Guidelines from the Northern District Regarding Class Action Settlements
The United States District Court for the Northern District of California has issued a document called “Procedural Guidance for Class Action Settlements” (Guidance). The Guidance is extremely helpful, and offers a glimpse at the prevailing wisdom with respect to settlements of class actions, at least in federal court.
The first section of the Guidance addresses motions for preliminary approval (MPAs), making the following noteworthy points:
Ayala v. Antelope Valley: When are “Independent Contractors” really Employees?
On June 30, 2014, in Ayala v. Antelope Valley Newspapers, Inc., the California Supreme Court clarified the appropriate test to use when determining whether “independent contractors” are actually employees for the purposes of California’s wage and hour laws. The Court also provided a clear road map that lays out how courts should analyze class actions that raise this issue. These clarifications are welcome, and should help more plaintiffs achieve class certification in similar cases in the future.
The plaintiffs in Ayala deliver daily newspapers to people who subscribe to the Antelope Valley Press. Antelope Valley Newspapers, Inc. (Antelope) classifies these delivery men and women (called carriers) as independent contractors, not employees. As a result, they are deprived of the wage and hour protections to which they would otherwise be entitled.
An Epic Dissent: Justice Werdegar Nails it in Iskanian
The majority opinion in Iskanian has been discussed at length, both here and in every other employment blog that touches on California law. What has been overlooked, however, is the incredibly eloquent and persuasive dissenting (and concurring in part) opinion written by Justice Kathryn Werdegar.
The fundamental points made by Justice Werdegar are that (1) class actions are a form of collective action; (2) Congress has made it clear for eighty years that contracts that strip employees of the right to engage in collective action are illegal; and (3) therefore class action waivers are illegal and unenforceable.
Ninth Circuit Clarifies Some Issues and Ducks Others Regarding Arbitration Agreements
The Court of Appeal for the Ninth Circuit recently issued a pair of decisions that help to clarify the law surrounding arbitration agreements: Davis v. Nordstrom (holding that no particular form of notice is required to modify existing arbitration agreements) and Johnmohammadi v. Bloomingdale’s (opportunity to opt out of arbitration agreements with class action waiver defeats argument that federal labor laws bar such waivers).
In Davis v. Nordstrom, Inc. (9th Cir.2014) 2014 DJDAR 8019 the court clarified the law with respect to whether and how an employer can modify an existing arbitration agreement so as to prohibit class actions. The plaintiff in Davis had received an employee handbook that required arbitration but permitted class actions. In 2011, Nordstrom revised the arbitration agreement to bar class actions.
A Win for California Workers: Iskanian Upholds and Strengthens PAGA Claims
In Iskanian v. CLS Transportation Los Angeles, LLC, filed on June 23, 2014, the California Supreme Court strengthened the Private Attorneys General Act (PAGA), Labor Code § 2698, et seq. Specifically, the Court held that arbitration agreements that waive employees’ right to proceed with representative PAGA actions violate public policy. As such, they are not enforceable. This aspect of the Court’s opinion is a huge win for employees, and means that PAGA actions are alive and well even where employers seek to avoid them through contractual waivers. (more…)
The Bad News: Supreme Court finds Qualified Immunity in Lane v. Franks
[This is the second of two posts on the United States Supreme Court’s decision in Lane v. Franks. The facts of the case and its procedural history are set forth in the first post, and will not be repeated here.]
After siding with the plaintiff in the first part of its opinion, the Supreme Court turned its attention to the issue of qualified immunity. Qualified immunity is a judicially created doctrine that drastically limits people’s ability to sue public officials for illegal conduct. The way that it works is that courts are not permitted to award damages in lawsuits against government officials in their personal capacity unless two requirements are met:
First, the government official must have violated a statutory or constitutional right.
Second, the right at issue must have been clearly established at the time of the violation. However, in order for a court to find that a right was clearly established, there does not need to be a prior case with identical, or even materially similar, facts. Instead, the question is whether the preexisting law provided the defendant with fair warning that his or her conduct was unlawful. See Flores v. Morgan Hill (9th Cir.2003) 324 F.3d 1130, 1136-37.
In Lane, the Supreme Court found that the appropriate question for resolving whether qualified immunity applied was whether the defendant, Mr. Franks, could reasonably have believed, at the time that he fired the plaintiff, that a public employer could terminate an employee because of testimony that the employee gave that was outside of the scope of the employee’s normal job duties. (more…)
The Good News: Supreme Court Expands Free Speech Protection in Lane v. Franks
In Lane v. Franks (June 19, 2014) No. 13-483, the Supreme Court of the United States provided further guidance regarding two important issues for government employees who blow the whistle. First, the Court explained that speech that merely concerns the employee’s job duties, as opposed to being part of the employee’s job duties, is protected under the First Amendment. Second, the Court clarified what a government employee must show in order to survive a motion to dismiss based on qualified immunity. (The qualified immunity issue will be discussed in a separate blog post that will follow shortly.) (more…)
California Court Clarifies Exhaustion and Minimum Number of Employees Requirements under the Fair Employment and Housing Act
A recent decision from California’s Fourth Appellate District clarifies two oft-ignored aspects of claims brought under the Fair Employment and Housing Act (FEHA): the administrative exhaustion requirement and the requirement that an employer have at least five employees in order to be covered by the FEHA. (more…)
U.S. Supreme Court Expands Whistleblower Protections
The Sarbanes-Oxley Act of 2002 (“SOX” or “the Act”) was enacted in the wake of the financial scandals that occurred in the nineteen-nineties and early aughts. SOX was a response to the brazen behavior of companies like Enron that, in conjunction with their accounting firms, engaged in massive fraud to inflate their supposed value. When these companies later filed for bankruptcy, their shareholders and workers lost billions of dollars. Subsequent criminal convictions of scoundrels like Kenneth Lay did little to comfort those who lost large portions of their pensions.
Among other things, SOX was written so as to protect whistleblowers-people who report unlawful or dishonest behavior-at publicly traded companies. Section 1514A of the Act protects such whistleblowers from demotion, harassment, and termination, among other things:
No [public company]…or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee…because of [whistleblowing or other similar activity]
Note that Section 1514A includes not only officers and employees: It also includes contractors and subcontractors of such companies. This language therefore raises the question: Does Section 1514A protect workers at privately held companies that contract with publicly held companies? (This is a fair question. The title of SOX, after all, is “Whistleblower Protection for Employees of Publicly Traded Companies.” It does not mention anything about contractors or subcontractors.) (more…)
PAGA Claims Remain In State Court Where They Belong
Workers in California have a powerful tool for combating wage and hour violations: the Private Attorneys General Act, or PAGA, California Labor Code section 2698, et seq. PAGA allows workers to bring civil cases seeking penalties that otherwise would be available only to the Labor and Workforce Development Agency.
PAGA cases are almost always filed in state court. Employers seeking to defeat PAGA actions have increasingly been attempting to remove them to federal court. This is because federal judges are generally viewed as more pro-employer on the issues that arise in PAGA cases than state court judges. In other words, employers believe that they are more likely to win in PAGA actions if they are in federal court.
However, in another win for plaintiffs who seek to bring PAGA actions, the Ninth Circuit recently held that PAGA claims are not class actions. Thus, they are not subject to the Class Action Fairness Act, or CAFA. (more…)