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Appellate Court Tells Trial Court to Add-On Another 400-plus Cases to Coordinated Proceeding

Ford Motor Warranty Cases 5/8/17 CA2/8

In 2015, Ford was facing almost 775 Lemon Law (i.e., breach of warranty) cases concerning certain Fiesta and Focus models.  The cases had been filed in 44 separate California counties.  In Los Angeles, Ford moved to coordinate the cases before one judge, and the coordinated motion judge granted Ford’s petition as to 470 of the cases, which were venued mostly in southern counties.  The coordinated case was assigned to the coordinated trial judge.  Just a few months later, Ford petitioned to add-on 467 substantively identical cases, many of which had been recently filed, although some had been inadvertently or intentionally (for procedural reasons related to pending trial dates) left off of its first petition.  The coordinated trial judge denied the add-on petition because, it felt, that Lemon Law cases are not amendable to complex management.  Ford filed a writ petition.  Held: Reversed.

Code of Civil Procedure 404 says that a petition for coordination shall be supported by a declaration stating facts showing that the actions are complex and that the actions meet the factors set out in Code of Civil Procedure 404.1.  Section 404.1 says that “coordination of civil actions sharing a common question of fact or law is appropriate if one judge hearing all of the actions for all purposes in a selected site or sites will promote the ends of justice taking into account whether the common question of fact or law is predominating and significant to the litigation . . .”  That section goes on to list the common sense factors that should guide the decision (e.g., the relative development of the actions, judicial efficiency, convenience of parties, witnesses and counsel; and avoiding inconsistent rulings).  

The trial court found that only one factors weighed in favor of granting Ford’s petition: The “relative development of the actions and the work product of counsel.” In other words, all cases were at an early stage. All other factors weighed against coordination: The facts and issues in each case was individualized; it would be inconvenient for counsel and witnesses from San Diego, Riverside etc. to travel to court in Los Angeles; it was not judicially efficient; there was no risk of inconsistent rulings because each case is individualized; and, the cases were simple Lemon Law cases and not complex.

Given that a prior trial judge had already ordered coordination – basically confirming that the section 404.1 factors had been met for cases subject to the original petition, and would necessarily be met for similar future cases – the court placed special emphasis on the “relative development of the actions and the work product of counsel.”  In fact, the court found that this “suggests the primacy of that factor in determining the propriety of adding a case or cases to a coordination proceeding.” If discovery and motion work for the coordinated cases had been going on for years, then dropping 400 new cases into the mix might be disruptive.  However, the trial court had stayed the originally coordinated actions, and not much had happened in the interim.  DCA8/2 found that the coordinated trial judge’s denial of the add-on petition acted as a repudiation of the earlier judge’s order granting coordination.

The court also found that Lemon Law cases can meet the definition of “complex” cases because of the large number of represented parties in related actions pending in different counties.  The court then proceeded to do an analysis of each factor listed in section 404.1.  This is very much worth reading, if only for the description of the flexibility and latitude the coordinated trial judge has in managing a coordinated proceeding: 

        “That these cases may be coordinated does not mean they need be tried in one forum; it does not even indicate that ultimate trial of the cases need be unified.” (citations)  Further, “the procedures which may be utilized by the coordinating judge are flexible indeed.” (citations) McGhan pointed out the rules would permit the coordination trial judge to order any issue or defense tried separately; order hearings conducted at various sites in the state to provide convenience to witnesses, parties and counsel; “prescribe all manner of pretrial discovery devices designed to aid the litigation”; sever cases or claims and transfer them back to their original venue; and try specific issues separately. The coordination trial judge is vested with “whatever great breadth of discretion may be necessary and appropriate to ease the transition through the judicial system of the logjam of cases which gives rise to coordination.”


Final thing to note:

  • Based on precedent, the court found that  review of the trial court order denying coordination is de novo.  The rationale — “[T]his is a decision which requires the ‘exercise [of] judgment about the values that animate legal principles,’ and hence the concerns of judicial administration . . . favor the appellate court, and the question should be classified as one of law and reviewed de novo.”

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Under Equal Pay Act, Employers Use of Prior Salary to Set Wages Can be Valid, But is Fraught With Peril

Rizo v. Yovino, Ninth Cir., 04/27/17

Aileen Rizo, employee of Fresno County public schools, filed a lawsuit against Fresno County Superintendent of Schools after discovering that she was getting paid a lower salary than her male co-workers for the same work.  Rizo claimed that this disparity in pay was in violation of the Equal Pay Act, Title VII of the Civil Rights Act of 1964, and the California Fair Employment and Housing Act, Cal. Gov. Code § 12940.  Despite the County’s concession that it paid Rizo less than comparable male employees for the same work, the County moved for summary judgment arguing that a pay differential “based on any other factor other than sex” is an affirmative defense to a claim under the Equal Pay Act. In this case, that “other factor” was recent prior salary, supported by the various reasons why the County considered prior salary. The district court rejected the County’s argument and denied summary judgment. Held: Vacated and Remanded.

Rizo was hired by the County as a math consultant.  The County uses a multi-level salary structure – with many levels and with many steps in each level.  As with other employees, Plaintiff’s salary was set at the level that corresponded to her prior salary. Rizo had lived and worked in Arizona and was making about $50k/year.   Therefore, her prior salary was way below the lowest step of the first level, and so her salary was set at the bottom rung (about $62k).  County policy required that new employees be paid at least 5% more than their prior salary.  All of Rizo’s male counterparts received a higher salary, presumably because their past salaries were higher.  The County had various reasons for its system – it removed bias and created consistency; the 5% increase over past salary helped lure employees to the County; and, it saved tax dollars.

The district court refused to consider the County’s justifications and instead determined that, under the Equal Pay Act, prior salary alone can never qualify as “a factor other than sex,” reasoning that “a pay structure based exclusively on prior wages is so inherently fraught with the risk . . . that it will perpetuate a discriminatory wage disparity between men and women that it cannot stand, even if motivated by a legitimate nondiscriminatory business purpose.” The court therefore denied the County’s motion for summary judgment.

Its conclusion didn’t square with the Ninth Circuit’s decision in Kouba v. Allstate Insurance Co.  In Kouba, the appeals court said that an employee’s prior salary can be considered “a factor other than sex” under the federal Equal Pay Act if the employer can show that doing so “effectuate[s] some business policy” and is done “reasonably in light of [its] state purpose as well as its other practices.” However, the district court refused to consider the County’s business reasons.  The Ninth Cir. noted that “[w]e do not see how the employer’s consideration of other factors would prevent the perpetuation of existing pay disparities if, as we assumed in Kouba and as is the allegation here, prior salary is the only factor that causes the current disparity.”  The Ninth Circuit therefore vacated the district court’s order and remanded to the court to consider the justifications of the County.

My view – This case shows how facile it is to simply presume that prior salary can never qualify as a factor other than sex, or that prior salary only perpetuates prior sex discrimination.  The County’s system itself had nothing to do with sex, and applied equally to men and women.  Moreover, the disparity was likely based on the fact that Ms. Rizo lived and worked in Arizona. (Google this query: What is the cost of living differences between Arizona and California . . . .)

A few notes of interest:

• Under federal law, Equal Pay Act creates a form of strict liability.  The burden is on the claimant, who makes a prima facie case by showing he/she is receiving different wages for equal work.  The burden of persuasion then shifts to the employer to justify the disparity in one of four statutory exceptions: seniority, merit, quantity/quality of production or a differential based on any other factors other than sex.
• In Kouba, the court found that the Equal Pay Act does not impose a strict ban on the consideration of prior salary; at the same time, past salary does not automatically qualify as a factor other than sex.
• Other jurisdictions have held that the prior salary alone cannot justify pay disparities between the sexes.
• Effective January 1, 2017, California passed AB 1676 which amended Section 1197.5 of the Labor Code to explicitly prohibit an employer from justifying an otherwise unlawful difference in pay on an employee’s or applicant’s prior salary alone. California employers may still use prior salary as one “bona fide factor other than sex” justifying a gender, race, or ethnicity wage disparity, so long as, the pay gap is also based on at least one other reasonable factor, such as education, training or experience.