was inappropriate. Once the district court concluded that Noyes raised a triable question that the promotion decision was not consistent with Kelly Services stated reasons, the question of whether the real reason for the promotion decision was unlawful discrimination should have gone to the jury. Instead, the district court required Noyes to prove the ultimate issue of unlawful discriminationthat she was passed over for the promotion specifically because she was not a member of the Fellowship. In doing so, the district court erroneously heightened the standard on summary judgment. The district court also downplayed Noyes statistical evidence... Although we agree that [the] statistical evidence standing alone was insufficient to raise a triable issue of fact, coupled with Noyes other evidence, the numerical picture buttressed Noyes challenge... After declining to exercise its discretionary supplemental jurisdiction in the absence of any remaining federal claim, the district court dismissed Noyes state law claims for lack of subject matter jurisdiction... However, Noyes complaint alleged diversity jurisdiction ... as an alternative basis for jurisdiction over the state law claims. Although Kelly Services agrees that diversity jurisdiction exists, because subject matter jurisdiction is a threshold issue, on remand, jurisdiction must be determined by the court, not by concession by the parties... [] [T]he district court should reconsider whether to exercise supplemental jurisdiction under [28 U.S.C.] 1367, in light of our remand for trial on Noyes Title VII disparate treatment claim. For plaintiff: M. Catherine Jones, Nevada City. For defendant: Tyler M. Paketau, Winston & Strawn, San Francisco. Ninth Circuit, 5/29/07; opinion by McKeown joined by Hug and Moskowitz; 2007 DAR 8287, 2007 WL 1531824.

Where the evidence of pretext is circumstantial, rather than direct, the plaintiff must present specific and substantial facts showing that there is a genuine issue for trial... However, that requirement is tempered by our observation that, in the context of Title VII claims, the burden on plaintiffs to raise a triable issue of fact as to pretext is hardly an onerous one. Payne v. Northwest Corp., 113 F.3d 1079, 1080 (9th Cir 1997). The district court did not apply the proper law governing proof of pretext, but, rather, imposed a heavier burden on Noyes at summary judgment. According to the district court, to show pretext, Noyes had to show both that [Kelly Services proffered] reason was false, and that discrimination was the real reason. This formulation can be traced to a statement in St. Marys Honor Center v. Hicks, 509 U.S. 502 (1993), which addressed a merits determination rather than summary judgment... [C]onsidered in the proper procedural posture, St. Marys Honor Center clearly does not alter the burden on summary judgment. We reiterate that at the summary judgment stage, a plaintiff may raise a genuine issue of material fact as to pretext via (1) direct evidence of the employers discriminatory motive or (2) indirect evidence that undermines the credibility of the employers articulated reasons. [cite omitted.] Noyes countered Kelly Services purported nondiscriminatory reasons ... with specific, substantial evidence that undermined the credibility of those reasons. Noyes overarching complaint is that membership in the Fellowship permeated the promotion process... The claim is made against the backdrop that Heinz recognized that perceived favoritism to Fellowship members was an ongoing issue. Noyes pointed to evidence that she was more qualified for the job than Jilesen and that Heinzs actions deprived her of fair and full consideration for the promotion... Viewing Noyes circumstantial evidence of pretext through the proper lens on summary judgment, we conclude that Noyes

STATE WAGE AND HOUR AND RELATED CLAIMS FOR UNPAID TRAVEL TIME AND OVERTIME WERE NOT PREEMPTED BY LMRA 301
BURNSIDE v KIEWIT PACIFIC CORP. The named plaintiffs in this case (whom we shall call Burnside...) represent approximately 270 former and current employees of defendant Kiewit Pacific Corporation. Burnside alleges that Kiewit never compensated the employees for time they spent traveling from designated meeting sites to their jobsites and from those jobsites back to the designated meeting sites. Kiewit, Burnside further alleges, required them to undertake this round trip daily; they were not allowed to get to the jobsites on their own. This appeal requires us to decide a single question: Whether the employees claims, brought under state law, are preempted by section 301 of the LMRA... We hold that they are not, reverse the district courts decision to the contrary, and remand with instructions to remand to the Superior Court of San Diego County. Burnside estimates that the combined meeting and travel time added two to two-and-one-half hours of work to each employees day. Burnside also represents that each employee already worked more than eight hours every day and more than forty hours every week... In total, Burnside conservatively estimates that Kiewit owes the employees more than $16 million in wages. At all times relevant to this litigation, many of the terms and conditions of each employees work for Kiewit were governed by one of five collective bargaining agreements... [] Agreements 1, 4, and 5 ... make clear that the Contractor is responsible for payment of wages for round-trip commutes from the reporting point ... to the jobsite, unless the employee has reported to that initial meeting point voluntarily. [] Agreements 2 and 3 are silent regarding the existence of a daily initial reporting place... and so do not address whether
(Cont'd on Page 12, DECISIONS)

-11-

DECISIONS
(From Page 11)

the employer would be responsible for compensating his employees for any time spent traveling between these two points. Burnside made no mention of these CBAs in the complaint... Instead, the complaint set forth three claims, all based on state law. Specifically, the employees alleged: (1) violations of [B & P] Code 17200 et seq, on the theory that non-payment of wages, overtime, and employment taxes and benefits gave Kiewit an unfair competitive advantage...; (2) violations of ... Wage Order 16-2001, and sections 200, 500, 510, and 1198 of the California Labor Code, for unpaid regular and overtime wages...; and (3) conversion... [W]e hold that Burnsides claims are not preempted by section 301 and may go forward under state law because [per Morillion v Royal Packing Co. (2000) 22 C4th 575, and Allis-Chalmers Corp. V Lueck (1985) 471 US 202] (1) the right to be compensated for employer-mandated travel time is a right conferred by state law, independent of the CBAs; and (2) the matter at hand can be resolved without interpreting the CBAs... As in Lingle [v Norge Div. Of Magic Chef, Inc. (1988) 486 US 399], Kiewit cannot maintain that its employees claims are preempted merely because a state court eventually will have to determine whether the travel was compulsory, even if a court would have had to undertake the same inquiry to enforce rights contained in Agreements 1, 4, and 5... For plaintiffs: George F. Schaefer, San Diego. For defendant: Thomas R. Kaufman, Seyfarth Shaw, Los Angeles. Ninth Circuit, 6/20/07; opinion by Berzon joined by Pregerson and W. Fletcher; 2007 DAR 9222, 2007 WL 1760747.

UNPUBLISHED CALIFORNIA COURT OF APPEAL DECISIONS


[Note: The following are summaries of only a selection of the unpublished Court of Appeal decisions filed during the past month.]

ted to enforce and benefit from the agreement. [cite omitted.] After reviewing the record, we conclude Miles did not meet his burden. Whether or not an arbitration agreement is operative against a person who has not signed it involves a question of substantive arbitrability which is to be determined by the court. [cite omitted.] [] Miles cites Dryer v. Los Angeles Rams (1985) 40 Cal.3d 406 and 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, for the proposition that nonsignatory defendants are entitled to the benefit of the arbitration clause if they were acting as agents for the signatory defendant. We have independently reviewed the entire complaint, and conclude the allegations certainly show Abou-Khalils claims arose while she was at work. And it is undisputed her injuries were caused by a partner at the Firm, on a normal work day, and during a workrelated lunch meeting. However, we found no allegations from which it must necessarily be inferred Miles was acting as the Firms agent when he purportedly assaulted, battered, and/or intentionally caused Abou-Khalil emotional distress. In both Dreyer and 24 Hour, the principal affirmatively accepted the agency relationship. This is a crucial piece of evidence missing in this case, and the reason those cases are distinguishable. There is no supporting declaration from the Firm in this case. Other than the pleadings, there is only Miless declaration discussing three arbitration agreements he believes support the motion: (1) his agreement with the Firm to arbitrate any dispute arising from his employment; (2) the Firms employee handbook indicating all disputes arising from his employment must be arbitrated; and (3) the Firms revised handbook containing a similar arbitration provision. He does not assert the claims relate to actions within the scope of his employment, or were ratified by the principal (the Firm). There is no persuasive authority to support Miless claim to be acting as an agent for the Firm
(Cont'd on Page 13, DECISIONS)

FOURTH DISTRICT HOLDS THAT LAW FIRM PARTNER WHO HARASSED EMPLOYEE COULD NOT ENFORCE ARBITRATION AGREEMENT BETWEEN EMPLOYEE AND FIRM
ABOU-KHALIL v MILES. Douglas Miles, the managing partner of a law firm, appeals from the trial courts order denying his motion to compel arbitration of Diana Abou-Khalils third through seventh causes of action. The court determined Abou-Khalil, the firms executive assistant, did not have to arbitrate her claims brought against Miles in his individual capacity for assault, battery, intentional infliction of emotional distress, and violations of Civil Code sections 51.7 and 52.4. Finding none of Miless contentions on appeal have merit, we affirm the order. In October 2005, the firm hired AbouKhalil as an executive assistant. She signed an Employee Acknowledgment and Agreement which contained an arbitration provision... [] Eight months later, Abou-Khalil filed a complaint for damages against Miles... Abou-Khalil also demanded arbitration of her claims against the Firm, and its head of human resources, Heidi Griffin, alleging the same causes of action with the exception of the Civil Code violations. In her arbitration demand, Abou-Khalil also added several new claims: (1) the Firm failed to prevent harassment (Gov. Code 12940); (2) wrongful termination; and (3) violation of Business and Professions Code section 17200. We first address the issue of standing. Miles did not sign the agreement containing the arbitration provision. Nonsignatories have the burden of demonstrating why they should be permit-12-

DECISIONS
(From Page 12)

regarding the events giving rise to AbouKhalils dispute with him personally. Certainly, if this case concerned a dispute over Abou-Khalils salary, benefits, or wrongful termination, we would not hesitate to hold Miles was acting as an agent for the Firm in dealing with such matters. However, this case involves a dispute of a much different kind: torts arising from a sexual encounter between two adults. We cannot conclude as a matter of law Miles was the Firms agent for all purposes. There is simply no evidence indicating that the Firm intended its partners to sexually assault, batter, or emotionally distress its executive assistants. Miles argues Abou-Khalil is equitably estopped from asserting he cannot enforce the arbitration agreement. He argues her claims against him and the Firm are based on the same set of facts... He claims the complaint alleges all defendants acted in concert to harm her. We are unpersuaded. It is not enough to simply have claims with some facts in common. We do not find Abou-Khalils claims against the Firm and Miles to be intimately founded in and intertwined with the employment agreement. Contrary to Miless argument, Abou-Khalil did not allege all the defendants acted in concert to assault, batter, or cause emotional distress. The allegations of joint action related to her first and second cause of action (sexual harassment in the work environment and retaliation), which the court determined were subject to arbitration. The courts order regarding the motion to compel arbitration is affirmed. Respondent shall recover her costs on appeal. [Note: The principles under which a nonsignatory may be bound by an agreement to arbitrate were also recently at issue in a Second District decision filed on May 29 in a non-employment case, Matthau v Superior Court (William Morris Agency), 2007 DAR 7809, 2007 WL 1532347.]

For plaintiff: Finlayson, Augustini & Williams, Michael R. Williams and Sharyl Bilas Garza. For defendant: Fisher & Philips, James J. McDonald, Jr., and Christopher J. Boman. Fourth Dist Div Three, 6/4/07; opinion by OLeary with Sills and Bedsworth concurring; 2007 WL 1589456 (unpublished).

claims like that of Hogan, which involved events that concluded months before the agreement became effective. The NDR provides that, if necessary, the arbitrator will determine whether any particular claim or person is subject to the [NDR] Program. Thus, while Hogan denies that her discrimination claim is covered by the NDR, she concedes that issue is for the arbitrator, rather than the court, to determine. Hogan submits that the NDR is unconscionable insofar as it may extend to pre-existing claims. She ... argues that the obligation to arbitrate is not truly bilateral as to pre-existing claims because Nordstrom has the power to decide whether to require the employee to enter into the NDR, and thus to dictate which pre-existing claims are arbitrated. This argument is unpersuasive... Hogan was not singled out ..., and there is no likelihood that Nordstrom adopted the NDR out of concern for her particular case. Nor did Nordstrom make the NDR immediately effective; it gave those like Hogan with pre-existing claims a window of time within which to file them in court... Thus, while there might be situations where it would be substantively unconscionable to require arbitration of pre-existing claims, this is not one of them. The next allegedly unconscionable aspect of the NDR stems from a provision notifying the employee that he or she is responsible for paying [a]ny costs to produce evidence you request, including, but not limited to, deposition costs or discovery requests. ... [][T]he NDR merely and permissibly requires the employee to bear the same discovery costs he or she may incur in a court action. The other allegedly unconscionable facet of the NDR is its provision for payment of attorneys fees if a court action is instituted over a covered claim... [] Hogan ... contends that the potential fee liability ... will impermissibly chill employee challenges to the NDR. However, it is sufficient that both sides are
(Cont'd on Page 14, DECISIONS)

FIRST DISTRICT REVERSES DENIAL OF MOTION TO COMPEL ARBITRATION OF DISABILITY CLAIM, REJECTING UNCONSCIONABILITY AND ARMENDARIZ ARGUMENTS
HOGAN v NORDSTROM, INC. Defendant Nordstrom, Inc. appeals from an order denying its motion to compel arbitration of Sharon Hogans disability discrimination claim under [FEHA]. The issues are whether the parties arbitration agreement is unconscionable, and whether the agreement satisfies the requirements for arbitration of FEHA claims. Because the arbitration agreement is not substantively unconscionable, we find no grounds to deny enforcement of the agreement, and reverse the order denying the motion to compel arbitration. After missing some months of work because of an auto accident, the plaintiff had asked to return to work with restrictions. Nordstrom refused that request, and denied her request for accommodations. About four months after that denial, the plaintiff filed discrimination charges with the DFEH. Two months thereafter, she was permitted to return to work, and was required to attend a meeting regarding Nordstroms Dispute Resolution Program and to sign an NDR Acknowledgment Form. According to her declaration, the plaintiff believed that if she did not sign the Form, her job would be in jeopardy. We begin with the assumption that the NDR, which is limited to claims arising from or connected with current or future employment, could nonetheless be interpreted to require arbitration of -13-

DECISIONS
(From Page 13)

equally exposed to the same liability for breach of the agreement. No authority suggests that a neutral fee provision can be deemed unconscionable merely because it is of relatively greater consequence to the party with lesser financial resources. For the foregoing reasons, the NDR is not substantively unconscionable. In view of that holding, we need not address any issues of procedural unconscionability. Hogan contends that the discovery cost provision ... violates the second and fifth of the [Armendariz] requirements, but, as we have explained, that provision does not require employees to pay unreasonable costs. Nor does the discovery cost provision allow for only minimal discovery... There are no limitations on discovery under the NDR other than those the arbitrator may impose, and AAA rules governing discovery [in employment disputes] are fair to claimants. (Lagatree [v Luce, Forward, Hamilton & Scripps] 74 CA4th at p.1130, fn. 21.) Hogan argues that the NDR does not provide for neutral arbitrators because it limits the pool of arbitrators to members of the AAA, which Hogan describes as an arbitral forum in which Nordstrom is a repeat player. [E]ven where relatively few arbitrators are available for appointment..., courts are not prepared to say without more evidence the repeat player effect is enough to render an arbitration agreement unconscionable. (Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 178-179.) For plaintiff: Gerald Andrew Clausen, Allan Joseph Gomes, McCormac & Associates, San Francisco. For defendant: Mitchell F. Boomer, Jackson, Lewis, et al, San Francisco. First Dist Div One, 6/11/07; opinion by Marchiano with Stein and Margulies concurring; 2007 WL 1666815 (unpublished).

RETALIATION CLAIM ARISING FROM COUNTYS INVESTIGATION OF DISCRIMINATION CLAIM SHOULD HAVE BEEN STRICKEN AS SLAPP SUIT
GALLANIS-POLITIS v MEDINA. A Los Angeles County employee sued the County and a County official, asserting discrimination claims under state and federal law. In her third amended complaint, the employee also asserted a retaliation claim, and sued two other County supervisory employees... She alleged the two supervisors obstructed her efforts to obtain bilingual bonus pay by conducting a pretextual investigation and preparing a report falsely concluding she was not entitled to bilingual pay. The two supervisors filed a special motion to strike the complaint under the anti-SLAPP statute... They contended that the retaliation claim against them arose from protected First Amendment activity, as the investigation was conducted and the report was prepared in response to a request from counsel for the County in connection with the employees discovery requests in the ongoing lawsuit. The supervisors further asserted the employee could not prevail on the merits of her retaliation claim because the litigation privilege operated as an absolute bar to her claim. We agree with the supervisors on both points, and reverse the order of the trial court denying their special motion to strike the retaliation claim. For plaintiff: Gregory R. Ellis and, on the briefs, Alexander & Yong, J. Bernard Alexander and Tracy L. Fehr. For defendants: Thomas, Donahue, Thomas & Hurevitz; Greines, Martin, Stein & Richland. Second Dist Div Eight, 5/25/07; opinion by Boland with Rubin and Flier concurring; 2007 WL 1519783 (unpublished).

KING v UNITED PARCEL SERVICE, INC. This case is not about whether a long-term supervisory employee of UPS asked or encouraged a driver to falsify a timecard to bring it into compliance with federal regulations limiting driving time, the Third District wrote in an unpublished May 23 opinion, but whether UPS had an honest, good faith belief that the [supervisor] had violated its integrity policy when it fired him. There is no dispute that the driver did falsify his timecard. The falsification occurred ... about two months after plaintiff Richard King returned to work following a fourmonth medical leave of absence for a blood disorder. Finding no triable issues of material fact, the trial court granted UPSs motion for summary adjudication of plaintiffs causes of action for discrimination, failure to provide reasonable accommodation, breach of an implied contract to terminate only for good cause, and defamation. We affirm. Plaintiff accuses UPS of cloak-anddagger techniques in an undercover conspiracy to get rid of him. But he fails to identify the culprits... [N]one of [the men he complains about] were involved in the decision to terminate him, and his dispute with them about his hours and responsibilities preceded his disability leave. [Concerning the alleged failure-to-accommodate], [w]e agree with the trial court that plaintiff has not sustained his burden of demonstrating a genuine issue of material fact given his failure to get additional clarification from his doctor to specifically restrict his hours and to communicate his limitations to his supervisors. This case has regrettable consequences for plaintiff, who worked for UPS almost 30 years and claims to have lost all of his medical benefits when he was close to retiring. We are not empowered to determine whether plaintiff deserved to be discharged for the integrity violation UPS management honestly believed he committed. Even if, as plaintiff insists, he was innocent of
(Cont'd on Page 15, DECISIONS)

THIRD DISTRICT AFFIRMS SUMMARY JUDGMENT ON DISABILITY DISCRIMINATION CLAIM BY UPS SUPERVISOR OSTENSIBLY DISCHARGED FOR INTEGRITY VIOLATION
-14-

DECISIONS
(From Page 14)

the charges leveled against him, the law does not condemn managerial mistakes so long as his employer honestly believed the reasons for his termination. Because he has failed to present substantial evidence that the decision was anything more than a mistake by demonstrating triable issues of pretext, bad faith, or malice, we must affirm the summary judgment in favor of UPS. For plaintiff: Marjorie E. Manning, Bolling, Walter & Gawthorp, Anthony M. Perez, Sacramento. For defendant: Sarah A. Jain, Paul, Hastings, Janofsky & Walker, San Francisco. Third Dist, 5/23/07; opinion by Raye with Nicholson and Hull concurring; 2007 WL 1493316 (unpublished).

tion and the supervisor continued to harass and discriminate and retaliate against him, and the CPUC took no action to stop the continuing discrimination and harassment; (4) from plaintiffs filing of his internal CPUC complaints of March 2004 and July 2004 and his April 12, 2005, June 15, 2005, and August 30, 2005, discrimination complaints with the California EEOC, his supervisors harassment and discriminatory acts increased; and (5) as a result of exercising his protected rights of filing the internal and external harassment and discrimination complaint(s) against the supervisor(s)/ CPUC, he was retaliated against through their progressive disciplinary process that resulted in negative evaluations and ultimately an adverse action pay reduction against plaintiff. Concerning damages, Judge Quidachay wrote: The parties have stipulated that Mr. Naidus economic damages amount to $1,872 for reduced pay and $312 for docked pay, not including pre-judgment interest. Pre-judgment interest can be addressed in plaintiffs post-trial motion for equitable relief if the parties cannot resolve the issue. The Court awards Mr.Naidu $2,184 for economic damages. Based on the totality of the evidence including Dr. Carlos Andersons and Mr. Naidus testimony, the Court finds Mr. Kazemadehs and CPUCs severe and pervasive unlawful conduct and actions from March 2004 to present and continuing caused Mr. Naidu to suffer emotional distress. The Court awards Mr. Naidu $545,000 as damages for his emotional distress... Mr. Naidu is entitled to recover attorneys fees and costs of suit. For plaintiff: Richard M. Rogers, Mayo & Rogers, San Francisco. San Francisco County Superior Court, No. CGC-05-444782; 6/1/07; Judge Ronald E. Quidachay; Statement of Decision provided by counsel.

LOS ANGELES JURY AWARDS $750,000 ON DEFAMATION CLAIM, WHILE RETURNING DEFENSE VERDICT ON CLAIM FOR WRONGFUL TERMINATION
REGALIA v THE NETHERCUTT COLLECTION. On May 16, a jury in Los Angeles County Superior Court (Central) returned a plaintiffs verdict and awarded $750,000 on a defamation claim (poll: 10-2), while voting 12-0 for the defense on a claim for wrongful termination. The defense had refused to make any settlement offer. The allegations and evidence were summarized as follows by plaintiffs counsel: Michael Regalia began his career at age 23 as a painter for J.B. Nethercutt, Sr., a collector of antique and classic automobiles. At the time of his termination in 2005, he was 52 years old and had risen to the position of president of the Nethercutt Collection, the not-forprofit museum and restoration facility founded by the senior Nethercutt. Following the death of the senior Nethercutt in late 2004, the Collection fired Regalia without cause because he objected to the misuse of charitable funds for the private benefit of Jack B. Nethercutt II and his family, and because he was viewed as unwilling to cooperate in a scheme to use the Collection to evade state and federal taxes. The lawsuit included a common law claim for wrongful termination in violation of three public policies: (1) the public policy requiring that non-profit charitable and educational corporations use their funds only for the benefit of the public; (2) the public policy requiring the payment of taxes; and (3) the public policy prohibiting employers from retaliating against employees for refusing to participate in an activity that would result in the violation of a state or federal statute, rule, or regulation. A claim was also asserted against Jack B. Nethercutt individually for tortious interference with contract and with advantageous business relations and opportunities. And the successful slander claim was as(Cont'd on Page 16, DECISIONS)

VERDICTS AND
SETTLEMENTS FOLLOWING COURT TRIAL, PLAINTIFF IS AWARDED $2,000 IN ECONOMIC DAMAGES AND $545,000 FOR EMOTIONAL DISTRESS ON RACE DISCRIMINATION CLAIMS
NAIDU v CALIFORNIA PUBLIC UTILITIES COMMISSION. In a Statement of Decision filed on June 1, San Francisco County Superior Court Judge Ronald E. Quidachay found in favor of the plaintiff on all four causes of action asserted: racial discrimination, racial harassment, retaliation, and failure to stop discrimination. The court summarized the plaintiffs allegations as follows: [P]laintiff alleges that (1) beginning March 2004 plaintiffs CPUC supervisor Moshen Kazemzadeh [of Iranian origin and Muslim faith] harassed and discriminated against him because of his national origin [Indian] and/or religion [Hindu] creating a hostile work environment; (2) plaintiff complained about the supervisors conduct to the CPUCs EEO officer who found his hostile work environment allegations to be true; (3) the CPUC supervisor did not heed the CPUCs EEO officers recommenda-

-15-

DECISIONS
(From Page 15)

serted against both named defendants for falsely telling people that Regalia had been fired for demanding a finders fee to which he was not entitled, and because he had a violent temper. For plaintiff: Marvin Krakow. For defendants: Robert Baker. Los Angeles County Superior Court (Central), No. BC348782; 5/16/07; Judge Susan Bryant-Deason; information provided by counsel.

years to four years where there is no willful misconduct, and from three years to five years in cases involving willfulness, and to extend the time period for which employers must maintain wage and job classification records from two years to five years. The bill passed the Assembly on June 7 and was sent to the Senate Committee on RLS for assignment. AB 1043. CELAs bill to prohibit mandatory forum selection and choice-of-law provisions as conditions of employment passed the Assembly on May 17, and was referred to the Senate Judiciary Committee on May 23, with a hearing scheduled for June 19. H.R. 1540. As noted in the May 31 edition of NELAs Washington Report On The Hill, this years version of the Civil Rights Tax Relief Act has added fourteen new co-sponsors since its introduction in March. (The bill was referred to the House Ways and Means Committee on March 15.) See www.nela.org for details. S. 1345 and H.R. 2232. On May 9, Senators Daniel Akaka (D-HW) and Susan Collins (R-ME), and Representatives Henry Waxman (D-CA) and Tom Davis (R-VA) introduced identical companion bills, The Clarification of Federal Employment Protections Act, to make clear that federal employees are protected against discrimination on the basis of sexual orientation. The bills would add sexual orientation as a prohibited basis for action under 5 USC 2302(b)(1). It would also specifically repudiate any assertion that Federal employees are not protected from discrimination on the basis of sexual orientation, referring to the much-criticized interpretation of the law by Special Counsel Scott Bloch. EEOC ENFORCEMENT GUIDANCE. On May 23, the EEOC issued new Enforcement Guidance: Unlawful Disparate Treatment of Workers with Caregiving Responsibilities, No. 915.002. (See www.eeoc.gov/policy/ guidance.) According to the May 31 edition of NELAs Washington Report On The Hill, the EEOCs guidance -16-

appears to outline different ways to prove sex, pregnancy, and disability discrimination based on stereotyping evidence of workers who have caregiving responsibilities. Indeed, the guidance incorporates some of the theories presented at NELAs 2006 seminar Beyond Stereotypes: Discovering and Proving Hidden Bias in Employment Cases.

LEGISLATIVE UPDATE
[Note: See www.leginfo.ca.gov for information about the provisions and status of bills pending in the California legislature. For information on bills pending in the United States Congress, see the Library of Congresss website, www.thomas.loc.gov.] SB 549. On June 6, CELAs Bereavement Leave bill passed the California Senate by a vote of 23-13. It was sent to the Assembly Labor & Employment Committee on June 11, with a hearing scheduled for June 20. SB 622. A bill, introduced by Alex Padilla (D-LA), to make it unlawful to willfully misclassify workers as independent contractors and to establish civil penalties for such willful misclassification. The bill passed the Senate on June 4 and was sent to the Assembly Labor & Employment and Judiciary Committees. SB 836. A bill, introduced by Sheila Kuehl (D-LA), to add familial status to the list of characteristics that are prohibited bases of discrimination under FEHAs employment provisions, and to define familial status to include being an individual who is or will be caring for or supporting a family member. The bill passed the Senate on May 31 and was sent to the Assembly Labor & Employment and Judiciary Committees. AB 435. A bill, introduced by Julia Brownley (D-LA), to extend the statute of limitations for a civil action alleging sex-based wage discrimination from two

PLANNING FOR CELAS 20TH ANNUAL CONFERENCE


CELAs 20th Annual Conference is about three months awaySeptember 2729, 2007. We have reserved a limited block of rooms at the Conference site, the Fairmont Hotel in San Jose. If you plan to stay there, you should contact them no later than September 6, at (800) 346-5550, or www.fairmont.com. CELAs group rate is $165 for a single/ double, or $225 for a one-bedroom suite. Be sure to mention that you are attending the CELA conferencethe promotional code is GRCAL1. Remember that on Thursday, September 27the day before the Conference properCELA will present a full-day seminar, (from 10am to 5:30pm), entitled Intake Through Trial of a Disability Discrimination Case. On both Friday the 27th and Saturday the 28th, registration and breakfast will run from 8am to 9am, with general sessions beginning at 9am. Fridays reception and auction will take place from 5pm to 8pm, and the final session on Saturday will end at 3pm.

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

BULLETIN
Published Monthly EDITOR: CHRISTOPHER BELLO July 2007 Vol. 21, No. 7

RECENT EMPLOYMENT LAW DECISIONS


CALIFORNIA SUPREME COURT
SUPREME COURT WILL REVIEW DECISION THAT HELD THAT STATE EMPLOYEE WAS ESTOPPED FROM FILING CIVIL SUIT WHERE SHE HAD FAILED TO REQUEST HEARING AFTER ADVERSE FINDINGS BY SPB
STATE BOARD OF CHIROPRACTIC EXAMINERS v SUPERIOR COURT (ARBUCKLE). On June 27, the California Supreme Court announced that it will review the Third Districts February 28 decision that held that a state employee was collaterally estopped from bringing a civil tort action where she had not requested a hearing after receiving an adverse notice of findings from the State Personnel Board. The underlying case involves allegations that the State Board of Chiropractice Examiners took adverse employment actions against Arbuckle in retaliation for her whistleblowing activities. The Third Districts opinion appeared at 148 CA4th 142, 55 CR3d 374, and was summarized in CELA Bulletin, March 07, p.1. For real party: Gaspar Garcia, Sacramento. Cal SC, 6/27/07; 2007 DAR 10087, 2007 WL 1988538.

JOHN C. McCARTHY 1923 - 2007


by James Stoneman

AFFIRMING SIXTH DISTRICT, SUPREME COURT HOLDS THAT EMPLOYERS MALICIOUS PROSECUTION CLAIM AGAINST FORMER EMPLOYEES ATTORNEYS WAS NOT BARRED BY POST-JUDGMENT SETTLEMENT
SIEBEL v MITTLESTEADT. Agreeing with the Sixth Districts May 2004 decision, (118 CA4th 406, 12 CR3d 906; summarized in CELA Bulletin, May 04, p.5), the California Supreme Court held that a malicious prosecution claim by an employer against the attorneys who had represented a former employee in a wrongful termination action was not precluded by the fact that, after a judgment in favor of the employer, the parties had reached a settlement that compromised the sums awarded. The Supreme Court agreed that the present situation was distinguishable from that in Ferreira v Gray, Cary, Ware & Friedenrich (2001) 87 CA4th 409. A post-judgment settlement constitutes a favorable termination, the Supreme Court held, when the malicious prosecution plaintiff received a favorable judgment in the underlying action and settled without giving up any portion of the judgment in his or her favor. For employer: Blecher & Collins; Greines, Martin, Stein & Richland. For employees attorneys: Tony J. Tanke; Gary L. Simms; Russell S. Roeca; Daniel W. Hager; Murphy, Pearson, Bradley & Feeney. Cal SC, 7/16/07; unanimous opinion by Corrigan; 2007 DAR 10802, 2007 WL 2027804.
(Cont'd on Page 2, DECISIONS)

It is with great sadness that I commemorate the passing, at age 83, of a truly great lawyer and CELA co-founder, John C. McCarthy. John passed away peacefully at his home, among family, the last week of June, after a very productive life and a courageous battle with cancer. I had the privilege of practicing with John for twelve exciting years. I realize that many current CELA members dont remember John, who went into semi-retirement around 1996. At that time our organization had less than 100 members, and we now have over 700, most of whom have joined in the last five years. So Ill try to share my thoughts and feelings about this inspirational teacher, author, mentor, pioneer, and enormously effective lawyer. John absolutely loved CELA, and it is important to recognize that many of our members recent accomplishments and successes have been achieved on the shoulders of people like John. Those of
(Cont'd on Page 10, JOHN MCCARTHY)

AUTHORS SOUGHT FOR SPECIAL ISSUES OF CELA BULLETIN TO BE DISTRIBUTED TO JUDGES


The CELA Executive Board has approved a plan to publish two special issues of the CELA Bulletin for distribution to California Superior Court Judges. Each issue will feature five articles, of about 2,000 words each, by CELA members on topics of importance to employment law practitioners. Please submit proposed article topics to Wilmer Harris by September 1, 2007, (www.WHarris@sdshhlaw.com). Well then need to receive the finished articles on the selected topics by November 1, 2007.

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: Michelle Reinglass 23161 Mill Creek Drive Suite 170 Laguna Hills, CA 92653 Tel: (949) 587-0460 FAX: (949) 587-1004 E-mail: michelle@reinglasslaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Sherman Oaks) Eve Chesbro (Pasadena) David DeRubertis (Woodland Hills) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Wilmer Harris (Pasadena) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Cynthia Rice (San Francisco) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles) Brad Yamauchi (San Francisco)

DECISIONS
(From Page 1)

CALIFORNIA COURTS OF APPEAL


UNLIKE UNDER UCL, REPRESENTATIVE CLAIMS UNDER PAGA NEED NOT BE BROUGHT AS CLASS ACTIONS
ARIAS v SUPERIOR COURT (ANGELO DAIRY). In an opinion filed on July 24, the Third District issued a peremptory writ of mandate directing the San Joaquin County Superior Court to vacate its order striking wage and hour causes of action brought pursuant to the PAGA by a former dairy employee who sought damages and injunctive relief in his representative capacity for the interest of other current and former employees. The court reached a different conclusion, however, with respect to the plaintiffs UCL claims. At issue in this appeal, the Third District wrote, is whether an individual bringing an action on behalf of himself and others under the Unfair Competition Law (UCL) (Bus. & Prof. Code, 17200 et seq.) and the Labor Code Private Attorneys General Act (PAGA) (Lab. Code, 2698 et seq.) must bring his representative claims as a class action. We shall conclude that the UCL requires that a representative claim be brought as a class action because the UCL requires compliance with the class action provisions of Code of Civil Procedure section 382. (Bus. & Prof. Code, 17203.) We shall further conclude that

the PAGA expressly allows a person to prosecute a representative claim without requiring that it be brought as a class action. [Concerning UCL claims,] under the prior law [pre-Proposition 64] ... a private plaintiff was authorized ... to bring a representative action not certified as a class action... (Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 126, fn.10.) [] Arias argues that the plain language of Proposition 64 is clear and unambiguous, and that it contains no requirement that a representative suit be brought as a class action. We shall conclude that although Proposition 64 does not on its face require a representative claim to be pled as a class action, it requires that the claim comply with section 382, which is commonly understood to authorize class actions. The requirement that a representative claim comply with section 382 makes plain that a representative UCL claim must be pursued as a class action. To the extent that Proposition 64 presents any ambiguity, we resolve it by the indicia of the voters intent. That intent, as set forth in the official ballot pamphlet, was that representative claims under the UCL be brought as class actions. The PAGA was adopted to empower aggrieved employees to act as private attorneys general and to authorize them to seek civil penalties for Labor Code violations that previously could be assessed only by state agencies...
(Cont'd on Page 3, DECISIONS)

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

-2-

DECISIONS
(From Page 2)

"Both the language of the PAGA and the express intent of the Legislature indicate that an aggrieved employee may bring an action on behalf of other employees without complying with the requirements of a class action. Labor Code section 2699 specifically states that an aggrieved employee may bring an action on behalf of other employees, [n]otwithstanding any other provision of law... The wording of the PAGA ... is similar to the former wording of Bus. & Prof. Code section 17204... Non-class representative actions were authorized under [that statute]. The Legislature has made clear that an action under the PAGA is in the nature of an enforcement action ... designed to protect the public and penalize the defendant for past illegal conduct. Restitution is not the primary object of a PAGA action, as it is in most class actions. [cites omitted] Thus, both the purpose and the language of PAGA indicate an enforcement action on behalf of others need not be brought as a class action. For plaintiff: California Rural Legal Assistance, Blanca A. Banuelos and Michael Meuter. For real parties: Anthony P. Raimondo and Michael C. Saqui. Third Dist, 7/24/07; opinion by Blease with Raye and Hull concurring; 2007 WL 2111017.

claim, as well as on her claims for race discrimination, retaliation, and related state law torts. (The plaintiffs claims for assault and battery, the intentional and negligent infliction of emotional distress, and negligent retention were barred by the doctrine of workers compensation exclusivity, the court held.) The court wrote in part: We conclude, based on the totality of the circumstances, Jones failed to present a triable issue of material fact from which it reasonably could be inferred she suffered harassment prohibited by FEHA. Specifically, Respondents, in their moving papers, pointed to Joness testimony in which several times she was asked whether the comments and complaints her coworkers made about her were prompted by gender or race. Jones repeatedly answered, No and I dont know. The absence of the nexus between the alleged harassment and Joness gender negates her FEHA claim. Joness claim also fails for the independent reason that she did not produce evidence that the conditions she complained of were sufficiently severe or pervasive to constitute harassment. As the trial court concluded..., These incidents are akin to being a collection of isolated and objectively non-discriminatory events. We regard the wheelbarrow incident as the most severe ... because it involved physical conduct. [The plaintiff alleged that during an argument a co-worker had banged her body around, and that she had sought medical attention for neck, wrist, and shoulder pain.] However, it was a one-time occurrence, which was unrelated to her gender. Several of her other complaints similarly were either regarding discrete incidents or matters that were not severe... There is no evidence that the male coworkers daily criticisms were severe because, as recounted in Joness deposition testimony, they amounted to no more than comments that she was not doing her job. [Concerning the plaintiffs disparate treatment claim], as we have noted, there is no nexus shown between the coworkers conduct and Joness gen-3-

der or race; therefore, she cannot make out a claim for discrimination. Jones likewise failed to produce evidence rebutting Respondents proffered reasons for certain employment decisions or mak[ing] a showing they were merely pretexts for discriminatory conduct. Based on the above, any slights or offenses Jones complains about did not rise to the level of discrimination. [Concerning alleged retaliation], Respondents demonstrated that Jones failed to provide any evidence disputing Respondents claim she suffered no adverse change in the terms and conditions of her employment. Specifically, she never experienced a loss or reduction in her classification, position, salary, benefits and work hours; and her employment was not terminated. She failed to make out a claim she was constructively discharged because no evidence showed her employer intentionally created or knowingly permitted working conditions so intolerable or aggravated that a reasonable employee in her position would have felt compelled to resign. Jones merely listed, but did not separately discuss, the nine instances of claimed adverse employment action; rather, she alleged that these actions, collectively, formed a pattern of conduct that adversely changed the terms and conditions of her employment. Respondents correctly point out Joness briefing is deficient because it relies on block citations to her deposition testimony... In any event, we point out that, as a threshold matter, we need not and do not decide whether each alleged ... act constitutes an adverse employment action in and of itself. (Yanowitz, 36 Cal.4th at p. 1055.) Joness allegations are not supported by specific facts showing that a triable issue of material fact exists as these causes of action... In short, there is no evidence, and it is not reasonable to infer, that Joness work conditions were materially altered. For plaintiff: Donald R. Holben & Associates, Leah Marie Peer.
(Cont'd on Page 4, DECISIONS)

NEXUS BETWEEN ALLEGED HARASSMENT AND PLAINTIFFS GENDER AND RACE WAS NEGATED WHEN SHE ANSWERED NO AND I DONT KNOW WHEN ASKED IF HARASSERS CONDUCT WAS PROMPTED BY DISCRIMINATORY MOTIVE
JONES v R. J. DONOVAN CORRECTIONAL FACILITY. In a opinion filed on June 14 and ordered published on July 3, the Fourth District, Division One, affirmed summary judgment on an African-American corrections officers FEHA hostile environment

DECISIONS
(From Page 3)

For defendants: Chris A. Knudsen, Theodore S. Drcar, Deputy Attorneys General. Fourth Dist Div One, 6/14/07, publication ordered 7/3/07; opinion by ORourke with Huffman and McDonald concurring; 2007 WL 1705671.

tions, Inc. (2007) 40 Cal.4th 1094...) We explain in our discussion, post, why we have decided to proceed with this appeal despite any mootness resulting from the recent filing of Murphy. [The court reasoned that the matter was of general public interest and likely to recur.] We shall conclude appellants show reversible error because the Commissioners attempt to issue a binding precedent decision was an invalid circumvention of the APAs rulemaking requirements. However, we shall conclude appellants fail to show reversible error with respect to the untimely processing of claims. We shall affirm in part and reverse in part. For plaintiffs: California Rural Legal Assistance, Michael M. Meuter, Melissa Barrios, Alegria De La Cruz, and Cynthia L. Rice. For defendant: DLSE, Anne P. Stevason and Anne Hipshman. Third Dist, 7/10/07; opinion by Sims with Hull and Robie concurring; 2007 WL 1978025.

Rohnow... Rather, the contract simply called for the payment of a fixed sum to VL Systems should they choose to do so. We disagree with VLS and hold that paragraph 6 is not enforceable. Our analysis begins with Business and Professions Code section 16600 which states: Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void. [T]he question becomes whether two parties can agree on a no-hire provision as a matter of contract. Freedom of contract is an important principle... This type of contractual provision, however, may seriously impact the rights of a broad range of third parties. In this case, those third parties not only included the VLS employees who actually performed work for Star Trac under the contract, but all of those who did not, including Rohnow, who was not even employed by VLS at the time. [W]e take no position on whether a more narrowly drawn and limited no-hire provision would be permissible under California law. Paragraph 6, however, is in no sense narrowly drawnit is a very broad provision covering not only solicitation by Star Trac, but all hiring, and it applies to all VLS employees, regardless of whether they worked [on the Star Trac contract] or were even employed [by VLS] at the time. Such a broad provision is not necessary to protect VLSs interests and is outweighed by the policy favoring freedom of mobility for employees. It is therefore unenforceable. For VL Systems: David R. Calderon, Orange. For Unisen (Star Trac): Hema C. Bhamre, Newport Beach. Fourth Dist Div Three, 6/25/07; opinion by Moore with Rylaarsdam and Ikola concurring; 2007 WL 1807001.

LABOR COMMISSIONER IMPROPERLY ISSUED PRECEDENT DECISION ON PAYMENTS FOR MISSED MEAL/ REST PERIODS IN CIRCUMVENTION OF APAS RULE-MAKING REQUIREMENTS
CORRALES v BRADSTREET. The Sacramento County Superior Court erred in part, a Third District panel held in an opinion filed on July 10, in denying a petition for writ of mandate and complaint for declaratory relief. Appellants complain, the court explained, then [Labor] Commissioner Donna Dell (1) violated statutory duties relating to timely processing of employee claims under Labor Code section 98, and (2) improperly issued a precedent decision purporting to be binding in all section 98 hearings, in circumvention of rulemaking requirements of the Administrative Procedure Act (Gov. Code, 11340 et seq. (APA).) [Note: See CELA Bulletin, June 05, p.7, for a summary of the purported precedent decision, Hartwig v Orchard Commercial, Inc. (Cal. Dept. of Industrial Relations, DLSE, May 11, 2005, No. 12-56901RB), and for a note concerning its apparent illegality as analyzed by CELA member Suzanne Murphy.] The underlying substantive issue is whether payments for missed meal/ rest periods ... constitute wages or penalties. The precedent decision characterized such payments as penalties, with the apparent result of smaller potential recoveries due to a shorter limitations period and unavailability of other statutory penalties. While this appeal was pending, the California Supreme Court issued an opinion holding section 226.7 payments are wages, not penalties. (Murphy v. Kenneth Cole Produc-

BROAD NO-HIRE PROVISION IN CONTRACT BETWEEN SOFTWARE CONSULTANT AND CLIENT VIOLATED POLICY FAVORING EMPLOYEES FREEDOM OF MOVEMENT
VL SYSTEMS, INC. v UNISEN, INC. The Fourth District, Division Three, reversed a judgment in favor of a software consulting company which had sued a client for hiring-away one of the companys employees in violation of a no-hire provision of the consulting contract. The court explained as follows its conclusion that the no-hire provision was unenforceable as a matter of law: According to VLS, this case has absolutely nothing to do with an [e]mployees freedom of movement or covenants not to compete between employer and employee. Nor does this case involve any issues involving employer/employee relations... [] The subject contract did not preclude Star Trac from hiring David -4-

(Cont'd on Page 5, DECISIONS)

DECISIONS
(From Page 4)

NINTH CIRCUIT
REVERSING JUDGMENT FOR ADEA PLAINTIFF, NINTH CIRCUIT HOLDS THAT AS MATTER OF LAW EVIDENCE DID NOT SUPPORT CONSTRUCTIVE DISCHARGE FINDING
POLAND v CHERTOFF. After a bench trial, a Ninth Circuit panel wrote in a July 20 opinion by Gould, the district court [D Oregon] entered a judgment in favor of James R. Poland, a former employee of the United States Customs Service, on his employment discrimination claim... Specifically, the district court held the Customs Service liable for violating [ADEA] by retaliating against Poland after he filed Equal Employment Opportunity complaints and by constructively discharging Poland by transferring him to a new job in a new location. The district court based its damage award [of $339,130] solely on the theory that Poland had been constructively discharged... On the Secretarys appeal, we affirm the district courts determination that the Customs Service unlawfully retaliated against Poland... We reverse the district courts conclusion that the Customs Services transfer of Poland amounted to a constructive discharge, and we vacate the district courts order awarding damages to Poland on a constructive discharge theory. We also vacate the district courts award of attorneys fees to Poland. We remand the case to the district court so that Poland can amend his complaint to seek the remedies available under his retaliation theory. The Secretary first argues that Poland did not establish his claim of retaliation... [] This situationone where a subordinate employee with bias ... precipitates an investigation that leads to an adverse employment action but an employee without bias makes the final decision to take the adverse action raises difficult issues not yet addressed by our circuit...

First, we could adopt a simple but for causation test... Under a but for standard, any time a biased employee, in response to a plaintiffs protected activity, sets in motion the process that leads to an adverse employment action, the employer would be liable, even if the employer then conducted an entirely independent inquiry and decisionmaking process insulated from the animus of the biased employee... The second rule we consider is the one suggested in this case by the Secretary. The Secretary urges that we should impute a subordinates animus to his or her employer only in cases in which the subordinate dominates the investigatory process and the final decision is a perfunctory approval of the biased subordinates inclination. Courts have termed this standard the rubber stamp or cats paw approach... We hold that if a subordinate, in response to a plaintiffs protected activity, sets in motion a proceeding by an independent decisionmaker that leads to an adverse employment action, the subordinates bias is imputed to the employer if the plaintiff can prove that the allegedly independent adverse employment decision was not actually independent because the biased subordinate influenced or was involved in the decision or decisionmaking process... [Here] we agree with the district court that the [biased subordinates] animus and his role in defining the scope of the inquiry and in leading the inquiry panel to evidence unfavorable to Poland unlawfully tainted the decision to transfer Poland... We affirm the district courts judgment in favor of Poland on his ADEA retaliation claim... [But] under the facts found by the district court, Poland was not, as a matter of law, constructively discharged. Neither the district courts factual findings nor any other evidence in the record indicates that Polands working conditions in Virginia [after his transfer from Oregon] were so poor that they trumped his motivation to earn a living... In fact, Poland worked in Virginia for five months before deciding to retire. Even after he -5-

decided to retire, Poland worked the same job for three more months. As a matter of law, these are not the actions of someone who finds his working conditions so intolerable that he felt compelled to resign... Poland never testified that he felt compelled or forced to resign... Instead, Poland testified that he decided to take early retirement because the extended separation from his family was difficult and because his new position in Virginia was a career ender. That testimony is not enough... Because the court did not award Poland any other damages or form of relief, Poland ... is therefore not a prevailing party. We thus vacate the district courts order awarding attorneys fees and costs to Poland... In the event Poland obtains any form of relief on remand, he will have secured a material change in the legal relationship ... and once again he will be a prevailing party entitled to attorneys fees and costs... Judge Richard A. Paez wrote in part as follows, concurring and dissenting in parts: In light of [Polands] testimony, which the district court found credible, and the seven or eight years of discrimination and retaliation prior to the demotion in Polands duties, there was ample evidence for the district court, as trier of fact, to find that Poland was subjected to treatment sufficiently intolerable that a reasonable employee would have felt compelled to resign... [] Nor is the majoritys reversal of the district courts factual finding justified simply because Poland worked for about five months after his demotion before resigning. We have never held that continuing to work for a period of months following an adverse employment action precludes a constructive discharge finding. For plaintiff: Kevin Keaney, Portland. Ninth Circuit, 7/20/07; opinion by Gould with Rawlinson concurring and Paez concurring and dissenting in parts; 2007 WL 2069651.

(Cont'd on Page 6, DECISIONS)

DECISIONS
(From Page 5)

IN UNPUBLISHED DECISION, NINTH CIRCUIT HOLDS THAT ADA PLAINTIFFS EVIDENCE RAISED FACT ISSUES AS TO TIMING OF DECISION TO ELIMINATE HER POSITION RELATIVE TO HER DISCLOSURE OF IMPAIRMENT
KINNEY v EMMIS OPERATION CO. Reversing summary judgment on ADA and Oregon statutory claims, the Ninth Circuit wrote in a July 2 memorandum opinion: Kinney was diagnosed with lupus in 1988. Beginning in August of 2001, she worked for defendants for nineteen months, and was promoted from parttime news trainee to an associate producer position. On April 2, 2003, Kinneys supervisor informed her that she was being reassigned from her daytime position to an overnight associate producer position. Kinney stated that she would be unable to accept the position, because her lupus prevented her from working an overnight shift. On April 7, 2003, she gave her supervisor a doctors letter confirming that she was unable to work overnight... The next day, Kinney was notified that KOIN was eliminating her daytime position, and did not have another position for her. [T]he district court based its decision on its conclusion that a reasonable trier of fact could only conclude that KOIN eliminated Kinneys position before it knew of Kinneys impairment, and that Kinney was terminated because she was unable to accept the only available position for which she was eligible. The district courts decision rests on the timing of KOINs decision to eliminate Kinneys daytime associate producer position. However, the record raises a genuine issue of material fact whether the premise of the district courts decision is correct. Kinney provided proof of the close temporal proximity between her disclosure that she had lupus and her discharge by alleging that her supervisor did not inform her that her daytime position was

being eliminated during their April 2, 2003, meeting, when Kinney disclosed that she had lupus, and that instead she was first informed that the position was being eliminated on April 8, 2003, the day after Kinney provided KOIN with a doctors note confirming her impairment. Kinney also offered documentation from Defendants showing that as of April 15, 2003, her daytime position was still included in the 2004 budget... Kinneys testimony and evidence both raise issues as to the timing of KOINs decision sufficient to go to a jury, regardless of any explanations Defendants have offered regarding the sequence of events. For plaintiff: Nathan Karman, Portland. For defendant: Amy Joseph Pedersen, Dennis Westlind, Portland. Ninth Circuit, 7/2/07; memorandum before Pregerson, Leavy, and Rymer, (one judge dissenting); 2007 WL 1959092 (unpublished).

Diyorio has not demonstrated any basis for a reasonable belief on her part that her employers were behaving in a discriminatory manner towards her, and she cannot claim the protection of 12940(h). [FN3. Although we doubt that Diyorios offhand remark was sufficient to amount to a complaint of age discrimination, we need not reach that issue.] Three of Diyorios remaining claims are premised on her allegations of age and gender discrimination: (1) wrongful termination in violation of public policy; (2) intentional infliction of emotional distress; and (3) violation of Californias unfair competition law... Given Diyorios failure to come forward with evidence that would allow a reasonable factfinder to find that defendants discriminated against her, those claims also fail. Finally, Diyorio alleges that she was fired in violation of an implied-in-fact employment contract providing that she would not be fired without cause. She also argues that once defendants put her on a short-term performance improvement plan with a deadline of February 1, 2003, to meet its goals, this action amounted to a promise that she would not be fired before that date. Here, Avayas written personnel policies provide that employment ... is atwill. Although Diyorio points to the longevity of her employment, this factor standing alone cannot overcome Californias presumption that employment is at-will and Avayas express policies affirming that principle. [cite omitted] The fact that a company official allegedly asked Diyorio to stay on with Avaya rather than taking an early retirement in 2001 is also insufficient to show an implied-in-fact contract... Finally, there is no suggestion anywhere in Diyorios short-term development plan that her job was secure until February 2003. [FN4. Although Diyorio pled a separate claim [for breach of the implied covenant], California law ... does not allow such a stand-alone claim in the circumstances of this case.]

IN UNPUBLISHED DECISION, NINTH CIRCUIT HOLDS THAT PLAINTIFF FAILED TO RAISE FACT ISSUES ON DISCRIMINATION, RETALIATION, AND RELATED COMMON LAW CLAIMS
DIYORIO v AT&T. The Ninth Circuit affirmed the Central Districts grant of summary judgment on causes of action for age and gender discrimination, retaliation, Tameny tort, i.i.e.d., violation of implied contract, violation of the implied covenant, and violation of the unfair competition law (B & P Code 17200 et seq.). The court wrote in part: We assume without deciding that Diyorio established a prima facie case of age and gender discrimination. Defendants, however, have offered several legitimate, nondiscriminatory reasons for Diyorios discharge... Diyorio has failed to discredit any of these reasons. Nor has she put forward any other appreciable evidence of discriminatory motive on defendants part... Diyorio also asserts that defendants fired her in retaliation... In this case, -6-

(Cont'd on Page 7, DECISIONS)

DECISIONS
(From Page 6)

For plaintiff: Keith A. Fink, Los Angeles. For defendant: Stefan R. Miller, Torrance. Ninth Circuit, 6/25/07; memorandum opinion before Trott, Tashima, and Rawlinson; 2007 WL 1853629 (unpublished).

she made the constitutional argument that the DC Circuit surprisingly accepted in its August 2006 opinion. On rehearing, the court wrote in part as follows, first addressing a jurisdictional issue: Insofar as the Congress in 28 U.S.C. 1346(a)(1) has waived sovereign immunity with respect to suits for tax refunds, that provision specifically contemplates only actions against the United States. Therefore, we hold the IRS, unlike the United States, may not be sued eo nomine in this case. Although the pre-1996 version of 104(a)(2) was at issue in OGilvie [v United States (1996) 519 US 79], the Courts analysis of the phrase on account of, which phrase was unchanged by the 1996 amendments, remains controlling here. Murphy no doubt suffered from certain physical manifestations of emotional distress, but the record clearly indicates the Board awarded her compensation only for mental pain and anguish and for injury to professional reputation. We conclude Murphys damages were not awarded by reason of, or because of, ... [physical] personal injuries, OGilvie, 519 U.S. at 83. Therefore, 104(a)(2) does not permit Murphy to exclude her award from gross income. Addressing the constitutional argument, the court reasoned that even assuming that a damages award for non-physical injuries does not constitute taxable income under the Sixteenth Amendment, the federal tax levied upon such an award is not a direct tax and is thus not subject to the apportionment requirement of Article I, Section 9 of the Constitution. The tax is uniform throughout the United States, the court concluded, and therefore passes constitutional muster [under Article I Section 8]. [Note: See www.nela.org for information concerning the Civil Rights Tax Relief Act of 2007, (S. 1689, H.R. 1540).] DC Circuit, 7/3/07; opinion by Ginsburg joined by Rogers and Brown; 2007 WL 1892238.

LEGISLATIVE UPDATE
[Note: See www.leginfo.ca.gov for information about the provisions and status of bills pending in the California Legislature. For information on bills pending in the United States Congress, see the Library of Congresss website, www.thomas.loc.gov. NELAs Action Center for bills in Congress is www.capwiz.com/nela/home.]

DISTRICT OF COLUMBIA CIRCUIT


ON REHEARING, DC CIRCUIT ABANDONS ITS ORIGINAL POSITION AND UPHOLDS TAXATION OF AWARD FOR EMOTIONAL DISTRESS
MURPHY v INTERNAL REVENUE SERVICE. On July 3, the D.C. Circuit, on rehearing, abandoned the position it took in the August 2006 decision in which it held that IRC 104(a)(2) violates the Sixteenth Amendment insofar as it fails to exclude from taxable gross income non-economic damages for emotional distress and injury to reputation. (See Murphy v IRS (DC Cir 2006) 460 F3d 79, rehg granted, 12/22/06; summarized in CELA Bulletin, Aug 06, p.10.) The Government petitioned for rehearing en banc, the court explained, arguing for the first time that, even if Murphys award is not income, there is no constitutional impediment to taxing it because a tax on the award is not a direct tax and is imposed uniformly. In view of the importance of the issue thus belatedly raised, the panel sua sponte vacated its judgment and reheard the case. The case involves a suit brought by the plaintiff to recover income tax she paid on $70,000 in compensatory damages awarded in an administrative action against her former employer alleging blacklisting claims under various whistleblower statutes. She contended that her award should have been excluded from her gross income because it was compensation received on account of personal physical injuries or physical sickness. In the alternative,

SACRAMENTO
SB 549. On July 12, Steve Pingel of CELA's Legislative Committee testified before the Assembly Appropriations Committee on CELAs Bereavement Leave bill. It passed out of committee on an 11-5 party-line vote, and headed to the Assembly floor. (The bill had passed the Senate on June 6 by a vote of 23-13.) SB 622. A bill, introduced by Alex Padilla (D-LA), to make it unlawful to willfully misclassify workers as independent contractors and to establish civil penalties: passed the Senate on June 4; passed out of the Assembly Labor and Employment Committee on June 21 and the Judiciary Committee on July 3, and was then sent to the Assembly Committee on Appropriations. SB 836. A bill, introduced by Sheila Kuehl (D-LA), to add familial status to the list of characteristics that are prohibited bases of discrimination under FEHAs employment provisions, and to define familial status to include being an individual who is or will be caring for or supporting a family member: passed the Senate on May 31; passed out of the Assembly Labor and Employment Committee on July 3 and out of he Judiciary Committee on July 10. AB 435. A bill, introduced by Julia Brownley (D-LA), to extend the statute of limitations for a civil action alleging sex-based wage discrimination from two years to four years where there is no willful misconduct, and from three years to five years otherwise, and to extend the time period for which employers must maintain wage and job classifica(Cont'd on Page 8, DECISIONS)

-7-

DECISIONS
(From Page 7)

tion records from two years to five years: passed the Assembly on June 7; passed out of the Senate Committees on Judiciary and Labor and Industrial Relations, and was sent to the Senate Appropriations Committee on July 11. AB 1043. CELAs bill to prohibit mandatory forum selection and choice-of-law provisions as conditions of employment: passed the Assembly on May 17, and passed out of the Senate Judiciary Committee on June 27.

S.1782 and H.R.3010. On July 12, Sen. Russ Feingold (D-WI) and Rep. Hank Johnson (D-GA) introduced parallel versions of the Arbitration Fairness Act of 2007, a comprehensive bill to effectively ban arbitration clauses from all consumer and employment contracts. H.R.2015. On April 24, Rep. Barney Frank (D-MA) introduced the Employment Non-Discrimination Act to prohibit employment discrimination on the basis of sexual orientation or gender identity. On May 4, the bill was sent to the House Judiciary Committees Subcommittee on the Constitution, Civil Rights, and Civil Liberties. H.R.2821. On June 22, less than a month after the Ledbetter decision was filed, the Ledbetter Fair Pay Act of

2007 was introduced in the House by George Miller (D-CA) with 31 co-sponsors. The bill would amend Title VII, ADEA, the ADA, and the Rehab Act to clarify that a discriminatory compensation decision or other practice that is unlawful under such acts occurs each time compensation is paid pursuant ot the discriminatory compensation decision or other practice. On July 20, a companion bill, The Fair Pay Restoration Act, was introduced in the Senate by Tom Harkin (D-IA) with many cosponsors.

WASHINGTON
S.1689. On June 25, a companion bill to H.R. 1540, the Civil Rights Tax Relief Act of 2007, was introduced in the Senate by Jeff Bingaman (D-NM) and Susan Collins (R-ME).

C O M I N G

E V E N T S

September 27-29, 2007 CELA's 20th ANNUAL CONFERENCE The Fairmont Hotel San Jose October 19-20, 2007 NELA FALL SEMINAR Representing Workers in Individual and Collective Actions under the FLSA Sheraton New Orleans Hotel (see www.nela.org for details) November 9-11, 2007 CAOCs 46th ANNUAL CONVENTION Westin St. Francis Hotel, San Francisco (see www.caoc.com for details)

-8-

JOHN MCCARTHY
(From Page 10)

panies in which he adamantly maintained that the denial of insurance benefits should be a tort. He was among the pioneers in using the implied covenant of good faith and fair dealing as a vehicle to obtain tort damages. During the 1970s, John consistently maintained that a tort remedy for denial of insurance benefits was the only way to achieve justice in cases where small amounts of benefits were at issue. Without a tort remedy, he reasoned, insurers could get away with paying only the benefits (which they had owed all along) at the conclusion of the litigationand only then in the few cases where they got caught. John handled a number of important appellate insurance bad faith cases, including Silberg v California Life Ins. Co. (1974) 11 C3d 452, the first case upholding a policyholders verdict awarding tort damages for the bad faith denial of insurance benefits. During the mid-1970s, John detoured into environmental law, with great impact. In his landmark case, Friends of Mammoth v Mono County, the Supreme Court decided that the California Environmental Quality Act applies to private development and requires Environmental Impact Reports. That, of course, gave birth to the EIR industry. As a result, John became involved in other environmental litigation, much of it in Sonoma County. He was also hired by the City of Beverly Hills to stop plans to build about thirty skyscrapers in Century City. (Part of his investigation in that case revealed that an earthquake fault runs right under Beverly Hills High School, a fact no one seems to know how to handle to this day.) In the late 1970s, John came to believe that the bad faith tort doctrine had a role to play in the employment context. He became particularly interested when he read a portion of the Second Districts subsequently-reversed decision in Tameny v Atlantic Richfield: At an earlier time, the Second District wrote, it was axiomatic that an employee at will was engaged wholly at the pleasure of his employer and was subject to discharge at any time, for any reason, irrespective of motive. The presence of morals in the marketplace of human

labor was at best dubious and not a subject of any great interest in laissez faire economics. We think the axiom is still the law and has continuing vitality. This got Johns attention, and he spent a good part of his remaining career dedicated to what he called the revolutionary idea that morality does have a role in the marketplace of human labor. In 1979, John tried to verdict the first private sector, non-union, at-will wrongful discharge (tortious bad faith) case in the entire country, Shannon v Geico, LASC No. C72668. (He later went into temporary mourning when, in December of 1988, the Supreme Court in the Foley case decreed that the implied covenant provides only a contract remedy in the context of employment contracts.) During the next couple of years, John took more cases in the relatively new field of non-union wrongful termination, and met others who were doing the same. These pioneers noticed that they were being outgunned in terms of resources, knowledge, and strategy the corporate employers had the Paul Hastings of the world to pound plaintiffs into the ground. John and a few others discussed this problem, and ultimately decided to found CELA, dedicated to the improvement of the quality of representation provided by the plaintiffs employment bar. John served on the Board from the organizations founding in1986 until about 1992. He was fond of calling CELA a statewide law firm, and from its inception we all followed the rule of which Michelle Reinglass reminded us at the last Annual CELA Conference: CELA members always take calls from other CELA members. [Editors note: CELAs official historian, Susan Hartley, provides the following details: in addition to John, CELAs original Executive Board included Chair Bill Crosby, Susan Hartley, Joe Posner, Bill Quackenbush, Bennett Rolfe, and Jim Stoneman. That Board was elected at the very first CELA meeting, which was called by Bill Crosby and was held on November 8, 1986.] John was one of the best trial lawyers of his time, and obtained many significant -11-

verdicts. This was the result of his intensity, but also due to his excellent understanding and empathy, and to a superior story-telling ability. He could really talk to jurors, (although not always to judges). He got jurors to understand the plight of his clients. Perhaps his greatest win, and certainly the largest, was the $38 million verdict against the Las Vegas Hilton in 1988, after a four-month trial. Our own Dolores Leal co-tried the case with John as an EEOC trial lawyer, on behalf of 37 blackjack dealers. It was the largest verdict in California that year. John was a master in the use of dramatic, visceral language to sear his point into the brains of listeners, (whether they be jurors, judges, opposing attorneys, or his own associates and partners). Employees had been stripped of their rights. Beancounters looking for an immediate fix to the bottom line were often behind age discrimination. Corporate executives duped employees by sneaking an at-will clause into the employee handbook. The long term employee was discarded like a used tissue by greedy executives. Finally, John was supremely dedicated to the improvement of the trial skills of other plaintiffs lawyers. He spoke at countless programs and wrote countless articles for CTLA (now CAOC), NELA, CELA, and ATLA, and he held leadership roles in most of those organizations. He wrote some of the first books on insurance bad faith and wrongful discharge, and did so much more that Im sure others will remember. [Editors note: John recruited the current editor of the CELA Bulletin in 1989 I had gotten to know John while working for Lawpress on the annual updates for his books on insurance bad faith (first edition 1976), and wrongful discharge (first edition 1985), both of which have now gone through multiple editions and are still in print and being annually supplemented.] While Johns passing is a tremendous loss, his spirit and mission has left a legacyyour hard work representing
(Cont'd on Page 12, JOHN McCARTHY)

JOHN MCCARTHY
(From Page 11)

victims of corporate abuse. The Dedication in his books speaks to all of us: To those trial lawyers whose vision, determination, and abilities will continue to lead the way towards a system of justice for all.

employees. I know I always felt invigorated after listening to Johns hearty calls to Charge! Susan Hartley There are two vivid visions I have of Johnone was of the warrior standing at the podium at the founders meeting of CELA, inspiring us to unite to defeat the unlimited resources of those who would trample the rights of workers. The other was of an angel gracefully skiing in front of me down the black diamonds of Beaver Creek, urging me to again follow his lead. John was an inspiration, a pioneer, and a true champion of the people! He was deeply loved and will be forever missed. Nancy Bornn Johns passion for workers and those who are victimized by capitalism without a conscience never waned. His commitment to CELA as a community of advocates for workers never faltered. Many years ago, when I first joined CELA, I was fortunate enough to spend time talking to John at conferences. He was just beginning his retirement, but his vision inspired me to look beyond myself and my clients to reach out to all of you. Eve Chesbro John was a tower of courage, intellect, and dedication on whose shoulders we now stand. Janet Koehn

COLLEAGUES REMEMBER JOHN McCARTHY


John McCarthy was a true champion of justice for the underdog. When I started practicing in the mid-70s and through the 80s, his books on insurance bad faith and wrongful termination were primary sources to me in learning the law and practice tips. No one was more active and passionate in educating lawyers at CEB, CTLA, and other seminars during this period, and he helped shape the law with memorable verdicts and published appellate decisions. There was no better teacher than John on how to try a case or write an appellate brief. I recall meeting with John in his office for advice on how to prepare for trial in my first big employment case. John was a real mentor, and it was truly a pleasure working with him, with Joe Posner, and with other founding CELA Board members in establishing the first statewide organization for employee rights attorneys. John was a great lawyer, and a real pioneer in the cause of employee rights. He will long be remembered. William Crosby I always loved Johns passion for employee rights, his passion for educating new lawyers, and his passion for having a group of plaintiff employment lawyers to counter the resources of a major defense firm. He always talked about the David and Goliath battle we all fight. He, like a lot of us, saw CELA as a means to help level the playing field, (or, as we thought of it, the battlefield). He was a founding CELA Board Member who was full of fire for strengthening, advocating, and promoting the rights of

I was a new trial lawyer in 1988 when I co-counseled the Brooks v Las Vegas Hilton case with John. The experience John created, not only during the fourmonth trial, but also during the pre-trial phase, was memorable and truly educational. We represented 37 individuals (casino dealers) in a discrimination/ wrongful termination case in Las Vegas. John was an amazing teacher. He was able to organize our clients and our trial team into an integrated operation. He had the ability to make the trial team laugh when we were frustrated and cry when needed to relieve the tension. He was a wonderful storyteller and his ability to connect with the jury was masterful. Dolores Leal John was one of those unforgettable characters who come along only a few times in life, and Im happy to have known him. I skied with John when he was about 82. Of course, he skied circles around me. His books and talks were an inspiration and his spirit lives on in CELA. Steve Pingel John will always be that vibrant, energetic, passionate person I watched in his 80s schussing down slopes faster than I could ever aspire to. Michelle Reinglass

-12-

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

BULLETIN
Published Monthly EDITOR: CHRISTOPHER BELLO August 2007 Vol. 21, No. 8

RECENT EMPLOYMENT LAW DECISIONS


CALIFORNIA SUPREME COURT
ABILITY TO PERFORM ESSENTIAL JOB FUNCTIONS IS PART OF PRIMA FACIE CASE OF DISABILITY DISCRIMINATION UNDER FEHA
GREEN v STATE OF CALIFORNIA. Reversing a Fourth District decision that was issued two years ago, (132 CA4th 97, 33 CR3d 254; summarized in CELA Bulletin, Aug. 05, p.6), the Supreme Court, in a 4-3 decision filed on August 23, disagreed with the Court of Appeals conclusion that the defendant has the burden of proving, as an affirmative defense, that a disability discrimination plaintiff is unable to perform essential job functions. The Fourth District had rejected the argument that the plaintiff has the burden of proving his capacity to perform as part of the prima facie case, and had affirmed jury awards totaling $2.6 million. The Supreme Court explained the issue and its conclusion in part as follows: The Americans with Disabilities Act (ADA) requires that plaintiffs prove they are qualified individuals under the statute, i.e., that they have the ability to perform a jobs essential duties before they can prevail in a lawsuit for discrimination. (42 U.S.C. 12112(a).) Although Californias Fair Employment and Housing Act ... does not expressly include the term qualified individual, the question here is whether it includes a similar requirement. In 1997, a Court of Appeal held that it does. ( Brundage v. Hahn (1997) 57 Cal.App.4th 228, 235.) The Court of Appeal here held that it does not. [] After reviewing the statutes language, legislative intent, and well-settled law, we conclude the FEHA requires employees to prove that they are qualified individuals under the statute just as the federal ADA requires. We therefore reverse the Court of Appeals judgment. As the legislative history discloses, the Legislature amended the FEHA in 1992 by clarifying that an employee must be able to perform the essential duties with reasonable accommodations. (Stats. 1992, ch. 913, 1, p. 4282.) In passing the amendment, at least one legislative analysis observed the Legislatures conformity [to the ADA rules] will benefit employers and businesses because they will have one set of standards... [cite omitted.] It is clear, then, that the Legislature incorporated the ADA requirement with full knowledge of the purpose the language serves in the ADA... Thus, even if there were some conceivable ambiguity regarding the burden issue prior to that point in time, no such ambiguity existed afterward. Plaintiff contends that the employer bears the burden... In support of this argument, plaintiff points to language in the FEHA stating the statutory provisions apply to any person making a discrimination claim. In plaintiffs view, this particular language in the FEHA differs significantly from the ADA, which omits the any person language and instead reflects an unambiguous intent to protect a qualified individual only. The Court of Appeal agreed with plaintiff, reasoning that the statutory phrase
(Cont'd on Page 2, DECISIONS)

THE CLASS ACTION KILLER INITIATIVE


by L. Tracee Lorens Tracee Lorens is a member of CELAs Wage and Hour Committee and the Board of Governors of CELAs ally, the Consumer Attorneys of California (CAOC). On July 13, 2007, the Civil Justice Association of California (CJAC), formerly known as The Association for California Tort Reformers, filed an Initiative they called The California Class Action Fairness Act which would have effectively banned class actions in the State of California. CJACs Board of Directors is made up of big PhRMA, insurance companies, big oil, automobile manufacturers, the California Chamber of Commerce, etc. The Initiative expressly sought to repeal all previous court decisions relating to class actions and to replace that body of law with statutes that would have made it virtually impossible for employees and consumers to bring class action lawsuits in the State of California. The proponents initially sought to have the Initiative appear on the June 2008 ballot. The measure sought to abolish the judicial policy in California in favor of class actions, and to effectively deny class action status if the defendant could show any defense unique to a single plaintiffs individual injuries. The Initiative implied that if the defendants acts or practices are subject to a state or federal agencys oversight, a class action could not proceed. It would have required plaintiffs to pay the costs of notifying the class, and eliminated the
(Cont'd on Page 15, CLASS ACTION)

DECISIONS
(From Page 1)

any person applies to any plaintiff alleging a claim of disability discrimination under the FEHA. ( 12940, subd. (a).) The court interpreted the FEHAs use of this phrase to mean that a plaintiff need not prove that he or she satisfies the ADAs qualified individual requirement, but that lack of qualification would be an affirmative defense. We are not persuaded. The FEHAs use of the term any person in listing the various forms of prohibited discrimination does not warrant disregard of the specific language unambiguously providing that an adverse employment action on the basis of disability is not prohibited if the disability renders the employee unable to perform his or her essential duties even with reasonable accommodation. When read together with subdivision (a)(1), subdivision (a)s reference to any person cannot reasonably be understood to specially alter the ordinary burden of proof set forth in Evidence Code section 500. Had the Legislature actually intended to relieve a plaintiff employee of the burden of proving an actionable discrimination on the basis of disability, thereby departing significantly from federal law, we believe it could and would have done so in a more conspicuous manner. The jury here was never instructed that plaintiff must prove that he was able to perform the jobs essential functions. For this reason, defendant was prejudiced by the failure to so instruct, and we believe defendant is entitled to a new trial, with proper instructions, unless the evidence shows as a matter of law that plaintiff cannot meet his burden. In a lengthy and persuasive dissenting opinion joined by Kennard and Moreno, Werdegar wrote in part as follows: To reach its ... conclusion, the majority ignores the statutes structure, distorts its legislative and regulatory history, and relies on inapposite authority. But fundamentally, a single logical error pervades the majoritys discussion. Because section 12940, subdivision (a)(1) relieves employers from liability for firing or refusing to hire a disabled person if the disability prevents that

person from performing the positions essential functions, the majority reasons, proof of ability to perform must be part of the plaintiffs case... This syllogism rests on the false premise that no affirmative defense exists or can exist to a claim of disability discrimination. In fact, as I will explain, section 12940 provides for several affirmative defenses, inability to perform being only one. In effect, the majority creates a presumption that people with disabilities cannot perform in the workplace.... [T]he rule that individuals with disabilities are presumed unable to work until they prove otherwise is not one intended by the Legislature. The majority simply reads it into the statute. For plaintiff: Norman Pine, Beverly Tillett Pine, David H. Greenberg. For CELA as amicus: Jeffrey K. Winikow. For amici Legal Aid Society-Employment Law Center, Disability Rights Advocates, DREDF, and Disability Rights Legal Center, Claudia Center, Lewis Bossing, and Elizabeth Kristen. For defendant: Jacob A. Appelsmith, Assistant Attorney General; Elizabeth Hong, Vincent J. Scally, Jr., Silvia M. Diaz, and Michelle Logan-Stern, Deputy Attorneys General. For defense amici Employers Group and California Employment Law Council, Paul, Hastings, Janofsky & Walker, Paul W. Crane, Katherine C. Huibonhoa, and Jaime D. Byrnes. Cal SC, 8/23/07; opinion by Chin with George, Baxer, and Corrigan concurring; dissenting opinion by Werdegar joined by Kennard and Moreno; 2007 DAR 12799, 2007 WL 2388920.

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: Michelle Reinglass 23161 Mill Creek Drive Suite 170 Laguna Hills, CA 92653 Tel: (949) 587-0460 FAX: (949) 587-1004 E-mail: michelle@reinglasslaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Sherman Oaks) Eve Chesbro (Pasadena) David DeRubertis (Woodland Hills) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Wilmer Harris (Pasadena) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Cynthia Rice (San Francisco) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles) Brad Yamauchi (San Francisco)

EMPLOYEE PROFIT-SHARING PLAN DID NOT CONSTITUTE PROHIBITED SHIFTING OF COSTS BACK ONTO EMPLOYEES
PRACHASAISORADEJ v RALPHS GROCERY COMPANY, INC. We confront a significant question of California wage law, Baxter wrote in a 4-3 majority opinion filed on August 23. Defen(Cont'd on Page 3, DECISIONS)

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

-2-

DECISIONS
(From Page 2)

dant Ralphs Grocery Company, Inc. ... implemented a written incentive compensation plan whereby certain employees of each store were eligible to receive, over and above their regular wages, supplementary sums based upon how the stores actual Plan-defined profits, if any, for specified periods compared with preset profitability targets. For both target an actual puposes, profits were determined by subtracting store operating expenses from store revenues. Plaintiff claims the Plans formula for calculating these supplemental profit-sharing payments thus violated California statutes, rules, and decisions that prohibit an employer from shifting certain of its costs to employees by withholding, deducting, or recouping them from wages or earnings, or otherwise obliging employees to contribute to them. The Plan was not illegal, we conclude, simply because, pursuant to normal concepts of profitability, ordinary business expenses, such as storewide workers compensation costs, and storewide cash and merchandise losses, were figured in, along with such other store expenses as the electric bill and the costs of goods sold, to determine the stores profit, upon which the supplementary incentive compensation payments were calculated. By doing so, Ralphs did not illegally shift those costs to employees. After fully absorbing the expenses at issue, Ralphs simply determined what remained as profits to share with its eligible employees in addition to their normal wages. In sum, we are persuaded that the reasoning of Ralphs Grocery [Co. v Superior Court (2003) 112 CA4th 1090] is flawed, and the authorities on which that decision relied are distinguishable. Ralphss ICP, as described in plaintiffs complaint, was not illegal on the grounds plaintiff asserts. We will therefore reverse the instant Court of Appeal judgment [122 CA4th 29, 18 CR3d 514; summarized in CELA Bulletin, Sept 04, p.5].

In a dissent joined by Kennard and Moreno, Werdegar insisted that [t]his is a case of statutory interpretation. Labor Code section 3751 prohibits employers from directly or indirectly passing all or any part of their workers compensation costs back to their employees through deductions from their employees compensation. Ralphs Grocery Company, Inc.s compensation plan does just that. Whatever this courts views concerning the reasonableness and desirability of such plans, judicial notions of policy are irrelevant if the Legislatures policy decision, as embodied in the text of the statute, compels a different result. It does so here. For plaintiff: Fred Kumetz, Stephen Glick; Ian Herzog; Paul R. Fine, Scott A. Brooks, Craig S. Monita. For amici Asian Law Caucus, Asian Pacific American Legal Center, Golden Gate Womens Employment Rights Clinic, La Raza Centro Legal, The Legal Aid Society-Employment Law Center, and Stanford Community Law Clinic: Golstein, Demchak, Baller, Borgen & Dardarian, Laura L. Ho and Nina Ravin. For amicus CAOC: Evan D. Marshall. For defendant: Thelen Reid & Priest, Thomas E. Hill, Robert Spagat; Horvitz & Levy, Barry R. Levy and Daniel J. Gonzalez. For defense amici Employers Group and California Employment Law Council: Gibson, Dunn & Crutcher, Deborah J. Clarke, Elisabeth C. Watson, and Lisa A. Barr. For defense amicus California Grocers Association: Littler Mendelson, J. Kevin Lilly, Diane Kimberlin, and James E. Hart. Cal SC, 8/23/07; opinion by Baxter with George, Chin, and Corrigan concurring; dissenting opinion by Werdegar joined by Kennard and Moreno; 2007 DAR 12823, 2007 WL 2388914.

SUPREME COURT WILL REVIEW DECISION THAT HELD THAT EQUITABLE TOLLING PRINCIPLES APPLY TO LIMITATIONS PERIOD IN GOV CODE 12960(d)
McDONALD v ANTELOPE VALLEY COMMUNITY COLLEGE DISTRICT. On August 15, the Supreme Court announced that it will review the Second District decision that held that equitable tolling is potentially available to a plaintiff who files a DFEH charge beyond the one-year period specified in Gov Code 12960(d). During most of the period between the dates of the discriminatory actions alleged in the present case and the filing of the plaintiffs DFEH charge, the plaintiff had been pursuing internal remedies with school administrators, and the Second District accordingly denied a motion for summary judgment. (The Second Districts June 2007 opinion appeared at 151 CA4th 961, 61 CR3d 62, and was summarized in CELA Bulletin, June 07, p.9.) For plaintiffs: Gregory W. Smith; Bradley C. Gage. Cal SC, 8/15/07; 2007 DAR 12440.

CALIFORNIA COURTS OF APPEAL


SUBSTANTIAL EVIDENCE SUPPORTED FINDING THAT FED EX DRIVERS ARE EMPLOYEES, NOT INDEPENDENT CONTRACTORS, AND ARE ENTITLED TO REIMBURSEMENT OF EXPENSES
ESTRADA v FEDEX GROUND PACKAGE SYSTEM, INC. Holding that substantial evidence supported the trial courts finding that the members of a class of FedEx delivery drivers are employees, not independent contractors, and are entitled, under Labor Code 2802, to the reimbursement of some of their expenses, the Second District, Division One, wrote in part as follows in
(Cont'd on Page 4, DECISIONS)

-3-

DECISIONS
(From Page 3)

a lengthy August 13 opinion by Vogel: Three drivers brought this class action ... contending that, for the limited purpose of their entitlement to reimbursement for work-related expenses, they were employees, not independent contractors. They sought reimbursement and declaratory and injunctive relief, and obtained class certification for their reimbursement claim. In a trifurcated trial, the court found the drivers were employees within the meaning of Labor Code section 2802 (Phase I), ordered FedEx to reimburse some (about $5 million, including prejudgment interest) but not all of their expenses (Phase II), and ordered FedEx to pay the drivers costs and attorneys fees (about $12.3 million). This is the third appeal in this case. In Estrada I, we held that orders dismissing some potential class members were not appealable, and dismissed the appeal as premature. (Estrada v. RPS, Inc. (2005) 125 Cal.App.4th 976 [summarized in CELA Bulletin, Jan 05, p.6].) In Estrada II, we reversed all of the equitable orders, resolving those issues against the drivers and in favor of FedEx. (Estrada v. FedEx Ground Package System, Inc. (2006) [2006 WL 3378246, summarized in CELA Bulletin, Nov. 06, p.6).] On this appeal, we consider FedExs challenges to the trial courts class certification order, the courts Phase I finding that the drivers are employees, its Phase II reimbursement awards, and its post-trial attorneys fee award. On the drivers crossappeal, we consider their challenges to limitations imposed on the Phase II reimbursement awards and to the pretrial orders dismissing potential class members (the issue prematurely before us in Estrada I). We affirm the finding that the drivers are employees, the certification order, and the finding that attorneys fees are recoverable, but reverse the fee award because the amount must be reconsidered, reverse two orders limiting the scope of reimbursable expenses, and remand to the trial court for further proceedings and recalculation of the attorneys fee award.

The trial court found that ... the drivers are employees within the meaning of Labor Code section 2802. FedEx contends the trial court is wrong. We disagree. Because the Labor Code does not expressly define employee for purposes of section 2802, the common law test of employment applies. [cite omitted] The essence of the test is the control of details' ... but there are a number of additional factors... [] The parties label is not dispositive and will be ignored if the actual conduct establishes a different relationship. [cites omitted] FedEx contends the trial court misapplied the test ... and made insupportable inferences of fact in determining that the drivers are employees. We disagree. [] First, FedExs assumptions are wrong. Although it is true that the Operating Agreement says the manner and means to satisfy the objectives of the contract are within the discretion of the [drivers], and that FedEx does not have the authority to impose any term or condition to the contrary, the evidence shows unequivocally that FedExs conduct spoke louder than its words... The same is true with regard to FedExs claim that it cannot terminate the drivers at-will. Although the Operating Agreement provides for termination with cause, it also provides for nonrenewal without any cause at all and substantial evidence established that FedEx discharges drivers at will. Second and most significantly, the trial courts findings are supported by substantial evidence. FedExs control over every exquisite detail of the drivers performance, including the color of their socks and the style of their hair, supports the trial courts conclusion that the drivers are employees, not independent contractors. FedEx contends the drivers claims were unsuitable for class treatment... [T]he claim is that individual facts predominated over the common issues. We disagree... [] On this record ... it is clear that common issueswhether the drivers were employees and, if so, which expenses were reimbursablepredomi-4-

nated. The anecdotal evidence was admitted to show FedExs power to interpret the Operating Agreement and was relevant to the class as a whole, not just to the drivers who happened to be the subject of a particular anecdote. FedEx contends that, assuming the drivers are employees, FedEx already indemnified them for the expenses due under section 2802. As did the trial court, we disagree... [] According to FedEx ... the settlement formula in the Operating Agreement effectively provided reasonable compensation for the drivers business expenses. FedEx is wrong. The Operating Agreement obligates the drivers to provide their own trucks, scanners, and clean uniforms, and to bear all costs and expenses incidental to operation of the trucks, including maintenance, cleaning, depreciation, fuel, oil, tires, repairs, taxes, licenses, tolls, and insurance... As for the settlement, the Operating Agreement provides that it is for services provided, not expenses incurred (for example, contractor and van availability). FedExs suggestion that the settlement formula is keyed to specific expenses and, as such, includes reimbursement for those expenses, is not supported by any evidence. FedEx contends the attorneys fee award is manifestly improper... [] The trial court reduced the [requested] fee by 18 percent (finding the amount slightly bloated) but otherwise granted the motion (including the 2.0 multiplier) and gave Estrada a total of $12,373,875 for costs and fees, noting the risk inherent in a contingent fee, the financial burden of private enforcement, and the years of long, hard-fought and labor intensive litigation involving enforcement of an important right that conferred a significant benefit on a large class... We reject FedExs claim that fees were not recoverable in this case but agree that the amount must be reduced [because of the reversal of the equitable orders in Estrada II] and that the same facts cannot be used to trig(Cont'd on Page 5, DECISIONS)

DECISIONS
(From Page 4)

ger the application of [Code Civ Proc] section 1021.5 and justify a multiplier. Finally addressing five issues raised by Estrada on his cross-appeal, four challenging the trial courts rulings vis-a-vis the damages proved during the Phase II trial, and the fifth revisiting the dismissal orders that were the subject of Estrada I, the court concluded, inter alia, that remand was necessary for further proceedings to determine the amounts to which the drivers are entitled for out-ofpocket expenses and the amount due for their work accident insurance premiums. For plaintiffs: Ellen Lake, Leonard Carder, Lynn Rossman Faris, and Beth A. Ross. For defendant: Seyfarth Shaw, James A. Nelson; OMelveny & Myers, Walter Dellinger, Robert M. Schwartz, Chris A. Hollinger, and Jonathan D. Hacker. Second Dist Div One, 8/13/07; opinion by Vogel with Mallano and Jackson concurring; 2007 DAR 12305, 2007 WL 2297469.

The jury had awarded the plaintiff, the defendants Vice President of Lending who had taken a leave of absence for cancer surgery and chemotherapy, $2,041,558 in compensatory damages in addition to $1.2 million in punitives against the credit union and $7,000 in punitives against the credit unions CEO. The trial court had conditionally granted a new trial motion unless the plaintiff accepted a reduction of the compensatory damages by $750,000.The plaintiff accepted the reduction, and the trial court refused to remit any portion of the punitive damages. Concerning sovereign immunity, the Fifth District held that ...when analyzed within the framework set forth by United States Supreme Court, it must be concluded that the sue and be sued clause in the federal credit union enabling legislation presumptively waives immunity from punitive damages. Since appellants have failed to clearly show the applicability of an exception to this waiver presumption, sovereign immunity does not apply. And concerning the second issue, the court emphasized that ...a reduction in compensatory damages does not mandate a corresponding reduction in punitive damages. There is no requirement that the original ratio between compensatory and punitive damages as measured by the jury remain. (Betts v. Allstate Ins. Co. (1984) 154 Cal.App.3d 688, 201 Cal.Rptr. 528.) Rather, the court must evaluate the case based on ... the nature of the defendants acts, the amount of compensatory damages, and the defendants wealth... Applying the considerations above to this case, it cannot be concluded that the punitive damages were excessive as a matter of law. Appellants conduct was reprehensible... Moreover, the award bears a reasonable relation to the actual damages as reduced, approximately 1 to 1. Further, there is no evidence that the award will constitute an undue burden on the Credit Union or precipitate financial ruin. [] By issuing the one remittitur but not the other, the court made an implied finding that the punitive award was correct. [cite omit-5-

ted.] Deference to the trial court is appropriate in this case. For plaintiff: Norman Pine and Beverly Tillett Pine, Los Angeles; Peter Sean Bradley, Fresno; Andrew B. Jones, Fresno. For defendants: Horvitz & Levy, Peter Abrahams and Robert H. Wright, Encino; Borton, Petrini & Conron, J. David Petrie and Sean T. ORourke. Fifth Dist, 8/2/07; opinion by Levy with Cornell and Dawson concurring; 2007 DAR 11846, 2007 WL 2214898.

SUPERIOR COURT DID NOT ERR IN GRANTING ANTI-SLAPP MOTION TO STRIKE DEFAMATION CLAIMS BY DISCHARGED FOOTBALL COACH
McGARRY v UNIVERSITY OF SAN DIEGO. In an opinion filed on July 17 and ordered certified for publication on August 15, the Fourth District, Division One, affirmed orders granting the defendants anti-SLAPP motions to strike defamation claims brought by the Universitys former head football coach. (The employment termination aspect of McGarrys lawsuit was not at issue in the present appeal.) The defamation claims were premised on statements contained in a newspaper article reporting the reasons for the plaintiffs termination, and on statements made by a university official during a meeting with parents of members of the football team. The court summarized the plaintiffs contentions on appeal and its conclusions as follows: On appeal, McGarry argues the antiSLAPP law was inapplicable because neither the statements to the press nor the statements to the parents qualified as protected conduct under the antiSLAPP law. He alternatively asserts that, even if the anti-SLAPP law does apply, the trial courts ruling must be reversed for two distinct reasons. First, he argues that, insofar as his defamation claim was rooted in the statements
(Cont'd on Page 6, DECISIONS)

FEDERALLY CHARTERED CREDIT UNIONS ARE NOT IMMUNE FROM PUNITIVE DAMAGES, AND REDUCTION IN COMPENSATORIES DID NOT REQUIRE CORRESPONDING REDUCTION IN PUNITIVES
McGEE v TUCOEMAS FEDERAL CREDIT UNION. In an opinion filed on August 2, the Fifth District rejected the argument that a federally chartered credit union cannot be held liable for punitive damages absent an express waiver of sovereign immunity. Nor, the court held, had the trial court been required to reduce the punitive damages award when it reduced the award of compensatory damages. The two issues arose on appeal from a judgment in favor of the plaintiff on FEHA claims for retaliation, disability discrimination, failure to engage in an interactive process, and failure to provide reasonable accommodation.

DECISIONS
(From Page 5)

to the parents, he demonstrated a probability of success on the merits. Second, he argues that insofar as his defamation claim was rooted in the statements in the article, the trial courts application of the Shield Law [to deny the plaintiffs motion to compel the deposition of newspaper reporters] was error and had the effect of precluding him from discovering evidence necessary to satisfy his burden to show a likelihood of success on the merits of his claim. [T]he considerations outlined in Terry [v Davis Community Church (2005) 131 CA4th 1534] convince us the statements concerning McGarrys employment termination qualify for anti-SLAPP treatment. His termination was of concern to a substantial number of people, and it is difficult to imagine a greater closeness between the topic of the public interest (the termination) and the challenged statements (the reasons for the termination)... Finally, [the defendants] did not by their conduct create a defense by thrusting McGarry into the public eye; McGarrys role as head coach of a local universitys football team already made him a public figure, and his employment termination was already a topic of widespread public interest. We conclude the trial court correctly found the complained-of conduct was speech in connection with a public issue or a matter of public interest... Accordingly, the burden shifted to McGarry to show there was a reasonable probability he would prevail on the merits at trial... McGarry asserts he was not a limited purpose public figure, and therefore need not meet the more stringent constitutional malice standards and its associated quantum of proof. [] Numerous courts ... have concluded professional collegiate athletes and coaches are at least limited purpose public figures. [cites omitted]... [] McGarry voluntarily entered the public arena as a college football coach, and the statements dealt exclusively with his performance of the public role he voluntarily undertook. We conclude McGarry was a limited purpose public figure for purposes of the

allegedly defamatory statements. We conclude McGarry did not show he was likely to prevail on the merits of his claim, insofar as it was based on [the officials statement to the football team parents arguably implying that the coach had been terminated for unspecified immoral behavior] for at least two reasons. [] First, we conclude the complained-of statement was not reasonably susceptible of being interpreted to imply a provably false assertion of fact. [] The amorphous nature of the implied assertion is fatal for a second reason. McGarrys evidence did not demonstrate malice, i.e., that Lyons subjectively believed her statement was (or was likely) a false statement. [Concerning the statements reported in the newspaper article] [u]nder Playboy Enterprises, Inc. [v Superior Court (1984) 154 CA3d 14], we do not believe a limited disclosure can be deemed to waive the immunity for refusing to reveal unpublished information, including the unidentified source of the information. [] McGarry cites no pertinent authority supporting his claim that the reporters immunity was waived. Because the Shield Law [Cal Const, art. I, 2, subd. (b); Evid Code 1070(a)] is absolute on its face ... we conclude the reporters could not be compelled to reveal the sources for their article. [McGarry] asserts the limited information he sought was outside the protections of the Shield Law because he sought only an order compelling the reporters to, in effect, repeat under oath the facts stated in the article... [H]e argues he was entitled to obviate the Universitys hearsay objection to the article... [] We conclude that it is unnecessary to determine whether the Shield Law precludes deposing the reporters for the limited purposes proposed by McGarry... [C]ompelling the reporters to authenticate or verify the articles content would not have provided McGarry with evidence that would have satisfied his anti-SLAPP burden. For plaintiff: Robert N. Hocker. For defendants: Luce, Forward, Hamilton & Scripps, Philip L. Kossy and Richard -6-

R. Spirra. Fourth Dist Div One, 8/15/07; opinion by McDonald with Nares and Irion concurring; 2007 DAR 12396, 2007 WL 2040578.

APPLICATION OF ADMINISTRATIVE/PRODUCTION WORKER DICHOTOMY LEADS TO CONCLUSION THAT CLAIMS ADJUSTERS ARE NON-EXEMPT EMPLOYEES UNDER WAGE ORDER 4-2001 AS WELL AS UNDER WAGE ORDER 4
HARRIS v SUPERIOR COURT (LIBERTY MUTUAL INS. CO). In these original proceedings, the Second District, Division One wrote in a lengthy August 16 opinion, we hold that plaintiffs are not exempt from the overtime compensation requirements imposed by California law. Defendants are insurance companies. Plaintiffs are the companies claims adjusters, who seek damages based on overtime work for which they allege they were not properly paid. Plaintiffs claims are governed by two different California regulations: Wage Order 4 applies to claims arising before October 1, 2000, and Wage Order 4-2001 applies to claims arising thereafter. The matter is before us on the parties cross-petitions for writ review. [The] dispute turns on the relationship between the administrative exemption and a legal distinction known in the case law as the administrative/production worker dichotomy... [T]he trial court originally certified plaintiffs proposed class on the ground that application of the administrative/production worker dichotomy was a predominant issue and could well be dispositive with respect to the administrative exemption. Later, however, the court revisited the issue and decertified the class for all claims arising after October 1, 2000, on the ground that under Wage Order 42001, but not under Wage Order 4, the adminstrative/production worker dichotomy is neither dispositive nor a
(Cont'd on Page 7, DECISIONS)

DECISIONS
(From Page 6)

predominant issue that would justify class treatment of plaintiffs claims. As the trial court recognized, the only cases interpreting the administrative exemption under Wage Order 4 are Bell v. Farmers Ins. Exchange (2001) 87 Cal.App.4th 805 (hereafter Bell II), and, to a more limited extent, Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715 (hereafter Bell III). There is no case law interpreting the administrative exemption under Wage Order 4-2001. Under Wage Order 4 as interpreted by the Bell cases, the administrative/production worker dichotomy would indeed be predominant and dispositive in cases like the one before us. The trial court concluded that the federal regulations expressly incorporated in Wage Order 4-2001 [but not in Wage Order 4] compel the conclusion that claims adjusters can be exempt administrative employees notwithstanding the administrative/production worker dichotomy... [] [But] because the federal regulations must be used as a guide to interpreting Wage Order 4, and because Wage Order 4-2001 expressly incorporates the federal regulations, we agree with the parties that the analysis of the administrative exemption should be the same under both wage orders. (See Eicher v. Advanced Business Integrators, Inc. (2007) 151 Cal.App.4th 1363, 1371-1373 [applying Bells Wage Order 4 analysis to a claim governed by Wage Order 4-2001].) We agree with the Bell cases concerning the role of the dichotomy under Wage Order 4, and we hold that the dichotomy plays the same role under Wage Order 4-2001. On that basis, we grant plaintiffs petition and deny defendants petition... The undisputed facts show that plaintiffs are primarily engaged in work that falls on the production side of the dichotomy, namely, the day-to-day tasks involved in adjusting individual claims. They investigate and estimate claims, make coverage determinations, set reserves, negotiate settlements, make settlement recommendations for claims beyond their settlement authority, iden-

tify potential fraud, and so forth. None of that work is carried on at the level of management policy or general operations. Rather, it is all part of the day-today operation of defendants business... [] [N]o evidence shows that even a single plaintiff primarily engages in [work that might fall on the administrative side of the dichotomy]. We direct the trial court to vacate its October 18, 2006 order (1) denying plaintiffs motion for summary adjudication and (2) partially granting defendants motion to decertify the class, and to enter a new and different order (1) granting plaintiffs motion for summary adjudication of defendants affirmative defense based on the administrative exemption and (2) denying in its entirety defendants motion to decertify the class. For employees: Lerach, Coughlin, Stoia, Geller, Rudman & Robbins, Theodore J. Pintar, Steven W. Pepich, and Kevin K. Green; Cohelan & Khoury, Timothy D. Cohelan and Isam C. Khoury; Spiro, Moss, Barness & Harrison, Dennis F. Moss and Ira Spriro. For Liberty Mutual: Sheppard, Mullin, Richter & Hampton, Douglas R. Hart, Robert J. Stumpf, and Geoffrey D. DeBoskey; William V. Whelan and Karin Dougan Vogel. Second Dist Div One, 8/16/07; opinion by Rothschild with Mallano concurring and Vogel dissenting; 2007 DAR 12495, 2007 WL 2325580.

conclude that, because back pay is a make-whole remedy, intended to restore the employee to the financial situation that would have existed but for the employers wrongful conduct, an employee is not entitled to earnings he or she would not have received in any event. We also conclude that the employee in this case was not entitled to immediate reinstatement given that he was medically unable to return to work. The case involved the director of the LAUSDs information systems branch who had been wrongfully demoted because of allegations of misconduct that a hearing officer subsequently found were unsupported by the evidence. But the employee had begun a disability leave of absence before he learned of the demotion, did not work during his demotion, and was medically unable to work in his prior position after the Personnel Commission upheld his appeal. His illness, the court emphasized, not his demotion or employment, was the sole cause of his inability to work... "The employer established that a wrongfully demoted employee would not have received a salary because of an illness unrelated to his demotion and employment. Under the causation principles applied by the California and federal courts, the Commission properly concluded that Davis was not entitled to lost earnings for the period of his unavailability. He would not have been able to work and would not have had any earnings regardless of whether the LAUSD had demoted him. For plaintiff: Audrey Y. Ripley. Second Dist Div One, 6/28/07; opinion by Mallano with Rothschild and Jackson concurring; 152 CA4th 1122, 62 CR3d 69.

WRONGFULLY DEMOTED SCHOOL EMPLOYEE WAS NOT ENTITLED TO BACK PAY FOR PERIOD IN WHICH HE WAS ON MEDICAL LEAVE FOR NONWORK-RELATED ILLNESS
DAVIS v LOS ANGELES UNIFIED SCHOOL DISTRICT PERSONNEL COMMISSION. The primary question on appeal, the Second District, Division One wrote in a June 28 opinion, is whether an employee who is wrongfully demoted is entitled to full back pay for a period when he was not available for work due to a nonindustrial illness. We -7-

(Cont'd on Page 8, DECISIONS)

DECISIONS
(From Page 7)

UNITED STATES SUPREME COURT


SUPREME COURT REVERSES NINTH CIRCUIT ON ERISA ISSUE INVOLVING PERMISSIBLE METHODS OF BENEFIT PLAN TERMINATION
BECK v PACE INTERNATIONAL UNION. Reversing the Ninth Circuit, (427 F3d 668), the United States Supreme Court, in a unanimous opinion by Scalia filed on June 11, addressed the question ...whether an employer that sponsors and administers a singleemployer defined-benefit pension plan has a fiduciary obligation under [ERISA] to consider a merger with a multiemployer plan as a method of terminating the plan. As explained in the case Syllabus: Respondent PACE International Union represented employees covered by single-employer defined-benefit pension plans sponsored and administered by Crown, which had filed for bankruptcy. Crown rejected the unions proposal to terminate the plans by merging them with the unions own multiemployer plan, opting instead for a standard termination through the purchase of annuities... The Ninth Circuit acknowledged that the decision to terminate a pension plan is a business decision not subject to ERISAs fiduciary obligations, but reasoned that the implementation of a termination decision is fiduciary in nature. It then determined that merger was a permissible termination method and that Crown therefore had a fiduciary obligation to consider PACEs merger proposal seriously, which it had failed to do. Held: Crown did not breach its fiduciary obligations in failing to consider PACEs merger proposal because merger is not a permissible form of plan termination under ERISA... The parties agree that section 1341(b)(3)(A)( i ) refers to the purchase of annuities, and that clause (ii) allows for lump-sum distributions. These are by far the most common [termination] methods. To decide that

merger is also a permissible method, the Court would have to disagree with the Pension Benefit Guaranty Corporation (PBGC), the entity administering the federal insurance program that protects plan benefits... The Court has traditionally deferred to the PBGC when interpreting ERISA. Here, the Court believes that the PBGCs policy is based upon a construction of the statute that is permissible, and indeed the more plausible. For union: Christian L. Raisner, Weinberg, Roger & Rosenfeld, Alameda; Julia Penny Clark, Laurence Gold, Douglas L. Greenfield, Leon Dayan, Kathleen M. Keller, Bredhoff & Kaiser, Washington DC. USSC, 6/11/07; unanimous opinion by Scalia; 127 S Ct 2310.

NINTH CIRCUIT
IN EN BANC DECISION, NINTH CIRCUIT HOLDS THAT TITLE VII IS VIOLATED BY CALCULATION OF SERVICE CREDIT THAT EXCLUDES TIME SPENT ON PREGNANCY LEAVE DURING YEARS PRECEDING PASSAGE OF PREGNANCY DISCRIMINATION ACT
HULTEEN v AT&T CORP. Rejecting the argument that its conclusion was based on an impermissible retroactive application of the 1979 Pregnancy Discrimination Act, the Ninth Circuit wrote as follows in an en banc opinion by Wardlaw filed on August 17. This appeal presents an issue previously decided on virtually identical facts sixteen years ago in Pallas v. Pacific Bell, 940 F.2d 1324 (9th Cir. 1991), cert. denied, 502 U.S. 1050 (1992). There we held that Pacific Bell violated Title VII in calculating retirement benefits after the effective date of the Pregnancy Discrimination Act of 1978, (PDA), 42 U.S.C. 2000e(k), when it gave service credit in those calculations for all prePDA temporary disability leave taken

by employees except leave by reason of pregnancy. Pallas, 940 F.2d at 132627. Here, a three-judge panel of our court, in a now-withdrawn opinion, held that AT&T Corporation, successor in interest to Pacific Bell and Pacific Telephone and Telegraph, did not violate Title VII by engaging in identical conduct. The panel reasoned that Pallas no longer controlled because it was inconsistent with intervening Supreme Court authority governing retroactivity principles. Hulteen v. AT&T Corp., 441 F.3d 653, 664 (9th Cir. 2006) (citing Landgraf v. USI Film Prods., 511 U.S. 244 (1994)). [The withdrawn Hulteen decision was summarized in CELA Bulletin, March 06, p.3.] Because we conclude that Pallas is not clearly irreconcilable with intervening authority, see Miller v. Gammie, 335 F.3d 889, 900 (9th Cir. 2003) (en banc), we affirm the district courts application of Pallas to the undisputed facts presented here and its award of summary judgment against AT&T. We further hold that our conclusion in Pallas that calculation of service credit excluding time spent on pregnancy leave violates Title VII was, and is, correct. In dissent, OScannlain, joined by Rymer, Bybee, and Callahan, summarized his position as follows: By concluding that Pallas ... remains good law, the majority erroneously perpetuates a circuit split with the Sixth and Seventh Circuits. [fn.1: Compare Pallas ... with Ameritech Benefit Plan Comm. v. Communication Workers of Am., 220 F.3d 814 (7th Cir. 2000), and Leffman v. Sprint Corp., 481 F.3d 428, 433 (6th Cir. 2007). No circuit has followed our decision in Pallas.] I believe that Pallas was wrong then and is wrong now. For plaintiff: Henry S. Hewitt, Blythe Michelson, and M. Suzanne Murphy, Oakland. For defendant: Joseph R. Guerra, Sidley, Austin, Brown & Wood, Washington DC. Ninth Circuit en banc, 8/17/07; opinion by Wardlaw joined by ten others; dissent by OScannlain joined by Rymer, Bybee, and Callahan; 2007 DAR 12527, 2007 WL 2332071.
(Cont'd on Page 9, DECISIONS)

-8-

DECISIONS
(From Page 8)

CLASS ACTION WAIVER IN CONSUMER ARBITRATION AGREEMENT WAS PROCEDURALLY AND SUBSTANTIVELY UNCONSCIONABLE
SHROYER v NEW CINGULAR WIRELESS SERVICES, INC. In this case, a Ninth Circuit panel wrote in an August 17 opinion by Reinhardt, we consider whether a class arbitration waiver in [New Cingulars] standard contract for cellular phone services is unconscionable under California law, and whether the Federal Arbitration Act preempts a holding that the waiver is unenforceable. We hold that the waiver is unconscionable, and, thus, unenforceable, and that the invalidation of the contract provision is not preempted by the Federal Arbitration Act. Accordingly, we reverse the district courts order compelling arbitration. [Fn.1. Our conclusion here is similar to that reached by district judges in the Northern, Central and Southern Districts of California in at least ten other cases. [cites omitted].] Applying [California] law to the class arbitration waiver at issue here, we conclude that under the test set forth in Discover Bank v. Superior Court of Los Angeles, 36 Cal.4th 148 (Cal. 2005), the waiver is both procedurally and substantively unconscionable and, therefore, unenforceable. First, as in Discover Bank, Cingulars Agreements ... are consumer contracts. They are also contracts of adhesion... [] Second, the Cingular Agreements occurred in a setting in which disputes between the contracting parties predictably involve small amounts of damages... At most, Shroyer and similarly situated class members suffered individual damages in the hundreds of dollars, an objectively small amount... Third, Shroyers complaint plainly allege[s] that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of customers out of individually small amounts of money... [] Because all three parts of the Discover

Bank test are satisfied, Cingulars class arbitration waiver is both procedurally and substantively unconscionable and cannot be enforced. The Ninth Circuit rejected two arguments aimed at distinguishing the present context from that at issue in Discover Bank, holding: (1) the existence of marketplace alternatives cannot bar a finding of procedural unconscionability; and (2) the potential availability of attorneys fees and costs to the prevailing party does not ameliorate the problem. Finally, the court rejected either express or conflict preemption as a barrier to the application of California law, and noted that due to the contracts nonseverability clause, Cingulars entire arbitration clause was void by its own terms. For consumers: William Weinstein, Wechsler Harwood LLP, NYC; Robert K. Friedl, Kirtland & Packard LLP, El Segundo. For Cingular: Donald M. Falk, Mayer, Brown, Rowe & Maw, Palo Alto; Evan Tager and Timothy C. Lambert, Mayer, Brown, Rowe & Maw, Washington DC. Ninth Circuit, 8/17/07; opinion by Reinhardt joined by Nelson with separate concurrence by Rymer; 2007 DAR 12554, 2007 WL 2332068.

Ariz), and held that there were sufficient triable issues to overcome summary judgment with respect to the issue of severity, and concerning the alteration of the terms and conditions of employment. Moreover, the court held, the employer did not successfully assert the Ellerth/Faragher reasonable care affirmative defense, since the plaintiffs minor [19-day] delay in reporting the behavior did not meet the stringent standard outlined in Faragher. (Because the affirmative defense failed on the second prong, the court did not address the sufficiency of the employers investigation and remedial action, which the plaintiff asserted had been a sham.) The Ninth Circuit held, however, that the plaintiff failed to make out a prima facie case for liability on a theory of quid pro quo harassment. The court emphasized that the plaintiff had not acquiesced to her supervisors demands, and had been neither demoted nor fired, although she testified that at one point she felt she that she would have to consent to keep her job. The supervisors comment I just dont think I can work with you anymore was insufficient, the court said, to cause a reasonable woman to believe that retaining her job was being conditioned on submission. (After reporting the harassment, she had been assured by senior executives that her job was not, in fact, in jeopardy.) Concerning claims against individual supervisors, the court wrote: We have long held that Title VII does not provide a separate cause of action against supervisors or co-workers. See Holly D., 339 F.3d at 1179; Pink v. Modoc Indian Health Project, Inc., 157 F.3d 1185, 1189 (9th Cir. 1998); Miller v. Maxwells Intl, Inc., 991 F.2d 583, 587-88 (9th Cir. 1993). Consequently, we affirm the district courts grant of summary judgment for [two individual managers]. For plaintiff: Ivan K. Mathew and Susan T. Mathew, Phoenix. For defendants: Stephanie J. Quincy and Gregg J. Tucek, Phoenix. Ninth Circuit, 8/9/07; opinion by Bybee joined by Goodwin and Smith; 2007 WL 2264635.
(Cont'd on Page 10, DECISIONS)

FACT ISSUES WERE RAISED ON HOSTILE ENVIRONMENT CLAIM, AND EMPLOYER COULD NOT ESTABLISH SECOND PRONG OF FARAGHER AFFIRMATIVE DEFENSE
CRAIG v M & O AGENCIES, INC. The Ninth Circuit reversed summary judgment in part on Title VII sex harassment claims brought by a company branch manager who had been subjected to persistent sexual propositions, including physical assault, by the companys interim President. (The court also addressed a number of issues relative to several Arizona common law claims.) With respect to liability under a hostile environment theory, the Ninth Circuit disagreed with the District Court, (D -9-

DECISIONS
(From Page 9)

NINTH CIRCUIT PANEL ADOPTS PRESUMPTION THAT EEOC RIGHT-TO-SUE LETTERS ARE RECEIVED THREE DAYS AFTER MAILING
PAYAN v ARAMARK MANAGEMENT SERVICES LIMITED PARTNERSHIP. The plaintiffs Title VII claims for sexual harassment, retaliation, and discrimination were untimely, the Ninth Circuit held in an August 2 opinion, where her lawsuit had been filed ninety-eight days after the EEOCs right-to-sue letter was issued. (The plaintiff noted in her opening brief that she did not know the exact date on which the letter arrived.) The Ninth Circuit wrote: Martha E. Payan appeals the district courts [D Ariz] dismissal of her Title VII claims... This appeal turns on one narrow and discrete issuehow to determine whether a Title VII action brought in district court after the receipt of an EEOC right-to-sue letter has been timely filed when the actual date of receipt by the litigant is unknown. Although we have addressed this question in a handful of previous cases, our earlier holdings fail to provide sufficient clarity to resolve the current case. Here, we seek to establish a coherent rule to apply to Payans case. Under that rule, we hold that in the absence of evidence of actual receipt, we will apply a three-day mailing presumption to determine notice of a right-to-sue letter. We conclude that Payans claims are untimely and affirm the district courts decision granting summary judgment for Aramark. Payan is correct that because the statute of limitations is an affirmative defense, the defendant bears the burden of proving that the plaintiff filed beyond the limitations period. [cites omitted.] Contrary to Payans argument, however, the defendant may do so by raising the limitations defense and providing sufficient evidence to support the presumption. Here, Aramark has raised the defense and offered proof of the right-to-sue letter. Thus, the undisputed facts established in Payans case are that the EEOC issued a right-to-sue notice letter to Payan on September 26,

2003, that the EEOC mailed the letter to Payans address of record, and that Payan received the notice letter at this address. From that basis, we must calculate Payans date of receipt. We begin with the presumption that the letter's issuance date is also the date on which the letter was mailed... [This] assumption[ ] may be rebutted with evidence to the contrary... [] Having established the mailing date, we next calculate Payans receipt of her rightto-sue notice... [] Our cases ... do not resolve the question... It appears that in one cases we used the issuance date as the receipt date. See Edwards v. Occidental Chem. Corp., 892 F.2d 1442, 1444-45 (9th Cir. 1990)... In another case we found timely an action filed 94 days after the EEOC letter was apparently mailed. See Ortez v. Wash. County, 88 F.3d 804, 807 (9th Cir. 1996). With no clearly applicable rule in our own precedent, we may look to other federal courts for insight. Most courts, including the Supreme Court, have presumed a receipt date of three days after EEOC letter issuance. [cites omitted.] At least one court, the Sixth Circuit, has used a five-day presumption. [cite omitted.] In addition, some courts have suggested, though not applied, a sevenday presumption. [cites omitted.] We adopt the three-day presumption. The three-day presumption accords with Federal Rule of Civil Procedure 6(e)... This rule is well-known, and is reasonable in this context as in other aspects of civil litigation... Based on the Supreme Courts use of the three-day presumption in Baldwin [County Welcome Ctr. v. Brown (1984) 466 US 147], its adoption by an overwhelming number of circuits, and its basis in Federal Rule of Civil Procedure 6(e), we adopt the three-day presumption as the governing standard for this circuit... [] [W]e affirm the district courts decision granting summary judgment for Aramark on Payans claims. For plaintiff: Mark E. McKane, Kirkland & Ellis, San Francisco. For defendant: Thomas L. Hudson, Meghan H. Grabel, Osborn Maledon, -10-

Phoenix. Ninth Circuit, 8/2/07; opinion by Bybee joined by Kleinfeld and Whaley; 2007 DAR 11806, 2007 WL 2199270.

UNPUBLISHED CALIFORNIA COURT OF APPEAL DECISIONS


[Note: The following are summaries of only a selection of the unpublished Court of Appeal decisions filed during the past month.]

SECOND DISTRICT HOLDS ARBITRATION AGREEMENT UNCONSCIONABLE AND UNENFORCEABLE FOR LACK OF MUTUALITY AND COSTS PROVISION
LOUIE v SUPERIOR COURT (PPG INDUSTRIES). In an opinion filed on August 15, the Second District, Division Two, issued a peremptory writ of mandate directing the trial court to set aside its order compelling arbitration of FEHA claims. The court held that the agreement was procedurally and substantively unconscionable and unenforceable under Armendariz because: (1) it improperly required an employee to pay for the presence of a court reporter; (2) it provided that an arbitration award is always final and binding as to an employee, but not as to the employer; and (3) it required arbitration only of the types of claims most likely to be brought by employees. The offending provisions were not severable, the Second District held. For petitioner: Michael D. Anderson and Nina Poladian. For real party: Kirkpatrick & Lockhart. Second Dist Div Two, 8/15/07; opinion by Ashmann-Gerst with Boren and Chavez concurring; 2007 WL 2318968 (unpublished).

(Cont'd on Page 11, DECISIONS)

DECISIONS
(From Page 10)

SIXTH DISTRICT AFFIRMS JUDGMENT ON JURY VERDICT FOR PLAINTIFF ON CLAIM FOR BREACH OF IMPLIED GOOD CAUSE CONTRACT
WEI v GREAT WALL TECHNOLOGY CO. In an opinion filed on August 28, the Sixth District held, inter alia, that substantial evidence supported the jurys finding that the parties had entered into, and that the employer had breached, an implied in fact good cause contract. The plaintiff had been discharged only five weeks after being hired as the president of a high-tech start-up company. The court emphasized: (1) the absence of any handbook provision or written memorandum either insisting on the atwill nature of employment, or suggesting any limitation on the employers discharge power; (2) oral assurances that the plaintiff would be the highest paid employee in the company and that he would be sent a formal employment contract; (3) the plaintiffs provision of independent consideration beyond the usual rendition of services in an employer/employee relationship. For plaintiff: John P. Cardosi, San Jose. For defendant: Thomas R. Hogan, San Jose. Sixth Dist, 8/28/07; opinion by McAdams with BamattreManoukian and Duffy concurring; 2007 WL 2421777 (unpublished).

to present any other circumstantial evidence of a discriminatory motive; (3) the defendant presented undisputed evidence that the plaintiff had been terminated as part of a bona fide RIF necessitated by adverse economic conditions. The court also held that no fact issues were raised on a failure to accommodate claim, (the defendant showed that it had granted all accommodations requested, and that the plaintiff had never asked for the accommodations she now insisted were denied); and on a harassment claim, (a supervisors biased remarks were infrequent and insufficiently severe). For plaintiff: Carney R. Shegerian. For defendant: Hughes, Hubbard & Reed. Second Dist Div Three, 8/24/07; opinion by Aldrich with Croskey and Kitching concurring; 2007 WL 2405793 (unpublished).

For plaintiffs: Peter Clark Lagarias, San Rafael. For defendants: Farella, Braun & Martel, San Francisco. Sixth Dist, 8/22/07; 2007 WL 2381545 (unpublished).

EVIDENCE COULD SUPPORT FINDING THAT PHONE CALL BY BIASED NON-DECISION MAKER WAS BUT FOR CAUSE OF ADVERSE ACTIONS
WILLIAMS v SUN MICROSYSTEMS, INC. The Sixth District reversed summary judgment on a FEHA sexual orientation discrimination claim. (The court affirmed summary adjudication, however, as to a number of tort and Labor Code claims.) The court wrote in part: Plaintiff alleged that he is a gay male, that he was performing competently, that he suffered discipline in the form of written reprimands, unfavorable performance evaluations, and demotion, and that he was denied a promotion, a raise, a bonus, and an award of stock options, based upon his sexual orientation. Plaintiffs evidence of discriminatory intent was Paveys [a supervisors] alleged anti-homosexual comments to [co-workers]... If a jury were to interpret Paveys comments as reflecting a negative opinion of gay men, the temporal relationship between her remarks and her call to Harpster [the decision-maker] could raise the inference that the telephone call was motivated by that negative opinion. Further, it is undisputed that Paveys telephone call to Harpster precipitated the investigation that led Harpster to rescind the favorable evaluation he had issued just a few weeks prior to the telephone call and to issue the unfavorable evaluations and compensation decisions that plaintiff challenges here. This evidence is sufficient to support a finding that Paveys telephone call ... was a but-for cause of the adverse employment actions.

SIXTH DISTRICT FINDS SEVERAL UNCONSCIONABLE PROVISIONS IN ARBITRATION AGREEMENT BETWEEN FRANCHISOR AND FRANCHISEE
McGUIRE v COOLBRANDS SMOOTHIES FRANCHISE. The Santa Clara County Superior Court did not abuse its discretion, the Sixth District held, in refusing on grounds of unconscionability to compel arbitration of a dispute between a franchisor and a franchisee. The contract was one of adhesion, the court held, and its substantively unconscionable provisions included: (1) a ban on any arbitral award of punitive damages; (2) an inherently one-sided prohibition against consolidated or class proceedings; and (3) a forum selection clause that was the product of procedural oppression and unfair surprise and that involved the burden of arbitrating claims concerning a California franchise in New York. The unconscionable provisions were not severable, the court held.

SECOND DISTRICT AFFIRMS SUMMARY JUDGMENT ON DISABILITY DISCRIMINATION AND RELATED CLAIMS
SIEGEL v NEWSPAPERS FIRST, INC. The Second District, Division Three, affirmed summary judgment on disability discrimination and related claims brought by a former sales assistant discharged, ostensibly, as part of a company downsizing. The court held, inter alia: (1) biased comments by a non-decision maker were not direct evidence of discriminatory animus; (2) the timing of the discharge tended to disprove causation, and the plaintiff failed

(Cont'd on Page 12, DECISIONS)

-11-

DECISIONS
(From Page 11)

For plaintiff: Marc A. Eisenhart, San Jose. For defendant: Danielle Ochs-Tillotson, Oakland. Sixth Dist, 8/7/07; opinion by Premo with Rushing and Elia concurring; 2007 WL 2254301 (unpublished).

position of Manager in the Department of Environmental Health. The primary decision-maker, Arturo Aguirre (deceased), claimed through videotaped testimony that Ms. Comey was unqualified and too emotional, and that her management styletoo friendly with subordinateswas inappropriate. At no time had Mr. Aguirre documented the basis for any of his criticisms. Just prior to trial, the County made a settlement offer of $175,000, which was increased to $250,000 on the condition that the plaintiff voluntarily retire. Plaintiff demanded $1.25 million, to include costs and attorney fees. (The case was mediated three times by Nikki Tolt.) For plaintiff: Bernard Alexander, Alexander & Yong. For County of Los Angeles: Michael Thomas, Thomas, Donahue, Thomas & Hurevitz. Los Angeles County Superior Court (Central), 7/23/07; No. BC 346146; Judge Elizabeth A. White; information provided by counsel.

with respect to Title VII pay discrimination claims. The vote was 225 to 199, (on party lines except for two Republicans voting for and six Democrats voting against.) A companion bill, The Fair Pay Restoration Act, (S.1843), was introduced in the Senate on July 20. S.1894. On August 2, the Senate passed The Support for Injured Servicemembers Act, an expansion to the FMLA that increases maximum leave time from twelve weeks to six months for families of wounded military personnel. S.1881. On July 26, the ADA Restoration Act of 2007 was introduced in the Senate by Senators Tom Harkin (D-IA) and Arlen Specter (R-PA). The House companion bill, H.R.3195, had 181 cosponsors, including 38 Republicans, as of August 3. The bill would, inter alia, prevent the courts from considering the use or non-use of mitigating measures when deciding whether an employee has a qualifying disability. S.1928. On August 1, the Equal Remedies Act of 2007 was introduced in the Senate. The bill would remove the caps on damages under Title VII and the ADA.

VERDICTS AND SETTLEMENTS


LOS ANGELES JURY FINDS FOR PLAINTIFF ON DISCRIMINATORY NON-PROMOTION CLAIM BY MANAGER AT COUNTY DEPARTMENT OF ENVIRONMENTAL HEALTH
COMEY v COUNTY OF LOS ANGELES. On July 23, 2007, Plaintiff Janet Comey, a 32-year employee of the County of Los Angeles, Environmental Health Services, prevailed on a gender discrimination claim against the County of Los Angeles. The jury found that Ms. Comey had been subjected to genderbased discrimination, and awarded her $768,286. (The jury was unanimous on all issues, except for an 11-1 vote on the issue of adverse action.) Post trial motions addressing costs, including attorney fees, remain. (The plaintiff will also be seeking an injunction ordering that she be promoted to the Bureau Director position.) Ms. Comey has held the title of Manager for approximately ten years. Evidence was presented concerning her substantial qualifications, her impeccable employment history, and her accomplishments with the County, including the creation of a nationally recognized Lead Unit. During nine of her ten years as a Manager, Ms. Comey received no performance evaluations, in violation of Civil Service rule 20.02. Meanwhile, a number of men were appointed to acting Bureau Director positions, thereby being groomed for permanent promotion. (All of them had received at least two performance evaluations.) No women have ever been promoted above the

PENDING LEGISLATION

H.R.2821. On July 31, the House passed the Ledbetter Fair Pay Act of 2007 to reinstate the paycheck accrual rule

C O M I N G

E V E N T S

September 27-29, 2007 CELA's 20th ANNUAL CONFERENCE The Fairmont Hotel San Jose October 19-20, 2007 NELA FALL SEMINAR Representing Workers in Individual and Collective Actions under the FLSA Sheraton New Orleans Hotel (see www.nela.org for details) November 9-11, 2007 CAOCs 46th ANNUAL CONVENTION Westin St. Francis Hotel, San Francisco (see www.caoc.com for details)

-12-

WHY HAVE YOGA CLASSES AT A PLAINTIFFS LAWYERS CONFERENCE?


by Mary Dryovage It is difficult for people to choose between professional activities and self care. But if you dont take time out to care for your body, the lifestyle of indoor sedentary work will take its toll on your well-being. It is 7:00 a.m. Yoga mat in hand, I am looking for the conference room. When I arrive, the yoga teacher, Tony Eason, is setting up mats and props. The room fills up and the class begins, and others straggle in, parking their coffee at the edge of the room. Breathe deep, draw oxygen into your thighs. We do the Awkward Pose, as the morning light streams into the room. For a moment, I am no longer thinking about my pending Court of Appeals brief. My whole world consists of keeping my back straight and my legs bent. There might seem to be a contradiction between the role of aggressive advocate and the dreamy world of meditation and yoga. A wide variety of students are in the class. Nancy, a tennis afficionado who has been practicing yoga for ten years or more, uses the class to stretch her muscles. Kathy, who does sea kayaking on the weekends, likes the strengthening poses. Harvey uses yoga classes to release the tension in his lower back. Rob was delighted to try yoga away from home, without risking the ridicule of his buddies at the health club. Some have never been in a yoga class, but have heard about the healing properties of yoga and want to check it out. The teacher makes gentle suggestions to modify the poses to make it easier for them. Tony is trained in Iyengar Yoga, which is notable for using props like straps and pillows to place the body in the correct position. He has developed a specialized yoga sequence. See, http:/ /ynottony.com/ He knows how to work people at their own edge, whether they are touching their toes for first time in years or maximizing a hamstring stretch by using a towel around the foot. All too often, by the time a litigator gets competent in the practice of law, physical problems begin to develop. I have CELA member Sam Rudolph and Instructor Terri Pitts at the 2006 CELA Conference. -14noticed attorneys on the courthouse steps, panting. Colleagues arrive at cocktail parties on crutches, due to mishaps which happen on the way to trial. I have a friend who quit the practice of law, on doctors orders, due to chronic back pain. The stressful, sedentary lives of trial lawyers feature irregular hours, high stakes and unpredictable outcomes. By mid-life, the casualties can be dire. It takes self-awareness to live in a balanced way. Asanas are both physical poses and mental exercises. They provide balance by connecting the mind and body. In Light on Life, B.K.S. Iyengar talks about the cultivation of tenacity and perseverance in yoga, as well in life. Obviously, yoga is not the only answerthere are plenty of other paths, like running, singing, biking, skiing, dancing, meditating, and other forms of activity or stillness involving focus on the breath. I discovered during law school that I had more energy and thought more clearly if I went to the gym at UAWs Solidarity House at 5:00 p.m., rather than continuing to work until I was so exhausted that all I could do was eat dinner and fall asleep. After years of admittedly intermittent yoga practice, I find that I have good cardio numbers and have gotten better at establishing rapport with my clients. I feel more alert and present. (This is not without cost: I could have taken on more clients or finished reading the novel for my book club.) This will be the fifth year that we have taken the time to begin the CELA conference day with a yoga class. The reasons for beginning the day with this ritual are complexrelax, strengthen, focus, and unfocus By educating CELA members not only on the law, but also about tools that enhance the practice of law, we support our members in living full lives. We contribute to CELAs members not only by presenting papers on litigation techniques, but also by supporting positive life-style changes. The class ended with us lying in Shivasana, or Corpse Pose.This is a five minute rest, in which the mind is clear and relaxed and the body rejuvenates. Then I rose, eager to greet my friends in the hotel lobby. Bring your stretchy clothes and join us for yoga class from 7:00 - 8:15 am on September 27, 2007, at the CELA conference at the Fairmont in San Jose.

CLASS ACTION
(From Page 1)

courts discretion to allocate that cost. The measure called for staying all discovery directed solely to the merits of the claims or defenses until after the court ruled on certification, while at the same time mandating the court to consider the substantive elements of the plaintiffs case, as well as any affirmative defenses. This would have shifted the burden of proof on affirmative defenses to the plaintiffs, while specifically precluding the plaintiffs from obtaining the discovery necessary to address those issues. At the same time, the measure aimed to prohibit discovery of the identity of potential class members, (at least until the court upheld the plaintiffs standing to assert the claim), thereby ensuring that only the defendant employers would have the information necessary to properly prepare for class certification or trial. Finally, the measure would require the plaintiffs to establish that the claims and defenses are substantially the same among all members as to liability, as well as damages. In my career, I have yet to certify a class action where the class members damages are substantially the same. The distinction between the current rule requiring similarity, and the Initiatives language requiring that issues of law or fact common to the class be substantially the same can not be overstated. Injunctive relief would not be allowable in an action seeking monetary damages. And the Act would permit automatic appeals of class certification orders, delaying our cases by years. Since this Initiative was filed, CAOC and a group of coalition partners, especially the Foundation for Taxpayer and Consumer Rights (FTCR), worked tirelessly gathering data from claims administrators across the nation to prove that the Initiative would not save the State of California money and might well cost hundreds of millions of dollars in taxes paid from class action settlements. Brad Seligman was actively involved on behalf of CELA and other civil rights organizations in the coalition opposing this odious initiative. Similarly, data was gathered to establish the bil-

lions of dollars received by non-profit organizations in the State of California via cy pres disbursements. At the same time, CAOC filed two counter initiatives and two versions of a competing initiative. The counter initiatives are called The No Say No Pay Act, and The Corporate Accountability Act. The former requires publicly traded corporations annually to report executive compensation and to give shareholders of California corporations the right to approve the compensation of Directors and Executive Officers. The Corporate Accountability Act is intended to deter deceptive and fraudulent corporate conduct. n addition to the penalties provided for under any other provision of law, it creates liability for Executive Officers or Directors that impacts their compensation or financial benefits during the time when legal violations occur. This is intended to protect consumers against the kind of corporate fraud that led to the collapse of Enron and WorldCom, with any monies collected to be paid to the Victims of Corporate Fraud Compensation Fund. You can access these initiatives at www.caoc.com/classactioninitiative. On August 27, 2007, after a milliondollar war chest had been collected to defeat the Initiative, CJAC and the Chamber of Commerce withdrew it from the State Attorney Generals office. Their explanation was that the timing of the June 2008 election and the States political climate made passage of the proposal uncertain at best. The president of CJAC stated, For us, there was the possibility that what we thought would be a quiet election could be an explosive one. At the time they filed this Initiative, CJAC and the Chamber of Commerce certainly did not believe that the June Primary would be an explosive one. They likely believed that the voter turnout would be light, due to the fact that Californias Presidential Primary will be held in February and the General Election in November. Reading between the lines, one might assume that what caused this change of heart was their realization that attorneys, civil rights, -15-

environmental, and labor organizations and all of us who support consumers and employees in this statehad a message and the will to raise enough resources to get it to the voters. This was not going to be another Prop. 64, and we were going to do whatever it took to defeat this Initiative. However, we must continue to work together to ensure that their Initiative is not re-filed for the November 2008 ballotthe current CJAC threatand that we have a fund in place to discourage corporate leaders from attempting to insulate themselves from responsibility now and into the future. Polling showed that if the voters knew corporate entities were behind the anti-class action Initiative it would not have passed. The only way to ensure voter awareness is to raise enough money to purchase the advertising time necessary to educate California consumers before they vote. Needless to say, CJACs Board of Directors have all the resources they need, at their fingertips, to purchase air time to promote anti-consumer initiatives such as this one. So even though the Initiative has currently been withdrawn, we must continue to organize and activate our members so that big PhRMA, insurance companies, big oil, auto manufacturers, and the California Chamber of Commerce realize that we are a force to be reckoned withthat we will never give up the fight for consumers and employees against those intent on violating their rights.

SCHOLARSHIPS AVAILABLE FOR UPCOMING CELA CONFERENCE


The purpose and function of CELAs Diversity Committee is to recruit and retain members, with an emphasis on increasing broad diversity in our organization. Through scholarships, outreach, and educational programs, the Committee looks to diverse communities to expand our membership and leadership base, and works to foster understanding of diversity issues in our practices. The Committee welcomes and encourages the representation of traditionally under-represented groups within its membership and Boardincluding people of color, women, the LGBT community, and people with disabilities. As part of that effort, CELA is offering scholarships for those who wish to attend CELAs upcoming Conference on September 27-29, at the Fairmont Hotel in San Jose. Depending on financial need, the scholarship will pay for part or all of the attendance fee for the Conference. For a scholarship application, contact CELAs Administrative Director, Christina Krasomil, at (818) 9077895, or clkrasomil@earthlink.net. Applications must be received by September 14, 2007.

-16-

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

Published Monthly

BULLETIN
EDITOR: CHRISTOPHER BELLO September 2007 Vol. 21, No. 9 bitration. We therefore reverse the judgment of the Court of Appeal upholding the class arbitration waiver [37 CR3d 790, summarized in CELA Bulletin, Jan 06, p.5] and remand for the above determination. Another issue posed by this case is whether a provision in an arbitration agreement that an employee can opt out of the agreement within 30 days means that the agreement is not procedurally unconscionable, thereby insulating it from employee claims that the arbitration agreement is substantively unconscionable or unlawfully exculpatory. As explained below, a finding of procedural unconscionability is not required to invalidate a class arbitration waiver if that waiver implicates unwaivable statutory rights. But such a finding is a prerequisite to determining that the arbitration agreement as a whole is unconscionable. Plaintiff in this case argues that other terms of the arbitration agreement were substantively unconscionable and that the entire agreement should not be enforced. Contrary to the Court of Appeal, we conclude the present agreement has an element of procedural unconscionability notwithstanding the opt-out provi(Cont'd on Page 2, DECISIONS)

RECENT EMPLOYMENT LAW DECISIONS


CALIFORNIA SUPREME COURT
CLASS ARBITRATION WAIVERS ARE FREQUENTLY IF NOT INVARIABLY UNENFORCEABLE IN CONNECTION WITH OVERTIME CLAIMS
GENTRY v SUPERIOR COURT (CIRCUIT CITY STORES, INC.). In this case, Moreno wrote in his 4-3 majority opinion filed on August 30, we consider whether class arbitration waivers in employment arbitration agreements may be enforced to preclude class arbitrations by employees whose statutory rights to overtime pay ... allegedly have been violated. We conclude that at least in some cases, the prohibition of classwide relief would undermine the vindication of the employees unwaivable statutory rights and would pose a serious obstacle to the enforcement of the states overtime laws. Accordingly, such class arbitration waivers should not be enforced if a trial court determines, based on the factors discussed below, that class arbitration would be a significantly more effective way of vindicating the rights of affected employees than individual ar-

LETTER TO MEMBERS CONCERNING CHANGES TO LISTSERV PROTOCOLS


from Michelle Reinglass (CELA Chair) and David Duchrow (Incoming CELA Chair) Greetings: The CELA OnTopic listserv is the most valuable benefit of CELA membership for many members. Protocols regarding listserv participation are often difficult to apply in such a way that everyone would agree that they are fair. In the past year, following approved protocols, CELA members have been suspended from the OnTopic listserv when they represent employers against other listserv participants. That rule was expanded to exclude from OnTopic participation anyone who works in a firm with someone who represents an employer against an OnTopic participant. In addition, CELA members who represent unions (and other OnTopic participants in their firms) have been suspended when they represent a union which is being sued by someone who is represented by an OnTopic participant. Further, the CELA member-opponents were prohibited from having a side agreement between themselves to essentially opt out of the protocol prohibiting OnTopic participation. (Note that the same exclusions did not apply to the OffTopic listserv.) The purpose of this letter is to advise you of significant changes to some of the OnTopic listserv protocols. Members who participate on the CELA
(Cont'd on Page 12, PROTOCOLS)

CELAS BILLS IN SACRAMENTO


Both SB 549, CELAs Bereavement Leave bill, and AB 1043, the bill to prohibit mandatory forum selection and choice-of-law provisions, were sent to the Governors desk in early September. SB 549 passed out the Assembly on Sept 4 by a vote of 44 to 31, and the Senate concurred in the Assemblys amendments on September 6 by a vote of 24 to 14. AB 1043 passed out of the Senate on September 5 by a vote of 21 to 14, and the Senates amendments were concurred in on September 6 by a vote of 47 to 30. (For information on the bills provisions, and to track developments, see www.leginfo.ca.gov.)

DECISIONS
(From Page 1)

sion, and therefore remand for a determination of whether provisions of the arbitration agreement were substantively unconscionable. Discover Bank [v Superior Court (2005) 36 C4th 148] was not intended to suggest that consumer actions involving minuscule amounts of damages were the only actions in which class action waivers would not be enforced. Rather, Discover Bank was an application of a more general principle: that although [c]lass action and arbitration waivers are not, in the abstract, exculpatory clauses [cite omitted], such a waiver can be exculpatory in practical terms because it can make it very difficult for those injured by unlawful conduct to pursue a legal remedy. Gentry argues persuasively that class action waivers in wage and hour cases and overtime cases would have, at least frequently if not invariably, a similar exculpatory effect for several reasons, and would therefore undermine the enforcement of the statutory right to overtime pay. First, individual awards in wage and hour cases tend to be modest... [] A second factor ... is that a current employee who individually sues his or her employer is at greater risk of retaliation... [] Third, some individual employees may not sue because they are unaware that their legal rights have been violated. We also agree with the Bell [v Farmers Ins. Exchange (2004) 115 CA4th 715] court that class actions may be needed to assure the effective enforcement of statutory policies even though some claims are large enough to provide an incentive for individual action... [cite omitted.] In other words, absent effective enforcement, the employers cost of paying occasional judgments and fines may be significantly outweighed by the cost savings of not paying overtime. We cannot say categorically that all class arbitration waivers in overtime cases are unenforceable... [] Nonetheless, when it is alleged that an employer has systematically denied proper overtime pay to a class of employees

and a class action is requested notwithstanding an arbitration agreement that contains a class arbitration waiver, the trial court must consider the factors discussed above... If it concludes, based on these factors, that a class arbitration is likely to be a significantly more effective practical means of vindicating the rights of the affected employees than individual litigation or arbitration, and finds that the disallowance of the class action will likely lead to a less comprehensive enforcement of overtime laws..., it must invalidate the class arbitration waiver... If [on remand] the trial court invalidates the waiver on public policy grounds, then the parties may proceed to class arbitration ... unless the trial court invalidates the arbitration agreement altogether for reasons discussed in the next section of this opinion... We believe that severance is particularly appropriate in the case of class arbitration waivers... The Court of Appeal concluded, and Circuit City argues, that the fact that an employee had 30 days to opt out of the agreement means that the terms of the agreement, including the class arbitration waiver, are not procedurally unconscionable and are therefore enforceable. But the validity of a class arbitration waiver was analyzed in the previous part of this opinion in terms of unwaivable statutory rights rather than unconscionability... Therefore, if the trial court on remand finds the class arbitration waiver invalid using the factors set forth ..., that waiver will not be enforced. Gentry does challenge provisions of the arbitration agreement other than the class arbitration waiver, however, and argues that the entire arbitration agreement is unconscionable and unenforceable... [B]ecause this issue may remain viable on remand, we will address the Court of Appeals holding that the arbitration agreement was not unconscionable because Gentry had a 30day period to opt out... We conclude that the Court of Appeal erred in finding the present agreement
(Cont'd on Page 3, DECISIONS)

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: Michelle Reinglass 23161 Mill Creek Drive Suite 170 Laguna Hills, CA 92653 Tel: (949) 587-0460 FAX: (949) 587-1004 E-mail: michelle@reinglasslaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Sherman Oaks) Eve Chesbro (Pasadena) David DeRubertis (Woodland Hills) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Wilmer Harris (Pasadena) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Cynthia Rice (San Francisco) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles) Brad Yamauchi (San Francisco)

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

-2-

DECISIONS
(From Page 2)

free of procedural unconscionability... [T]here are several indications that Gentrys failure to opt out ... did not represent an authentic informed choice. First and foremost, the explanation of the benefits of arbitration in the [handbook] was markedly one-sided... [A]lthough the handbook alluded to some of the shortcomings of arbitration in the general sense, it did not mention any of the additional significant disadvantages that this particular arbitration agreement had compared to litigation. These included the following: First, the agreement provided for a one-year statute of limitations as opposed to a threeyear statute of limitations provided under Code of Civil Procedure section 338 ..., and a four-year statute of limitations for unfair competition claims... Second, the agreement provided a limitation of remedies to backpay only up to one year from the point at which the [employee] knew or should have known of the events giving rise to the alleged violation of the law, whereas an employee filing suit could potentially recover backpay for a three-year period from the date the cause of action actually accrued. Third, the agreement imposed a maximum of $5,000 in punitive damages... Fourth, the agreement contained a provision that parties will generally be liable for their own attorney

fees, with the arbitrator having the discretion to award the employee attorney fees, as opposed to section 1194s provision that a prevailing employee is entitled to reasonable attorney fees and costs. Although an employee who read Circuit Citys nine-page single-spaced document ... would have encountered the above provisions, only a legally sophisticated party would have understood that these rules and procedures are considerably less favorable to an employee than those operating in a judicial forum... [A]nd contrary to the dissenting opinions contention otherwise, it is unrealistic to expect anyone other than higher echelon employees to hire an attorney to review what appears to be a routine personnel document. Moreover, it is not clear that someone in Gentrys position would have felt free to opt out. The materials ... made clear that Circuit City preferred that the employee participate in the arbitration program... The lack of material information about the disadvantageous terms ... combined with the likelihood that employees felt at least some pressure not to opt out ... leads to the conclusion that the present agreement was, at the very least, not entirely free from procedural unconscionability.

[W]e remand the matter to the Court of Appeal with directions to remand to the trial court to determine whether the class arbitration waiver is void. Unless the issue is mooted, the trial court must also determine on remand whether the original 1995 arbitration agreement or an amended agreement controls the present case and whether the controlling agreement has substantively unconscionable terms. If so, the court must determine whether these terms should be severed, or whether instead the arbitration agreement as a whole should be invalidated. For petitioner: Dennis P. Riordan, San Francisco; Matthew Righetti, San Francisco; John Glugoski; Ellen Lake, Oakland. For amici CELA et al: Altshuler, Berzon, Nussbaum, Rubin & Demain, Michael Rubin, Dorthea Langsam, San Francisco; Cliff Palefsky, San Francisco. For amici Trial Lawyers for Public Justice et al: Goldstein, Demchak, Baller, Borgen & Dardarian, Laura L. Ho, Oakland, and Joseph E. Jaramillo. As amicus for petitioner: Michael H. Crosby, San Diego. For real party: Berry & Block, Sacramento; Jones Day and Steven B. Katz, Los Angeles. Cal SC, 8/30/07; opinion by Moreno with George, Kennard, and Werdegar concurring; dissenting opinion by Baxter with Chin and Corrigan concurring; 2007 DAR 13433, 2007 WL 2445122.

CELA GOVERNANCE TASK FORCE BEING FORMED


from Kathy Dickson and Jeff Winikow As many of you know, CELA has always operated through an all-volunteer Board, designed to represent a cross-section of our membership. There are competing viewpoints, both within and outside the Board, concerning CELA governance, and we would like to form a Task Force on Governance to study the experience of other organizations that have open elections to fill all or some of their Board seats. The Task Force will then issue recommendations to the CELA Board regarding this issue. To be effective, this Task Force must be comprised of CELA members with differing views. We hope to have a representative cross-section of our membership serving on the Task Force, which will include both current Board members and non-Board members. CoChairing the Task Force will be Kathy Dickson and Jeff Winikow. At this point, we anticipate that an effective Task Force will consist of about ten members, although everyone in the organization will be encouraged to express thoughts and ideas directly to the Task Force members. Anyone wishing to serve as a member of the Task Force should contact CELA Administrative Director Christina Krasomil: clkrasomil@earthlink.net.

CALIFORNIA COURTS OF APPEAL


APPLYING FEHA STANDARD, SECOND DISTRICT HOLDS THAT OBSCENE THREAT WAS NOT SUFFICIENTLY SEVERE TO CONSTITUTE ACTIONABLE HARASSMENT UNDER CIV CODE 51.9
HUGHES v PAIR. In an opinion filed on September 10, the Second District, Division 5, affirmed summary judgment on a claim under Civil Code 51.9, a statute
(Cont'd on Page 4, DECISIONS)

-3-

DECISIONS
(From Page 3)

enacted in 1994 that prohibits sexual harassment by a person engaged with the plaintiff in a designated business, service, or professional relationship. The plaintiff alleged that she had been sexually harassed by one of the trustees of her deceased husbands estate, who, in a phone call, had suggested that the trust would give her what she wanted if she would be nice to him. The court recounted as follows a subsequent incident at a museum exhibit: The only thing Pair said to her was, Im going to get you on your knees and fuck you one way or another. This statement was made in close proximity to Pairs son and [the plaintiffs son.]. Holding that the term sexual harassment has the same meaning in 51.9 as in FEHA and Title VII, the Second District explained in part as follows its conclusion that the defendants conduct was not actionable: The undisputed evidence in this case reveals that Suzan cannot establish quid pro quo sexual harassment because Pairs statements did not alter their relationship in any way. No tangible action occurred as a result of Pairs conduct. Because there was no quid pro quo sexual harassment, Suzan can only prevail if Pairs conduct rose to the level of being pervasive or severe. Suzan understandably does not contend that Pairs sexual harassment was pervasive... She does argue, however, that Pairs conduct was severe and the trial court erred in looking to cases interpreting the FEHA and Title VII to determine the meaning of severe... Suzan argues that the FEHA and Title VII definitions of severe ... have no relevance to the types of relationships protected from sexual harassment under section 51.9. The trial court correctly ruled that the words pervasive or severe have the same meaning under section 51.9 as they are given in the well-settled case law decided under the FEHA and Title VII... In cases under the FEHA and Title VII, the issue is whether the sexually harassing conduct is severe enough to create an abusive work environment. [cite omitted.] Under section 51.9, the

issue is whether the sexually harassing conduct is pervasive or severe enough to cause a plaintiff to suffer economic loss or disadvantage or personal injury, including, but not limited to, emotional distress or the violation of a statutory or constitutional right...' ( 51.9, subd. (a)(4).) Whether in the employment context ... or ... under section 51.9, the ultimate issue of whether the defendants conduct is pervasive or severe comes down to the same considerations. In its survey of pertinent authority, Herberg [v California Institute of the Arts (2002) 101 CA4th 142] recognized that a single incident generally is insufficient to establish a hostile work environment... Although plaintiffs argue that even a single incident of severe harassment may be sufficient to establish liability..., a review of the cases they cite reveals that a single incident must be severe in the extreme and generally must include either physical violence or the threat thereof. As in Herberg, the nature of the alleged sexual harassment of Suzan by Pair does not begin to approach the severity of rape or violent sexual assault or even milder forms of unwanted physical contact. [cite omitted.] Suzan was not physically touched. The comments made by Pair in the telephone call were ambiguous... Although Suzan was disturbed and distressed by Pairs coarse and vulgar comments at the King Tut exhibit, his statement was an isolated inciden[t] that cannot remotely be considered extremely serious, as required by the Supreme Court. ([Clark County School Dist. v] Breeden, supra, 532 U.S. at p. 271.) To allow Suzans action to proceed to trial would require an interpretation of the word severe that is inconsistent with its meaning under the FEHA and Title VII... Although the conduct attributed to Pair was grossly inappropriate, it is simply not actionable under section 51.9. In a dissenting opinion, Armstrong disagreed with the majoritys importation of employment cases into Civil Code section 51.9 jurisprudence, emphasizing that the Legislature specified that the statutes are independent. Moreover, -4-

Armstrong wrote: When Hughes rejected his advances, Pair followed up with a brazen, obscene threat, made in a public place, in earshot of Hughess son and his own... He exhibited a complete abandonment of his fiduciary duty to [Hughess son], indicating that he was willing to ignore the constraints of the law. He did so in public, in front of children, indicating a willingness to ignore all normal rules of civilized behavior... There are triable issues of fact... For plaintiff: Hillel Chodos and Deborah Chodos. For defendant: Melanie C. Ross. Second Dist Div Five, 9/10/07; opinion by Kriegler with Mosk concurring and Armstrong dissenting; 2007 WL 2584712.

ADVERSE RESULT IN LABOR GRIEVANCE ARBITRATION DID NOT HAVE BINDING EFFECT ON STATUTORY CLAIMS WHERE M.O.U. DID NOT EXPLICITLY SO PROVIDE
MARCARIO v COUNTY OF ORANGE. In an opinion filed on September 19, the Fourth District reversed a judgment on the pleadings that had been entered against a County employee who alleged that, in retaliation for his filing of a non-employment-related federal qui tam action against the city, he had been reassigned and demoted. The plaintiff pleaded causes of action for workplace retaliation in violation of Labor Code 1102.5, violation of civil rights in violation of 42 USC 1983, and i.i.e.d. The court wrote in part, in an opinion by Bedsworth: Anita Marcario appeals from a judgment on the pleadings entered in favor of her employer, the County of Orange. The trial court concluded the [adverse] resolution of an earlier labor grievance, pursued through a binding arbitration in accordance with terms of a Memorandum of Understanding (MOU) between
(Cont'd on Page 5, DECISIONS)

DECISIONS
(From Page 4)

the County and Marcarios union, precluded Marcarios claim for damages based upon retaliation in violation of the Labor Code, and her remaining two claims were barred by the applicable statute of limitations. Marcario argues the court erred, because the arbitration of her labor grievance could not be given binding effect with regard to statutory claims unless the MOU clearly specified that it would be; and any statutes of limitations were tolled during the time she participated in the internal grievance procedure. We agree with Marcario on both counts. A significant number of California appellate courts have already held that the arbitration of a labor grievance, conducted pursuant to the terms of a collective bargaining agreement, cannot have binding effect as against the employees claims for violation of statute, unless the agreement states explicitly that it will. The MOU in this case said no such thing. The Countys argument to the contrary is based upon cases which are distinguishable... As for the tolling issue, Marcario correctly points out that equitable tolling should be applied whenever (1) a plaintiff pursues one of several remedies in good faith; and (2) defendant is not prejudiced. Because this case was resolved on a motion for judgment on the pleadings, there was simply no evidence from which the court might have properly drawn the conclusion that Marcario was not entitled to such tolling... For plaintiff: Mark Rosen. For defendant: William L. Haluck, Benjamin P. de Mayo, and Wanda S. Florence. Fourth Dist, 9/19/07; opinion by Bedsworth with Moore and Aronson concurring; 2007 DAR 14646, 2007 WL 2717197.

INC. In an opinion filed on September 19, the Second District, Division 6, affirmed summary judgment on wage and hour claims brought by a class of current and former Skywest flight attendants. The Second District agreed with the trial court that the claims were preempted by the Railway Labor Act, (45 USC 151 et seq.), and that application of IWC Order No. 9-2001 would violate the Airline Deregulation Act of 1978, (49 USC 41713(b)(1)). For plaintiffs: Norman Pine and Beverly Tillett Pine; Bruce N. Anticouni; Thomas Slovak and Lucien Van Hulle. For defendant: Paul D. Fogel, Margaret A. Grignon, Raymond A. Cardozo, Dennis Peter Maio and Reed Smith; Ford & Harrison and Norman A. Quandt, Patricia T. Stambelos, Assistant General Counsel. Second Dist Div Six, 9/19/07; opinion by Yegan with Gilbert and Perren concurring; 2007 DAR 14661, 2007 WL 2728371.

redress alleged constitutional violations, it must state its intention clearly. We conclude that the statutory scheme governing TSA security screeners does not express a clear intention on the part of Congress to preclude judicial review of screeners constitutional claims. The district court therefore has subject matter jurisdiction over Plaintiffs-Appellants action. We further conclude that AFGE has standing. When Congress established the TSA and federalized airport security screeners in late 2001, it set out specific hiring and training requirements for TSA security screeners... It then included a catchall provision giving the TSA Administrator significant discretion over the employment of security screeners... Pursuant to its catchall authority, the TSA Administrator issued a Human Resources Management Letter ... which declared that all screeners are subject to a one-year probationary period and may be terminated at any time during that period... Although the letter provides that the TSA will state the reason for the termination of probationary screeners, it also provides that such screeners have no right of reply and may not bring an administrative appeal... By contrast, nonscreener TSA employees are covered by the personnel management system of the FAA... The FAAs personnel management system, which operates parallel to the Civil Service Reform Act of 1978 (CSRA), allows employees, including employees with less than one year of service, to appeal personnel actions to the Merit Systems Protection Baord and to seek judicial review of MSPB decisions... Having no administrative recourse, Plaintiffs-Appellants filed suit in federal district court on April 1, 2004, claiming that the TSA violated their First Amendment speech and associational rights by penalizing Mr. Gavellos exercise of his legal right of advocacy of union membership.

NINTH CIRCUIT
TSA AIRPORT SECURITY SCREENER DISCHARGED FOR UNION ACTIVITIES HAS RIGHT TO JUDICIAL REVIEW OF FIRST AMENDMENT CLAIMS
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES LOCAL v STONE. Plaintiffs-Appellants American Federation of Government Employees, Local 1 (AFGE) and John Gavello appeal the [Northern Districts] dismissal of their action against the Administrator of the Transportation Security Administration (TSA) in his official capacity. The district court held that PlaintiffsAppellants were not entitled to judicial review of their claims that the TSA violated their First Amendment Rights by disciplining them and then discharging Gavello, a TSA security screener, for engaging in union activities. The district court also held that AFGE lacked standing. We reverse. If Congress wishes to deny federal employees the ability to -5-

WAGE AND HOUR CLAIMS BY CLASS OF FLIGHT ATTENDANTS WERE PREEMPTED BY RAILWAY LABOR ACT
FITZ-GERALD v SKYWEST AIRLINES,

(Cont'd on Page 6, DECISIONS)

DECISIONS
(From Page 5)

The [district] court reasoned that ... Congresss decision not to extend the CSRAs protections to TSA screeners ... indicated that Congress did not intend to permit screeners to obtain judicial review of personnel decisions. The court explained that AFGE lacked standing because the complaint did not allege that Gavello was actually a member of AFGE, and because Gavellos claims were unreviewable. The district court concluded that AFGE had no standing to sue either on its own behalf or on behalf of Gavello. The court rested its decision partly on the ground that Gavello was not entitled to review of his First Amendment claims and partly on the ground that the complaint did not specify that Gavello was an AFGE member. As we explain in the next section, Gavellos claims are reviewable. We ... conclude that, even if Gavello is not an AFGE member AFGE satisfies both constitutional and prudential requirements for standing... In the district court, the government argued successfully that Plaintiffs-Appellants suit should be dismissed on jurisdictional grounds. The Supreme Court subsequently granted certiorari in Whitman v. Department of Transportation, 126 S.Ct. 2014 (2006) (per curiam), another case involving the right of a federal employee to obtain judicial review of constitutional claims. In its briefing in Whitman, the government adopted a position that was contrary to the position it had taken before the district court in the present case. Specifically, the government accepted that the language of the CSRA did not provide the clarity necessary to foreclose judicial review of an employees constitutional claims. [cite omitted.] The Supreme Court in Whitman did not decide the reviewability question. However, consistent with its arguments in Whitman , the government now concede[s] that total preclusion of [an employees] equitable constitutional claims could not be sustained and agrees with Plaintiffs-Appellants that dismissal for lack of jurisdiction was inappropriate. Despite the governments turnaround, we have an independent duty to determine our jurisdiction.

Consistent with Mitchum [v Hurt (3d Cir 1995) 73 F3d 30] and Spagnola [v Mathis (DC Cir 1998) 859 F2d 223], and with the position of both sides in this case, we conclude that the district court erred when it dismissed Plaintiffs-Appellants suit for lack of subject matter jurisdiction. We hold that the statutory scheme governing Gavellos employment does not clearly state an intention on the part of Congress to preclude judicial review of constitutional claims. Plaintiffs-Appellants are therefore entitled to seek equitable relief based on the alleged violation of their First Amendment rights. [T]he government argues that their claim for back pay should be dismissed on sovereign immunity grounds... The government readily admits that it did not raise this argument before the district court, and we decline to address it here. We leave it to the district court to decide the issue on remand... As a fallback position, the government argues that we should dismiss Plaintiffs-Appellants action pursuant to FRCP 12(b)(6) for failure to state a claim upon which relief can be granted. The government did not file a Rule 12(b)(6) motion in district court... [and] we decline to consider the governments argument in the first instance. For employee: Mary Dryovage, San Francisco. For AFGE: Mark D. Roth, Joe Goldberg, Gony Frieder. For government: William G. Kanter, Mark W. Pennak, U.S. Department of Justice. Ninth Circuit, 9/5/07; opinion by W. Fletcher joined by Tashima and Holland; 2007 DAR 13725, 2007 WL 2482144.

part as follows: Anthony L. Williams appeals the district courts dismissal of his complaint alleging violations of the Federal Airline Deregulation Acts Whistleblower Protection Program (the WPP), 49 U.S.C. 42121, and related state law claims. At issue in this case is whether an aggrieved employee may bring a suit in federal district court to allege violations of the WPP. We hold that the WPP does not create such a right of action and affirm the [Northern Districts] dismissal of Williamss action on the basis that the district court lacked subject matter jurisdiction. In September 2004, Williams filed a pro se complaint against United, alleging retaliatory discrimination under the WPP and three state law tort claims. He claimed that United terminated him in retaliation for a dispute related to an alleged safety violation. The district court exercised jurisdiction over the federal claim pursuant to 28 U.S.C. 1331, and supplemental jurisdiction over his state law claims. Williamss retaliatory discrimination claim was dismissed on summary judgment, and his state law claims were dismissed under Federal Rule of Civil Procedure 12(b)(6). On appeal, United does not challenge the district courts exercise of jurisdiction. Nonetheless, we are obliged to raise questions of the district courts subject-matter jurisdiction sua sponte. [cite omitted]... We uphold the dismissal of the action not on the merits but because the district court lacked jurisdiction... [T]he WPP established a detailed administrative scheme for the investigation and resolution of claims brought by airline employees... [] In exercising jurisdiction, the district court noted that the administrative filing requirement ... is phrased permissively... Focusing on this language, the district court concluded that exhaustion of administrative remedies was not required before bringing a claim under the WPP in federal district court. [T]he may language in [49 U.S.C.]
(Cont'd on Page 7, DECISIONS)

WHISTLEBLOWER PROTECTION PROVISIONS OF FEDERAL AIRLINE DEREGULATION ACT DO NOT SUPPORT PRIVATE RIGHT OF ACTION
WILLIAMS v UNITED AIRLINES, INC. In an opinion by McKeown filed on August 31, the Ninth Circuit wrote in -6-

DECISIONS
(From Page 6)

42121(b)(1) merely confers authority on the Secretary of Labor to accept complaints from aggrieved employees. Whether the WPP grants federal district courts jurisdiction to entertain claims alleging violations of the WPP is a separate question. Because the WPP does not expressly grant a right of action in federal district court, we consider whether there is an implied right of action under the statute... [] The plain language of the WPP supports the view that Williams is a member of the special class the statute was designed to protect... [] [But] ... there is no evidence that Congress intended to create a direct remedy in federal district court. Because Congressional intent is clear, the third and fourth factors in Cort [v Ash (1975) 422 US 66] are unnecessary to our analysis... [] The legislative history of the WPP does not warrant a different conclusion. The dismissal of Williamss federal claim requires dismissal of his state law claims... Although diversity jurisdiction provides an independent basis for federal jurisdiction over state law claims, complete diversity is lacking in this case... For plaintiff: Anthony L. Williams, pro se. For defendants: Michael Mankes and Michael G. Pedhirney, Littler Mendelson, San Francisco. Ninth Circuit, 8/31/07; opinion by McKeown joined by Siler and Bea; 2007 WL 2458504.

plaintiff waived her right to assert ADA and 1983 claims that were predicated on actions taken during the employers background investigation; (2) the plaintiff had failed to exhaust administrative remedies with respect to claims under the Arizona Employment Discrimination Act; and (3) although the plaintiff stated a prima facie case of retaliation under Title VII and the AEDA, she failed to raise a genuine issue of material fact as to the assertedly pretextual nature of the defendants explanation that her application had been rejected because she had failed a psychological exam, not because she had filed an EEOC charge against a former employer. For plaintiff: David F. Gaona, Phoenix. For defendant: Mark T. Steadman, Mesa. Ninth Circuit, 9/13/07; opinion by Rawlinson joined by Gould and Covello; 2007 DAR 14307, 2007 WL 2669788.

ployment under 20 C.F.R. 639.3(i)(1)(5). NLL therefore had 50 employees at a single site only if the number of remote construction workers can be aggregated with the number of headquarter employees. To consider this possibility, we look to 639.3(i)(6)s provision for outstationed workers. Section 639.3(i)(6) counts certain categories of mobile employees as part of a site of employment distinct from that at which they are physically located, that site being the site of their home base for WARN Act purposes. Plaintiffs contend that all NLL employees who work outside of Billings are outstationed, that Billings is their home base, and that the Billings headquarters is therefore the single site of employment for all NLL employees... We disagree with Plaintiffs interpretation of the regulation... Plaintiffs have not demonstrated that Billings meets any of the criteria for assignment as NLL remote workers site of employment. Specifically, Plaintiffs have not demonstrated that Billings was: (1) the site to which workers were assigned as their home base; (2) the site from which work was assigned; or (3) the site to which the workers reported. For plaintiffs: Kenneth D. Peterson, Billings, Montana. For defendants: Mark J. Levine, Houston, Texas. Ninth Circuit, 9/10/07; opinion by Tashima joined by Hall and Callahan; 2007 DAR 14032, 2007 WL 2581110.

AFFIRMING SUMMARY JUDGMENT ON WARN ACT CLAIMS, NINTH CIRCUIT HOLDS THAT CONSTRUCTION WORKERS AT SCATTERED PROJECTS WERE NOT EMPLOYED AT SUFFICIENTLY LARGE SINGLE SITE
BADER v NORTHERN LINE LAYERS, INC. Affirming summary judgment on WARN Act claims, the Ninth Circuit explained that [t]his case presents the question of whether construction workers site of employment is the company headquarters or the workers actual work site, under the Acts implementing regulations. We conclude that it is the latter. Consequently, Plaintiffs have not demonstrated that 50 or more laid-off employees worked at a single site of employment... Because none of the construction project locations was geographically proximate to [company headquarters in] Billings or to any other construction project location, Billings and the various project sites are separate sites of em-7-

NINTH CIRCUIT AFFIRMS SUMMARY JUDGMENT ON SEVERAL STATUTORY CLAIMS BROUGHT BY REJECTED APPLICANT FOR POLICE OFFICER POSITION IN ARIZONA
NILSSON v CITY OF MESA. Affirming summary judgment on claims brought by a rejected applicant for a police officer position, the Ninth Circuit held: (1) because she had signed a waiver in connection with her job application, the

OVERTIME CLAIMS WERE RELEASED ONLY WITH REGARD TO TIME PERIOD SPECIFIED ON WH-58 STANDARD FORM SETTLEMENT RECEIPT
DENT v COX COMMUNICATIONS LAS VEGAS, INC. In March 2004, the Ninth Circuit wrote in a September 10 opinion by B. Fletcher, plaintiff-appellant accepted overtime compensation that was
(Cont'd on Page 8, DECISIONS)

DECISIONS
(From Page 7)

owed him by his former employer, MC Communications, pursuant to a settlement supervised by the Department of Labor in accordance with Fair Labor Standards Act... Dent signed a WH-58 standard form Receipt for Payment of Lost or Denied Wages, Employment Benefits, or Other Compensation, which was prepared by the DOL and certified by MC Communications, acknowledging receipt of payment of unpaid wages for the period beginning with the workweek ending 5-04-02 through the workweek ending 10-11-03. On August 27, 2004 Dent commenced this suit claiming unpaid overtime wages under the FLSA ... as well as supplemental Nevada State statutory wage payments. The defendants/appellees ... moved to dismiss Dents FLSA claim on the ground that it had been released, in full, by the March 2004 settlement. The district court [D Nevada] granted the motion... On appeal, Dent agrees that the March 2004 settlement fully waived his right to pursue any claims for the period specified on the WH-58... He maintains, however, that the settlement does not bar him from seeking compensation earned prior to that period. [] The issue ... is thus whether the DOL-supervised settlement ... released Dents claims under the FLSA for wages earned prior to April 28, 2002. We hold that it did not. As summed up by the brief of Cox Communications, the defendants position is that no matter what time period the Secretary used in calculating the settlement amount, [29 USC] 216 requires that the settlement addressed all unpaid wages owed to Dent and extinguished all future claims. We do not find, however, that the plain meaning of 29 U.S.C. 216(b) unambiguously compels such a conclusion... The statutory language of the FLSA does not reject the possibility of a settlement payment and resulting waiver that are tied to a specified time period. [W]e conclude that Dents claims were released only with regard to the time period specified on the WH-58. We

therefore ... reverse the district courts dismissal of Dents causes of action under the FLSA accruing on or between August 27, 2001 and April 27, 2002. For plaintiff: David Borgen, Oakland; Leon Greenberg, Las Vegas. For defendants: Rick D. Roskelley and S. Libby Henninger, Littler Mendelson, Las Vegas; William D. Deveney, Atlanta, Georgia; Carol Davis Zucker and Chantel D. Carmouche, Las Vegas. Ninth Circuit, 9/10/07; opinion by B. Fletcher joined by Clifton and Shea; 2007 DAR 14021, 2007 WL 2580754.

If we determined that Ronald Dibles activities were related to his public employment, we would [consider the Pickering balancing test]... [B]efore an employee is even entitled to have the balancing test applied, the speech must touch on a mater of public concern. [cite omitted.] [Dibles] activities were simply vulgar and indecent. They did not constitute speech on a matter of public concern... If we determined that Ronald Dibles activities were unrelated to his public employment, we would also have to apply a balancing test... [] [T]he interest of the city in maintaining the effective and efficient operation of the police department is particularly strong. It would not seem to require an astute moral philosopher or a brilliant social scientist to discern the fact that Ronald Dibles activities, when known to the public, would be detrimental to the mission and functions of the employer. [cite omitted.] And although the governments justification cannot be mere speculation, it is entitled to rely on reasonable predictions of disruption. [cite omitted.] In fine, whether Ronald Dibles activities were related to his employment or not, the City could discipline him for those activities without violating his First Amendment rights. The Dibles also claim that their First Amendment rights to privacy and freedom of association were violated by the City... [I]n a case of this nature, a governmental employee cannot avoid the strictures of the balancing tests that we have heretofore described by attempting to resurrect fallen speech claims as privacy and associational claims. Those First Amendment claims must also necessarily fall with the Dibles speech claims. In a separate opinion, Canby concurred in the result because any rational trier of fact would find that Dible would have been discharged for making false statements to police department investigators, had he not been discharged for his
(Cont'd on Page 9, DECISIONS)

NINTH CIRCUIT AFFIRMS SUMMARY JUDGMENT ON FIRST AMENDMENT CLAIMS BY ARIZONA POLICE OFFICER DISCHARGED FOR OPERATING PORNOGRAPHIC WEBSITE
DIBLE v CITY OF CHANDLER. Ronald and Megan Dible appeal from the district courts [D Arizona] grant of summary judgment against them in their action against the City of Chandler, Arizona, the Chandler Police Department, and the Chandler Police Chief... Principally, the Dibles assert that Ronald Dible was a police officer whose rights under the First Amendment ... were violated when he was terminated for participating in (performing in, recording and purveying) a sexually explicit website with his wife. We affirm. The Supreme Court [in City of San Diego v Roe (2004) 543 US 77] surveyed First Amendment law as it related to government employees, and set forth an analytical framework for consideration of the issue. The Court first recognized that [a] government employee does not relinquish all First Amendment rights ... just by reason of his or her employment. [cite omitted.] That said..., there are two paths of analysis, depending on whether the speech is related or unrelated to the persons employment... [] As in Roe, the result would be same under either line of cases. The Dibles cannot prevail. We will explain.

-8-

DECISIONS
(From Page 8)

website activity. But Canby insisted that Dibles expressive website conduct was an unconstitutional ground for his discharge. Canby emphasized that because Dibles expressive activity was not employment related, the police department must demonstrate that the alleged harm caused by his expression was real, not merely conjectural. [cite omitted.] The evidence of harm in this case is so insubstantial that it can be characterized as conjectural. For plaintiffs: Keith M. Knowlton, Mesa, Arizona. For defendants: Katherine E. Baker, Scottsdale. Ninth Circuit, 9/5/07; opinion by Fernandez joined by Schroeder; separate opinion by Canby concurring in judgment; 2007 DAR 13692, 2007 WL 2482147.

sion of the district court. We are aware of only one court of appeals that has adopted a per se rule that a finding of evident partiality is precluded by an arbitrators lack of actual knowledge of the information upon which [an] alleged conflict was founded.' Gianelli Money Purchase Plan & Trust v. ADM Investor Servs., Inc., 146 F.3d 1309, 1313 (11th Cir. 1998). In Gianelli, the Eleventh Circuit disapproved of our decision in Schmitz [v Zilveti (9th Cir 1994) 20 F.3d 1043]. But even if we were persuaded that Schmitz was wrongly decided, we would be bound to follow it as the law of our circuit. For appellant: Howard L. Horwitz, Beverly Hills. For appellee: Charles N. Shephard, Los Angeles. Ninth Circuit, 9/4/07; opinion by W. Fletcher joined by Pregerson and Berzon; 2007 WL 2472467.

found sleeping on the job. We conclude, however, that Taheri present evidence raising a genuine factual dispute whether Evergreens proffered reason ... was pretextual. The district court reached the opposite conclusion after determining that there was no evidence that Kegley was aware of other employees who slept at work but were not punished, and because other similarly situated employees had also been disciplined for sleeping on the job. In making this determination, the district court failed to consider the evidence in the light most favorable to Taheri. Instead, the court made a credibility determination that favored Kegleys account over that of Taheri and his co-workers. Taheris evidence that sleeping on the job between shifts was rampant, practiced by employees and supervisors alike, and visible almost daily, calls into question Kegleys testimony that he was unaware that this practice was taking place. In addition, Taheri presented evidence that Kegley was involved in addressing Taheris discrimination complaint and was aware of Millers retaliatory animus and threats, yet based his termination decision in part on Millers ... disciplinary action. For plaintiff: Theodore J. Stepovich, Anchorage. For defendant: Brian Peters, Ford & Harrison, Los Angeles; Patricia G. Griffith, Ford & Harrison, Atlanta. Ninth Circuit, 8/31/07; Memorandum opinion by Noonan and Paez with Wallace dissenting; 2007 WL 2491462 (unpublished).

CENTRAL DISTRICT CORRECTLY VACATED ARBITRATION AWARD FOR EVIDENT PARTIALITY OF ARBITRATOR
NEW REGENCY PRODUCTIONS, INC. v NIPPON HERALD FILMS, INC. This case arises from the arbitration of a contract dispute between a film production company and a film distribution company. The [Central District] vacated the arbitration award based on the neutral arbitrators failure to disclose that during the arbitration, he began work as a senior executive with a company that was negotiating with a production executive of one of the parties to the arbitration to finance and co-produce an important motion picture. We hold that vacatur by the district court for evident partiality of the arbitrator was proper under the Federal Arbitration Act. We conclude that the lack of evidence of the arbitrators actual knowledge of the ongoing negotiation does not prevent a finding of evident partiality because, under the circumstances of this case, the arbitrator had a duty to investigate possible conflicts resulting from his new employment and to disclose that employment to the parties. We therefore affirm the deci-

IN UNPUBLISHED DECISION, NINTH CIRCUIT HOLDS THAT DISTRICT COURT MADE IMPERMISSIBLE CREDIBILITY DETERMINATION IN GRANTING SUMMARY JUDGMENT ON RETALIATION CLAIM
TAHERI v EVERGREEN AVIATION GROUND LOGISTICS ENTERPRISES, INC. In an unpublished opinion filed on August 31, the Ninth Circuit reversed summary judgment on a retaliation claim brought under the Alaska Human Rights Act. The court wrote as follows in a Memorandum opinion (with Wallace dissenting): The Alaska Human Rights Act tracks federal civil rights law... [] We agree with the district court that Taheri established a prima facie case of retaliation because he was terminated shortly after he complained ... that Evergreen was discriminating against him based on national origin, race, religion, and age. We also agree that Evergreen met its burden of producing a non-discriminatory reason for terminating Taheri: that on three or more occasions he was -9-

(Cont'd on Page 10, DECISIONS)

DECISIONS
(From Page 9)

UNPUBLISHED CALIFORNIA COURT OF APPEAL DECISIONS


[Note: Only a selection of the past months unpublished Court of Appeal decisions is summarized below.]

AFFIRMING SUMMARY JUDGMENT ON RETALIATION CLAIM, FIRST DISTRICT HOLDS THAT UC BERKELEY MANAGER FAILED TO PROVIDE EVIDENCE OF SUBSTANTIAL AND DETRIMENTAL EMPLOYMENT ACTION
SAWYERS v THE REGENTS OF THE UNIVERSITY OF CALIFORNIA. Affirming summary judgment on a retaliation claim brought by an African American managerial employee of the UC Berkeley Athletics Department, the First District, Division Five, engaged in an extended discussion of the Yanowitz standards before concluding that, whether viewed individually or in the aggregate, Sawyers has provided no evidence of any substantial and detrimental employment consequence sufficient to constitute an actionable adverse employment action. For plaintiff: Daniel Mark Siegel, Oakland. For defendant: Paul David Fogel, San Francisco. First Dist Div Five, 8/30/07; opinion by Needham with Simons and Gemello concurring; 2007 WL 2456102 (unpublished).

Tameny tort and various discrimination claims, the First District, Division Three, held that because the defendant bank had failed to prove that the plaintiff was an officer of the bank under Wells Fargo Bank v Superior Court (1991) 53 C3d 1082, it had not been entitled to summary judgment on grounds of preemption under Section 24 (Fifth) of the National Bank Act, according to which officers may be dismissed at pleasure. (The court noted that courts have ... acknowledged the doctrine of preemption protects national banks that dismiss their officers ... from state law discrimination claims..., although in this regard, courts have differed on whether such preemption is total or partial.) [W]e hold that where an employee asserts that his or her position as Vice President is not vested with any of the duties or responsibilities normally associated with such a positionas Ramanathan did herethen to obtain summary judgment on preemption grounds ... the Bank must show the employee is an officer... For plaintiff: Daniel Louis Feder, San Francisco. For defendant: Patricia Kruse Gillette, San Francisco. First Dist Div Three, 8/30/07; opinion by Horner with McGuiness and Siggins concurring; 2007 WL 2456100 (unpublished).

overtime compensation for the overtime hours he worked. There is considerable evidence, the court wrote, that far more than one-half of plaintiffs work time was devoted to duties which meet the test of the exemption. Speaking in general terms, among other things, those tasks consisted of his various coordination activities for pickups and deliveries; his prioritizing and checking of the warehouse workers work; his attention to workers time cards, overtime and meal break times; his lining up mechanical repair work for broken machinery and adjusting workers schedules at such times; his assistance in scheduling work hours for the office employees he supervised; and his attention to necessary discipline and safety issues. For plaintiff: Irving Meyer. For defendant: Gordon & Rees. Second Dist Div Three, 8/29/07; opinion by Croskey with Klein and Aldrich concurring; 2007 WL 2429984 (unpublished).

IN SEX HARASSMENT ACTION, SECOND DISTRICT HOLDS THAT PLAINTIFF RAISED TRIABLE ISSUES AS TO SEVERITY AND AS TO HARASSERS STATUS AS SUPERVISORS
FUENTES v AUTOZONE, INC. Marcela Fuentes appeals from summary judgment ... on her complaint for sexual harassment, intentional infliction of emotional distress and slander. Plaintiff argues that she presented evidence that her individual harassers were supervisors and therefore defendant is strictly liable... We find triable issues of material fact ... as to whether the individual harassers were supervisors and as to whether the harassment was severe. A major issue on appeal is whether [the harassers] were supervisors or managers within the meaning of ... Government Code section 12940, subdivision
(Cont'd on Page 11, DECISIONS)

WAREHOUSE WORKER WITH SUPERVISORY DUTIES FAILED TO ESTABLISH NON-EXEMPT STATUS


BRAGG v ORGANIC MILLING CO. Affirming summary judgment on overtime claims, the Second District, Division Three held that the evidence demonstrated that the plaintiffs duties were largely managerial and did not raise a triable issue concerning application of the executive exemption. The plaintiff alleged that he had worked for defendant in a salaried clerical and/or warehouse position for twenty-five years, and did so in excess of 40 hours per week without receiving straight time or -10-

BANK WAS NOT ENTITLED TO SUMMARY JUDGMENT ON NATIONAL BANK ACT PREEMPTION GROUNDS WHERE IT FAILED TO ESTABLISH THAT NOMINAL VICE PRESIDENT IN REALITY HAD DUTIES OF BANK OFFICER
RAMANATHAN v BANK OF AMERICA. Reversing summary judgment on

DECISIONS
(From Page 10)

(j)... [] Defendants evidence that Garcia and Carrillo were not supervisors under FEHA focused on their lack of authority to hire, fire, lay off, recall, promote, demote, transfer, suspend or increase or decrease the pay of other employees. But ... the definition of supervisor under FEHA goes beyond such authority and addresses the responsibility to direct the plaintiff. The Garcia and Williams declarations, together with the evidence submitted by plaintiff, establish that Garcia, as acting store manager, had responsibility for the daily operation of the store. Based on the statement that the parts sales manager cannot schedule work for other employees without approval of the store manager, we infer that the store manager does have that authority. Williamss description of the PSM position held by Carrillo reveals that he had the authority to request assistance from other employees to perform routine tasks related to inventory, sales, cashier, or other store support when needed. This raises a triable issue of material fact as to whether Carrillo had the authority to assign or direct plaintiff within the meaning of section 12926, subdivision (r)). The trial court ruled that defendant was entitled to summary adjudication of the sexual harassment cause of action on the merits, finding that plaintiff had not

presented evidence of anything beyond ordinary flirtation. We disagree with this characterization of the evidence... [] Plaintiff cites evidence of physical touching by Garcia, as well as sexually explicit and hostile statements by both Garcia and Carrillo... For plaintiff: Matthew J. Matern, Sandra M. Falchetti, Paul J. Weiner, and Caroline H. Lee. For defendant: Littler Mendelson, Jeremy A. Roth, Gregg C. Sindici, and Tina M. Fryar. Second Dist Div Four, 9/10/07; opinion by Epstein with Willhite and Suzukawa concurring; 2007 WL 2585794 (unpublished).

cal sales representatives that they may participate in a collective action alleging FLSA overtime violations. The litigation is one of more than a dozen overtime cases across the country brought against major drug companies by outside salespeople. (In mid-July, U.S. District Judge John F. Walter in Los Angeles allowed plaintiffs to contact potential class members in Balyasny v Bayer Corp., CV 06-7594-JFW. Steven G. Zieff is lead plaintiffs counsel in the Bayer case.) For plaintiffs: Aashish Y. Desai, Mower, Carreon & Desai. For defendant: John S. Battenfeld, Morgan, Lewis & Bockius. USDC, SD Cal., SACV-07-263-CJC; Judge Cormack Carney; information reported in Daily Journal, 9/7/ 07.

UNITED STATES DISTRICT COURTS


PHARMACEUTICAL SALES REPRESENTATIVES ARE ALLOWED TO PROCEED WITH COLLECTIVE ACTION ALLEGING FLSA OVERTIME VIOLATIONS
DELGADO v ORTHO-McNEIL, INC. In the first week of September, District Judge Cormack Carney in Santa Ana issued a ruling that permits plaintiffs counsel to notify about 8,000 current and former Ortho-McNeill pharmaceuti-

OCTOBER EVENTS
Monday, October 22, at 5pm, CELA/ LEFTJAW members will join others in the workers rights community at The Stand in Century City for an informal send-off for Eve Hill, who is stepping down as the Executive Director of the Disability Rights Legal Center in Los Angeles. The Stand, (described by the organizers as a high end hot dog joint serving beer and wine), is located at 2000 Avenue of the Stars, in the park between the Century Towers and the CAA Building.) Thursday, October 25, in Long Beach, CELA will sponsor a dinner program at which Genie Harrison and Robert Kitson will discuss their $7.93 million discrimination, harassment, and retaliation verdicts against the Los Angeles Fire Department. Included will be a discussion by Genie, Robert, and trial tech extraordinaire Jason McClure of their use of technology during litigation and trial. The event will take place from 6pm to 10pm at the Westin Hotel in Long Beach. (The program will be repeated in Northern California, with details to be announced.)

C O M I N G

E V E N T S

October 19-20, 2007 NELA FALL SEMINAR Representing Workers in Individual and Collective Actions under the FLSA Sheraton New Orleans Hotel (see www.nela.org for details) October 25, 2007 CELA DINNER PROGRAM ON LAFD VERDICTS Westin Long Beach (See this page for details) November 9-11, 2007 CAOCs 46th ANNUAL CONVENTION Westin St. Francis Hotel, San Francisco (see www.caoc.com for details)

-11-

PROTOCOLS
(From Page 1)

listservs are expected to know the protocols and abide by them. The actual revised protocols follow below. The CELA Board has been evaluating the suspension protocols over the past year, and a Listserv Committee was established to, among other things, monitor the listservs and to develop and apply protocols. The Listserv Committee was busy resolving not only one-onone conflicts between the employee attorney and employer attorney, but also conflicts involving multiple attorney firms, and the difficult issues that arise when an employee sues a union, and both are represented by listserv members. At least one member of the Listserv Committee spoke to every member who was suspended from the listserv for any reason, when possible, in order to encourage those people to participate in the development of better protocols. Members of the Listserv Committee and Board also solicited feedback from the membership at large and evaluated responses to an earlier survey sent out to the membership, to consider how to balance everyones interests and thereby come up with more workable protocols. The Listserv Committee developed protocols, which were further modified by the members of the Board. Here are the highlights of the new protocols, which have been approved by the Board and are now in effect: (1) The general rule remains that [a] CELA member on the List who represents or is aligned with the interests of an employer, and who is adverse to the interests of an employee represented by a CELA member on the List, will be removed from the OnTopic List for the duration of the matter. However, side agreements will now be allowed, meaning that if the two members involved the employees attorney and the employers attorneymake a side agreement, the employers attorney may stay on the OnTopic listserv, although the agreement must prohibit discussion of the case being litigated between the two members. The old rule did not allow side agreements, since there was a concern that newer or less experienced attorneys would accede to the

requests of more senior listserv participants. Note that no member will be required to agree to a side agreement. (2) Situations in which a CELA member represents an employee against a unionas-employer will be handled on a case by case basis. The attorneys involved must contact Christina Krasomil and disclose the conflict. Union representation issues will be relayed by the CELA List Monitoring Committee to the CELA Board, and will be addressed on a case by case basis in order to determine whether a conflict truly exists, and how the conflict should be addressed. Every effort will be made to allow both attorneys (and their firms) to remain on the listserv. As a general rule, when a union is being sued, but not as the employer, there will not be a suspension of either member, but the case may not be discussed on the listserv. (3) The suspension will only apply to OnTopic posts. Moreover, any member suspended from OnTopic may also pose questions through Christina Krasomil. A third option is for a suspended member to create his or her own list of attorneys and ask questions of that group. (4) A conflict wall protocol will be developed to isolate the individual attorney(s) acting in an employer defense capacity, as opposed to suspending the entire firm. Pending the creation of a workable conflict wall resolution, the individual and firm suspensions will continue. (5) The Board further determined that the running of the listservs should be turned over to the members who participate. Thus, a Listserv Monitoring Committee will be developed, consisting of CELA member volunteers. Toward that end, an introductory informal assembly will be held at the CELA Conference, on Friday, September 28, 2007, following the last session. Former Listserv Committee members Toni Jaramilla, Bernard Alexander, Eve Chesbro and David Duchrow will answer questions from interested members, and take the names of people who would like to be trained in monitoring, developing, and nurturing the listservs. More information will be provided before the conference. Any interested person who will not be able to -12-

attend that initial informal meeting may contact any one of the former Listserv Committee members for further information. Training is anticipated to take about one hour, and will be done online. Former Listserv Committee member Michael Baltaxe will chair the new Listserv Monitoring Committee. On behalf of the CELA Board and the former Listserv Committee, we hope that these new conflict protocols provide everyone with maximum access to this wonderful member benefit.

CELA LIST PROTOCOLS


Please remember that CELA is an organization dedicated not only to ensuring that the rights of employees are not trampled, but were also a collegial organization designed to assist one another in fighting the same fight against employers and defense counsel with limitless resources. The CELA List was developed in order to help us be on a level playing field with defense counsel who have access to numerous attorneys within their firms and within their local employment defense organizations. In developing the CELA List, we wanted the participants to be able to have a candid dialogue with other CELA members about their cases, judges, opposing counsel, and mediators. The List protocols were approved and adopted by the CELA Board. If you continue as a member of the List, CELA will assume that you agree to abide by the following. (If you do not agree to abide by the following, please immediately notify CELAs List Administrator, Christina Krasomil, and you will be removed from the List.) (1) The CELA OnTopic List is for topics related to plaintiffs employment law. This means representation of employees in disputes with employers. We also recognize that occasionally employees may be defendants in a dispute with an employer. Please do not post messages to the List about anything else. This protocol is critical.
(Cont'd on Page 13, PROTOCOLS)

PROTOCOLS
(From Page 12)

The OnTopic list is for: Questions about plaintiffs employment law Questions about law practice management Any other issues directly affecting plaintiffs employment law The OffTopic List is for: Attorney referrals outside plaintiffs employment law Questions regarding a non-plaintiffs employment law case (so long as it is not employment defense) Employment law posts by individuals who have been conflicted off the OnTopic list A political issue or announcement you just have to talk aboutso long as it is free of flaming or derogatory references All messages not related to plaintiffs employment law must be sent to CELAs Off Topic List. The CELA OnTopic List must be focused on our common interest of employment law. Further, postings about non-employment cases run a higher risk of conflict with another CELA member or a lawyer in a CELA members firm. (2) The CELA OnTopic List is for employment law topics of interest to the entire List. Please do not use the List for messages that contain only expressions of gratitude to an individual or other personal messages. For example, messages that state only thank you, go get em, fax it to me, I want it too, etc. must be sent to the individual rather than to the entire List. (An expression of gratitude or other personalized comment can be appended to a larger substantive message of interest to the entire List.) Every message that you post on the List must include your personal information, including name, address, phone number, fax number, and email address, so that replies can be made only to you. (3) The CELA OnTopic List is a shared responsibility. CELA cannot guarantee the confidentiality of the communications on the List and believes it is the obligation of every participant to observe the confidentiality of the List. Every List participant must omit infor-

mation which would identify a client from all messages posted to the List. Information gained from the List can only be shared with persons who are regular CELA members and who qualify for List access, persons who function as staff for regular CELA members and who are cautioned to maintain the confidentiality of the information, and persons whose practice of law could not place them in an adversarial position to the practice of a regular CELA member and who are cautioned to maintain the confidentiality of the information. Information gained from the List must not be shared with lawyers who would not qualify as regular CELA members because their representation of employers is greater than allowed for by CELA membership rules, and their practice of law could place them in an adversarial position to a regular CELA member. This would include other lawyers in a regular CELA members firm. It is the responsibility of every List participant in every case to determine whether another List participant or another List participants firm is an opposing counsel. Every List participant must observe the confidentiality of the List and not post a List message concerning a matter which involves another List participant or participants firm as an opposing counsel. Any comment posted is the writers opinion. CELA encourages the exchange of honest, candid opinions on the List. As a List user, you understand and agree that all comments that you or others place on this List regarding any judge, mediator, counsel, or other individual are merely expressions of nonactionable opinion protected by the First Amendment. If you express anything other than positive opinions about an individual in a List message, you must make clear in the message that it is your honest opinion and is not a statement of fact or the opinion of CELA. Do not communicate to non-list participants that a specific list participant has made critical comments about a particular individual. (4) All exchanges on the CELA OnTopic List are responses to re-13-

quests to exchange opinions. As a CELA List user, you understand and agree that all exchanges and statements on the List regarding judges, mediators, counsel, and others are reasonable responses to reasonable requests to exchange opinions for the purposes of improving our ability to represent our clients effectively. (5) Do not flame or personally attack any other user on the List. Using derogatory language towards any other user on the List is forbidden. Do not engage in a flame war with other users on the List. Do not personally attack other users on the List. Insults or personal criticisms directed at other users are forbidden. Please keep our common focusfairness and justice in the workplace. (6) The content of messages posted on the CELA OnTopic List may be used on the CELA web site. Any message posted to the CELA OnTopic List which contains legal citations, briefs, motions, or portions of these or similar documents may be posted on the CELA Web sites Members Only section at the discretion of the CELA Board or its designated committee. When a message is posted on the CELA OnTopic List containing such a document, the CELA OnTopic List participant who posted the List message has given consent that the document may be posted on the CELA Web sites Members Only section. You are requested to copy all messages containing attached documents to the CELA Administrative Director, Christina Krasomil, at clkrasomil@earthlink.net.

CONFLICT PROTOCOLS
It is incumbent upon all List participants to identify whether their opponent, or a member of their opponents firm, is a CELA member, and to determine the application of the conflict protocols. (7) Individual Conflict. A CELA member on the List who represents or is aligned with the interests of an employer, and who is adverse to the interests of an employee represented by a CELA member on the List, will be re(Cont'd on Page 14, PROTOCOLS)

PROTOCOLS
(From Page 13)

moved from the OnTopic list for the duration of the matter, unless there is a Side Agreement, (see Side Agreements section). This conflict protocol potentially applies to the representation of an employer or interests aligned with an employer before any litigation or administrative process is initiated, to the representation of individuals adverse to the interests of an employee in an employment matter, and to the representation of an employer in an employment-related matter even when the employer is identified as the ostensible plaintiff in a matter. If you are a CELA member on the List who represents or is aligned with the interests of an employer, and are adverse to the interests of a CELA-represented employee on the List, it is your responsibility to immediately contact Christina Krasomil and inform her of the conflict. You will be removed from the List for the duration of the matter. During the appeal stage of a case, a CELA member who represents or is aligned with the interests of an employer, and is adverse to the interests of an employee represented by a CELA member on the List, will not have access to the List during certain stages of the appeal. Recognizing that the appeal process may be very lengthy, removal from the List during the appeal process will begin only after the clerks transcript on appeal is prepared. CELA members who are adversaries during the appeal process must notify Christina Krasomil immediately upon notification that the clerks transcript has been prepared. (8) Side Agreements. If a CELA attorney on the plaintiff-employee side in a litigation is facing an employer-defendant represented by a CELA member, both CELA members can enter into a Side Agreement. If both CELA members are amenable to continued participation on the List, and agree not to discuss their specific case on the CELA List, the CELA member representing the employer-defendant may remain on the List. (9) Union Representation Issues. If you are a CELA member participating

on the List and are representing a Unionemployer facing a plaintiff-employee represented by a CELA member, it is your responsibility to immediately contact Christina Krasomil and inform her of the conflict. The provisions of Paragraphs (7) and (8) above, governing conflicts and side agreements respectively, will then apply. Union representation issues will be addressed on a case by case basis by the CELA List Monitoring Committee which will make recommendations to the Board, in order to determine whether a conflict truly exists, and how the conflict should be addressed. Every effort will be made to allow both attorneys (and their firms) to remain on the listserv. (10) Potential Conflict. Before gaining access to the List, each new List applicant must first answer a series of questions in order to confirm that the applicant does not represent and is not aligned with the interests of an employer adverse to the interests of an employee represented by a CELA member on the List. Before applying for admission to the List, it is the responsibility of every List applicant to determine whether they are representing or aligned with the interests of an employer adverse to a CELA member on the List who is representing an employee. If your opponent is a CELA member, you will not be given List access until the conclusion of that matter, unless there is a Side Agreement, (see Side Agreements paragraph). (11) Firm Conflict. A conflict wall protocol will be developed to isolate the individual attorney(s) acting in a defense capacity, as opposed to suspending the entire firm. Pending the creation of a workable conflict wall resolution, the individual and firm suspensions will continue. This protocol addresses circumstances where the firm of a CELA member on the List represents an employer, or interests aligned with the employer, adverse to the interests of an employee represented by a CELA member on the List. This may occur, even though the firm CELA member on the List is not directly responsible for representing the em-14-

ployer or interests aligned with the employer. Under those circumstances, the firm associated with the CELA List user will be removed from the List during the duration of the matter. (The Board is aware that this protocol may cause concern among CELA members on the List and is sensitive to those concerns. The Board believes that the firm conflict protocol may evolve in response to those concerns as potential application of this protocol occurs.) (12) Temporarily Suspension Alternatives. Temporarily suspended List participants and firms have alternatives available, including posting to OffTopic about their plaintiffs employment cases, or creating their own contact list of CELA members, in order to exchange information. As a means of allowing limited access to suspended participants to discuss matters unrelated to the conflict, posts can be made to OnTopic on behalf of the suspended participant through Christina Krasomil, CELAs Administrative Director. (13) Monitoring Committee. CELAs List issues are addressed by a List Monitoring Committee, made up of CELA volunteer members who do not serve on the Executive Board, and who work on a rotating basis. The Committee monitors list violations, and will communicate directly with members about the day to day violations, (e.g., me too, thanks). Anyone wishing to make a complaint or inquiry about any listserv posting may contact Michael Baltaxe, the Chair of the Listserv Monitoring Committee, (or whoever is currently the committee chair). Michael Baltaxe can be reached at mfbaltaxe@aol.com. More serious violations, such as those which would involve a potential suspension, shall be brought to the CELA Boards Executive Committee, (which consists of Michelle Reinglass, David Duchrow, Kathy Dickson, Phil Horowitz, Dolores Leal, and Jim Stoneman). You may also bring any complaint or inquiry, of any nature, to Christina Krasomil, who will pass it along to the correct people.

-16-

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

Published Monthly

BULLETIN
EDITOR: CHRISTOPHER BELLO October 2007 Vol. 21, No. 10 age 54, ostensibly because of job elimination. The conflicting evidence that Googles stated reasons for Reids termination changed after Reid was terminated, the court wrote, coupled with Reids statistical evidence, evidence of ageist comments, and demotion create a triable issue of fact as to pretext. The court explained the evidence and its principal holdings as follows: Reid presented statistical evidence of Googles practices through the declaration of Professor Norman Matloff, a statistician with 30 years experience in the field.... [] Matloff ... reported that he observed a statistically significant negative correlation between age and
(Cont'd on Page 2, DECISIONS)

RECENT EMPLOYMENT LAW DECISIONS


CALIFORNIA COURTS OF APPEAL
TRIAL COURT IMPROPERLY WEIGHED EVIDENCE IN GRANTING SUMMARY JUDGMENT ON AGE DISCRIMINATION CLAIMS
REID v GOOGLE, INC. In an opinion filed on October 4, the Sixth District reversed summary judgment on six age discrimination-related claims brought by an electrical engineer who had been hired by Google at age 52 as Director of Operations and Director of Engineering, and then terminated at

CELAS 2007 ANNUAL CONFERENCE: AN APPRECIATION


DAY ONE
by Jim Guziak It just keeps getting better folks! Kudos are in order for the CELA members who planned and pulled off our 20th annual conference in San Jose. The varied topics, the wonderful speakers and the incredible source materials have all made this an event that left everyone who attended (roughly 200 attendees) energized and renewed. Despite good intentions, I missed the opening day morning yoga session. However, my brain got some serious exercise during the balance of the days activities. Outgoing chair Michelle Reinglass got things off to an enthusiastic start with her welcoming and opening remarks. That was followed by a fascinating panel discussion moderated by Kathryn Burkett Dickson with members Nathan Goldberg, Genie Harrison, and Sam Wells, on the sometimes neglected task of making the pain real for jurors in cases involving significant claims of emotional distress. The topic was especially timely for me, as I was then prepping a difficult sex harassment case for trial. After the break, members had to make some difficult choices between competing panel discussions throughout the balance of the day. I attended the discussion on negotiating employment and severance agreements which included panelists Doug Silverstein and Gina DeVito. The quality of the presen(Cont'd on Page 15, CONFERENCE)

CELAS LEGISLATIVE COMMITTEE TO THE GOVERNOR: WELL BE BACK


On October 13, Gov. Schwarzenegger vetoed both of our bills, SB 549, (Bereavement Leave), and AB 1043, (Choice of Law/Forum.) His veto messages can be found at www.leginfo.ca.gov. The Legislative Committee Chairs, (Jean Hyams, David Lowe, and Steve Pingel), want to thank the many CELA members who helped in CELAs first effort to pass our own bills. CELA did itself proudfrom conception last December, to drafting and redrafting, finding authors, co-authors, and allies during the winter, testifying several times in committee hearings during the spring and summer, participating in Lobby Day in May, and writing letters and postcards in the past couple months. Getting both of our bills out of the Legislature was a real accomplishment. The Legislative Committee will now be considering possible goals for 2008, including having the vetoed bills reintroduced, and writing legislation to clarify the issue of internal and judicial remedy exhaustion. Please email us your suggestions for legislation you would like to see. On a related note, also on October 13 the Governor actually signed AB 220, The Firefighters Procedural Bill of Rights, which prescribes rights related to, inter alia, political activity, interrogation, punitive action, and administrative appeals. For details, see www/ leginfo.ca.gov.

DECISIONS
(From Page 1)

performance rating. Specifically, for every 10 year increase in age, there was a corresponding decrease in performance rating... [] [And] Matloff found a 29 percent decrease in bonus amount related to every 10 year increase in age... Google challenges the statistical evidence offered by Reid on numerous grounds, including Matloffs methodology and sample sizes analyzed. In its order, the trial court issued a ruling pursuant to Biljac Assoc. v. First Interstate Bank (1990) 218 Cal.App.3d 1410, 1419-1429, declining to rule on the specific evidentiary objections, instead opting to rely only on competent and admissible evidence. (Ibid.) With regard to the trial courts duty when presented with objections to evidence in the summary judgment context, the weight of current authority is contrary to the holding in Biljac, and seems to agree that (1) the trial court is obligated to rule expressly on all objections, and (2) the courts failure to do so may effect a waiver of objections, so that they are not preserved for appellate review. However, we believe the Biljac decision was substantially correct, and was surely more nearly correct that its critics have been. Indeed, based on Biljac, in the absence of express rulings by the trial court, as in the present case, we presume either that the trial court ruled correctly on evidentiary questions, or that the court overruled all objections it did not expressly sustain. Here, Google filed proper objections to the statistical evidence ... that the trial court did not expressly rule upon. We infer from the lack of an express ruling on the objections that the trial court impliedly overruled them, and considered the evidence when ruling on summary judgment. And we may consider the issue of the admissibility of the statistical evidence on appeal because we do not find the lack of a ruling creates waiver. Statistical evidence is clearly admissible in the present case. An employee

such as Reid may produce statistical evidence regarding an employers practices to show that the challenged action is consistent with a pattern of discrimination. [] Here, based on our inference from the lack of an express ruling, we find the trial was correct in considering the statistical evidence... Despite considering the statistical evidence, however, the trial court clearly erred when it determined that there was no triable issue of material fact arising from that evidence. Importantly, Google does not offer conflicting expert testimony to dispute Reids statistical findings; rather, Googles counsel offers arguments about why the findings are not sound. Such argument goes to the weight of the statistical evidence, a task reserved for a jury, not a court on summary judgment. Reid asserts that a general youthful atmosphere at Google ... demonstrates the environment was biased against older workers. [] In addition, Reid offers statements made regarding his age... [] [And] when Reid was terminated from employment, he was told twice ... that he was not a cultural fit at Google. Google argues at length that the comments Reid offers were stray remarks that do not raise a triable issue of fact as to pretext. The so-called stray remarks rule allows courts to deem racist or sexist remarks insufficient to support denial of summary judgment if the remarks are considered stray. We cannot view such a rule as anything other than the assumption by the court of a factfinding role. We do not agree with suggestions that a single, isolated discriminatory comment [cite omitted], or comments that are unrelated to the decisional process are stray and therefore insufficient to avoid summary judgment. [cite omitted.] There are certainly cases that in the context of the evidence as a whole, the remarks at issue provide such weak evidence that a verdict resting on them cannot be sustained. But such judgments must be made on a
(Cont'd on Page 4, DECISIONS)

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: David J. Duchrow 11340 W. Olympic Blvd. Suite 305 Los Angeles, CA 90064 Tel: (310) 479-5303 FAX: (310) 479-5306 E-mail: dduchrow@djduchrowlaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Los Angeles) Eve Chesbro (Pasadena) David DeRubertis (Woodland Hills) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Wilmer Harris (Pasadena) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Michelle A. Reinglass (Laguna Hills) Cynthia Rice (San Francisco) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles)

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

-2-

NELA NEWS
October issues of NELAs electronic newsletters @NELA and Advocates in Action included the following information and announcements NELA Executive Director Terisa E. Chaw is pleased to announce that Bruce A. Frederickson has become NELAs President. Mr. Frederickson has served on the NELA Executive Board since 2002. For three years, he was NELAs Vice President of Public Policy, during which time he worked tirelessly on passage of the Civil Rights Tax Relief Act and saw the attorneys fees provision become law in 2004. Until recently, Mr. Frederickson was NELAs First Vice President. He is cochair of NELAs Membership Committee, and serves on the organizations Legislative and Policy Committee, Strategic Planning Committee, and the program committee for NELAs Spring 2008 trial practice seminar. Mr. Frederickson is also a member of the Metropolitan Washington Employment Lawyers Associations Board of Directors. He is a partner in the Washington DC-based law firm of Webster, Frederickson, Heinrichsen, Correia & Puth, PLLC. The firm is perhaps most noted for its sex discrimination class action, Hartman v Powell, which settled for a record-breaking $508 million, plus more than $25 million for 48 claims tried and decided. Since 1986, Mr. Frederickson has taught trial practice as an adjunct professor at the Washington College of Law of the American University. [Note: Former NELA President Kathleen Bogas resigned from that position on October 8 in response to controversy within the organization surrounding her role as trial counsel for sexual harassment defendant Isiah Thomas. Her resignation letter appeared on the CELA ontopic listserv on October 9.] The Class & Collective Actions Committee is proud to announce the launch of their Committee Resource page at www.nela.org/classcollectiveactions. The committees page provides helpful information for NELA members and plaintiffs lawyers, including a collection of class and collective actions resources found on the internet, resources available through NELA, circuit reports, committee updates, and contact information. NELAs Ethics and Sanctions Committee monitors NELANet for ethical questions that arise. Recently an inquiry was posted asking for advice on how a lawyer might ethically protect his or her fees in a contingency case if the client decides to settle for less money than the attorney recommends. The ensuing discussion led the Committee to prepare a thorough memo on the subject, which includes a discussion of the relevant law as well as some practical advice. In short, properly drafted fee-protective provisions in the original retainer agreement are enforceable, but attorneys seeking to enforce them should proceed with great care in drafting their retainers, in giving advice to the client considering the settlement, and in deciding whether to enforce the retainer or reach some sort of compromise with the client. The Committees entire memo can be downloaded from www.nela.org/NELA/docDownload/ 10944. More tips are provided by the Committee at www.nela.org/SAFER. Thanks to all who attended our fall seminar in New Orleans, 'Representing Workers in Individual & Collective Actions under the FLSA,' on October 1920. This seminar had the highest attendance of any our seminars since 2000. NELAs scholarship program ensured that over 35 legal services and public interest organizations were represented. Special thanks to our co-sponsors, Farmworker Justice, The Impact Fund, the National Employment Law Project, and the Southern Poverty Law Center. Seminar material will be available for electronic download soon. If you wish to order audio CDs of the seminar presentations, an order form can be downloaded at www.nela.org/NELA/ docDownload/11117. The following updates on ENDA, (the Employment Non Discrimination Act), appeared in the October 18 issue of NELAs Washington Report, On The Hill, and the October 22 issue of NELAs -3on-line newsletter Advocates in Action: The past two weeks have been ones of intense activity for the LGBT community. A concerted effort was made to get hard commitments of support from Representatives for a gender identity inclusive bill. But that goal proved elusive, at least for now. Thus today, October 18, 2007, the leadership went forward with its plan for the House Education & Labor Committee to mark up a new bill that bans employment discrimination on the basis of sexual orientation only, not discrimination on the basis of gender identity (H.R. 3685). The bill was reported out of Committee favorably by a vote of 27-21. Four Democrats voted against the bill because it doesnt include gender identity: Representatives Yvette Clarke (NY), Rush Holt (NY), Dennis Kucinich (OH), and Linda Sanchez (CA). On Wednesday, October 24, 2007, the House of Representatives will have the historic opportunity to extend civil rights protections by enacting ENDA. But the bill that will be brought to the floor will outlaw workplace discrimination on the basis of sexual orientation only, not discrimination on the basis of gender identity, as originally introduced. To ensure that ENDA covers the entire LGBT community, Representative Tammy Baldwin (D-WI) is planning to offer an amendment to add gender identity back into the bill. (NELA asked members to contact their representatives urging votes in favor of the Baldwin amendment.)

DECISIONS
(From Page 2)

case-by-case basis in light of the entire record, and on summary judgment the sole question is whether they support an inference that the employers action was motivated by discriminatory animus. Their weight as evidence cannot enter into the question. In addition to the statistical evidence and comments of coworkers and supervisors as evidence of pretext, Reid also asserts his demotion ... to head of Googles graduate program that was eliminated shortly thereafter is also evidence of pretext. Here, we see little difference between the district court in Torre [v Casio, Inc. (3d Cir 1994) 42 F3d 825] and the trial court in this case. In granting summary judgment in favor of Google, the trial court resolved a number of factual issues in dispute, such as the weight and value of Reids statistical evidence, the validity and weight of the ageist comments made by decision makers..., and whether the newly created position ... was in fact a way-station for Reids ultimate termination. These evidentiary evaluations are clearly the purview of the jury, and not the decision of the trial court on summary judgment. Finally ..., by our evaluation, the question of whether Google changed its position on the reasons for Reids termination is clearly disputed... In addition, Googles claim that Reid was terminated for poor performance is also disputed... [] The conflicting evidence that Googles stated reasons for Reids termination changed after Reid was terminated, coupled with Reids statistical evidence, evidence of ageist comments, and demotion create a triable issue of fact as to pretext. Google argues that it is entitled to an inference against discrimination, because ... the only person responsible for Reids termination was ... over 50 at the time... Specifically, Google asserts that because Rosing was responsible for both hiring and firing Reid within a short period of time, there is a strong inference that there was no discriminatory motive... We take Googles invitation to be no more than an attempt to

use persuasive evidence as a guise for undisputed evidence. The argument that Rosing ... would not discriminate against another person over 50 years old may prove effective (or not) in closing argument before a jury, but it is not an inference we will make on summary judgment... [] Although Google is correct in its assertion regarding [West v] Bechtel [(2002) 96 CA4th 966], and the inference against discrimination, it is incorrect in asserting that there is undisputed evidence that Rosing was solely responsible for Reids hiring and termination... Therefore, Google is not entitled to an inference of no discrimination. On a separate issue, the Sixth District rejected the argument that the trial court erred in striking Reids allegations of unlawful hiring and promotion claims under the UCL. The court wrote: Reids lawsuit was filed before Proposition 64 was passed. Google filed a motion to strike the UCL provisions of Reids complaint using Proposition 64 as support, and asserting that Reid was not harmed by Googles hiring practices... [] By Reids own admission, he was hired by Google the only time he ever applied for employment. The basis of his claim, that Reid spoke with some Vice Presidents at Google about securing another position at Google when he was terminated, does not qualify as a rejected application for employment... In addition, Reid never applied for a promotion at Google. Reid asserts the trial court erred in striking his prayer for restitution under the UCL, and specifically asserts he should have the right to seek the unvested stock options he had at the time of his termination... [] However, unvested stock options are not owned by the option holder... [] Here, Reids stock options were not earned at the time of his termination, because they had not yet vested. Reid at most had an expectancy interest in the options, however, such interest does not constitute ownership for the purpose of restitution... [] Because an ownership interest is required in order to seek restitution under the UCL ... the trial court was correct in -4-

striking the claim for restitution... For plaintiff: Duane Morris, Barry L. Bunshoft, Ray L. Wong, Paul J. Killion, Lorraine P. Ocheltree, Eden Anderson. For defendant: Wilson, Sonsini, Goodrich & Rosati, Fred W. Alvarez, Marina C. Tstalis, Gary M. Gansie, Marvin Dunson III. Sixth Dist, 10/4/07; opinion by Rushing with Premo and Elia concurring; 66 CR3d 744, 2007 DAR 15443.

CLASS ACTION WAIVER, AND PROVISION FOR ARBITRATION OF UNCONSCIONABILITY ISSUES, WERE TWO SUBSTANTIVELY UNCONSCIONABLE TERMS THAT RENDERED ADHESIVE AGREEMENT ENTIRELY UNENFORCEABLE
MURPHY v CHECK N GO OF CALIFORNIA, INC. Defendant ... appeals from an order denying its motion to compel arbitration of a wage and hour case filed by plaintiff Lisa Murphy. The main issues are whether the class action waiver in the arbitration agreement is unconscionable, a question we review with the benefit of the recent decision in Gentry v. Superior Court (2007) 42 Cal.4th 443, and whether that question should be resolved by the court, rather than by an arbitrator appointed under the agreement. We conclude that the court was empowered to decide the unconscionability issue, agree with its ruling that the class action waiver is unconscionable, and affirm the order denying the motion to compel arbitration. Plaintiff worked for defendant, a payday lending company, for eight years ending in 2005; for the last seven of those eight years she held the position of salaried retail manager. She sued defendant in February 2006, alleging that defendant misclassified its salaried retail managers as exempt employees under state labor laws. The suit asserts causes of action on behalf of the class of salaried retail managers for
(Cont'd on Page 5, DECISIONS)

DECISIONS
(From Page 4)

violation of Business and Professions Code section 17200 et seq., and failure to pay or provide overtime compensation, accurate itemized wage statements, adequate meal and rest periods, and wages upon termination... Plaintiff signed defendants Dispute Resolution Agreement in June 2004... She states that no one explained the agreement to her, or told her that she had the option to revise or opt out of the agreement... The agreement covers all claims arising from or relating to plaintiffs employment, other than claims she would file with governmental agencies that enforce employment insurance or discrimination laws. Covered claims include any assertion by you or us that this agreement is substantively or procedurally unconscionable... Section 3.5.2 provides for arbitration by the American Arbitration Association ... and states in bold print that you and we agree that an arbitration firm may not arbitrate a Covered Claim as a class action or a representative action and may not otherwise consolidate the Covered Claim with the claims of others. Plaintiff opposed the motion [to compel] on unconscionability grounds. In addition to her declaration, plaintiff lodged declarations of her counsel and two other attorneys experienced in wage and hour cases attesting to the difficulty of prosecuting such cases individually rather than as class actions. The attorneys stated that, given the relatively small sums of money involved in individual cases, it is difficult for plaintiffs to find counsel willing to take them, despite the availability of statutory attorneys fees. The attorneys further opined that class actions were the only effective way to redress wage and hour violations. They each stated: The blunt reality is that employers want to limit class actions because they do not want to reform business practices [and] reduce profitsregardless of the legality of the practices... [I]f the employer can limit attacks on its global classification decision to the odd lawsuit or arbitration here and there, it will have no incentive to truly examine whether its practices

comply with the law... As a matter of simple economics, a few individual settlements or even lost trials or arbitrations will be more than made up for exponentially by the savings from the decision to (mis)classify employees... In [his] order denying the motion to compel arbitration, [San Francisco County Superior Court Judge Ronald E. Quidachay] determined that: (1) [the trial court] had the power to rule on the unconscionability issues; (2) the parties agreement ... was a contract of adhesion; (3) the agreements class action waiver was unconscionable under Discover Bank v. Superior Court (2005) 36 Cal.4th 148; (4) the agreements provisions for arbitration of unconscionability issues and pre-existing claims were also substantively unconscionable; and (5) the unconscionable terms could not be severed from the agreement. All of these determinations are challenged in this appeal. Defendant notes that arbitrable claims under the agreement include any assertion by you or us that this Agreement is ... unconscionable... [] While the language of the agreement could not be clearer, plaintiffs alleged assent to this provision was vitiated by the fact that it was set forth in a contract of adhesion... We can infer from [the] evidence that plaintiff reasonably expected that she was required to sign the contract as a condition of continued employment. Defendant submitted no evidence to the contrary, and the provision ... permitting the employee to consult with an independent attorney, without more, certainly did not compel a contrary finding. Generally speaking, there are two judicially imposed limitations on the enforcement of adhesion contracts or provisions thereof. The first is that such a contract or provision which does not fall within the reasonable expectations of the weaker or adhering party will not be enforced against him. The seconda principle of equity applicable to all contracts generallyis that a contract or provision ... will be denied enforcement if ... it is unduly oppressive or unconscionable. [cites omitted]

Both limitations on enforceability are present here... [P]arties would not ordinarily expect that an arbitrator, rather than a court, would determine his or her own jurisdiction. The provision for arbitrator determinations of unconscionabililty is also itself substantively unconscionable... The agreement is facially mutual ... but, as plaintiff points out, the provision is entirely one-sided because defendant cannot be expected to claim that it drafted an unconscionable agreement. The class action waiver in the case at bench is ... patently one-sided [cite omitted] and Discover Bank applies when the class action waiver is in practice the exemption of defendant from responsibility... This issue was essentially a factual question, and plaintiffs declarations of counsel were the only evidence presented on that question... Those opinions constituted substantial evidence supporting the courts ruling that the class action waiver provisions of the agreement were exculpatory clauses under Discover Bank, and therefore substantively unconscionable. Defendant argues that the court erred by refusing to enforce the entire arbitration agreement, rather than severing the clauses it found to be unconscionable... [] Here ... at least two aspects of the arbitration agreement are unconscionable... [G]iven the multiple unlawful provisions, the trial court did not abuse its discretion in concluding that the arbitration agreement is permeated by an unlawful purpose. Armendariz, supra, 24 Cal.4th at p. 124), and that the agreement as a whole should not be enforced. Gentry does not dictate a contrary result. While the court believe[d] that severance is particularly appropriate in the case of class action waivers (Gentry, supra, 42 Cal.4th at p. 466), this statement referred to a situation where an arbitration agreement contains a single term in violation of public policy (ibid.). The opinion went on to note that severance would be an open issue in
(Cont'd on Page 6, DECISIONS)

-5-

DECISIONS
(From Page 5)

Gentry if it were determined that the agreement contained multiple unconscionable terms. For plaintiffs: Keller Grover, LLP, Eric A. Grover, Jade Butman, Elizabeth A. Acevedo. For defendant: Squire, Sanders & Dempsey, Alexandra A. Bodnar, Casey J. T. McCoy, Mark C. Dosker. First Dist Div One, 10/17/07; opinion by Marchiano with Stein and Margulies concurring; 2007 DAR 15905, 2007 WL 3016414.

(2005) 132 Cal.App.4th 359. Defendant appeals, contending the trial court applied the incorrect legal standard or otherwise abused its discretion when it (1) mistakenly presupposed it was required to apply a fee multiplier..., and (2) improperly considered out-of-town counsels higher rates for a fee multiplier without an adequate evidentiary showing. We agree, and will remand to allow the trial court to exercise its discretion whether or not to apply a multiplier based on consideration of all the appropriate factors. [I]n a proper case where a threshold showing has been made that obtaining local counsel was impracticable, a trial court should consider the need to hire more expensive out-of-town counsel as a factor in determining the base fee used in the lodestar figure or in evaluating whether to apply a lodestar enhancement... [] [I]t is clear from plaintiffs declaration that, although she had concerns that she would be unable to find adequate representation, no effort was made to retain local counsel. Despite the fact that plaintiff failed to make an adequate threshold showing, the trial court proceeded to impose a fee multiplier based on the out-of-town attorneys higher rates. Use of a fee multiplier to compensate for the higher rates of out-of-town counsel requires a sufficient showingwhich plaintiff failed to make in this casethat hiring local counsel was impracticable... Otherwise, the rule tethering the lodestar to local rates would be effectively bypassed, since a trial court could always account for out-of-town rates through the backdoor by means of a multiplier, even when there was no showing that local attorneys were unavailable. Additionally, as noted earlier, the trial court mistakenly believed that it was required to impose a multiplier whenever a FEHA plaintiff hires out-oftown counsel from a higher fee market. No such mandatory multiplier rule exists in the law, and we have already concluded that reversal is warranted on that ground alone. On remand, the trial court shall exercise its sound discretion to impose a multiplier (or not) based upon a consideration of the relevant -6-

lodestar adjustment factors in this case, but without consideration of the out-oftown attorneys higher rates. In an unpublished portion of the opinion addressing a number of other attorneys fees issues, the court wrote, inter alia: [D]efendant argues the attorney fee award was punitive, since the case settled before trial and the award greatly exceeded the [$175,000] compensatory damages paid. We find the contention to be without merit. Although it is true that a settlement was reached, that did not occur until shortly before trial, and the record clearly reflects that this case was aggressively litigated by defendant... It was also reasonably necessary for plaintiff to conduct a great deal of discovery in preparing her case for trial. [] Moreover, it is not uncommon for attorney fee awards to exceed compensatory damages in FEHA cases. For plaintiff: Morrison & Foerster, Arturo J. Gonzalez, Eric A. Tate, Samantha P. Goodman. For defendant: Liebert Cassidy Whitmore, Shelline K. Bennett and Desiree Reed-Francois. Fifth Dist, 10/2/07; opinion by Kane with Harris and Hill concurring; 66 CR3d 680, 2007 WL 2836555.

TRIAL COURT ERRED IN SUPPOSING THAT FEE MULTIPLIER WAS REQUIRED TO ACCOUNT FOR OUT-OF-TOWN COUNSELS HIGHER RATES, AND PLAINTIFF FAILED TO MAKE ADEQUATE SHOWING OF UNAVAILABILITY OF LOCAL COUNSEL
NICHOLS v CITY OF TAFT. With respect to a motion to fix attorneys fees following the settlement of sexual harassment claims, the Fifth District wrote in part as follows in an October 2 opinion: [P]laintiff presented evidence of the reasonableness of her attorneys customary rates of compensation. Her attorneys were members of a large out-oftown law firm [Morrison & Foerster] with offices in Los Angeles and San Francisco, and their usual fees were considerably higher than would be charged in the local Kern County area. Defendant insisted that the fee award must be limited to the reasonable rate for comparable legal services in the local community. In an apparent compromise, the trial court applied local (Kern County) rates for purposes of reaching an initial lodestar figure, and then enhanced the lodestar by a multiplier of 1.33. When the math was done, plaintiff was awarded $471,374.24 in attorney fees. The court explained it was obligated to apply the multiplier based on its reading of this courts decision in Horsford v. Board of Trustees of California State University

EMPLOYERS SICK LEAVE AND DISABILITY POLICIES AND PRACTICES WERE NOT INCONSISTENT WITH TREATMENT OF EMPLOYEES AS EXEMPT FROM OVERTIME REQUIREMENTS
SUMUEL v ADVO, INC. Plaintiffs ... on behalf of a class of employees and former employees of ADVO, Inc., sued ADVO and one of its managers for unpaid overtime compensation and monetary penalties. On cross-motions for summary judgment or summary adjudication, the trial court granted summary judgment to ADVO. The issue raised by this appeal is whether ADVOs paid disability leave policy and prac(Cont'd on Page 7, DECISIONS)

DECISIONS
(From Page 6)

tices violated the salary basis test utilized under federal and state labor regulations to determine whether an employee is exempt from overtime pay requirements. We find no error in the trial courts determination of this issue, and affirm the judgment in favor of ADVO. [The plaintiffs] alleged that ADVO repeatedly made various impermissible deductions from its employees salaries, including deductions made when employees were out of work due to illness, that were inconsistent with and rendered unlawful ADVOs treatment of the employees as exempt from overtime. ADVO filed a cross-motion ... seeking a determination as a matter of law that its sick leave and short-term disability policy and practices did not affect the exempt status of its salaried employees. [T]he evidence shows, at most, a triable issue of material fact with respect to whether ADVO took salary deductions for full-day absences when employees went on disability leave after working a partial week. However, we find no triable issue of material fact, under either federal or state law, with respect to whether such deductions were taken in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary caused by disability. Accordingly, the trial court properly granted summary judgment to ADVO. For plaintiffs: Mary T. Dumont, Donald L. Tasto, Jay B. Koslofsky. For defendants: Winston & Strawn, Jonathan M. Cohen, Krista M. Enns. First Dist Div One, 10/1/07; opinion by Margulies with Stein and Swager concurring; 2007 DAR 15272, 2007 WL 2822770.

UNITED STATES SUPREME COURT


CERTIORARI IS GRANTED IN CASE IN WHICH SECOND DISTRICT HELD THAT FAA DOES NOT PREEMPT LABOR CODE
PROVISION REQUIRING LABOR COMMISSIONER TO FIRST ADJUDICATE LEGALITY OF TALENT AGENCY CONTRACT FERRER v PRESTON. On September 25, the United States Supreme Court announced a grant of certiorari to review a Second District decision, (145 CA4th 440), that held that the Federal Arbitration Act does not preempt California law, the Talent Agencies Act, (Lab Code 1700 et seq.), requiring the Labor Commissioner to first adjudicate the legality of a contract between an attorney who rendered services for personnel in the motion picture and television industry and a television performer. The question was whether the attorney was a personal manager who could lawfully operate without a license, or an unlicensed talent agent. In the latter case, the contract, which included a standard AAA arbitration clause, was void. The Second District wrote: The question before us is who has original jurisdiction to make the determination of the validity of the parties contract. Defendant contends that the question of the contracts validity should be determined by the arbitrator, and the trial court therefore erred in refusing to compel arbitration. We disagree. The trial court here correctly applied Buchwald v. Superior Court (1967) 254 Cal.App.2d 347 in refusing to order arbitration and staying the proceedings until the Commissioner resolved the question before him. [] Defendant is unable to distinguish the facts in the present case from the facts in Buchwald... Defendant also argues that the Federal Arbitration Act ... preempts California law requiring the Commissioner to first adjudicate the legality of the contract. -7-

Defendant relies on the case of Buckeye Check Cashing, Inc. v. Cardegna (2006) 546 U.S. 440, 126 S.Ct. 1204. [] Buckeye is inapposite, however. Buckeye did not involve an administrative agency with exclusive jurisdiction over a disputed issue. Buckeye did not consider whether the FAA preempts application of the exhaustion doctrine... Buckeye did not discuss whether a challenge to a contract as a whole should first have been made to an administrative agency where there is a statute vesting the agency with exclusive original jurisdiction to decide a challenge based on specific grounds. For defendant attorney: Joseph D. Schleimer, Beverly Hills. For client: Mitchell, Silberberg & Knupp, Ronald A. DiNicola, Douglas W. Bordewieck, Kirsten E. Miller, robert M. Dudnik, Los Angeles. USSC, 9/25/07; 2007 WL 1339440.

NINTH CIRCUIT
CENTRAL DISTRICT ERRED IN GRANTING SUMMARY JUDGMENT ON 1981 AND FEHA RACE DISCRIMINATION AND RETALIATION CLAIMS
METOYER v CHASSMAN. In an opinion filed on September 26, the Ninth Circuit, in an opinion by Nelson joined by Rawlinson, with Bea concurring and dissenting in parts, reversed summary judgment on a number of race discrimination and retaliation claims brought by the Screen Actors Guilds former affirmative action administrator. The court held that, as in the case of a Title VII claim following the amendments contained in the 1991 Civil Rights Act, a defendant cannot raise a mixed-motive defense to liability for discrimination claims brought under 1981. The mixedmotive defense, even if proven as an undisputed fact, does not provide a basis for summary judgment in a 1981 discrimination case, the court wrote. The court held otherwise, however, with respect to retaliation claims. In Stegall
(Cont'd on Page 8, DECISIONS)

DECISIONS
(From Page 7)

v. Citadel Broadcasting Company, the court wrote, we applied the mixedmotive defense to liability in a Title VII retaliation case. 350 F.3d 1061, 1062, 1068 (9th Cir. 2004). Since a claim under 1981 follows the same legal principles as those applicable in a Title VII case ... we hold that the mixed-motive defense to liability for retaliation ... also applies to this retaliation claim brought under 1981. Therefore, if the mixed-motive defense to retaliation is proven as a undisputed fact, it can provide a basis for summary judgment. The majority opinion continues in part as follows: In May, 2001 the Screen Actors Guild fired Dr. Patricia Heisser Metoyer, an African American, after PricewaterhouseCoopers concluded that Metoyer authorized payment in excess of $30,000 of funds available for Guild use to friends, business partners, and her husbands production company. Metoyer responded by bringing multiple claims against the Guild, including federal race discrimination and retaliation claims under 42 U.S.C. 1981 and state law discrimination claims under FEHA. The district court granted summary judgment in favor of the Guild on all claims. We reverse in part and find that Metoyer has raised a triable issue of fact on all but one of the federal and state race discrimination and retaliation claims. Metoyers complaint alleged three 1981 claims: (1) discrimination in the terms, conditions or privileges of employment based on SAGs failure to confirm her as National Director of Affirmative Action [the title she alleged she had been orally promised when hired]; (2) wrongful termination; and (3) retaliation. We affirm summary judgment on the claim of discrimination in the terms, conditions or privileges of employment, but reverse the grant of summary judgment on Metoyers wrongful termination and retaliation claims. Metoyers claim [for discrimination in the terms, conditions or privileges of employment] fails because, due to the parol evidence doctrine, there is no admissible evidence establishing that the Guild had a contractual obligation to confirm her as the National Director of

Affirmative Action... [] [T]he Guild offered and Metoyer accepted employment as the Guilds Executive Administrator of Affirmative Action. Together, the Guilds offer letter and Metoyers acceptance letter constitute an integrated employment contract... Metoyers second contention is that the district court erred in granting summary judgment as to her claims of discriminatory termination under 1981. The district court ... determined that the plaintiff failed to present specific and substantial circumstantial evidence of pretext... [] Metoyer contends that ... she presented both direct and circumstantial evidence demonstrating that SAG management harbored discriminatory animus toward African Americans. We agree. Metoyer presented direct evidence of discrimination in the form of several remarks by members of senior management [Schick and Chassman] suggesting the existence of racial bias. We have held that bigoted remarks by a member of senior management may tend to show discrimination, even if directed at someone other than the plaintiff. [cite omitted.] Furthermore, we have held that remarks by such a decisionmaker tend to show bias, even if several years old. [cite omitted.]... [] The Guild is correct ... that there is no evidence linking Schick to the termination decision, but there is evidence that raises a genuine issue of material fact as to the role of Chassman in the firing decision... [] Even if Chassman is not considered the ultimate decision-maker ... a trier of fact could conclude that Chassman influence or participated in the decisonmaking process. Metoyer presented both direct and circumstantial evidence of retaliation for bringing discrimination complaints to the attention of SAG management and highlighting the fraudulent Equal Employment Opportunity (EEO-1) report submitted to the EEOC... Metoyer was told that it was not her business to raise complaints of racial discrimination... When [she] failed to heed the warnings ... senior staff responded to the relayed complaints with discriminatory com-8-

ments about African Americans... [W]hen [she] raised the fraudulent EEO1 report to SAG senior management and announced her intention to discuss the discrepancies and present the discrimination complaints by employees to SAGs national plenary session..., Schick responded vindictively... Shortly before the plenary session, Metoyer was suspended ... ostensibly because of the findings from the PwC audit... We hold that SAG has not presented sufficient evidence to support summary judgment based on the mixed-motive defense... While the facts of [Metoyers] misconduct are undisputed, SAGs contention that it would have made the same decision is undermined by Metoyers declaration that other persons engaged in [similar] questionable practices ... and faced no discisplinary consequences... [] In addition ... there was also evidence in the record that the PwC audit was not a completely unbiased investigation... [Finally], the district erred in interpreting Metoyers [ambiguous] statement as stipulating to dismissal of her FEHA claims... [F]or the dismissal to be effective, it must be unqualified and unambiguous. Here, Metoyers statement in her brief is too ambiguous to constitute such consent. The statement [Dr. Metoyer] is prepared to dismiss may mean something other than she is dismissing. [] We therefore reverse the district courts grant of summary judgment on the state law discrimination and retaliation claims for the same reasons we reverse on the federal law discrimination and retaliation claims. For plaintiff: Marco Simons, Lauren Teukolsky, Anne Richardson, Hadsell & Stormer, Pasadena; Rick Hicks, Eugenia Hicks, Beverly Hills. For defendant: Catherine B. Hagen, Eric J. Amdursky, Renee M. Spigarelli, Ryan Rutledge, OMelveny & Myers, Newport Beach. Ninth Circuit, 9/26/07; opinion by Nelson joined by Rawlinson; concurring and dissenting opinion by Bea; 2007 WL 2781909.
(Cont'd on Page 9, DECISIONS)

DECISIONS
(From Page 8)

ERISA DOES NOT PREEMPT STATE LAW CLAIMS BY ESTATE OF DECEASED EMPLOYEE ALLEGING THAT EMPLOYER BREACHED PROMISE TO CONTINUE LIFE INSURANCE COVERAGE
MILLER v RITE AID CORP. In an opinion filed on October 11, Judge Reinhardt wrote in part as follows: This case presents the question whether the estate and alleged beneficiaries of an employee who was neither enrolled in, nor eligible for, a life insurance plan regulated by ERISA at the time of her death (which preceded the time this action was filed) may bring an ERISA claim. We hold that these parties may not bring such a claim, and therefore ERISA does not preempt Appellants state law claims. Connie Miller was employed by Rite Aid from approximately 1981 until her death on February 13, 2002. For some unknown period of time, Rite Aid made deductions from Millers paycheck to pay for life insurance through a group plan provided by ReliaStar Life Insurance Company. Appellants claim that the ReliaStar policy provided for a benefit of approximately $150,000 and that Millers children were the beneficiaries of the policy. In February 2001, Miller was diagnosed with terminal cancer and was placed on disability until her death one year later. On July 1, 2001, before Millers death, Rite Aid terminated its ReliaStar plan and replaced it with a group plan provided by Standard Insurance Company. Miller was not enrolled in the Standard life insurance plan because she was not included in the list of employees exempt from the plans active at work requirement... Therefore, Miller was not enrolled in a group life insurance plan after Rite Aid terminated the ReliaStar plan. Miller also did not convert the ReliaStar group plan into an individual plan. Appellants allege, without any details, that Rite Aid offered, as part of the employment agreement, that [Miller]

would be provided with life insurance. Appellants also allege that after Miller became terminally ill Rite Aid representatives assured her that she would continue to have life insurance through the time of her death... In their Amended Action, [the beneficiaries] alleged breach of insurance contract against ReliaStar and, in the alternative, against Standard... Alternatively, Appellants alleged breach of employment contract against Rite Aid for failing to provide Miller with life insurance. The Millers also alleged that Rite Aid negligently failed to ensure that [Millers] fringe benefits would be preserved. [] The district court [D Oregon] granted summary judgment on the preemption ground and dismissed the action... At the time of Millers death she did not qualify as a participant in any ERISA life insurance plan because at that time she was not covered by any life insurance policy and she did not have a colorable claim to benefits under any plan. Rite Aids first argument is that the extent to which it failed to provide life insurance depends on the terms of the ReliaStar policy... But a party does not become a participant in a plan merely because the court will have to look to the terms of a terminated plan to determine the employers liability for failure to create a new plan... Rite Aids second argument is that we should consider Miller a participant in the ReliaStar ERISA plan because Miller was eligible to convert that plan to an individual policy... [] But ... converted plans are not ERISA plans. Such plans cover members as individuals, not as employees, and an employee benefit plan must cover at least one employee to constitute an ERISA plan... Even if Miller had converted the ReliaStar plan, that would not make her a participant in any ERISA plan... For plaintiffs: J. Michael Alexander, Swanson, Lathen, Alexander & McCann, Salem, Oregon. For defendant: Bruce A. Rubin and -9-

Jennifer J. Roof, Portland. Ninth Circuit, 10/11/07; opinion by Reinhardt joined by Hall and Smith; 2007 DAR 15628, 2007 WL 2948900.

UNITED STATES DISTRICT COURTS


LANGUAGE OF SUMMARY PLAN DESCRIPTION PREVAILED OVER THAT OF PLANS MASTER DOCUMENT AND PLAINTIFFS WERE THUS ENTITLED TO PENSION BENEFITS FOR YEARS OF SERVICE WITH PREDECESSOR COMPANY
VAZQUEZ v CARGILL, INC. In an opinion filed on September 11, Judge Cormac Carney of the Southern District awarded pension benefits to the plaintiffs based on their combined years of service for their original employer in addition to their years at an acquiring company. (The plaintiffs are now seeking prejudgment interest and attorneys fees.) The court summarized the facts and its reasoning as follows: This ERISA trial involved a dispute over pension benefits owed to plaintiffs ... under the pension plans ... Cargill, Inc. and Associated Companies Salaried Employees Pension Plan, and Cargill, Inc. and Associated Companies Pension Plan for Production Employees. Plaintiffs are each retirees who worked for over 35 years at the same oil facility in Fullerton. This facility was owned and operated for many years by HuntWesson until it was acquired by Cargill in 1990. Plaintiffs contend that when Cargill acquired the Fullerton facility and employed them, it promised them that they would receive pension benefits for their years of service for both Hunt-Wesson and Cargill. Plaintiffs also contend that they and other employees were provided a summary plan description for the Production Plan indicating that they would receive pension benefits for all their years of service at the Fullerton facility. Defendants, on the
(Cont'd on Page 10, DECISIONS)

DECISIONS
(From Page 9)

other hand, deny that Plaintiffs are entitled to pension benefits for their years at Hunt-Wesson, relying on the Production Plan master document that expressly excludes years of service at a predecessor company from the calculation of pension benefits. After considering all the evidence presented by the parties, as well as the arguments of their counsel, the Court finds in favor of Plaintiffs. If a conflict arises between an ERISA plan master document and a summary plan description more favorable to an employee, the summary plan description controls. In light of the wording of the summary plan description implying the Plaintiffs would receive pension benefits for all their years of service at the Fullerton facility, as well as the representations made to Plaintiffs by Cargill that were consistent with that implication, Plaintiffs are entitled to receive pension benefits for their years of service at the Fullerton facility beginning January 1, 1964. The court adopts the parties stipulated damages amounts [$431,143] and orders Defendants to make payments to the Plaintiffs in accordance with that stipulation. For plaintiffs: Firouzeh Simab, Michael S. Ahmad, Michelle A. Reinglass. For defendant: Gordon A. Letter, Littler Mendelson, Los Angeles; Nancy L. Ober, Littler Mendelson, San Francisco. USDC SD Cal, 9/11/07; opinion by Carney; 2007 WL 2681711.

BRINKER RESTAURANT CORP. v SUPERIOR COURT (HOHNBAUM). In a detailed 20-page opinion filed on October 12, the Fourth District summarized the claims and its holdings as follows: Plaintiffs and real parties in interest ... sued defendants ... on behalf of themselves and similarly situated current and former California hourly restaurant employees ... alleging that Brinker had violated numerous California wage and hour laws and Californias Unfair Competition Law (Bus. & Prof. Code 17200 et seq.). Specifically, plaintiffs alleged that Brinker failed to provide certain rest breaks or meal periods, or compensation in lieu thereof ... and also required them to work off the clock during meal periods. Brinker petitions for a peremptory writ of mandate directing the trial court to vacate an order certifying the proposed class. The principal question ... is whether the trial court abused its discretion in certifying the class based on its determination that common questions regarding meal periods and rest breaksspecifically the common legal issue of what [Brinker] must do to comply with the Labor Codepredominate over individual issues. We conclude that the class certification order is erroneous and must be vacated because (1) the order rests on improper criteria and incorrect assumptions with respect to the rest break claims, and the court abused its discretion in finding that those claims are amenable to class treatment; (2) the courts rolling five-hour meal period ruling in its July 2005 order was erroneous, and thus the class certification order rests on improper criteria with respect to the rolling five-hour meal period claims; (3) the class certification order rests on an incorrect assumption with respect to the meal period claims to the extent those claims are based on the theory that Brinker had a duty to ensure that its hourly employees took the meal periods it provided to them, and thus the court abused its discretion in finding that these claims are amenable to class treatment; and (4) the -10-

court incorrectly assumed it did not have to examine the elements of plaintiffs off-the-clock claims, and thus abused its discretion by finding without such an examination that those claims are amenable to class treatment. Accordingly, we order that a peremptory writ shall issue with directions that the superior court vacate its order granting class certification. For real parties: Timothy D. Cohelan, L. Tracee Lorens, William Turley, Frederick P. Furth. For petitioners: Rex S. Heinke, Karen Joyce Kubin, Akin, Gump, Strauss, Hauer & Feld, Los Angeles. Fourth Dist Div One, 10/12/07; opinion by Nares with Haller and ORourke concurring; 2007 WL 2965604 (unpublished).

HOLDING THAT FACT ISSUE WAS RAISED AS TO EMPLOYERS KNOWLEDGE OF PLAINTIFFS LEARNING DISABILITY, FOURTH DISTRICT REVERSES SUMMARY JUDGMENT ON DISABILITY DISCRIMINATION CLAIMS
FUREY v BLOCKBUSTER, INC. The San Diego County Superior Court erred in granting summary judgment on disability discrimination claims brought by a video rental store clerk with a learning disability, the Fourth District held in an unpublished opinion filed on July 11. Emphasizing, inter alia, the steps an employer must take to engage in a meaningful interactive process with an employee whose cognitive disability may impede his or her communication of the need for accommodation, the court wrote in part as follows: Furey contends the trial court erred in granting summary judgment as to each of her causes of action because the court acknowledged there was evidence she was a qualified individual with a disability, who could perform the job duties either with or without reasonable accommodation. She contends the trial court nevertheless failed to recognize
(Cont'd on Page 11, DECISIONS)

UNPUBLISHED CALIFORNIA COURT OF APPEAL DECISIONS


[Note: The following summaries represent only a selection of the recent unpublished Court of Appeal decisions.]

FOURTH DISTRICT ORDERS SUPERIOR COURT TO VACATE CLASS CERTIFICATION ORDER IN WAGE AND HOUR ACTION BY RESTAURANT EMPLOYEES

DECISIONS
(From Page 10)

[evidence] that Blockbuster ... had actual or constructive knowledge of such disability, sufficient to raise triable issues of fact about (1) discrimination against her on the basis of her disability, by taking adverse actions against her for pretextual reasons; or (2) failure to make reasonable accommodations...; or alternatively (3) failure to respond to her evident needs and requests for such an interactive process to accommodate her disability, or inadequate responses... Furey asserts she presented sufficient evidence from which a trier of fact could conclude she was unreasonably prevented from performing her job functions and was therefore constructively terminated in violation of public policy. After setting forth our standard of review and applicable rules of law for resolving these FEHA claims, we examine the evidence and ultimately conclude the trial court erroneously granted summary judgment. For plaintiff: Christopher J. Hayes, Grace, Hollis, Lowe, Hanson & Schaeffer, San Diego. For defendant: Michael S. Kalt, Wilson, Petty, Kosmo & Turner, San Diego. Fourth Dist Div One,7/11/07; opinion by Huffman with McConnell and McIntyre concurring; 2007 WL 1991450.

trator submitted an inaccurate disclosure and failed to disclose that his son had previously been employed as an attorney at the law firm that was representing defendants in the arbitration. We conclude that the neutral arbitrator was not required to disclose this information and that this information and the neutral arbitrators inaccurate disclosure (that no member of his family had ever been associated with an attorney for a party) did not create a basis for vacating the arbitration award. For plaintiff: Amy Eskin, San Francisco. For defendant: George Clause, San Jose; Kennedy P. Richardson, Oakland. Sixth Dist, 9/28/07; opinion by Mihara with Bamattre-Monoukian and Duffy concurring; 2007 WL 2819316 (unpublished).

For plaintiff: Robert P. Biegler, Sacramento. For defendant: Susan L. Schoenig, McDonough, Holland & Allen, Sacramento. Third Dist, 10/2/07; opinion by Sims with Raye and Cantil-Sakauye concurring; 2007 WL 2834551 (unpublished).

FOURTH DISTRICT AFFIRMS SUMMARY JUDGMENT ON DISCRIMINATION AND RETALIATION CLAIMS BY WHITE MALE TELEPHONE OPERATOR DENIED FULL-TIME POSITION BECAUSE OF LACK OF BILINGUAL FLUENCY
WHALEY v STATE OF CALIFORNIA EMPLOYMENT DEVELOPMENT DEPT. In an unpublished opinion filed on September 21, the Fourth District affirmed summary judgment on discrimination and retaliation claims brought by a white male telephone operator employed at the EDDs call center. In January of 2005, the plaintiff had received a favorable ruling by an SPB administrative law judge with respect to his contention that EDDs bilingual requirement for the conversion of parttime to full-time positions was racially discriminatory on a disparate impact theory, and the SPB had ordered that Whaley be appointed to a full-time position with back pay. The ALJ also found, however, that no credible evidence supported a disparate treatment theory, and the plaintiff did not file a petition in superior court challenging the SPBs decision. In July of 2005, the plaintiff, having received a right-to-sue letter, filed an action in San Diego County Superior Court alleging (1) racial and national origin discrimination based on a disparate impact theory; (2) racial and national origin discrimination based on a disparate treatment theory; (3) retaliation in response to his internal and DFEH complaints about discrimination and cooperation with authorities in their
(Cont'd on Page 12, DECISIONS)

STRESS-RELATED INABILITY TO WORK UNDER PARTICULAR SUPERVISOR DOES NOT CONSTITUTE LIMITATION ON MAJOR LIFE ACTIVITY
ADAMS v SUTTER NORTH MEDICAL FOUNDATION. In an unpublished opinion filed on October 2, the Third District affirmed summary judgment on disability discrimination and failure to accommodate claims brought by a coordinator in the defendant foundations Marketing Department who suffered from stressrelated problems caused by her difficulty in getting along with her supervisor. The court held, inter alia , that Colmenares v Braemar Country Club, Inc. (2003) 29 C4th 1019 did not overrule the holding in Hobson v Raychem Corp. (1999) 73 CA4th 614 that the inability to work under a particular supervisor does not constitute a FEHA disability. We further conclude, the Third District wrote, that applying the mere limitation test (as opposed to the federal substantial limitation test), the inability to work under a particular supervisor does not constitute a limitation on a major life activity. -11-

ETHICS STANDARDS WERE NOT VIOLATED BY ARBITRATORS FAILURE TO DISCLOSE SONS PRIOR EMPLOYMENT WITH FIRM REPRESENTING DEFENDANTS
NOLDER v THE PERMANENTE MEDICAL GROUP. In an action for medical malpractice, the Sixth District held as follows in an unpublished opinion filed on September 28: Alexa Nolder, the successor-in-interest to deceased plaintiff Leisa Lewis, challenges the superior courts denial of Lewiss petition to vacate an arbitration award in favor of defendants. Lewis claims the arbitration award should have been vacated because the neutral arbi-

DECISIONS
(From Page 11)

investigations and with the ALJ in his administrative hearing; and (4) retaliation in violation of Labor Code 1102.5 for alleged whistleblowing actions. (In January 2006, the trial court sustained a demurrer to the fourth cause of action.) EDDs motion for summary judgment argued: (1) Whaley could not establish that he suffered an adverse employment action; (2) there was no nexus between Whaleys protected activity and EDDs actions; (3) EDD had legitimate, nondiscriminatory reasons for its actions; and (4) Whaleys discrimination claims were barred by the applicable statute of limitations and the doctrines of collateral estoppel and the failure to exhaust administrative remedies. Concerning (1), the Fourth District held that the plaintiff had only provided sufficient supporting evidence with respect to nine of the 29 adverse acts he alleged, and concluded that [c]onsidering the totality of the circumstances ... they do not constitute adverse employment actions by EDD within the meaning of the FEHA and Yanowitz. Concerning (4), the court wrote: EDDs decision in November 2002 not to convert Whaleys position to a full-time position was a single, discrete action, rather than a continuing course of conduct. That decision acquired a sufficient degree of permanence within the meaning of Richards [v CH2M Hill, Inc. (2001) 26 C4th 798] in November 2002... EDDs conversion of Whaleys position to a full-time position in May 2004 pursuant to the SPBs order did not ... denote the end of the period of a continuing violation in denying him that conversion... [T]he statute of limitations defense is sufficient by itself to support the trial courts conclusion that EDD was entitled to summary adjudication... Nevertheless, we briefly note that Whaleys second cause of action is also barred by the doctrines of collateral estoppel and exhaustion of judicial remedies... [] Whaleys failure to pursue his judicial remedy and challenge the SPBs rejection of his disparate treatment

theory resulted in the finality of the decision, involving application of the doctrine of collateral estoppel. For plaintiff: Joel C. Golden, San Diego. For defendant: Office of the Attorney General, San Diego. Fourth Dist, 9/21/07; opinion by McDonald with Haller and Irion concurring; 2007 WL 2745205 (unpublished).

SECOND DISTRICT AFFIRMS SUMMARY JUDGMENT ON CLAIMS OF DISCRIMINATION AND RETALIATION FOR EXERCISE OF CFRA RIGHTS
AMARIA v BANK OF AMERICA. Plaintiff and appellant Yasmine Asmaria sued ... Bank of America ... for wrongful termination... Amaria, a long-term employee of the Bank, alleged, among other things, that her termination was in retaliation for her alleged exercise of rights pursuant to the CFRA... Amaria also alleged that defendants discriminated and harassed her for alleged exercise of rights pursuant to the CFRA. The trial court granted summary judgment/adjudication in favor of defendants. We affirm. As to Amarias third and fifth causes of action for discrimination and retaliation for her alleged exercise of rights under the CFRA, the Bank presented evidence that her termination was for a legitimate non-discriminatory and non-retaliatory reason. Amaria failed to raise a triable issue of ... pretext... As to Amarias fourth cause of action for harassment for allegedly exercising rights under the CFRA, Amaria failed to raise a triable issue of material fact that defendants conduct in terminating her constituted anything other than the exercise of routine personnel duties, upon which harassment claims cannot be based. (Reno v. Baird (1998) 18 Cal.4th 640, 646-647). As to Amarias sixth cause of action for breach of an implied employment contract to be terminated only for good cause, Amaria failed to raise a triable -12-

issue ... that her employment was anything other than at will. The court quoted Dore v Arnold Worldwide, Inc. (2006) 39 C4th 384 for the proposition that an express written at-will provision, signed by the employee, cannot be overcome by evidence of a prior or contemporaneous implied-in-fact good cause agreement, and emphasized that the unwritten good cause policy alleged by the plaintiff was directly inconsistent with the Banks at-will policies as stated in its manuals and as contained in an Employment Agreement executed by the plaintiff in 1999. For plaintiff: Carney R. Shegerian. For defendant: Payne & Fears, Jane M. Flynn and Karen O. Frankudakis. Second Dist Div Three, 9/24/07; opinion by Kitching with Klein and Croskey concurring; 2007 WL 2758055 (unpublished).

ARBITRATION AGREEMENT WAS PROCEDURALLY UNCONSCIONABLE AND SUBSTANTIVELY ONE-SIDED WHERE AMBIGUOUS SEPARATE AGREEMENT ARGUABLY ALLOWED JUDICIAL FORUM FOR INTELLECTUAL PROPERTY CLAIMS
COLOMBO v BNC MORTGAGE, INC. In an unpublished opinion filed on September 26 relative to several claims relating to allegations of sexual harassment and retaliation, the Third District affirmed the denial of the employers petition to compel arbitration. The court agreed with the trial court that elements of both procedural and substantive unconscionability were present, and rejected the employers argument that ...once an employee signs, at the employers behest, an arbitration agreement that states it was voluntarily entered into, the employee can never challenge the circumstances surrounding the execution of the agreement, since such evidence implicates the express terms of the agreement [and violates
(Cont'd on Page 13, DECISIONS)

DECISIONS
(From Page 12)

the parol evidence rule]. The Third district continued in part as follows: Plaintiffs declarations establish the basis for the trial courts finding of procedural unconscionability. Plaintiffs were urged to hurriedly sign paperwork that included the [arbitration] Agreement. None of the plaintiffs had the opportunity to change any of the terms of the document. Each plaintiff needed her job, a job that required she sign the Agreement. Given the unequal bargaining power, the rushed atmosphere, and the lack of opportunity to question or change the arbitration obligation, we find the Agreement procedurally unconscionable. We agree with the trial courts assessment that the Agreement subjects employment disputes to arbitration, but the [separate] IP Agreement allows for legal recourse in intellectual property disputes. As such, the Agreement lacks mutuality and is substantively unconscionable. BNC is correct in noting that the IP Agreement does not explicitly state that BNC may pursue intellectual property disputes in court... But if, as BNC posits, the Agreements arbitration clause covers intellectual property disputes, the rights at law and in equity language in the IP Agreement is superfluous. At best, the language is ambiguous. However, BNC is the source of the ambiguity which permits it to choose a preferred construction based on the nature of the legal dispute... [H]ad the present dispute involved a purported violation of the IP Agreement, BNC could just as plausibly claim that, as an aspect of its rights at law and in equity, it could seek judicial relief against an offending employee. [] It is inherently unfair to give BNC such flexibility. For plaintiff: Gary Gwilliam, Oakland; Daniel U. Smith, Kentfield. For defendant: Alexander McLain Sperry, Orrick, Herrington & Sutcliffe, Sacramento. Third Dist, 9/26/07; opinion by Raye with Hull and Robie concurring; 2007 WL 2783328 (unpublished).

STATE BAR COURT WHISTLEBLOWERS CLAIMS WERE LARGELY BARRED BY PRECLUSIVE EFFECT OF FEDERAL COURT JUDGMENT
KONIG v STATE BAR OF CALIFORNIA. Plaintiff is a former attorney on the staff of the State Bar of California, the First District, Division One explained in an unpublished opinion filed on September 28. His complaint alleges that he became aware of unethical and improper conduct by judges of the State Bar Court. When his superiors refused to take steps to report this misconduct, plaintiff notified various regulatory bodies. Thereafter, he was subjected to a number of negative employment actions ... and he eventually resigned his position. Plaintiff initially sued the State Bar and several of his superiors in federal district court. The district court dismissed without prejudice all of his claims against the State Bar on Eleventh Amendment grounds and eventually granted summary judgment on his claims against the individual defendants. After plaintiff refiled his claims in state court, the superior court granted judgment on the pleadings, holding that the claims were barred by the preclusive effect of the federal judgment or were otherwise legally deficient. We reverse in part, concluding that plaintiffs claim for defamation against the State Bar and the individual defendants acting in their official capacities is not barred by the federal judgment. We otherwise affirm. For plaintiff: Alan Konig, San Francisco, pro per. For defendants: John vonLoewenfeldt, San Francisco. First Dist Div One, 9/28/07; opinion by Margulies with Marchiano and Swager concurring; 2007 WL 2819655 (unpublished).

VERDICTS AND SETTLEMENTS


[Editors note: Members with a verdict or settlement to report are strongly urged to complete a copy of the form that is available for that purpose from Administrative Director Christina Krasomil, and to return it to the CELA Bulletin editor.]

SONOMA COUNTY JURY AWARDS $230,000 TO FORMER SOFTBALL COACH ON GENDER DISCRIMINATION CLAIM
ELZE v BOARD OF TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY. On June 12, 2007, a Sonoma County Superior Court jury found in favor of the plaintiff, the defendant universitys former head softball coach, on a claim of gender discrimination, and awarded her $117,068 for past and future economic loss, and $112,000 for emotional distress. The plaintiff proved that she had been treated differently from similarly situated male coaches in connection with three personnel decisions: (1) a decision to suspend her in mid-season; (2) a second decision to extend the suspension for the remainder of her contract; and (3) a decision to terminate her from employment by the non-renewal of her contract. The university unsuccessfully contended that the decisions had been made for legitimate business reasons and without a discriminatory motive. For plaintiff: David C. King, Petaluma. For defendant: Gaylynn Kirn Conant, Oakland. Sonoma County Superior Court, No. SCV 237663; 6/12/07; Judge Elaine Rushing; information provided by counsel.

-13-

THE PETROVSKA CASE IS NOT OVER


by William Crosby Anyone who has tried a medical malpractice case knows how difficult it can be to persuade a jury to second guess a doctors judgment. My task in Jannike Petrovska v Loma Linda University was even more difficult, as I had to persuade the jury that the unanimous vote of twelve doctors, including department heads, to dismiss my client from medical school was for discriminatory, bad faith reasons. I very much regret to report that following a fourteen day trial, the San Bernardino Superior Court jury returned a defense verdict in this most important case of my 36 years of practicing law. My efforts to obtain justice for Ms. Petrovska are not over, however, as I intend to file appeals to the Supreme Court, if necessary. Ms. Petrovskas case involved a single cause of action for discrimination based on disability under the Unruh Civil Rights Act. A paraplegic with limited use of her hands since 1980, (when she was shot four times in the back in a murder attempt), Ms. Petrovska has a life-long dream of being a physician. Following her injury, her goal has been to own a ranch where she can care (and be a role model) for children with spinal cord injuries. She has won numerous athletic events, (including the Wheelchair Olympics), and gained national recognition as co-founder of a clinic that treats paralyzed patients with electrical stimulation to restore partial use of their limbs. After her graduation suma cum laude from La Sierra University as a pre-med major in 2000, she was accepted into LLUs School of Medicine. She was accommodated reasonably well during her first two years, although the school was not fully wheelchair accessible. It was understood that her live-in helper, Ralph Clark, would assist her in certain activities such as clinical procedures, picking up campus mail and e-mails, and helping her in traversing the sloped campus. Because of physical difficulties resulting from a broken leg, and emotional stress due to a protracted divorce proceeding after her husband left her, Ms. Petrovska obtained permission to have her second year of medical school split into two years. In the middle of her third year, she and Mr. Clark suffered severe respiratory injuries, including prolonged disorientation and severe headaches, as a result of toxic gas inhalation when the heater in their home malfunctioned. Due to these health problems, and because she was now living alone for the first time in 20 years, (Mr. Clark having left because of his own health problems), Ms. Petrovska requested a further extension of her sophomore year. The Academic Review Committee placed Ms. Petrovska on a leave of absence until the beginning of the 2003 fall term, but ordered her to complete all of her second year course requirements by May 28, 2004. Other conditions were imposed, including that she establish a relationship with a mental health care provider. The ARC minutes also reflected unjustified concerns regarding alleged unprofessional conduct. Ms. Petrovska requested more time to heal, but was ordered by the Deans office to return to school in the fall term. The Dean of Student Affairs began to treat her in an accusatory and increasingly hostile manner. In February of 2004, Ms. Petrovska suffered third degree burns on her legs due to scalding water from a malfunctioning water heater. She was required to have a home care burn nurse, and was unable to complete her clinical requirements by the May 28, 2004 deadline. When the Assistant Dean refused to grant her the extra time she needed to complete the physical exam of a patient, or to allow her to use an adaptive ophthalmoscope for an eye exam, she inquired of the Department of Justice and was advised of her rights as a disabled student. When the Assistant Dean learned of this, a special meeting of the Accommodations Committee was held and Ms. Petrovska was granted these accommodations. But her failing grade in pathophysiology was not reversed. -14In September of 2004, the ARC Committee met to consider Ms. Petrovskas dismissal for her alleged failure to meet the conditions the Committee had previously imposed. Ms. Petrovska was not provided advance notice of the specific charges against her, nor was she allowed to be present to confront witnesses against her. The ARC members, (most of whom did not know Ms. Petrovska personally and relied on misinformation provided by the Deans office), unanimously voted to dismiss her. Ms. Petrovskas dismissal was upheld following a kangaroo court hearing of her appeal by the Executive Committee, which was chaired by the schools Dean. She was denied meaningful due process throughout these proceedings. The ARC minutes note her dismissal due, inter alia, to an alleged long term pattern of irresponsibility and lack of integrity in financial matters. The only evidence regarding her finances was her choice to pay her tuition during the late period. Ms. Petrovskas expert, Jay Finkelman, Ph.D., testified that the slanderous allegations against her were a result of various failures of the school to provide reasonable accommodations. These failures included the denial of a student helper to pick up daily mail and e-mails, denial of assistance in transportation around campus, inadequate training of staff, and, most importantly, failure to allow additional time for her to heal from the toxic gas and burn injuries and from her diagnosed anxiety and post traumatic stress disorder. Ms. Petrovskas claim of discrimination was based in part on disparate treatment, since other students had been allowed up to seven years to graduate based on special circumstances. The defense expert on accommodation, Sharon Kawai, M.D., (herself a paraplegic), testified that despite Ms. Petrovskas good grades she was illsuited to practice medicine because of her non-cognitive deficiencies. She
(Cont'd on Page 15, PETROVKA CASE)

PETROVSKA CASE
(From Page 14)

added, patronizingly, that because of Ms. Petrovskas many other accomplishments, she didnt need to be a doctor to help humanity. Judge Janet Frangie denied reinstatement based on the jurys defense verdict on damages. We intend to move for a new trial and JNOV based, among other grounds, on the judges refusal to give special instructions defining the specific accommodations required in the post-graduate professional school context, as required by the Americans With Disabilities Act, (incorporated into the Unruh Act in 1992). Although the post-trial motions are expected to be denied, hopefully the Fourth District Court of Appeal, (and the Su-

preme Court if necessary), will scrutinize the record and clarify the law pertaining to the duty to accommodate and disability discrimination generally. In my view, something akin to a strict liability standard needs to be applied in the case of a disabled student who can show failure to accommodate according to standards set forth in legislation or applicable administrative regulations. It was indeed disheartening that this jury was unable or unwilling to clear Ms. Petrovskas good name, and to perceive the gross injustice which prevented her from pursuing her lifes calling. She intends to apply to a foreign medical school where there is some prospect of her acceptance despite the stigma resulting from LLUs actions.

As a post script, I will be representing Ms. Petrovska in early December in a negligence action against the company that installed the defective gas heater. Had it not been for the injuries caused by that companys negligence, she would not have needed the accommodations the school denied her, and she could have fulfilled her dream. Her damages in the negligence action should be substantial, and hopefully can be used toward establishing the ranch for disabled children. The Petrovska case is not over.

CONFERENCE
(From Page 1)

tations and materialsand even the questions posed by those present was truly inspiring. There were also spirited and helpful sessions on recovering statutory awards of attorneys fees, (Lisa Maki, Richard Pearl, and Mark Talamantes), and on special issues in cases involving immigrant workers, (Enrique Martinez, Evangelina Hernandez, Christopher Ho, and Virginia Villegas). Fridays luncheon was highlighted by tributes to CELAS founding members, and the presentation of the Joseph Posner Award. Presiding over the luncheon, Michelle Reinglass movingly shared her memories of founding member John C. McCarthy, who passed away in June, [see the July issue of the CELA Bulletin]. Founding member William M. Crosby was also honored. Fred Ashley described Bill (a Republican) as Lincolnesque, and credited Bill with influencing him to transition his practice from the defense to the employee side. Other founding members of CELA who were present and honored included Susan J. Hartley and James P. Stoneman. Joe Posners wife Tina and daughter Michele were present to honor Jeffrey

K. Winikow as this years recipient of the Joseph Posner Award, and Mrs. Posner read from the eulogy that Jeff delivered at Joes funeral in 2000. Accepting the Award on behalf of himself and his wife, who Jeff said deserved an equal share, Jeff described his own evolution, following his marriage, from management-side labor lawyer to plaintiffs attorney. Jeff told of an influential incident early in his career when someone mistook him for an employeeside attorney, and expressed admiration for that role. Jeff said the incident helped him decide to make the switch. The afternoon panels were also excellent, presenting us with some varied choices. A panel on winning at arbitration was moderated by Deborah Rothman with panelists Hon. Raul Ramirez, Deborah Kochan, and Marvin Krakow. At the same time, another panel, (Arlo Garcia Uriarte, Anthony Luti, Cynthia Rice, and Amy Semmel), provided insights into current practice and developments under PAGAthe Private Attorneys General Act. A third, highly entertaining panel captured my attention, as guest NELA board members Bruce Fredrickson, Dennis Egan, Diane King, and Robert Richardson shared their insights and stories about -15-

best opening statements. After the afternoon break, the largest panel of the day, (John Igarashi, Darci Burrell, Gay Carroll, James DeSimone, Kelly Stimpel Martinez, and Elisa Ungerman), reminded us all, in plenary session, that winning doesnt come easy! We closed out the day with the annual CELA cocktail party, mixer, and silent and live auctions. It was great mingling, networking, and meeting the faces behind so many helpful list-serv postings. Although I am a longstanding member, I made new friends, and truly basked in the glow of being around so many likeminded advocates for justice in the workplace!

DAY TWO
The second days formal sessions began with the annual employment law update by Cliff Palefsky, Steve Pingel, Steven Serratore, and Sharon Vinick. This critical summary of new cases from the state and federal courts always demonstrates the impressive breadth of the issues addressed by CELA members. (Dozens of decisions involving,
(Cont'd on Page 16, CONFERENCE)

CONFERENCE
(From Page 15)

among many other issues, the FLSA and state wage and hour laws, disability discrimination, class certification, and arbitration agreements are summarized and discussed in the CELA Conference materials that can be ordered on the CELA website.) We were joined at the Diversity Committee Luncheon by the Hon. Cruz Reynoso, former California Supreme Court Justice, former member of the U.S. Civil Rights Commission, and current faculty member at U.C. Davis, King Hall Law School. Justice Reynoso spoke of the need to embrace diversity in our schools and our practice, and the fundamental role of lawyers in bringing justice to low income communities and people of color. His remarks were particularly well-received, and they undoubtedly served as an inspiration to the many law students attending the conference as recipients of CELAs diversity scholarships. Bringing the day to a close, Noah Lebowitz, Michael Hallerud, Hon, Jaime Jacobs-May, and Ellen Lake addressed the increasing use of summary judg-

ment motions by the defense bar, and the rising level of proof necessary to defeat summary judgment motions. The panel urged plaintiffs lawyers to use summary judgment motions affirmatively to resolve undisputed issues and affirmative defenses. -- Cynthia Rice

to the seminar, not only because of our incredible speakers, but because of the seminars inclusive scopefrom client intake to trial. After getting some terrific practical tips in the morning from trail blazers David deRubertis, Jean Hyams, Bernard Alexander, Arash Homanpour, and David Duchrow, Norm Pine gave a wrenching description of his trials and tribulations in Green. After a productive lunch discussing the landscape after Green, we had some great afternoon panelists, including workplace investigations guru Michael Robbins, National Jury Project consultant Carol Bauss, and arbitrator and mediator, retired Judge Demetrios Agretelis. If you could not make the seminar, the massive materials are available and invaluable, particularly the section on discovery. -- Debora S. Vierra

THE DISABILITY DISCRIMINATION SEMINAR


CELAs disability discrimination seminar, held on the Thursday before the Conference, could not have been more timely in light of the California Supreme Courts recent (August 23) decision in Green v State of California (2007) 42 C4th 254. The seminar was a huge draw and the room was filled to overflowing. Considering the difficulty of disability discrimination cases, this speaks volumes about the passion and tenacity of CELA members. It was especially uplifting to meet so many new members who were attracted

C O M I N G

E V E N T S

November 9-11, 2007 CAOCs 46th ANNUAL CONVENTION Westin St. Francis Hotel, San Francisco (see www.caoc.com for details) November 29, 2007 DISABILITY RIGHTS LEGAL CENTER GALA Omni Hotel, Los Angeles (see www.disabilityrightslegalcenter.org for details) October 3-4, 2008 CELAS 2008 ANNUAL CONFERENCE (with skills seminar on October 2) Hilton Pasadena

-16-

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

Published Monthly

BULLETIN
EDITOR: CHRISTOPHER BELLO November 2007 Vol. 21, No. 11 entitled to no deference), the Supreme Court continued in part as follows: Because of the onerous burdens that the actual expense method imposes on both employer and employee, few employers use this method to determine reimbursement for work-required use of employees own automobiles, and both parties agree that the actual expense method is not the only method that an employer may use... Both parties agree
(Cont'd on Page 2, DECISIONS)

RECENT EMPLOYMENT LAW DECISIONS


CALIFORNIA SUPREME COURT
EMPLOYER MAY REIMBURSE EMPLOYEES FOR AUTOMOBILE EXPENSES BY PAYING HIGHER SALARY OR COMMISSIONS, BUT PAYMENTS MUST BE APPORTIONED AND MUST BE ADEQUATE FOR FULL REIMBURSEMENT
GATTUSO v HARTE-HANKS SHOPPERS, INC. In a unanimous opinion by Kennard filed on November 5, the California Supreme Court wrote in part as follows: Labor Code section 2802, subdivision (a), requires an employer to indemnify its employees for expenses they necessarily incur in the discharge of their duties. May an employer satisfy this statutory obligation by paying employees increased wages or commissions instead of separately reimbursing them for their actual expenses? We conclude that an employer may satisfy its statutory reimbursement obligation by paying employees enhanced compensation in the form of increases in base salary or increases in commission rates, or both, provided there is a means or method to apportion the enhanced compensation to determine what amount is being paid for labor performed and what amount is reimbursement for business expenses. As we will explain, our conclusion differs somewhat from that reached by the trial court and Court of Appeal, and the differences affect the analysis of another issue presented here, whether the trial court abused its discretion in denying class certification. Accordingly, we reverse the Court of Appeals judgment and remand the matter to that court for further proceedings consistent with our opinion. The action was brought by Outside Sales Representatives of a marketing company who are required to drive their personal cars in the discharge of their duties. According to the employer, OSRs are paid a higher base salary and commission rates than other sales representatives to compensate them for automobile expenses. Affirming a Superior Court order concerning the meaning of Lab Code 2802, the Second District had emphasized that ...we do not express any opinion as to whether Harte-Hanks has actually indemnified any of its OSRs for all of his or her automobile expenses via increased compensation, but only that section 2802 does not prevent HarteHanks from doing so in this manner. The Second District had also affirmed an order denying certification of the case as a class action, agreeing with the superior courts conclusion that common issues did not predominate over questions affecting individual members. (The Second Districts October 27, 2005 opinion appeared at 35 CR3d 260, and was summarized in CELA Bulletin, Nov 05, p.7.) After reviewing the relevant DLSE policy statements and DLSE advice and opinion letters as evidence of the DLSEs interpretation of the statute, (while noting that the DLSEs interpretation was

CELA TO PRESENT DECEMBER 7 SEMINAR: AN INTRODUCTION TO TRIAL PRESENTATION SOFTWARE


On Friday, December 7, 2007, CELA will present a half-day seminar entitled An Introduction to Trial Presentation Software, covering the use of trial technology in your employment litigation practice. The seminar will be held in two locations: in Pasadena at two times, (from 9am to noon, or from 1:30 pm to 4), and in San Francisco from 9am to noon. Seasoned trial attorneys will introduce and demonstrate various types of trial technology software, including programs such as Sanction, Trial Director, and Microsoft Access, and discuss how software is used to organize and retrieve voluminous documentation, and how to use presentation software effectively during trial. 2.75 hours of MCLE credit will be available. See www.celaweb.org for seminar brochure and registration form. For further information, contact CELA Administrative Director Christina Krasomil at (808) 907-7895; clkrasomil@earthlink.net.

DECISIONS
(From Page 1)

that an employer may also use the mileage reimbursement method. The DLSE interpretive bulletin [No. 847] said that the mileage rate could be set by agreement of the parties... We agree that, as with other terms and conditions of employment, a mileage rate for automobile expense reimbursement may be a subject of negotiation and agreement... Under section 2804, however, any agreement made by the employee is null and void insofar as it waives the employees rights to full expense reimbursement... Therefore, the existence of an agreement ... would not relieve the employer of the statutory obligation to provide complete reimbursement, nor would it preclude an employee from challenging the sufficiency of a reimbursement payment that was calculated using the agreed mileage rate. We [also] agree with Harte-Hanks, and also with the trial court and the Court of Appeal, that section 2802 does not prohibit an employers use of a lumpsum method ..., provided that the amount paid is sufficient to provide full reimbursement for actual expenses... [] Of course, an employee must be permitted to challenge the amount of a lumpsum payment as being insufficient under section 2802... [W]e next consider whether the employer must segregate the lump sum from other compensation or whether, as the trial court and the Court of Appeal concluded, the employer instead may pay the lump sum in the form of an increase to the employees base salary or commissions... [] We conclude that an employer may satisfy its ... obligation under section 2802 by paying employees enhanced compensation in the form of increases in base salary or commission rates, provided the employer establishes some means to identify the portion of the overall compensation that is intended as expense reimbursement, and provided also that the amounts so identified are sufficient to fully reimburse the employees for all expenses actually and necessarily incurred.

The remaining issue is whether the trial court abused its discretion in denying [class certification]. [] Harte-Hanks has taken the position that as to the members of [the] proposed class, it fulfilled its reimbursement obligation ... by paying them higher commission rates and higher base salaries... As we explained in the previous section, the validity of this claim will turn on the resolution of these questions: (1) Did Harte-Hanks adopt a practice or policy of reimbursing outside sales representatives for automobile expenses by paying them higher commission rates and base salaries...? (2) If so, did it establish a method to apportion the enhanced compensation payments between compensation for labor performed and expense reimbursement? (3) If so, was the amount paid for expense reimbursement sufficient to fully reimburse the employees...? Neither the trial court nor the Court of Appeal framed the class certification issue in that way, and so neither court considered whether these inquiries are capable of resolution on a class-wide basis. Accordingly, the class certification issue is to be reconsidered on remand. For plaintiffs: Hollins Schechter, Andrew S. Hollins, Kathleen M. K. Carter, Jeffrey R. Gillette, Alicia K. Berry, and Christine Arnold. For Employee Rights Center as amicus on behalf of plaintiffs: Thomas L. Tosdal. For defendant: Seyfarth Shaw, Raymond R. Kepner, Ann Haley Fromholz, John A. Van Hook, and Holger G. Besch. For Employers Group as amicus on behalf of defendant: Winston & Strawn. For Employment Law Council as amicus on behalf of defendant: Paul, Hastings, Janofsky & Walker and Paul Grossman. Cal SC, 11/5/07; unanimous opinion by Kennard; 2007 DAR 16553, 2007 WL 3243861.

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: David J. Duchrow 11340 W. Olympic Blvd. Suite 305 Los Angeles, CA 90064 Tel: (310) 479-5303 FAX: (310) 479-5306 E-mail: dduchrow@djduchrowlaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Los Angeles) Eve Chesbro (Pasadena) David DeRubertis (Woodland Hills) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Wilmer Harris (Pasadena) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Michelle A. Reinglass (Laguna Hills) Cynthia Rice (San Francisco) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles)

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

(Cont'd on Page 3, DECISIONS)

-2-

DECISIONS
(From Page 2)

SUPREME COURT ORDERS FOURTH DISTRICT TO VACATE OPINION THAT REVERSED CLASS CERTIFICATION ORDER IN WAGE AND HOUR CASE
BRINKER RESTAURANT CORP. v SUPERIOR COURT (HORNBAUM). On October 31, the Supreme Court filed the following order: At the request of the Court of Appeal, review is granted on this courts own motion. The cause is transferred to the Court of Appeal, Fourth Appellate District, Division One, with directions to vacate its opinion and reconsider the matter as it sees fit. The petition for review is denied as moot. The requests for publication are denied as moot. In an unpublished opinion filed on October 12, (2007 WL 2965604; summarized in CELA Bulletin, Oct 07, p.10), the Fourth District had ordered the superior court to vacate a class certification order in a wage and hour action by restaurant employees involving a number of claims involving rest breaks and meal periods. For employees: Timothy D. Cohelan, L. Tracee Lorens, William Turley, Frederick P. Furth. Cal SC, 10/31/07; 2007 DAR 16441 (order).

remedies provided by a CBA. Because the Districts internal grievance procedures were created by a CBA and culminated in an arbitration, the Court of Appeal wrote, neither administrative nor judicial exhaustion applies to bar Ortegas claims. The court further explained: After his demotion..., Ortega filed a statement of grievance on April 7, 2004, alleging a violation of the CBA. College president Helen Carr sent Ortega a memo denying the grievance on April 16, citing a failure to follow proper procedure and a failure to comply with grievance timelines.... Ortega requested a Level III fact-finding panel. The union and the District each suggested a panel member; however, the process proceeded no further. Ortega filed a complaint with the [DFEH] and received a right-to-sue notice on April 26, 2004. On August 12, 2004, Ortega filed a complaint in the Contra Costa Superior Court against the College (the demotion action)... His complaint included three causes of action: (1) race discrimination..., (2) intentional infliction of emotional distress, and (3) negligent supervision... In his complaint, Ortega alleged that he had exhausted all of his administrative remedies. On November 28, 2005, the District filed a motion to dismiss based on Ortegas failure to exhaust the applicable grievance process, which the court granted. When his employment contract was not renewed, Ortega filed a second statement of grievance on June 28, 2005, alleging he was improperly terminated. This grievance was denied for failure to properly request a hearing and for failure to allege any specific violations of the CBA. It appears that no further action was taken pursuant to the CBA grievance procedure. Ortega received a second right-to-sue notice from the DFEH on June 29, 2005. He filed a complaint related to his termination against the District on December 27, 2005 (the termination action). This complaint included five causes of -3-

action: (1) race discrimination..., (2) intentional infliction of emotional distress, (3) negligent supervision, (4) retaliation..., and (5) wrongful termination in violation of public policy. Ortega alleged he exhausted all of the administrative remedies required by the FEHA. On April 12, 2006, the trial court sustained [a] demurrer without leave to amend. The courts order stated, [Ortega] invoked the grievance process in order to challenge his termination. [Ortega] has not alleged that he has exhausted his administrative remedies. This court is without jurisdiction to hear this case. On May 8, 200, the court entered judgment dismissing the complaint in favor of the District. The District relies on Schifando [v City of Los Angeles (2003)] 31 Cal.4th 1074, Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, and Page v. Los Angeles County Probation Dept. (2004) 123 Cal.App.4th 1135 to argue Ortegas FEHA claims ... were barred by his failure to exhaust his internal administrative remedies. [U]nder Schifando, a public employee may choose to ignore statutory civil service remedies for employment discrimination and proceed directly to the courts to obtain relief under the FEHA. However, under Johnson, if the public employee elects to utilize the civil service remedies provided and receives an adverse finding, that finding binds the trial court in any subsequent FEHA action, unless the finding is overturned in a mandate proceeding. Finally, as Page explains, if the public employee has had an evidentiary hearing during the civil service proceedings, the employee may not opt out of those proceedings before a final decision is reached in order file a FEHA claim in court. Instead the employee must exhaust the administrative remedies provided, until a final decision is obtained and, if the decision is adverse, exhaust the judicial remedy by pursuing mandate relief.

CALIFORNIA COURTS OF APPEAL


PUBLIC EMPLOYEE WAS NOT REQUIRED TO EXHAUST CBAS GRIEVANCE ARBITRATION PROCEDURE BEFORE FILING FEHA DISCRIMINATION CLAIMS
ORTEGA v CONTRA COSTA COMMUNITY COLLEGE DISTRICT. In an opinion filed on November 9, the First District, Division Five, held that the superior court had erred in dismissing FEHA and common law claims brought by the defendants former head football coach on the ground that the plaintiff had failed to exhaust the administrative

(Cont'd on Page 4, DECISIONS)

DECISIONS
(From Page 3)

The District argues that Ortega chose to initiate the internal grievance procedure provided in the CBA ... and the doctrines of administrative and judicial exhaustion bar his lawsuits. But the District ignores the critical difference between the decisions it relies upon, where the employees administrative remedies were provided by statute, and Ortegas cases, where his internal remedies were provided in a CBA. The CBA grievance procedure does not eliminate the right to a jurys determination of important state statutory rights afforded to individual workers... The District never argues that there is a clear and unmistakable waiver of the judicial forum in the CBA. The Districts reliance on Johnson, Schifando and Page is misplaced; none of those decisions involved a public employee subject to a CBA that vested control in the union over the fact-finding component of the grievance procedure. Because the CBA provides for arbitration of employee complaints, Ortegas utilization of this grievance process does not bar his state court FEHA actions against the District. In both his demotion and his termination cases, Ortega alleged that he timely filed a complaint with the DFEH, and this is sufficient to plead exhaustion. (Williams v. Housing Authority of Los Angeles (2004) 121 Cal.App.4th 708, 721.) We [also] conclude [Ortega] was not required to exhaust the available administrative procedures for [his] nonstatutory claims... [because] each of the nonstatutory claims is FEHA-related... For plaintiff: Sundeen Salinas & Pyle; Leah Hess. For defendant: John A. Shupe. First Dist Div Five, 11/9/07; opinion by Simons with Jones and Needham concurring; 2007 DAR 16831, 2007 WL 3317832.

UNITED STATES SUPREME COURT


SUPREME COURT HEARS ARGUMENT IN CASE FROM NINTH CIRCUIT INVOLVING ENFORCEABILITY OF PROVISIONS THAT ALLOW FOR EXPANDED JUDICIAL REVIEW OF ARBITRATION AWARDS
HALL STREET ASSOCIATES v MATTEL. On November 7, the United States Supreme Court heard argument in a Ninth Circuit case that raises an issue over which the circuits have split: whether parties can agree to arbitration provisions that allow for more expansive judicial review than is provided for under the FAA. The case involves a dispute over liability for environmental contamination and clean-up costs at an Oregon toy manufacturing facility. The arbitration agreement in question specifies that a United States District Court judge may vacate or modify an award because of an arbitrators legal or factual errors, and, pursuant to that provision, a federal judge in Oregon found the arbitrators ruling incorrect. In an unpublished memorandum opinion, however, the Ninth Circuit reversed, citing Kyocera Corp. v Prudential-Bache Trade Servs., Inc. (9th Cir. 2003) (en banc), for the proposition that the FAA does not permit expanded judicial review. Although the arbitrators assessment of the merits in this case contains possible errors of law, the panel majority (Goodwin and Reinhardt) wrote, those errors are not a sufficient basis to overrule an arbitration award. (196 Fed Appx 476, 2006 WL 2193411.) The Supreme Courts decision is expected by the end of June. For Hall Street (seeking enforcement of expanded review provision): Carter Phillips of Sidley Austin. For Mattel: Beth Brinkmann of Morrison & Foerster. USSC, No. 09-970.

NINTH CIRCUIT
UNION VIOLATED TITLE VII AND BREACHED DUTY OF FAIR REPRESENTATION BY FAILING TO PURSUE FEMALE UNION MEMBERS GRIEVANCES
BECK v UNITED FOOD AND COMMERCIAL WORKERS UNION, LOCAL 99. In an opinion by Ikuta filed on November 1, the Ninth Circuit wrote in part as follows: Local 99 ... appeals from the district courts [D Arizona] determination that Local 99 violated Title VII and breached its duty of fair representation in connection with the termination of one of its members, Cheryl Beck. Local 99s appeal requires us to consider the proper role of comparative evidence in a Title VII case against a union and the framework that must be applied to a members claim that the union breached its duty of fair representation. We ... affirm the district courts decision. At Becks request, Local 99 filed a grievance contesting Becks termination [for alleged use of profanity]... [Local 99s] attorney opined that an arbitrator would almost certainly conclude that termination for a second incident of profanity constituted just cause [for discharge] when the first incident [had] resulted in an unchallenged written warning less than three months earlier. Local 99 subsequently informed Beck that it would not arbitrate her grievance. After obtaining a right-to-sue letter from the EEOC, Beck filed the present action ... alleging that Local 99 discriminated against her on the basis of her sex ... and that Local 99 breached its duty to represent her fairly. The case proceeded to a bench trial. Beck bore the burden of proving that Local 99s actions were motivated by intentional sex discrimination. Beck sought to carry this burden by demonstrating that the grievances of two similarly situated men were handled by the
(Cont'd on Page 5, DECISIONS)

-4-

DECISIONS
(From Page 4)

same Local 99 representatives with greater zeal than her grievances and the grievance of another similarly situated female... The district court inferred from Becks evidence regarding the three employees that Local 99s decisions not to pursue Becks grievances were fueled by discriminatory animus... [and] ... entered judgment in favor of Beck on her Title VII claim. With respect to Becks duty of fair representation claim, the district court ... determined that Local 99s failure to file a grievance contesting the April warning constituted an arbitrary, discriminatory, and bad faith failure to perform a ministerial action. The district court also concluded that Local 99s decision not to arbitrate Becks July termination was the result of discrimination and bad faith. [T]he district court awarded Beck $16,304 in lost wages, $125,000 in compensatory damages for emotional distress, $50,000 in punitive damages, and attorneys fees and costs, not yet fixed. The district court determined that Local 99s failure to file a grievance with respect to Becks April warning did not stem from Local 99s exercise of judgment, but was instead a ministerial act. Local 99 contests the district courts ruling, contending that its decision ... was a rational exercise of judgment... [] Where [as here] a union has agreed to file a grievance but fails to file the grievance in a timely fashion, the unions error is properly characterized as failure to perform a ministerial act required to carry out [its] decision. [cite omitted] [] Local 99s failure to challenge Becks April warning effectively extinguished her right to challenge her ultimate termination... [] Because ... Becks ultimate termination was a direct consequence of that breach, we need not decide whether Local 99 also breached the duty of fair representation in declining to subsequently arbitrate Becks July termination.

[Relative to the Title VII claim] Local 99 ... argues that Beck could not raise an inference of discrimination based on two similarly situated males and one similarly situated female, because an inference of discriminatory intent does not arise as a matter of law where the statistical evidence is based on too small a sample size, does not present a stark pattern of discrimination, and does not account for possible nondiscriminatory variables. Our cases do not always clearly distinguish between statistical evidence that is non-probative because it is based on too small a sample size, and permissible comparative evidence of one or more similarly situated individuals. However, in general, we have upheld inferences of discriminatory motive based on comparative data involving a small number of employees when the plaintiff establishes that he or she is similarly situated to those employees in all material respects. [cites omitted] Here, Becks evidence was comparative in nature, rather than statistical... We cannot say that, as a matter of law, such evidence was an insufficient basis for the district courts conclusion... [T]he district courts findings are not clearly erroneous. For plaintiff: Helen Perry Grimwood, Phoenix. For defendant: Michael T. Anderson, Davis, Cowell & Bowe, San Francisco. Ninth Circuit, 11/1/07; opinion by Ikuta joined by Hall and OScannlain; 2007 DAR 16461, 2007 WL 3197089.

that the Eleventh Amendment barred sex discrimination and retaliation claims brought by two discharged members of the Alaska governors office, the Ninth Circuit, in a November 8 opinion by Noonan with Wallace concurring and Paez dissenting, rejected the argument that Congress abrogated the States Eleventh Amendment immunity to private claims for damages under the Government Employee Rights Act, 42 USC 2000e-16a et seq. The plaintiffs, the Director of the Office of the Governor in Anchorage, and one of the governors special staff assistants in that same office, had been discharged because of alleged election activities on behalf of a candidate of the opposition party. Noonan wrote in part: In 1972, Congress held extensive hearings on discrimination in the treatment of the ten million or more employees of state and local governments. On the basis of these hearings, the relevant committees found extensive gender and racial discrimination by the States... No special mention, one way or the other, was made of highly-placed employees serving in posts close to the Governor of a State. As enacted in 1972, the Equal Employment Opportunity Act based on the hearings excluded from its protection elected officers and any persons chosen by such officer to be on such officers personal staff and employees on the policymaking level or serving the official as an immediate adviser... The legislative history shows an acute awareness in the Senate of the undesirability of sweeping such key persons under the general prohibitions of discrimination. In 1991, the Equal Employment Opportunity Act of 1972 was amended by GERA... GERA wiped out the existing exemption of members of an elected officials personal staff, those serving the official on a policymaking level, and those serving as immediate advisers. GERA was enacted with no findings by Congress as to state practices of discrimination against employees at this level of government. Without such findings was GERA a proportionate re(Cont'd on Page 6, DECISIONS)

IN DISCRIMINATION CASE BROUGHT BY MEMBERS OF ALASKA GOVERNORS STAFF, NINTH CIRCUIT HOLDS THAT CONGRESS DID NOT VALIDLY ABROGATE STATES ELEVENTH AMENDMENT IMMUNITY IN ENACTING GOVERNMENT EMPLOYEE RIGHTS ACT
STATE OF ALASKA v EEOC. Holding -5-

DECISIONS
(From Page 5)

sponse to an identified evil? If not, GERA failed to meet the criteria set by the Supreme Court. See City of Boerne v. Flores, 521 U.S. 507, 520 (1997).

The EEOC argues that the necessary findings had already been made in the hearings that preceded enactment of the Equal Employment Opportunity Act of 1972... [But] in 1972, Congress thought of state policymakers as different from other state employees, so Congress specifically excluded them from coverage. The exclusion is at least an indication that the hearings did not establish an existing evil in the selection and retention of a governors close associates. Nothing in the record shows that a pattern of gender discrimination as to a governors staff, advisers, and policymakers existed in 1991 when GERA was enacted. The absence of such evidence is very critical. Very few modern governors, it may fairly be assumed unless the contrary were shown, would intentionally discriminate on the basis of race or gender in choosing key advisers, and very few modern governors who did discriminate would be likely to keep their office. We do not believe that GERA is a proportionate response to a widespread evil identified as the predicate of this legislation. Accordingly, we grant the Governors Offices appeal and remand to the EEOC with directions to dismiss the suit. For Office of the Governor: Richard W. Postma, Jr., Anchorage. For EEOC: Stephanie Marcus, Washington DC. Ninth Circuit, 11/8/07; opinion by Noonan with concurring opinion by Wallace and dissenting opinion by Paez; 2007 DAR 16747, 2007 WL 3287655.

WHERE COUNSEL WHO HAD NOT CONSENTED TO ELECTRONIC SERVICE FAILED TO RECEIVE NOTICE OF HEARING SENT ONLY BY EMAIL, DISMISSAL OF ACTION FOR HIS FAILURE TO APPEAR WAS ABUSE OF DISCRETION
CALDERON v IBEW LOCAL 47. In a short per curiam opinion filed on November 13, a Ninth Circuit panel held that District Judge Manuel L. Real of the Central District abused his discretion in dismissing the case for lack of prosecution when counsel for the plaintiff failed to appear at a scheduled hearing. The court wrote in part: The district courts dismissal of the complaint was based entirely on counsels failure to attend the show cause hearing... While failure to attend a scheduled hearing may justify the imposition of some sanction ... we doubt that the drastic remedy of dismissal could be justified by a single such event... We need not consider the question, however, because there is a far more fundamental problem here: Plaintiffs counsel was not given proper notice of the show cause hearing. Counsel was notified only by email, yet the rules did not authorize service by electronic means... There is no evidence that Calderon or his lawyer consented to electronic service. Where the rules do not authorize service by email, counsel has no obligation to check his email on a regular basis for possible orders from the court... The district judges unseemly haste in dismissing this case, and his failure to heed the perfectly plausible (and meritorious) explanation proffered by plaintiff in his motion for reconsideration, has cost the parties significant money and delay in pursuing this wholly unnecessary appeal. Justice suffers when judges act in such an arbitrary fashion. We apologize to the parties and admonish the district judge to exercise more care and patience in the future.

For plaintiff: Stanley R. Raskin, Torrance. For defendant: Ellen Greenstone and Glenn Rothner, Pasadena. Ninth Circuit, 11/13/07; per curiam opinion before Kozinski, Tashima, and McKeown; 2007 DAR 16861, 2007 WL 3342764.

IN UNPUBLISHED MEMORANDUM OPINION, NINTH CIRCUIT REVERSES SUMMARY JUDGMENT IN OVERTIME ACTION AGAINST UPS
MARLO v UNITED PARCEL SERVICE. In an unpublished memorandum opinion filed on October 25, a Ninth Circuit panel, (Kozinski, McKeown, and Jones), reversed summary judgment that had been granted by Central District Judge Dean Pregerson on a claim that UPS misclassified its Full-Time Supervisors, (about 1200 class members state-wide). Marlo has raised material issues of fact, the Ninth Circuit wrote, related to whether the FTS customarily and regularly exercise discretion and independent judgment. Cal. Code Regs. tit. 8, 11090(1)(A)(1)(d) (2005). Accordingly, summary judgment as to that issue was improper. The supervisors argued that UPS uses highly standardized procedures that effectively preclude them from making independent decisions. [Note: In a CELA List message on October 26, plaintiffs attorney Mark Peters noted that an audio file of the argument is available on the Ninth Circuits website, www.ca9.uscourts. gov] For plaintiffs: John A. Furutami, Mark Peters, Furutami & Peters, LLP; G. Scott Emblidge, Rachel Sater, Moscone, Emblidge & Quadra, LLP. For defendant: George W. Abele, Paul, Hastings, Janofsky & Walker, LLP, Los Angeles. Ninth Circuit, 10/25/07; memorandum opinion, (Kozinski, McKeown, District Judge Robert E. Jones, D Or, by designation); 2007 WL 3194122 (unpublished).
(Cont'd on Page 7, DECISIONS)

-6-

DECISIONS
(From Page 6)

UNPUBLISHED CALIFORNIA COURT OF APPEAL DECISIONS


[Note: The following brief summaries represent only a selection of the unpublished decisions recently filed by the California Courts of Appeal.]

EMPLOYERS OFFICER COULD ENFORCE ARBITRATION AGREEMENT ONLY IN CONNECTION WITH CLAIMS RELATING TO CONDUCT WITHIN SCOPE OF HIS AUTHORITY
MOORE v SOTHEBYS INTERNATIONAL REALTY, INC. Defendants and appellants Sothebys ... and Frank Symons ... appeal from the trial courts order denying in part their petition to compel arbitration of claims asserted by plaintiff... Plaintiff, who worked for Sothebys as an independent contractor, filed a complaint alleging causes of action against Symons for intentional infliction of emotional distress, and against both Symons and Sothebys for negligence and wrongful termination in violation of public policy. The trial court granted the petition to compel arbitration of the claims asserted against Sothebys, based on a written agreement to arbitrate, but denied the petition as to the claims against Symons. We reverse the order denying the motion to compel arbitration of the wrongful termination cause of action against Symons, and affirm the order in all other respects. Plaintiff opposed the petition on various grounds, including that Symons was not a party to the arbitration agreement... [] Although Symons is not a signatory to the arbitration agreement..., a non-signatory may compel contractual arbitration in certain circumstances... [] In this case, Symonss agency relationship with Sothebys and the doctrine of equitable estoppel allow Symons to enforce the agreement to compel arbitration of plaintiffs wrongful termination cause of action. The allegations made in connection with that cause of action pertain solely to Symonss actions as an officer of Sothebys... All

of the alleged misconduct attributable to Symons in connection with the wrongful termination cause of action falls within the scope of his authority as an officer of Sothebys... Plaintiffs wrongful termination cause of action also alleges substantially interdependent conduct by Symons and Sothebys. Sothebys liability for wrongful termination is based solely on Symonss conduct as a corporate officer. Principles of equitable estoppel therefore allow Symons to invoke the arbitration agreement... The same principles do not apply, however, with regard to plaintiffs causes of action against Symons for negligence and intentional infliction of emotional distress. The allegations on which those causes of action are based include conduct by Symons that predates his tenure as an officer of Sothebys. Because [those] causes of action concern Symonss conduct solely in his capacity as an individual, they fall outside the scope of [the] arbitration agreement. For plaintiff: Girardi Keese, Thomas V. Girardi and Keith D. Griffin; Streeter & Nangano and Bruce J. Tackowiak. For defendant: Manning & Marder, Kass, Ellrod, Ramirez, Mary M. Kocsis and Julie Fleming. Second Dist Div Two, 11/7/07; opinion by Chavez with Boren and Ashmann-Gerst concurring; 2007 WL 3276778 (unpublished).

The trial court granted summary adjudication of plaintiffs causes of action for breach of contract and breach of the implied covenant ... based on the fact that her employment was at-will. It granted summary adjudication of her retaliation causes of action, finding plaintiffs complaints about ... harassment were not a protected activity under FEHA, she failed to show defendant terminated her because she took a leave of absence under CFRA or denied her the leave to which she was entitled. It granted summary adjudication of plaintiffs harassment cause of action, finding no evidence she was harassed due to her disability. The trial court denied summary adjudication of plaintiffs disability discrimination cause of action under FEHA, finding a triable issue of fact as to whether defendant could have provided the requested accommodation. It denied summary adjudication of her causes of action for wrongful termination in violation of public policy and intentional infliction of emotional distress based on the continued viability of her disability discrimination cause of action. The case thereafter was tried before a jury. During trial, plaintiffs causes of action for [wtvpp] and [iied] were dismissed as duplicative and potentially confusing to the jury. The trial court granted a directed verdict as to plaintiffs cause of action for termination under CFRA, finding no evidence that plaintiff was retaliated against or terminated for taking her CFRA leave. The jury found in favor of defendant on plaintiffs causes of action for disability discrimination based on failure to accommodate and wrongful termination. The trial court entered judgment in favor of defendant. In affirming the judgment, the Second District rejected a number of arguments relating to the granting of defense motions in limine, and held, inter alia, that summary adjudication had been properly granted on the FEHA retaliation claim because the plaintiff had failed to introduce evidence that the harassment
(Cont'd on Page 8, DECISIONS)

SECOND DISTRICT AFFIRMS JUDGMENT ON JURY VERDICT FOR EMPLOYER ON DISABILITY DISCRIMINATION AND RELATED CLAIMS
ROSE v J. PAUL GETTY TRUST. Plaintiff filed this action alleging nine causes of action: breach of contract, breach of the implied covenant..., disability discrimination, retaliation under FEHA, retaliation under CFRA, retaliation under the Labor Code, harassment, wrongful termination in violation of public policy, and intentional infliction of emotional distress.

-7-

DECISIONS
(From Page 7)

of which she had complained was based on her disabilitythere was evidence that the plaintiff herself acknowledged that the supervisor had not known of her disability at the time the harassment took place. For plaintiff: Charles T. Mathews, Jeffrey A. Rager, Roxanne Huddleston. For defendant: Mitchell, Silberberg & Knupp, Patricia H. Benson and Suzanne M. Steinke. Second Dist Div One, 10/31/07; opinion by Jackson with Mallano and Rothschild concurring; 2007 WL 3173470 (unpublished).

(3) The trial court did not abuse its discretion in overruling Save Marts evidentiary objections. (4) Triable issues of material fact exist regarding whether the parties had an implied-in-fact agreement that limited Save Marts right to terminate Fries at will. (5) the erroneous grant of the motion for summary adjudication was not harmless error because it deprived Fries of the opportunity to present a theory of recovery that could have been resolved in her favor by the trier of fact. For plaintiff: Law Offices of Wagner & Jones, Nicholas J. P. Wagner and Christine M. Adams. For defendant: Lang, Richert & Patch, Charles Trudrung Taylor and John C. Fowler. Fifth Dist, 10/30/07; opinion by Dawson with Harris and Wiseman concurring; 2007 WL 3151609 (unpublished).

order. We agree with the trial court and affirm its order. Since the briefs in this case were filed, yet another of our sister courts has weighed in... In On-Line Power, Inc. v Mazur (2007) 149 Cal.App.4th 1079, the court agreed ... that when a section 998 offer is silent about attorneys fees and costs, it cannot reasonably be interpreted to exclude their recovery... For plaintiff: Eugene Taylor Franklin, Hayward. For defendant: Jonathan Berres Cole, Sherman Oaks; Mark Elliott Saltzman, Tarzana. First Dist Div Two, 10/30/07; opinion by Haerle with Lambden and Richman concurring; 2007 WL 3154270 (unpublished).

FRESNO COUNTY SUPERIOR COURT ERRED IN GRANTING SUMMARY JUDGMENT ON IMPLIED CONTRACT CLAIMS
FRIES v SAVE MART SUPERMARKETS, INC. Respondent Save Mart Supermarkets, Inc. fired appellant Debra Fries for falsifying her time card and lying about it in a subsequent investigation. Fries sued for wrongful termination under four legal theories. In this appeal, Fries challenges the superior courts order granting summary adjudication on her two contractbased theories of recovery. The superior court determined those theories had been negated because the undisputed facts established Fries was an atwill employee. Fries disagrees, claiming triable issues of fact exist. We conclude as follows: (1) An agreement to terminate only for good cause is not the sole way to contractually limit an employers right to terminate at-will employees for any or no cause; other contractual restrictions may be created by an implied-in-fact agreement. (2) Friess deposition testimony, which indicated she was not told expressly, orally or in writing, that she could not be discharged by Save Mart except for good cause, did not clearly and unequivocally contradict statements in her declaration about what Save Marts documents and personnel did express.

FACT THAT 998 SETTLEMENT OFFER WAS SILENT ON SUBJECT OF ATTORNEYS FEES DID NOT MEAN THAT SUPERIOR COURT COULD NOT ENTERTAIN MOTION TO AWARD THEM
PARNALA v PLYCON TRANSPORTATION GROUP, INC. Plaintiff and respondent Rita Parnala filed suit against defendant and appellant Plycon ... and an individual employed by it, alleging sexual discrimination and harassment. Prior to the trial date, Plycon tendered an offer of compromise pursuant to Code of Civil Procedure section 998. The offer stated that Plycon would, to settle the case, pay Parnala $60,000 in exchange for a dismissal with prejudice. The offer was silent regarding the payment of attorney fees or costs. Parnala accepted the section 998 offer. After payment of the $60,000, Parnalas counsel filed a motion seeking both attorney fees and costs, a motion which, as modified in terms of amount, the trial court granted. Plycon then filed a motion pursuant to section 473 to set aside that award. The trial court denied the motion and Plycon appeals from that

FIRST DISTRICT HOLDS THAT JNOV WAS NOT WARRANTED BUT THAT TRIAL JUDGE REASONABLY RE-WEIGHED EVIDENCE IN GRANTING NEW TRIAL MOTION ON GENDER DISCRIMINATION AND RETALIATION CLAIMS
CLARK v WESTREC MARINA MANAGEMENT, INC. A jury awarded plaintiff Bette Clark $177,926.29 in damages against defendant ... on causes of action for gender discrimination and retaliation under [FEHA] and wrongful termination in violation of public policy. She appeals from orders by the trial court granting Westrecs motions for new trial and [JNOV]. We agree with Clark that the evidence presented at trial was legally sufficient when viewed in the light most favorable to the verdict, and that the motion for JNOV should have been denied. However, the trial court was entitled to reweigh the evidence when considering the motion for new trial, and it did not abuse its discretion in concluding that

(Cont'd on Page 9, DECISIONS)

-8-

DECISIONS
(From Page 8)

the verdict on the discrimination claims was against the weight of the evidence. We reverse the order granting JNOV, but affirm the order granting a new trial. For plaintiff: William Francis Adams, Pleasonton; Alan Charles DellArio, Oakland. For defendant: Michael McCarthy, Sherman Oaks; Thomas James Ready, Encino. First Dist Div Five, 10/29/07; opinion by Needham with Simons and Gemello concurring; 2007 WL 3138364 (unpublished).

the overtime issue and [the supervisor] decided to get rid of an irritant. A reasonable jury could also conclude that the purpose of the [investigators] report was to make a case against plaintiff in order to justify his termination. These may not be the only inferences that may be drawn from the evidence, or even the most likely, but they are permissible ones. Therefore, plaintiff established the existence of an issue of fact on the issue of pretext, and defendants were not entitled to summary adjudication on the retaliation claim. For the same reasons we conclude plaintiff has satisfied his burden of establishing a material issue of fact on his retaliation claim, we conclude plaintiff has a right to go forward on his wrongful termination claim. Both claims are based on the same conducttermination in response to reporting the overtime issue to management... [] [And] we [also] necessarily conclude defendants were not entitled to summary adjudication on plaintiffs claim for intentional infliction of emotional distress... The parties contend plaintiffs unfair business practice claim lives or dies with his retaliation and wrongful termination claims. Therefore ... his sixth cause of action also was not subject to summary adjudication. Plaintiff contends material issues of fact remain regarding [the supervisors] personal liability on plaintiffs various

causes of action... [] California courts have held individual supervisors liable for employment actions that amount to unlawful retaliation. [cites omitted] [] Because each of plaintiffs causes of action is based on his claim of termination in violation for engaging in a protected activity, [the supervisor] may be held personally liable. For plaintiff: Susan J. Sheridan, Sacramento. For defendants: Michael W. Kelly, San Francisco. Third Dist, 10/26/07; opinion by Hull with Davis and Raye concurring; 2007 WL 3122438 (unpublished).

THIRD DISTRICT HOLDS THAT TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT ON RETALIATION AND RELATED CLAIMS BY EMPLOYEE WHO REPORTED OVERTIME VIOLATIONS TO MANAGEMENT
HORANGIC v EBARA TECHNOLOGIES, INC. In an unpublished opinion filed on October 26, the Third District reversed summary judgment on a claim that the plaintiff had been retaliated against for reporting a violation of overtime wage law. On the evidence presented, the court wrote, a reasonable jury could conclude that [the plaintiffs supervisor] initiated [an investigation into plaintiffs alleged performance deficiencies] because he learned that plaintiff was escalating his complaints about

C O M I N G

E V E N T S

December 7, 2007 CELA SEMINAR: "INTRODUCTION TO TRIAL PRESENTATION SOFTWARE" Pasadena and San Francisco (see page 1 and www.celaweb.org for details) October 3-4, 2008 CELAS 2008 ANNUAL CONFERENCE (with skills seminar on October 2) Hilton Pasadena

-9-

-12-

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

Published Monthly

BULLETIN
EDITOR: CHRISTOPHER BELLO December 2007 Vol. 21, No. 12 of his or her current position, does the ADA require: (a) that the employer reassign the employee to a vacant, equivalent position for which he or she is qualified, as the Tenth and District of Columbia Circuits have held; or (b) that the employer merely permit the employee to apply and compete with other applicants for the vacant, equivalent position for which he or she is qualified, as the Seventh and Eighth Circuits have held. In the case below, the Eighth Circuit reversed the granting of the employees cross motion for summary judgment and remanded for entry of judgment in favor of the employer, holding that the ADA is not an affirmative action statute and does not require an employer to reassign a qualified disabled employee to a vacant position when such a reassignment would violate a legitimate nondiscriminatory policy of the employer to hire the most qualified candidate. The employer had hired a
(Cont'd on Page 2, DECISIONS)

RECENT EMPLOYMENT LAW DECISIONS


CALIFORNIA SUPREME COURT
SUPREME COURT ORDERS RECONSIDERATION OF THREE DECISIONS INVOLVING ENFORCEABILITY OF CLASS ACTION WAIVERS IN ARBITRATION AGREEMENTS
KONIG v U-HAUL COMPANY; JONES v CITIGROUP; MASSIE v RALPHS GROCERY. On November 28, the California Supreme Court transferred three cases back to the Courts of Appeal with directions to vacate their decisions and to reconsider them in light of Gentry v Superior Court (Circuit City Stores, Inc.) (2007) 42 C4th 443. The Konig decision was published at 52 CR2d 244, and was summarized in CELA Bulletin, Dec 06, p.2. The Jones decision was published at 38 CR3d 461, and was summarized in CELA Bulletin, Feb 06, p5; and the unpublished Massie decision appears at 2007 WL 1395580. The Gentry decision was summarized in CELA Bulletin, Sept 07, p.1. . Cal SC, 11/28/07; 2007 DAR 17872, 2007 WL 4303049 (Konig); 2007 DAR 17844, 2007 WL 4303045 (Jones); 2007 DAR 17826 (Massie). the Supreme Court granted review in a case in which the Second District, Division Five, affirming summary judgment, held that the term sexual harassment has the same meaning under Civil Code 51.9 as under FEHA, and that the obscene threat at issue was not sufficiently severe to be actionable. That Civil Code provision prohibits sexual harassment by a person engaged with the plaintiff in a designated business, service, or professional relationship, and the plaintiff alleged that she had been harassed by a trustee of her deceased husbands estate. The Second Districts opinion appears at 2007 WL 2584712, and was summarized in CELA Bulletin, Sept 07, p.3. For plaintiff: Hillel Chodos and Deborah Chodos. For defendant: Melanie C. Ross. Cal SC, 11/28/07; 2007 DAR 17537.

UNITED STATES SUPREME COURT


CERTIORARI IS GRANTED TO ADDRESS ADA ISSUE CONCERNING RIGHT TO REASSIGNMENT AS REASONABLE ACCOMMODATION
HUBER v WAL-MART STORES, INC. On December 10, the Supreme Court announced a grant of certiorari to review an Eighth Circuit decision, (486 F3d 480), and to address a question posed as follows in the employees petition for certiorari: If a disability prevents an employee from performing the essential functions

AUTHORS SOUGHT FOR SPECIAL ISSUES OF CELA BULLETIN TO BE DISTRIBUTED TO JUDGES


CELA is again soliciting articles for two special issues of the CELA Bulletin to be distributed to California judges as well as to CELA members. Please submit proposed article topics to Wilmer Harris, (Wharris@sdshhlaw. com) by January 8. Articles on the selected topics, approximately two pages in length, will then be due on February 15, 2008.

SUPREME COURT WILL REVIEW SECOND DISTRICTS HARASSMENT DECISION INVOLVING CIVIL CODE 51.9
HUGHES v PAIR. On November 28,

DECISIONS
(From Page 1)

more qualified employee for a vacant equivalent position, even though the plaintiff could have performed the duties of that job, and had assigned the plaintiff to a lower-paying position instead. USSC, No. 07-480; 12/10/07; 2007 DAR 18213, 2007 WL 2978334.

declaratory relief. [cites omitted] This does not mean that the entire class must fail. Those putative class members who were still Wal-Mart employees as of June 8, 2001 ... do have standing to seek the injunctive and declaratory relief requested ... and we are satisfied that these putative class members would reasonably bring this suit to put an end to the practices they complain of even in the absence of a possible monetary recovery... Accordingly, class certification under Rule 23(b)(2) was appropriate at least as to these plaintiffs. We thus remand to the district court for a determination of the appropriate scope of the class in light of the above observation and in light of any evidence presented to it regarding which putative class members were still Wal-Mart employees as of June 8, 2001. For employees: Brad Seligman, Jocelyn D. Larkin, The Impact Fund, Berkeley; Joseph M. Sellers, Christine E. Webber, Julie Goldsmith Reiser, Cohen, Milstein, Hausfeld & Toll, Washington DC; Irma D. Herrera, Debra A. Smith, Equal Rights Advocates, San Francisco; Stephen Tinkler, Charles Firth, Tinkler & Firth, Santa Fe, New Mexico; Debra Gardner, Public Justice Center, Baltimore, Md; Steve Stemerman, Elizabeth A. Lawrence, Davis, Cowell & Bowe, San Francisco; Merit Bennett, Santa Fe. For Wal-Mart: Theodore J. Boutrous, Jr., Gibson, Dunn & Crutcher, Los Angeles. Ninth Circuit, 12/11/07; opinion by Pregerson joined by Hawkins with Kleinfeld dissenting; 2007 DAR 18233, 2007 WL 4303055.

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION


The CELA Bulletin is published monthly for CELA members. Send membership inquiries and changes of address to office of Executive Board Chair: David J. Duchrow 11340 W. Olympic Blvd. Suite 305 Los Angeles, CA 90064 Tel: (310) 479-5303 FAX: (310) 479-5306 E-mail: dduchrow@djduchrowlaw.com For help with the CELA List, the CELA Website, and other administrative matters, contact CELA's Administrative Director: Christina Krasomil 16133 Ventura Blvd., Suite 625 Encino, CA 91436-2412 Tel: (818) 907-7895 FAX: (818) 907-7474 E-mail: clkrasomil@earthlink.net EXECUTIVE BOARD
J. Bernard Alexander III (Los Angeles) Eve Chesbro (Pasadena) David DeRubertis (Woodland Hills) Kathy Dickson (Oakland) David Duchrow (Los Angeles) Wilmer Harris (Pasadena) Phil Horowitz (San Francisco) Jean K. Hyams (Oakland) Toni Jaramilla (Los Angeles) Virginia Keeny (Pasadena) Dolores Leal (Los Angeles) Steven Pingel (Long Beach) Michelle A. Reinglass (Laguna Hills) Cynthia Rice (San Francisco) Mika Spencer (San Diego) James P. Stoneman (Claremont) Christopher Whelan (Gold River) Jeffrey Winikow (Los Angeles)

NINTH CIRCUIT
PANEL FILES REVISED OPINION AFFIRMING ORDER THAT CERTIFIED CLASS OF CURRENT AND FORMER WAL-MART EMPLOYEES ASSERTING SEX DISCRIMINATION CLAIMS
DUKES v WAL-MART, INC. On December 11, a three-judge panel issued a slightly revised 2-1 opinion that reached the same conclusion as the now-withdrawn version that was filed on February 6, 2007, (474 F3d 1214, summarized in CELA Bulletin, March 07, p.8). The panel again affirmed the Northern Districts order certifying a class of over two million current and former Wal-Mart employees who are asserting sex discrimination claims. The largest substantive change in the revised opinion involves the instruction to District Judge Martin Jenkins that he consider dropping class members who were no longer employed by Wal-Mart at the time the complaint was filed. The relevant portion of the revised opinion reads as follows: Wal-Marts final contention is that, because a substantial number of the putative class members no longer work for Wal-Mart and, thus, no longer have standing to seek injunctive or declarative relief, injunctive and declaratory relief cannot possibly predominate over monetary relief for purposes of certifying this class under Rule 23(b)(2). We agree with Wal-Mart to this extent: those putative class members who were no longer Wal-Mart employees at the time Plaintiffs complaint was filed do not have standing to pursue injunctive or

EVEN SUBSEQUENT TO AMENDMENTS CONTAINED IN 1991 CIVIL RIGHTS ACT, NO 1981 ACTION MAY BE BROUGHT AGAINST STATE ACTORS
PITTMAN v STATE OF OREGON.
(Cont'd on Page 3, DECISIONS)

Bulletin Editor
Christopher Bello 35116 Reith-Larson Lane Astoria, OR 97103 Ph: (503) 338-3891 E-mail: cmbello@charter.net

-2-

DECISIONS
(From Page 2)

Helen Pittman appeals from dismissal of an employment discrimination claim brought under 1981 against the Employment Department of the State of Oregon. The district court dismissed the 1981 action, holding that the statute does not provide a cause of action against states. We affirm. Under this circuits case law, 1981 contains a right of action against municipalities. Fedn of African Am. Contractors v. City of Oakland, 96 F.3d 1204 (9th Cir. 1996). The plaintiff maintains that Federation should be extended to permit a 1981 cause of action against a state, while the State contends otherwise. After surveying the statutory language and history in light of the governing case law, we must agree. [I]n Jett v. Dallas Independent School District, 491 U.S. 701 (1989) ... [t]he Court ... held that the prohibition on discrimination by a state or its officials contained in 1981 can be enforced against state actors only by means of 1983... Two years after Jett, Congress passed the Civil Rights Act of 1991, Section 101 of which added two new subsections to 42 U.S.C. 1981. The new subsection (c) provides: The rights protected by this section are protected against impairment by nongovernmen-

tal discrimination and impairment under color of State law. Plaintiff contends that the addition of subsection (c) to 1981 overruled Jett to create a cause of action against both municipalities and arms of the state... She argues ... that subsection (c) contains an implied right of action against both municipalities and state actors. All of the other circuits to reach the question have held that the 1991 amendments ... did not overrule Jett, and that there is still no cause of action against municipalities or other state actors. [cites omitted] [] We, however, in Fedn of African Am. Contractors v. City of Oakland, 96 F.3d 1204 (9th Cir. 1996), concluded that the addition of subsection (c) overruled Jett to create a cause of action against municipalities. We ... reject the extension of Federation to suits against arms of the state... Most notably, the reasoning of Federation depended in part on its conclusion that implication of a cause of action against municipalities under 1981 imposes no substantive change on federal civil rights law, because it did not expand the remedies available under 1981 beyond those already available under 1983. The Employment Department argues that, in contrast, recognizing a cause of action against state actors under 1981 would, in fact,

expand the remedies available under that statute beyond those available under 1983. On examination, that is so. For plaintiff: Glenn Solomon, Portland. For defendant: Marc Abrams, Oregon Department of Justice, Salem. Ninth Circuit, 12/5/07; opinion by Berzon joined by Fisher and Barzilay; 2007 DAR 17956, 2007 WL 4246114.

CALIFORNIA COURTS OF APPEAL


IN ABSENCE OF EVIDENCE OF SIGNED AGREEMENT, ARBITRATION WOULD NOT BE COMPELLED MERELY BECAUSE HANDBOOK STATED THAT ALL EMPLOYEES WOULD BE REQUIRED TO SIGN ARBITRATION AGREEMENTS
MITRI v ARNEL MANAGEMENT COMPANY. The Fourth District, Division Three wrote in part as follows in an opinion filed on December 12: Plaintiffs ... sued their former employer, Arnel Management Company, Arnels owner, George Argyros, and [three] Arnel supervisors ... for, inter alia, sexual discrimination and harassment. Defendants filed a motion to compel arbitration of plaintiffs claims on the ground plaintiffs had each signed a binding arbitration agreement. The trial court denied the motion based on defendants failure to prove the existence of any such agreement to arbitrate. Defendants contend the trial court erred by denying their motion. We affirm. Arnels employee handbook states, [a]s a condition of employment, all employees are required to sign an arbitration agreement and further states, [e]mployees will be provided a copy of their signed arbitration agreement. Defendants have not produced evidence of signed arbitration agreements. Defendants nevertheless contend the handbooks reference to arbitration is suffi(Cont'd on Page 4, DECISIONS)

NELA NEWS
Notable recent postings on www.nela .org have included: The October 25 statement by NELA Executive Board Member Cathy Ventrell-Monsees before a subcommittee of the House Judiciary Committee in support of the Arbitration Fairness Act, H.R. 3010, and information concerning the December 12 hearing on the Senates version of the bill, (S. 1782), before the Senate Judiciary Committees subcommittee on Civil and Constitutional Rights, (chaired by Russ Feingold). A message to NELA members on ENDA, the Employment Non-Discrimination Act, (H.R. 3685), from NELA President Bruce Fredrickson. A summary of recent and pending developments in Federal whistleblower legislation included in the On The Hill: NELAs Washington Report, (in the archived November 29 issue). A call from NELAs Program Director Stefano G. Moscato for information concerning clients or others who have had, or are in danger of having, claims dismissed because of the Ledbetter decision. Members of the Ledbetter Fix Coalition are moving forward on a grass roots effort to lobby targeted Senate fence-sitters. Contact smoscato@ nelahq.org. -3-

DECISIONS
(From Page 3)

cient to force plaintiffs to arbitrate their claims. As discussed in detail post, defendants argument is wholly without factual or legal merit. [T]he documents submitted by defendants do not show either plaintiff ever consented to binding arbitration... The arbitration agreement provision in the employee handbook generally states an Arnel policy that [a]ny dispute arising out of the employment with the Company, as allowed by law, will be settled by binding arbitration. The provision explains such an arbitration will be conducted by the American Arbitration Association, and describes some of the parameters of such an arbitration (e.g., written request triggers arbitration, Arnel agrees to equitably share arbitration expenses, and prevailing party is awarded attorney fees). The arbitration agreement provision, however, does not stop here. It also states that pursuant to Arnels policy, [a]s a condition of employment, all employees are required to sign an arbitration agreement. This provision completely undermines any argument by defendants the provision in the handbook itself was intended to constitute an arbitration agreement between Arnel and its employees. The provision further states, [e]mployees will be provided a copy of their signed arbitration agreementthus reinforcing an intent to have employees sign a separate arbitration agreement to effectuate Arnels policy of arbitrating employment claims. Defendants have not produced any evidence of the existence of such an arbitration agreement signed by either plaintiff." The court distinguished Asmus v Pacific Bell (2000) 23 C4th 1, DiGiacinto v Ameriko-Omserv Corp. (1997) 59 CA4th 629, and Craig v Brown & Root, Inc. (2000) 84 CA4th 416. [T]he question in Asmus, the court wrote, was whether [a] unilateral contract, once formed, could be unilaterally modified or terminated by the employer. [] In contrast, the core issue in this case ... is whether the documents prepared by Arnel show an express bilateral contract was entered into through which the parties agreed to arbitrate.

In [DiGiacinto] ... the appellate court noted, the majority line of cases supports the proposition that as a matter of law, an at-will employee who continues in the employ of the employer after the employer has given notice of changed terms or conditions of employment has accepted the changed terms and conditions. Both Asmus ... and DiGiacinto ... are in inapposite because ... the arbitration agreement provision contained in the employee handbook here placed plaintiffs on notice that they would be required to enter into a separate agreement with Arnel. As this record shows, neither plaintiff entered into an arbitration agreement. Unlike the arbitration agreement provision in the Arnel Employee Handbook, the memorandum in Craig v. Brown & Root, Inc. established in and of itself the employers dispute resolution program, and did not include an express agreement that its employees sign an arbitration agreement. Therefore, Craig v. Brown & Root, Inc. is inapposite. Defendants also contend the signed arbitration agreement required by the arbitration agreement provision in the Arnel Employee Handbook was impliedly unnecessary to establish an arbitration agreement between Arnel and plaintiffs. However, such an interpretation of the arbitration agreement provision contradicts that same provisions express term requiring a signed agreement. Defendants next argue the acknowledgment receipt form signed by each plaintiff constitutes evidence of each plaintiffs acquiescence to the arbitration agreement provision in the employee handbook.... [] Conspicuously absent from the acknowledgment receipt form is any reference to an agreement by the employee to abide by the employee handbooks arbitration agreement provision. We cannot and will not create a term of a contract between the parties that the evidence does not show was ever agreed upon by the parties.

For plaintiffs: Patricia J. Grace. For defendants: Paul, Hastings, Janofsky & Walker, Michael A. Hood, Sherri Fanger McInnes, Karin K. Sherr. Fourth Dist Div Three, 12/12/07; opinion by Fybel with Moore and Ikola concurring; 2007 WL 4328443.

SECOND DISTRICT AFFIRMS JUDGMENT FOR PLAINTIFF ON CLAIMS FOR RETALIATION AND FAILURE TO ENGAGE IN INTERACTIVE PROCESS
WYSINGER v AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA. In an opinion filed on November 29, the Second District, Division 6, affirmed a judgment for the plaintiff based on jury findings that the employer had retaliated against the plaintiff because he filed an age discrimination complaint and that the employer had failed to engage in an interactive process regarding the plaintiffs disability. The jury found that the plaintiff had sustained economic damages of $204,000 and non-economic damages of $80,000, and added $1 million in punitive damages. While thus finding for the plaintiff on two of his claims, the jury rejected additional claims for failure to provide a required reasonable accommodation, disability discrimination, and age discrimination. The court wrote in part as follows: ACSC contends denying Wysinger a transfer to Ventura is not a FEHA adverse employment action... [] ACSC claims that the Ventura position would not have changed Wysingers employment status. ACSCs human resources manager testified, however, it would have been a promotion... [] ACSC contends it is not responsible for Kanes retaliatory conduct. But an employer generally can be held liable for the retaliatory actions of its supervisors... ACSC notes that Wysinger filed the EEOC claim in December 1999. The decision not to transfer him to Ventura occurred between 2002 and 2003. It claims these events are too remote to
(Cont'd on Page 5, DECISIONS)

-4-

DECISIONS
(From Page 4)

be causally connected. A long period between an employers adverse employment action and the employees earlier protected activity may lead to the inference that the two events are not causally connected... But if between these events the employer engages in a pattern of conduct consistent with a retaliatory intent, there may be a causal connection... Here Wysinger was not invited to serve on management committees, to apply for management positions and was treated with coldness. ACSC contends the trial courts instruction [on retaliation] was inadequate under Akers v. County of San Diego (2002) 95 Cal.App.4th 1441. There, the Court of Appeal held that instructions ... are insufficient without the phrase, the employers retaliatory conduct must have been a substantial and material adverse effect on the terms and conditions of ... employment. [But] the combined effect of [the instructions actually given] required jurors to decide the retaliation issue by excluding employer conduct which would be trivial under Yanowitz or insubstantial under Akers. It required jurors not to include management decisions which involved ordinary discretion, even if the jurors found the conduct to be unfair. Wysinger had to prove animus and retaliation. Moreover, ACSCs actions had a substantial and material impact on the conditions of employment. The refusal to promote Wysinger is an adverse employment action under FEHA. (Yanowitz, supra, 36 Cal.4th at p. 1055.) There was also a pattern of conduct, the totality of which constitutes an adverse employment action. [T]he verdicts on the reasonable accommodations issue and the interactive process claim are not inconsistent. They involve separate causes of action and proof of different facts... [] Here the jury could find there was no failure to provide a required accommodation because the parties never reached the stage of deciding which accommodations were required. ACSC prevented this from happening by its refusal to

engage in the interactive process. The court also rejected a number of defense contentions concerning the calculation of damages, holding, inter alia: (1) sufficient evidence supported the award of damages for future wage loss; (2) the jury had been entitled to find that the supervisor whose animus fueled the retaliation was a managing agent for punitive damages purposes; (3) the punitive damages award was not excessive nor constitutionally disproportionate; and (4) an award of attorneys fees totaling $978,791, (including a multiplier of 1.1), was not excessive despite the fact that the plaintiff had prevailed on only two of eight claims. For plaintiff: Dan Stormer, Virginia Keeny, Nigel A. Whitehead. For defendant: Reed Smith, Margaret M. Grignon, Zareh Jaltorassian, Sheppard, Mullin, Richter & Hampton, Jeffrey A. Dinkin, Deborah Lynn Martin and John K. Beckley. Second Dist Div Six, 11/29/07; opinion by Gilbert with Coffee and Perren concurring; 2007 DAR 17669, 2007 WL 4200632.

Plaintiffs complaint, the court wrote, alleges he was an employee of ... an agency that provides temporary employees. He is the lead plaintiff in a putative class action seeking waiting time penalties under section 203 for defendants alleged failure to timely pay final wages on completion of temporary work assignments in violation of Labor Code sections 201 and 202. The complaint alleges that, instead of paying plaintiffs upon discharge or within 72 hours or resignation, defendant paid them on the next scheduled pay day. Plaintiff is not suing for the underlying wages; he admits those were paid. Defendant ... maintained the governing statute of limitations was one year pursuant to [Code of Civil Procedure] section 340(a). [] The court agreed with defendant, finding that because plaintiff sued for waiting time penalties only and not wages, section 203 did not apply. Since the Labor Code does not contain a statute of limitations for an action seeking those penalties alone, section 340(a), the general one-year statute of limitations for penalties, controlled. Plaintiff contends the statute of limitations in section 203 applies to any action for penalties, regardless of whether there is also a claim for the wages from which the penalties arise. [] We agree with plaintiff to the extent the period set out in section 203 applies to actions for waiting time penalties sought in conjunction with back wages. But for suits seeking penalties alone, the objective of section 203, the legislative intent, and the common sense meaning of the sections language persuade us defendants interpretation is correct. For plaintiff: Spiro Moss Barness, Los Angeles, and Gregory N. Karasik. For real party: Paul, Hastings, Janofsky & Walker, Stephen L. Berry and Julie D. Schisler, Costa Mesa. Fourth Dist Div Three, 11/27/07; opinion by Rylaarsdam with Sills and Ikola concurring; 2007 WL 4171456.

ONE-YEAR LIMITATIONS PERIOD APPLIES WHERE CLAIM IS FOR WAITING TIME PENALTIES ONLY AND NOT FOR UNDERLYING WAGES
McCOY v SUPERIOR COURT (KIMCO STAFFING SERVICES, INC.). The Fourth District denied a petition for writ of mandate that had asked the court to reverse an order striking as time-barred portions of a complaint seeking waiting time penalties for late payment of wages. The trial court was correct, the Fourth District held, in striking allegations seeking waiting time penalties for longer than one year before the date the complaint was filed. The court rejected the argument that, pursuant to Labor Code section 203, when an action seeks waiting time penalties only, the statute of limitations is the same as when a plaintiff sues for both back wages and penalties which, in this case, the employee contended, was four years. -5-

(Cont'd on Page 6, DECISIONS)

DECISIONS
(From Page 5)

PLAINTIFF WAS ENTITLED TO FEES AND COSTS AS PREVAILING PARTY ON DISCRIMINATION CLAIMS WHERE SECTION 998 OFFER OF COMPROMISE DID NOT EXPRESSLY EXCLUDE THEM
ENGLE v COPENBARGER AND COPENBARGER. Staci Engle appeals from a post-judgment order that denied her motion for attorney fees and costs in this action [for sex harassment and related claims]. The case settled when Engle accepted a statutory offer to compromise that said nothing about fees or costs. Engle argues she is entitled to statutory costs as the prevailing party, including fees authorized by statute. We agree and reverse. Engles fee motion requested costs as the prevailing party (Code Civ. Proc., 1032, subd. (b).) As an item of costs, she asked for attorney fees authorized by statute (Code Civ. Proc., 1033.5, subd. (a)(10)(B).) The statutory fee provision relied on was Government Code section 12965, subdivision (b)... The trial judge denied the motion for two reasons. First, he found the statement in the offer about the claims released was broad enough to include any claim for fees. Second, he said it was impossible to say from the language of the offer whether Engle had prevailed on any of her discrimination claims. Engle argues she is entitled to fees because they were not expressly excluded in the offer to compromise. She is right... [] This case falls squarely within the rule that a party who secures a recovery by accepting a section 998 offer is entitled to costs and fees unless they are excluded by the offer. Engle should have been awarded costs and fees. Copenbarger argues the language of the offer is more encompassing than that found in any of the cases, since Engle agreed to release and discharge of any and all claims, of whatever nature (substantive and procedural) which plain-

tiff may have against the defendants. It asserts the only reasonable reading of this provision is that Engles claim for fees was released. We cannot agree. The rule is that a section 998 offer to compromise excludes fees only if it says so expressly. It is a bright line rule: The only question is does the offer address fees or not? We are unaware of any case that suggests a broadly-worded release clause in a section 998 offer can serve to waive a prevailing partys fee claim, and none are cited by Copenbarger. If Copenbarger meant the offer to include Engles attorney fees, it was a simple enough matter to spell out that condition. Certainly it was simple enough that the firm had it figured out by the next day, when it tendered a release that included fees. We do not know why the release was written in terms broader than the offer. But we are convinced the bright-line rule exists precisely to avoid disputes such as this one about whether there was manipulation or misunderstanding... If Copenbarger wanted a fee waiver, it should have put one in the offer. Since the offer was silent on fees, it did not bar a later fee motion. Copenbarger argues Engle did not prevail on the discrimination claims, so she was not entitled to fees. The argument has three prongs... None are persuasive. Copenbarger first argues that most of the statutory discrimination claims were barred by a one-year statute of limitations... But the time to raise a statute of limitations defense was prior to settlement, not after... The next prong of the argument builds on the statute of limitations point. The firm argues the trial judge acted within his discretion in denying fees, since he found the $35,000 settlement was sufficient recompense for the single actionable incident of sexual harassment, and he found that adding a fee award would result in an unfair windfall. The problem here is that no such findings were made...

Finally, Copenbarger argues that there was no way to discern whether Engle won on the discrimination claims or the tort claims, so it was a proper exercise of discretion for the trial judge to deny fees for this reason. We disagree. [] The misconduct alleged ... was sexual in nature... There were no other allegationsnothing that would have supported a tort recovery but not one on the discrimination claims... There is no doubt that Engle received $35,000 on the discrimination claims, and there was no leewayor discretionto find otherwise. For plaintiff: Mark D. Margarian. For defendant: Paul D. Copenbarger, Santa Ana, and Kathleen M. Hatley. Fourth Dist Div Three, 11/26/07; opinion by Bedsworth with Rylaarsdam and Aronson concurring; 2007 WL 4157292.

FOURTH DISTRICT AFFIRMS JNOV ON SEX HARASSMENT CLAIM AND NEW TRIAL ORDER ON DAMAGES FOR RETALIATION
MOKLER v COUNTY OF ORANGE. In an opinion filed on November 26, the Fourth District, Divison Three wrote in part as follows: Defendants County of Orange and Chris Norby appeal from the trial courts denial of their motion for JNOV following a jury determination that the County terminated Pamela Mokler in violation of Californias whistleblower statute, Labor Code section 1102.5, and that Norby sexually harassed Mokler, creating a hostile work environment under FEHA... Defendants contend the trial court erred because Moklers failure to exhaust her administrative remedies barred her from pursuing her retaliatory discharge claim. Defendants also challenge the sufficiency of the evidence to support her claims for retaliation and sexual harassment. Mokler appeals the trial courts order granting the County a new trial on damages, conditioned on Mokler refusing a damage award remitted from
(Cont'd on Page 7, DECISIONS)

-6-

DECISIONS
(From Page 6)

approximately $1.6 million to $125,000. Mokler challenges the sufficiency of the evidence to support the trial courts statement of reasons for overturning the jurys damages verdict. We conclude the County waived its exhaustion defense by failing to raise it before trial. We also conclude that substantial evidence supports Moklers retaliatory dismissal claim. Moklers sexual harassment claim against Norby fails, however, because Norbys alleged harassment was not sufficiently severe or pervasive to alter the conditions of Moklers employment and create an abusive working environment. We also conclude substantial evidence supports the new trial order on damages. We therefore reverse the trial courts order denying JNOV as to Moklers harassment claim, but otherwise affirm the remainder of the JNOV order. We also affirm the new trial order. As recognized by Green [v City of Oceanside (1987) 194 CA3d 212], it is generally accepted that courts may excuse the failure to exhaust all available administrative remedies where the agency indulges in unreasonable delay. [cites omitted] By waiting to raise exhaustion until afer a full trial on the merits, the County unmistakably engaged in unreasonable delay. The County contends its failure at trial to raise exhaustion ... on Moklers retaliation claim did not waive the issue because the County had successfully asserted exhaustion on Moklers breach of contract and wrongful termination claims in pretrial motions... [] [But] Moklers breach of contract and wrongful termination claims essentially duplicated her retaliation claim; therefore, the trial court did not foreclose her ability to recover damages when it granted the Countys motion to dismiss on exhaustion grounds. Thus, Moklers incentive to vigorously oppose the Countys exhaustion defense to her breach of contract and wrongful termination claims was substantially less than if the County had raised exhaustion against her entire case. More importantly, the trial court never

provided Mokler the opportunity to present evidence on the futility exception in response to the Countys pretrial motions... Accordingly, Mokler never received a full opportunity to present evidence supporting her contention that exhaustion would have been futile. We therefore reject the Countys contention that it preserved its exhaustion defense as to Moklers retaliation claim. [Relative to the whistleblower claim under Labor Code section 1102.5] [w]e conclude substantial evidence supports a finding that Mokler reasonably believed [that a proposed change] in the reporting requirements of [the County Office on Agings] contracts department represented a material change requiring state approval ... [and that] the jury reasonably could infer the Countys allegations constituted a trumped-up effort to justify their retaliatory termination of Mokler. Following established precedent, we conclude [that the three alleged] acts of harassment fall short of establishing a pattern of continuous, pervasive harassment [cite omitted]. Norby did not supervise Mokler or work in the same building with her. The first incident involved no touching or sexual remarks; rather, Norby uttered an isolated but boorish comment on Moklers marital status. The second incident did not occur at work, and involved a minor suggestive remark and nonsexual touching. The third incident involved touching when Norby placed his arm around Mokler and rubbed his arm against her breast in the process. The touching, however, was brief and did not constitute an extreme act of harassment. Norbys request for Moklers home address was brazen, but this conduct falls short of what the law requires to establish a hostile work environment. Norbys derogatory statement regarding Mexicans was unmistakably foul and offensive, but not sexual... [] We therefore reverse that portion of the trial courts order denying JNOV on Moklers FEHA claim for sexual harassment. Mokler contends insufficient evidence supports the new trial order. We disagree. [] The considerable deference -7-

Code of Civil Procedure section 657 affords the jury when a trial judge is considering a new trial motion is exceeded only by the deference afforded the trial judge when the appellate court reviews an order granting a new trial. The evidence Mokler cites in challenging the new trial order does not demonstrate that any of the six items noted by the court [in its statement of reasons] were either unsupported or contradicted by the evidence at trial. The jurys failure to award damages for harassment meant that all of the damages flowed from the retaliatory termination. Although Mokler testified she felt threatened and humiliated by the Countys actions surrounding her termination, she did not require medical or professional attention. True, Mokler did introduce evidence of her positive reputation in the field, but the evidence did not show the County damaged her reputation in any way, or that she was scorned or ridiculed by the public. Indeed, that Mokler was unemployed for only two weeks suggests Moklers reputation remained unimpaired.... Because the trial courts reasons are supported by substantial evidence, we affirm the new trial order. For plaintiff: H. Brian Card, Robert H. Purvali, Stuart B. Esner, Andrew N. Chang. For defendants: Horvitz & Levy, Frederic D. Cohen, Kim L. Nguyen; Lynberg & Watkins, Norman J. Watkins and William F. Bernard. Fourth Dist Div Three, 11/26/07; opinion by Aronson with OLeary and Ikola concurring; 2007 DAR 17358, 2007 WL 4148594.

RELEASE OF RIGHTS IN SEVERANCE AGREEMENT COULD NOT BE ENFORCED TO EXTENT IT DEALT WITH CLAIMS OF TERMINATION BASED ON EMPLOYEES MEMBERSHIP IN MILITARY SERVICE
PEREZ v ULINE, INC. Plaintiff Brian Perez appeals from a judgment on his
(Cont'd on Page 8, DECISIONS)

DECISIONS
(From Page 7)

complaint ... for wrongful termination, breach of oral contract, failure to pay overtime wages..., and defamation, claiming the court erred in enforcing a severance agreement that was against public policy contained in, among other things, the Uniformed Services Employment and Reemployment Rights Act of 1994 (38 U.S.C. 4301 et seq), and obtained under duress. We determine that because USERRA directs that its provisions may not be eliminated by a contract, the release of rights in the severance agreement may not be enforced to the extent it deals with the claims of termination based on plaintiffs membership in the military or the military service. As to plaintiffs other claims for defamation and overtime payments, there is no basis to invalidate the release and we affirm. For plaintiff: Stanley M. Becker; Shuff Law Firm and John J. Gulino. For defendant: David G. Freedman. Fourth Dist Div Three, 12/6/07; opinion by Rylaarsdam with Sills and Ikola concurring; 2007 DAR 18977, 2007 WL 4260646.

A jury returned a special verdict in favor of Casella on each of his claims against defendants, and awarded Casella a total of $480,003. The jury also found in favor of Casella with regard to SouthWests breach of the employment agreement claim. Defendants appealed from the judgment. Casella appealed as well, contending the trial court erred by failing to award him more prevailing-party attorney fees. We affirm the judgment in full. [] We reject each of defendants contentions of error as follows: 1. We hold the public policy underlying Casellas wrongful termination in violation of public policy claim is tethered to Penal Code section 387 which proscribes theft by false pretense through fraudulent misrepresentations. Thus, the trial court did not err by refusing dismiss that claim. 2. Defendants challenge to the trial courts denial of their motion for judgment notwithstanding the verdict (JNOV) fails on the grounds substantial evidence (1) showed that SouthWest required Casella to aid and abet its car dealership clients in fraudulent activities as defined in Penal Code section 487, and (2) supported the inference that at the time he hired Casella, [SouthWests president] knew Casella would be required to help track the fraudulent activities of those SouthWest clients. 3. Defendants have failed to show the trial court abused its discretion in making evidentiary rulings which prejudiced them. 4. Defendants have failed to show the trial court erred in instructing the jury. 5. The trial court properly denied defendants motion for a new trial after discharging its responsibilities under Code of Civil Procedure section 657. With regard to Casellas cross-appeal, we conclude the trial court correctly declined to award Casella the portion of attorney fees he incurred in prosecuting his tort claims against defendants be-8-

cause here, as in Exxess Electronixx v. Heger Realty Corp. (1984) 64 Cal.App.4th 698, the attorney fees provision contained in the employment agreement expressly limits the recovery of prevailing-party attorney fees to those incurred in seeking to enforce that agreement. For plaintiff: Lee A. Wood, Jeffrey R. Salberg, and Richard Allen Jorgensen. For defendants: J. Scott Russo. Fourth Dist Div Three, 12/12/07; opinion by Fybel with Moore and Aronson concurring; 2007 DAR 18312, 2007 WL 4328440.

FOURTH DISTRICT AFFIRMS JUDGMENT ON JURY VERDICT IN FAVOR OF SALES MANAGER DISCHARGED FOR REPORTING FRAUDULENT BUSINESS PRACTICES
CASELLA v SOUTHWEST DEALER SERVICES INC. Plaintiff Zachery Casella sued his former employer and its president ... for wrongful termination in violation of public policy, fraud, and fraudulent inducement of employment in violation of Labor Code section 970. Casella claimed his employment was terminated because he reported SouthWests participation in some of its car dealership clients fraudulent business practices... SouthWest filed a cross-complaint against Casella for misappropriation of trade secrets and breach of the parties employment agreement. SouthWest dismissed its misappropriation of trade secrets claims before trial.