United States: California Employment Law Notes - November 2013

Employer Was Entitled To "Substantial Motivating Factor" Jury Instruction

Alamo v. Practice Mgmt. Info. Corp., 219 Cal. App. 4th 466 (2013)

In one of the first appellate opinions to consider the new jury instructions required for employment discrimination cases as set forth by the California Supreme Court in Harris v. City of Santa Monica, 56 Cal. 4th 203 (2013), the Court of Appeal reversed a judgment in favor of the plaintiff in this pregnancy discrimination case. The trial court had erroneously instructed the jury that the plaintiff had to prove her pregnancy-related leave of absence was "a motivating reason" for her discharge and not a "substantial motivating reason" as required by Harris. The Court further held, however, that the employer in this case was not entitled to an instruction on the mixed-motive or same-decision defense (i.e., that the employer would have made the same decision in the absence of a discriminatory or retaliatory motive) because the employer had failed to plead that defense or any other affirmative defense alleging that it had a legitimate, non-discriminatory and non-retaliatory reason for its discharge decision.

Employee Who Donated Kidney Could Proceed With Association-Based Disability Discrimination Claim

Rope v. Auto-Chlor Sys. Of Wash., Inc., 2013 WL 5631616 (Cal. Ct. App. 2013)

When he was hired in September 2010, Scott Rope informed his new employer (Auto-Chlor) that he planned to donate a kidney to his physically disabled sister and requested paid leave to do so under the then-newly enacted (but not yet effective) Donation Protection Act ("DPA"), Cal. Lab. Code § 1508, et seq. Despite receiving satisfactory performance reviews, Rope was terminated on December 30, 2010, two days before the DPA became effective. Rope sued Auto-Chlor on a variety of theories, and the trial court sustained the employer's general demurrers and dismissed the action. The Court of Appeal reversed in part, holding that Rope could proceed with his claims for association-based disability discrimination, failure to maintain a discrimination-free workplace, and wrongful termination in violation of public policy. The Court affirmed dismissal of Rope's claim under the DPA because his employment was terminated before the statute became effective on January 1, 2011.

Employer Was Not Liable For Employee's Negligent Driving

Halliburton Energy Servs., Inc. v. Dept. of Transp., 220 Cal. App. 4th 87 (2013)

Halliburton provided Troy Martinez with a company vehicle to use in the execution of his duties. After completing a day's work, Martinez drove to Bakersfield with his family to purchase a car for his wife. The trip to Bakersfield exceeded his normal commute by approximately 140 miles (Martinez had traveled to Bakersfield for work in the past). After leaving the dealership, Martinez struck a vehicle, injuring the six plaintiffs. The six injured plaintiffs sued Halliburton, Martinez, and others. The trial court granted Halliburton's motion for summary judgment, and the Court of Appeal affirmed, holding that even though Martinez was driving a company-owned vehicle and had traveled to a place where he had occasionally performed work, this trip was "entirely personal" and was not undertaken for the benefit of Halliburton. Further, the Court recognized that Martinez was not performing services or running errands for Halliburton during the trip, nor was his supervisor aware of his trip to Bakersfield until after the accident. Accordingly, Halliburton could not be said to have assumed the risk of a traffic accident during this trip nor was such a risk inherent in, typical of, or broadly incidental to, Halliburton's enterprise. See also State of Cal. v. Superior Court, 2013 WL 5620879 (Cal. Ct. App. 2013) (CHP was not liable for accident involving third-party tow truck company); compare Moradi v. Marsh USA, Inc., 219 Cal. App. 4th 866 (2013) (employee who stopped at a frozen yogurt shop was acting within the scope of her employment when she when she was commuting home from work).

Former Employer's Non-Trade Secret Claims Should Not Have Been Dismissed

Angelica Textile Servs., Inc. v. Park, 2013 WL 5615079 (Cal. Ct. App. 2013)

Angelica Textile Services, a large laundry business, sued a new competitor in the laundry business and one of Angelica's former employees on a variety of theories, including a claim under the Uniform Trade Secrets Act ("UTSA"). Prior to trial, the trial court granted defendants' motion for summary adjudication of all of Angelica's non-UTSA claims on the ground that those claims were preempted or displaced by the UTSA. A jury later found that none of the information that Angelica asserted had been misappropriated was a trade secret within the meaning of the UTSA. On appeal, Angelica asserted the trial court had erred in dismissing its non-UTSA claims for breach of contract, breach of fiduciary duty, violation of the Unfair Competition Law, interference with business relationships and conversion, and the Court of Appeal agreed, reversing the pre-trial dismissal of those claims. See also Andreini & Co. v. MacCorkle Ins. Serv., Inc., 219 Cal. App. 4th 1396 (2013) (Cal. Rule of Court 8.278 permitting recovery of costs for interest expenses incurred to borrow funds to deposit as security pending appeal of adverse judgment is not retroactive).

Former Employee Was Properly Convicted For Disrupting Employer's Computer System

People v. Childs, 2013 WL 5779044 (Cal. Ct. App. 2013)

A jury convicted Terry Childs of disrupting or denying computer services to an authorized user (his employer, the City and County of San Francisco) pursuant to Cal. Pen. Code § 502(c)(5). He was sentenced to four years in state prison and ordered to pay more than $1.4 million in restitution. Childs had served as the principal network engineer for the Department of Transportation and Information Services of the City and County of San Francisco. Childs had, by preventing anyone else from having administrative access to the computer network, sought to keep from being laid off or from having his work outsourced. In addition, Childs had failed to reveal his administrative password; locked the city out of the network; disabled console ports; applied access controls and sought to copyright in his own name a slightly sanitized version of the city network designs and configurations. The prosecution contended that Childs' conduct had made the network vulnerable to intrusion; precluded the city from maintaining, troubleshooting or adding new city departments onto the network; and required the city to spend large sums of money to regain administrative access to its network. The Court of Appeal affirmed the judgment, holding that Section 502(c)(5) does not apply only to "unauthorized hackers" but is also applicable to an employee such as Childs who locked his employer out of its own computer system.

Trial Court Should Not Have Dismissed Employee's Claim For Punitive Damages

Davis v. Kiewit Pac. Co., 2013 WL 5530356 (Cal. Ct. App. 2013)

Lisa Davis sued her employer, Kiewit Pacific Company, for gender discrimination, hostile work environment harassment, failure to prevent harassment, gender discrimination and retaliation. The jury awarded Davis $160,000 for past lost earnings and $110,000 for non-economic (emotional distress) damages. Prior to trial, the court granted Kiewit's motion for summary adjudication of Davis' request for punitive damages. In this appeal, the Court of Appeal reversed the dismissal of the punitive damages claim, finding triable issues of material fact regarding whether the employees about whom Davis had complained (the project manager and the equal employment opportunity officer) were managing agents of Kiewit. See also State of Ariz. v. ASARCO LLC, 2013 WL 5746408 (9th Cir. 2013) (300,000-to-1ratio of punitive to compensatory damages was constitutionally excessive, should be reduced to 125,000 to 1).

Employer Was Not Required To Pay For Attorney Selected By Employee

Carter v. Entercom Sacramento, LLC, 219 Cal. App. 4th 337 (2013)

As a result of drinking too much water in an ill-conceived radio contest, a woman died. Her family sued the company that owned the radio station (Entercom) and Matt Carter, an Entercom employee who helped conduct the contest. Entercom offered to provide legal counsel to Carter, but he chose to hire his own attorney and refused to use the attorney the company's insurance carrier had appointed for him. When the insurer refused to pay for the attorney Carter had selected, he cross-complained against Entercom, seeking indemnity under Cal. Lab. Code § 2802 for the fees and costs he incurred paying the lawyer whom he had selected. The trial court found that none of the fees and costs that Carter incurred after the insurer appointed an attorney to represent him were necessary expenditures within the meaning of Section 2802. The Court of Appeal affirmed, holding that Carter did not have an absolute right to choose his own attorney at the expense of his employer or its insurer under Section 2802.

Some Of Alleged Harasser's Claims For Defamation And Infliction Of Emotional Distress Were Properly Dismissed

Cho v. Chang, 219 Cal. App. 4th 521 (2013)

Jessica Chang sued her former employer and her former co-worker (Howard Cho) for sexual harassment and related torts. In response, Cho filed a cross-complaint against Chang, alleging defamation and infliction of emotional distress. Chang then filed a special motion to strike Cho's cross-complaint as a SLAPP (Strategic Lawsuit Against Public Participation) suit, pursuant to Cal. Code Civ. Proc. § 425.16. Because some of Chang's comments about Cho were protected activity (e.g., the claims she filed with the EEOC and the DFEH) and some were not (e.g., oral statements she made about Cho to her co-workers), the trial court struck allegations in the cross-complaint that attacked Chang's protected activity, while allowing the unprotected theories to remain. The Court of Appeal affirmed.

Former Employee Could Proceed With Retaliation Claim Filed With Labor Commissioner

American Corp. Sec., Inc. v. Su, 220 Cal. App. 4th 38 (2013)

Paul Thomas filed a complaint with the Labor Commissioner, claiming he was fired from his job with American Corporate Security, Inc. (ACS) in retaliation for asserting his rights under the Labor Code. Labor Code § 98.7 requires the Labor Commissioner to give notice of determination "not later than 60 days after the filing of the complaint." More than three years after Thomas filed his claim, the Labor Commissioner found reasonable cause to believe there was a violation. Relying upon the statute, ACS petitioned for a writ of mandate to order the Labor Commissioner to retract the determination and order for remedial action. The trial court sustained the Labor Commissioner's demurrer and dismissed ACS's petition. The Court of Appeal affirmed, holding that ACS has an adequate legal remedy to challenge the tardiness of the Labor Commissioner's determination in the context of its defense against the Labor Commissioner's civil action to enforce her order. See also Natkin v. CUIAB, 219 Cal. App. 4th 997 (2013) (unemployed attorney who sought to offset wages earned with business expenses allegedly incurred in setting up his own business was properly denied unemployment benefits).

Security Guards' Class Action For Unpaid Meal Breaks Was Properly Certified

Abdullah v. U.S. Sec. Assocs., Inc., 2013 WL 5383225 (9th Cir. 2013)

Muhammed Abdullah is a former employee of USSA, a private security guard company. Most of USSA's employees work at "single post" locations where no other guards are on duty at the same time. As a condition of employment, all of USSA's employees are required to sign "on-duty meal period agreements" in which the employees agree to an "on-duty" meal period that will be counted as time worked and compensated by the company. Employees who do not sign the agreement are not hired, and one of the requirements of the job is for USSA employees to eat meals on the job. Plaintiffs allege that USSA's policy of requiring employees to work through their legally mandated meal periods creates liability for paying premium compensation for missed meal periods pursuant to Cal. Lab. Code § 226.7. The district court certified a meal break sub-class pursuant to Fed. R. Civ. P. 23(b)(3). In this appeal, USSA challenged the certification of the sub-class on the grounds that plaintiffs did not establish commonality under Rule 23(a)(2) or predominance under Rule 23(b)(3). The Ninth Circuit affirmed the certification of the sub-class, holding that USSA's adoption of a single-guard staffing model satisfied the commonality requirements of Rule 23(a)(2). Further, the Court held that plaintiffs' claims "will prevail or fail in unison" as required by Rule 23(b)(3). See also Benton v. Telecom Network Specialists, Inc., 2013 WL 5631982 (Cal. Ct. App. 2013) (cellphone tower technicians' class action for meal and rest break violations and failure to pay overtime should have been certified despite evidence of diverse working conditions and policies); Rodriguez v. RWA Trucking Co., 219 Cal. App. 4th 692 (2013) (federal law preempts California state law prohibiting non-brokers from transacting insurance on behalf of others as applied to motor carrier, but state law prohibiting deductions from earnings for the cost of workers' compensation was not preempted by federal law).

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