December 9, 2014

Court's Holding that ADHD is not a Disability Under the ADA Leaves California Employees Free to File Under State Law

Weaving v. City of Hillsboro, 763 F.3d 1106 (2014), involved an Oregon police officer who claimed he was terminated because of his disability, ADHD (Attention Deficit Hyperactivity Disorder). The jury found for Officer Weaving, however the Ninth Circuit took his verdict away, claiming that ADHD may have limited his life functions of working and/or interacting with others, but it did not "substantially" limit those life functions.

It is a pity for Officer Weaving that he didn't work in the State of California, where a disability is defined by statute as "limiting" rather than "substantially limiting" a life function. California employees can certainly argue that ADHD is a disability because of this difference. California employees should always file a charge with the Department of Fair Employment and Housing (the DFEH, the California state agency governing employment discrimination and/or have the Equal Employment Opportunity Commission (the federal agency) cross-file the claim with the DFEH.

December 9, 2014
Jody I. LeWitter

December 2, 2014

First Amendment Free Speech Rights Are Not Trivial

Plaintiff Thomas claimed that her employer retaliated against her because she exercised her free speech rights and spoke out on matters of public concern. Thomas v. County of Riverside, 763 F.3d 1167 (2014).

The lower court dismissed her case, characterizing her claims as "petty workplace gripes". Ms. Thomas claimed that her employer retaliated against her by removing her from an unpaid position, removing her from a teaching assignment, and denying her a previously granted vacation.

Discussing the importance of First Amendment rights, including the fact that these rights might be chilled by the types of retaliatory actions the County of Riverside took against Ms. Thomas, the Ninth Circuit reversed the dismissal of the case, emphasizing the importance of free speech for public employees.

December 2, 2014
Jody I. LeWitter

November 20, 2014

California Supreme Court Lets Franchisor off the Hook for Sexual Harassment, but Victims of Sexual Harassment Should Always Look at Franchisor's Role

Franchise relationships are growing and need to be regulated. It is important to make both the franchisor and the franchisee responsible for the companies they create and/or run and/or set up. According to California Law, a franchisee is granted the right to engage in a business under a plan or system set up by the franchisor (think McDonald's where 80% of its restaurants are operated under franchise agreements, with 20% operated as a chain).

The California Supreme Court put its thumbs on the wrong side of the scale of justice by letting Domino's Pizza off the hook for sexual harassment because it was a franchisor. Patterson v. Domino's Pizza, 60 Cal.4th 474 (2014). Nonetheless, it is important that any victim of sexual harassment or wrongful conduct look carefully at the franchise contract and the conduct of the franchisor and franchisee before determining whether or not to sue a franchisor.

The California Supreme Court found that, on the facts of this case, Domino's didn't have control or the right to control hiring/firing/discipline/employment policies and practices, and thus wasn't responsible for the sexual harassment of Ms. Patterson. The Court declared that since Domino's doesn't have the right to control, or actual control, over these things, an employee can only sue the franchisee for sexual harassment. In reality, the Court decided it just didn't want to make the franchisor responsible - regardless of the facts or the law.

In every case involving a franchise relationship, it is important that employees and their lawyers look carefully at all the facts involving the right to control. Some cases have gone the opposite way of Patterson. For example, Nichols v. Arthur Murray, Inc., 248 Cal.App 2d 610 (1967), concluded that the franchisor had the right to control day-to-day operations including employment relations. It came out the opposite of the Patterson case because of the specific facts regarding the franchisor's "right to control" the franchise.

It is also important to ask whether the franchisor actually exercised control and/or acted as a joint employer. As noted by the dissent in the Patterson v. Domino's case, the franchisor did exercise control, and did act as a joint employer. It did so by regular inspections and threats that it could revoke a franchisee's status. It went so far as to "strongly hint[ed]" that certain employees should be fired.

Just because the California Supreme Court made a bad decision doesn't mean that employees should give up on making a case for franchisor liability.

Jody LeWitter
November 20, 2014

September 19, 2014

FedEx Drivers are Employees not Independent Contractors: If it Looks Like an Employee, Wears the Uniform of an Employee and Drives the Standard Truck of an Employee, It is An Employee, Even if Fed Ex calls its Drivers "Independent Contractors"

Can one even imagine that FedEx would so boldly claim that its drivers are independent contractors rather than employees because it lacks sufficient control over the drivers' work? Really? Walk the streets anywhere and you'll see the ubiquitous FedEx driver, in the exact same trucks, wearing identical uniforms and delivering packages in the exact same manner.

It is hard to even dream that FedEx would claim these folks aren't entitled to the protections of employment status. But they did. In order to save a buck, FedEx came up with an elaborate justification to claim their employees aren't employees.

FedEx claimed and claims that because they make these drivers buy their own trucks and scanners, pay for their own uniforms, and work whatever hours are necessary to get FedEx's work done, the drivers aren't employees. They claim that because they require their drivers to sign contracts saying they are independent contractors, that they are independent contractors. They claim just because they say FedEx can't control the "manner or means" of getting the job done, regardless of what they do, that these drivers are independent contractors.

But the US Ninth Circuit Court of Appeals, in Alexander v. Fed Ex Ground Package System, 765 F.3d 981 (2014) was able to clearly distinguish between what FedEx says and what it actually does. Yes, the drivers have to buy their own trucks, but the trucks have to be exactly as required by FedEx. Yes, the drivers have to buy their own uniforms, but it has to be, well, a FedEx uniform. And FedEx says the employees have freedom to determine how to do their job, but really, they don't. FedEx keeps tight control on exactly what these FedEx drivers do day in and day out, down to how they interact with customers and how they look.

The history of this case should make these FedEx drivers exceedingly happy that they live in the Golden State of California. This is because there were numerous class action cases against FedEx, and the courts consolidated them into multi-district litigation, where they were heard before the US district court in Illinois. There the court tossed the cases out, ruling for FedEx, that because FedEx said these drivers were independent contractors, and because FedEx claimed that the contractors had "significant entrepreneurial opportunity", the drivers were independent contractors.
On appeal, however, the Ninth Circuit held that the lower court in Illinois was wrong, under California law, explaining that traditional California law holds that if the employer has the right to control the means and methods of work, then these folks are employees. No smoke and mirrors can make it different.

There are so many instances out there where employers try to get away with providing less to their employees by calling them independent contractors. At least in California, this case is a strong strike for the rights of working people.

Jody LeWitter
September 19, 2014

August 6, 2014

California Supreme Court Upholds Protections for Undocumented Workers

In a partial victory for California workers, the State's highest court ruled, in Salas v. Sierra Chemical Co. 59 Cal.4th 407 (2014) that employers cannot get away with violating California employment laws just because they find evidence, after being sued, that their mistreated employees did not have proper authorization to work in the United States.

Mr. Salas had worked for Sierra Chemical Company in California for a number of years when he injured his back on the job. The company had regular seasonal layoffs during the winter months and typically hired back its workers when business picked up in warmer months. However, after Mr. Salas injured his back on the job and filed a worker's compensation claim, Sierra refused to hire him back until he could prove that he no longer needed an accommodation for his back injury. Mr. Salas filed a lawsuit against Sierra for unlawful employment discrimination and retaliation under the California Fair Employment and Housing Act, claiming that Sierra refused to accommodate his physical disability and refused to rehire him in retaliation for having filed a worker's compensation claim.

Almost two years after refusing to rehire Mr. Salas, and just before the case was set to go to trial, Sierra found evidence that Mr. Salas had used someone else's social security number when he applied for the job many years ago. The company argued that this information provided a complete justification for throwing his lawsuit out of court. Fortunately, the California Supreme Court disagreed, ruling that an employer cannot completely escape from liability just because it later finds evidence, after a lawsuit is filed, that the employee it discriminated against was undocumented. The Court explained that employers would otherwise have a powerful incentive to hire undocumented workers, or "look the other way" when hiring employees they suspect to be undocumented, because they would be able to violate any number of California's employment laws (including minimum wage laws, child labor laws, and anti-discrimination laws) and get away with it if any of their undocumented employees ever sued to enforce the law.

In reaching its decision, the California Supreme Court examined both federal immigration law and California employment law. The Court determined that since employers are not allowed to intentionally hire undocumented workers under federal law, the State cannot require an employer to pay lost wages to the employee for the time period after it learns of the employee's undocumented status. (The state also cannot force an employer to reinstate an undocumented employee.) However, in order to help police and enforce California's employment laws, the State can require employers to pay for other financial damages incurred as a result of its unlawful acts, including back pay for the time period before it finds evidence of an employee's undocumented status. In other words, if employers violate the California's employment laws, they can still be forced to pay their employees large financial awards even if they later find evidence that their employees did not have proper work authorization.

August 6, 2014
Heather Conger

July 15, 2014

A "Split Decision": California Supreme Court Addresses Arbitration Agreements and Gives Some Good News (But Mostly Bad News) to Employees

In the Iskanian v.CLS Transportation Los Angeles, LLC decision, the California Supreme Court addressed the enforceability of employer-employee arbitration agreements in various circumstances. Iskanian v.CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014). The case delivered some good news - but mostly bad news - for employees and attorneys who represent employees.

First, as to the bad news: Boxed in by the United States Supreme Court's decisions on the enforceability of arbitration agreements, including in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2001), the California Supreme Court upheld the validity of class action waivers in employment arbitration agreements. The California Supreme Court overruled its previous decision in Gentry v. The Superior Court of Los Angeles, 42 Cal.4th 443 (2007) as preempted by the Federal Arbitration Act ("FAA").

The California Supreme Court also addressed the recently developed and powerful argument that class action arbitration waivers are invalid under the National Labor Relations Act ("NLRA"), which provides workers with a right to collective organize and advocate for their rights as a group. That argument gained traction with the National Labor Relations Board ("NLRB") in its recent decision in D.R. Horton. Inc., 357 NLRB No. 184 (2012), but unfortunately the California Supreme Court sided with the Fifth Circuit's contrary opinion in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013). The California Supreme Court held that the NLRA was no obstacle to the applicability of the FAA to support the enforcement of class action waivers in arbitration agreements.

There is a silver lining to every cloud, and the Court's decision in Iskanian provided one. The Court held that an employer-employee arbitration agreement cannot provide for a waiver of employees' rights to undertake a representative action under the California Private Attorneys General Act ("PAGA"), as that would violate public policy. The Court held that the FAA did not mandate a contrary result, while explaining that "a single-claimant arbitration under the PAGA for individual penalties will not result in the penalties contemplated under the PAGA to punish and deter employer practices that violate the rights of numerous employees under the Labor Code. That plaintiff and other employees might be able to bring individual claims for Labor Code violations in separate arbitrations does not serve the purpose of the PAGA, even if an individual claim has collateral estoppel effects." In so holding, the Court also explained that PAGA does not violate the principle of separation of power under the California Constitution.

There are several interesting things to think about moving forward after this case. As an initial matter, it remains to be seen as to whether this will result in employers inserting more arbitration agreements in employment contracts and handbooks. The reason is that, although the United States and California Supreme Courts have made it easier for employers to do so, employers still need to be careful for what they wish for. Experience has demonstrated that arbitrations are costly for the employer, and they don't always come out the way the employer expects it to. For example, our firm has had excellent outcomes in arbitrations, including seven figure awards and awards of punitive damages.

Moreover, while Iskanian gives employers a new stick to enforce certain arbitration agreements, employees and their advocates faced with an arbitration agreement should not give up and lose hope because (1) arbitration agreements are still subject to challenge on unconscionability grounds (Iskanian did not change that), (2) PAGA provides at least some stick to enable employees to enforce their rights in "representative" actions, and (3) there are positive sides to an arbitration agreement. There is a positive side to arbitration agreements for employees because the employer generally has to pay the arbitrator's costs if the employee wins, there is no real appeal so the employer has to pay up quickly, and the arbitration can be quicker and less expensive for the employee.

We also all need to keep tabs on whether the U.S. Supreme Court decides to hear this case to address its holdings.

July 15, 2014
Benjamin Siegel

July 7, 2014

Supreme Court Bears Good News for Whistleblowers

In Thursday's unanimous Lane v. Franks decision, the Supreme Court decided that public employees are protected from retaliation when they testify in court about misconduct they observe on the job. Lane v. Franks, 134 S.Ct. 2369 (2014).

Edward Lane was a director of a program for underprivileged youth operated by Central Alabama Community College (CACC). As the director, he conducted an audit of the program's expenses and found that an Alabama State Representative, Susan Schmitz, was on the payroll even though she was not doing any work for the program! Mr. Lane terminated Ms. Schmitz's employment and soon thereafter, Ms. Schmitz was indicted on mail fraud and theft charges. Mr. Lane testified against Ms. Schmitz about why he fired Ms. Schmitz and Ms. Schmitz was ultimately convicted.

After he testified, Mr. Lane, along with 28 other employees were terminated. But a few days later, CACC's president Steve Franks hired back everyone other than Mr. Lane and one other employee. Mr. Lane filed a lawsuit claiming that Mr. Franks had violated his First Amendment rights by firing him in retaliation for testifying against Ms. Schmitz.

Prior cases have called into question when First Amendment protections apply to public employees. In determining whether a public employee is protected under the First Amendment, courts first determine whether the employee spoke as a "citizen" on "a matter of public concern." It was not Mr. Lane's job to testify against Ms. Schmitz - he merely learned about the corruption she was involved in through his job. The Court rightly determined that testimony in a court proceeding is a "quintessential example of citizen speech." The Court also decided that Mr. Lane's testimony about "corruption in a public program and misuse of state funds" was clearly a matter of public concern. Finally, the Court decided that the CACC did not have any justification for treating Mr. Lane differently.

The Supreme Court's ruling means that public employees who witness corruption at work will no longer be in the "impossible position" of being "torn between the obligation to testify truthfully and the desire to avoid retaliation and keep their jobs." Now public employees who learn about corruption or criminal activity on the job and testify about that unlawful conduct are still protected by the First Amendment. Even though this case applies specifically to First Amendment protections for public employees, the Court emphasized the importance of whistleblowing and the value of encouraging this type of speech which will likely have ramifications for both public and private sector employees.

This is a win for public employees and the public at large who have a shared interest in exposing corruption in government.

July 7, 2014
Jean Krasilnikoff

June 27, 2014

State Public Policy Claim Against Airline Preempted Because the Federal Aviation Act Occupies the Field of Aviation Safety

As Mr. Ventress learned the hard way - after three trips to the Ninth Circuit - it is tough to sue an airline for safety violations and/or termination for reporting safety violations.

Mr. Ventress claimed he was retaliated against as a flight engineer because he reported safety concerns. The case took three trips to the Ninth Circuit. In the first appeal, Ventress v. Japan Airlines (Ventress I) , 486 F. 3d 1111 (2007), the Ninth Circuit held that the Friendship Commerce and Navigation Treaty did not bar or preempt Mr. Ventress' claims. In the second trip to the Ninth Circuit, it held that the Airline Deregulation Act did not bar or preempt Mr. Ventress' claims. Ventress v. Japan Airlines (Ventress II), 603 F.3d. 676 (2010).

However, Mr. Ventress wasn't so lucky on his third journey to the Ninth Circuit, which held that Mr. Ventress' public policy/safety claims were barred by the Federal Aviation Act (FAA). The Court held that the claims would require the jury to decide safety questions that are governed by the FAA which occupies the field of aviation safety. Ventress v. Japan Airlines (Ventress III) 747 F.3d 716 (2014).

Although not a good outcome for Mr. Ventress, this is a fairly unique outcome limited to industries whose safety is carefully and extensively regulated by the federal government, such as the airline industry. Others should not be deterred from bringing state law public policy claims if, for example, fired for reporting a safety or other public policy concern.

June 27, 2014
Jody LeWitter
Public Policy

June 23, 2014

Same-Sex Harassment and Retaliation Case Reinstated by Court of Appeals

In good news for victims of sex harassment and retaliation, and especially for same-sex victims, Lewis v. City of Benicia, 224 Cal.App.4th 1519 (2014) reinstated many of the claims against the City of Benicia and one of its supervisors.

First, the California Court of Appeals made clear that the trial court overstepped its bounds when it dismissed a sexual harassment claim. Following the U.S. Supreme Court opinion in Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75 (1998), the court held that same-sex harassment which included sexual comments intended to humiliate the plaintiff due to his gender identity constituted sexual harassment. It reversed the lower court's ruling that the harassing conduct was not sufficiently "severe or pervasive" to constitute sexual harassment. It found that several months of a course of conduct of gifts and lunch purchases, sexual jokes, and pornographic computer images, was sufficient to bring a claim for sexual harassment.

On the other hand, the Court of Appeals dismissed a sexual harassment claim against another supervisor whose only conduct was showing computer pornography to a group of employees once or twice, and making an occasional joke.

Lewis also addressed a thorny evidentiary issue: in a retaliation claim, should a judge admit or exclude evidence of the underlying harassment where plaintiff's claim is that he/she complained about the harassment and was retaliated against for making the complaint? In the Lewis case, the lower court held that the evidence of the harassment itself was not admissible. Instead, the court simply read a statement about the harassment. The Court of Appeals found this to be error. In other words, the jury needs to understand and be presented with the underlying conduct about which the plaintiff complains in order for the jury to rule on a retaliation complaint.

All this is good news for plaintiffs in sexual harassment or retaliation claims. And stay tuned, because the California Court of Appeals specifically did not address recent amendments to the Fair Employment and Housing Act which specifies that "...sexual harassment conduct need not be motivated by sexual desire." Govt Code 12940(j)(4)(c). Certainly future cases interpreting this new provision should be helpful.

June 23, 2014
Jody LeWitter

June 13, 2014

U.S. Supreme Court Rules That Severance Payments are Taxable Wages

On March 25, 2014, the U.S. Supreme Court held that severance payments provided to a terminated employee are taxable. U.S. v. Quality Stores, Inc. 134 S.Ct. 1395 (2014). This case involved severance payments to employees laid off before and during bankruptcy proceedings. The size of the payments were determined by job security and length of employment. Given this case, most "severance payments" will be construed as taxable wages, wherein an employer should issue a W-2 and withhold taxes.

However, there certainly may be situations in which payments received from an employer at or around termination - at least some of the payment - may not be taxable wages. For example, if an employee is provided payment in lieu of a pending or possible discrimination claim, this payment certainly might contemplate payments for some combination of lost wages, emotional distress and/or attorney's fees. What the payment is actually intended to cover may vary in each situation. Thus, it is important to look at the underlying nature of the payment in order to determine whether a payment is taxable wages. And, as a precaution, it is important to clarify what the payment is for - preferably in a writing between the parties.

Alas, it is also important to note that even if a payment is not "taxable wages", there will most likely be taxes that are still due! For example, most emotional distress awards/settlements are taxable, just not taxable as wages. It is best to check with an employment lawyer and/or an accountant about this.

June 13, 2014
Jody LeWitter

January 21, 2014

Invasion of Privacy Claim Established Where Supervisor Blatantly Shares Medical Condition With Co-Workers

There is an employee-with-a-disability's worst nightmare. You suffer from a disability. You try your best to go to work each day despite your disability (which here is a mental disability). Because of the stigma associated with the disability, you keep your medical condition to yourself. When you must miss work due to your disability, you faithfully let your employer know. Because you want your employer to understand that there really is a good reason for your absence, you let your employer know the nature of your disability and that it caused you to miss work. Then, your employer stands up on a chair and screams to the world, including all your co-workers, "Ignat was bipolar!" Ignat v. Yum! Brands, Inc., 214 Cal.App.4th 808 (2013).

As a result of Ignat's supervisor's loose lips, Ms. Ignat's co-workers shun her and ask whether she is going to "go postal". Ms. Ignat sues for invasion of privacy. The employer defends based on a bunch of technicalities. First, it defended the case based on the fact that she filed her legal papers too late. The trial court bought this, but the Court of Appeals reversed. Then it defended claiming you can only state a claim for invasion of privacy if the invasion is done in writing, rather than orally. The lower Court bought this argument, and dismissed Ms. Ignat's claim. Luckily for her, the Court of Appeals agrees that an invasion of privacy doesn't require a written agreement, calling such a requirement "outmoded".

I wish Ms. Ignat good luck back in the trial court. Yum! Brands (which, by the way, owns the likes of Kentucky Fried Chicken and Taco Bell) should apologize to Ms. Ignat rather than fighting her claim on technical grounds.

Jody I. LeWitter

December 31, 2013

Retaliation Claim Survives Even When Underlying Sexual Harassment Claim Fails

Sometimes courts raise the bar on sexual harassment claims too high. Whether the sexual harasser's conduct is "severe" or "pervasive" enough to go to trial often seems to be determined by the subjective lenses of the judges. The judges' lenses are often colored by their own life experience. Certainly whether a judge is a "he" or "she" may impact the analysis. Although here in Westendorf v. West Coast Contractors of Nevada, Inc. 712 F.3d 417 (9th Cir 2013), the three judge panel, including a female judge, all found against Ms. Westendorf's sexual harassment claim. Judges ought to walk a mile in the shoes of the victims of this offensive conduct, and they might not be so quick to declare that the conduct isn't severe or pervasive enough. I guess the judges weren't as offended as I was by all the talk about breasts and orgasms.

However, the same panel of judges did understand that Ms. Westendorf's claim for retaliatory termination should go forward, holding that there was a material fact as to whether she was fired because she complained of the crude and offensive remarks.

So, for Ms. Westendorf, the glass is half empty or half full, depending on the perspective!!

Jody I. LeWitter

December 23, 2013

Be Careful What You Say In Your Disability Application: It May Not Bar Your Case, But You'll Have Some Explaining to Do

The best that can be said about Smith v. Clark County School District (9th Cir 2013) 727 F.3d 950, as well as all the case law examining whether what an employee said on his or her disability application bars a claim for disability discrimination/failure to accommodate, is: BE CAREFUL! Anything you say can and will be used against you. However, as explained by the Ninth Circuit in Smith , if what you say can be interpreted in more than one way, this is a question for the jury.

Ms. Smith worked as a literacy specialist at a school district. She had a back injury that limited her mobility. When her principal informed her that she was being assigned to teach kindergarten for the next academic year, she told the principal that her back injury prevented her from doing so. Thereinafter, Ms. Smith aggravated her back injury, and was off work totally until the end of the academic year. She applied for disability benefits and family leave.

Ms. Smith filed a claim for disability discrimination and failure to accommodate under the Americans With Disabilities Act (ADA). The employer-school district filed for summary judgment.

Ms. Smith explained that by filing for disability benefits and family leave, she meant she was temporarily disabled, not that she could never perform her literacy specialist job. The lower court granted summary judgment, holding that Ms. Smith could not both claim disability and claim she could do the job.

The Ninth Circuit reversed, noting that employees should receive a "wide latitude to overcome apparent conflicts between their disability applications and their ADA claim."

So, BE CAUTIOUS! If you have or may have a disability or reasonable accommodation claim, and you need to fill out any paperwork (such as a disability application, workers compensation claim, personal injury case insurance forms, or family leave form) be careful what you say! They are watching you! If possible, consult with a lawyer beforehand!

Jody I. LeWitter
December 23, 2013

December 17, 2013

Labor Arbitration May Preclude Common Law Claims Such as Wrongful Termination in Violation of Public Policy

The law is pretty well settled that a labor arbitration does not generally bar a unionized employee from bringing a claim under the Fair Employment and Housing Act, such as a discrimination, sexual harassment or retaliation claim. See Alexander v. Gardner-Denver (1974) 415 U.S. 36; Camargo v. California Portland Cement Co. (2001) 86 Cal.App.4th 995. However, Wade v. Ports America Management Corporation (2013) 218 Cal.App.4th 648 declined to extend this good fortune to non-statutory claims such as wrongful termination in violation of public policy.

Mr. Wade brought a claim for wrongful termination in violation of public policy. His public policy claim was for race discrimination. Wade justified this outcome by noting the uniqueness of the Fair Employment and Housing Act's statutory scheme. That part, I generally understand, even if I don't agree with it However, the Court didn't stop there. It came up with a hard-to-follow and not so well- reasoned argument that Mr. Wade's public policy against race discrimination was violated was encompassed in his union arbitrations and therefore precluded by it. The fact that his union arbitration didn't in any way address race discrimination, didn't stop the Court from its labored and illogical analysis that it did. So, be very careful of your labor arbitration's impact on any civil case you might bring!

Jody I. LeWitter
December 17, 2013

November 20, 2013

Enforceability of Wage Claim Arbitrations Hangs in the Lurch Pending Remand in California Supreme Court's Sonic II

The tension between an employee's simple right to receive his wages for work he performed and the U.S. Supreme Court's favoritism towards employers, is almost palpable in the tortured history of Sonic-Calabasas A, Inc. v. Moreno (Sonic II) ___ Ca.4th ___ (Oct. 17, 2013).

Here the employer imposed an arbitration agreement upon Mr. Moreno. When Mr. Moreno filed a simple Labor Commission claim to collect his vacation pay, the employer refused to attend the Labor Commission (Berman) hearing, and instead moved to arbitrate the claim. I suspect the move was a ploy to make it so expensive and time consuming for poor Mr. Moreno to collect what wasn't a large amount of money to begin with, that he'd just give up. Lucky for Mr. Moreno, the Labor Commissioner realized the negative implications for all employees just trying to get paid for the work they do, if they can't go to the Labor Commission.

In 2011 the California Supreme Court held that Mr. Moreno was entitled to his Labor Commission hearing, and that if the employer was dissatisfied with the results of the Berman hearing, it could then move to arbitrate. This was a fairly benign and logical holding.

But I guess this wasn't enough for the anti-employee U.S. Supreme Court. It vacated the California Supreme Court opinion, and sent the case back to the California courts for reconsideration. Sonic-Calabasas A, Inc. v. Moreno 132 S.Ct 496 (2011). (I blogged about this previously, see entry of November 20, 2011.)

So, now we are back in the California Supreme Court's "court." Given that the U.S. Supreme Court held that arbitrations are practically invincible, the California Supreme Court felt forced to recant its prior opinion. Thus, it held that a Labor Commission hearing on the way to an arbitration imposed significant delays and could not be tolerated under the U.S. Supreme Court's holding on AT&T Mobility LLC v. Concepcion 131 S.Ct. 1740 (2011).

However, the California Supremes held out some hope. They held that the State of California still has the right to evaluate whether the arbitration agreement is unconscionable because it is, for example, unreasonably one-sided in favor the employer. Because the evidence related to that question had not been developed, the California Supremes sent the case back to the trial court to consider.

We can expect a hearing below looking at a variety of factors, including how unfair this is to Mr. Moreno. If Mr. Moreno has to go to arbitration, he'll need to hire a lawyer to obtain his vacation pay. This is absurd. He'll be paying more in attorney's fees than he will receive in his vacation pay! Likewise, if he has to pay the arbitrator to obtain what would have otherwise been a free hearing before the Labor Commission, this will wipe out his vacation pay, and is unconscionable and unreasonable.

And speaking of speed and efficiency - the ostensible values of the U.S. Supreme Court in basically making arbitration practically invincible - how many court hearings and years must pass before Mr. Moreno simply gets a determination of whether he is owed his vacation pay?

Jody LeWitter