Month: December 2017

Cornell v. Berkeley Tennis Club, DCA1/1, 12/21/17

Cornell, who is obese, was terminated by Berkeley Tennis Club after she allegedly tried to secretly record a board meeting. She sued for various disability discrimination theories, claiming that the termination was tied to her obsesity. The trial court granted summary judgment to employer on all causes of action, holding that Cornell had failed to established that her obesity resulted from a physiological cause. Held: Reversed as to some causes of action. Continue reading “Disability Discrimination Case: Burden to Produce Evidence at Summary Judgment Is Different Than at Trial”

California-American Water v. Marina Coast Water District, DCA1/1, 12/16/17

Government Code 1090 forbids government employees from being financially interested in contracts made by them in their official capacities.   When that happens, the contract is unenforceable.

Here, the parties (including two public water agencies) entered a contract to collaborate on a water desalination project.  A member of Monterey’s board of directors had a financial stake in the outcome of the contract.  Of the three parties to the contract, the private company, California American, and Monterey agreed that the contract was void.  Marina disagreed, filed a cross-complaint  and fought the case for years.

Ultimately the trial court held that the contracts were void because section 1090 had been violated.  It nonetheless awarded attorney’s fees to  California-American and Monterey because they prevailed and the contract Marina tried to enforce had an attorney’s fees clause.

Held: Affirmed. Continue reading “Defendant Who Prevails in Breach of Contract Action by Proving Contract Unenforceable Can Still Get Attorney’s Fees”

Jensen v. U-Haul, DCA4/2 , 12/11/17

This case deals with the enforceability of an arbitration agreement against an employee, but not in the usual case where employer seeks to compel its employee to arbitrate wrongful termination claims.

Here, the employer rented a U-Haul.  In its contract with U-Haul, the employer agreed to a broad arbitration clause that included claims brought by the employer’s employees.  You know the rest: The employee, Jensen, drove the U-Haul in the course of his work duties for the employer; he had an accident and was injured; when he sued U-Haul, U-Haul moved to compel arbitration.

The trial court denied U-Haul’s motion.

Held: Affirmed. Continue reading “Employer’s Ability to Bind Its Employee to Employer’s Contracts with Third Parties, Including Arbitration Agreements, Is Limited”

Duncan v. Wal-Mart, DCA4/3, 12/13/17

 When an employee is injured on the job, the injury is sometimes caused by a third party not associated with the employer.  In that case, the employee is entitled to seek worker’s comp benefits against the employer and bring a civil action against the third party.  The worker’s comp carrier who pays benefits to the employee can then place a lien on any recovery the employee obtains in the civil action.  The question, of course, is for how much.

 

The issue in this case was perhaps caused the employee’s civil attorney: As part of the worker’s comp settlement, the carrier, Hartford, paid employee $37,000 in lost wages. In the civil action, Plaintiff took the matter to trial against Wal-Mart and won.  However, Plaintiff apparently forgot to present evidence of her lost wages claim at trial. Hartford asserted its full lien against employee’s civil recovery, including for the payment it made for lost wages.  Plaintiff asked the trial court to reduce Hartford’s lien by the $37,000, and the trial court agreed.  When Hartford appealed, the appellate court agreed with Hartford.

 

This case is all about Labor Code 3856, which provides in part: “After the payment of such expenses and attorney’s fee the court shall, on application of the employer, allow as a first lien against the amount of such judgment for damages, the amount of the employer’s expenditure for compensation together with any amounts to which he may be entitled as special damages under Section 3852.”

 

The statute doesn’t authorize the trial court to reduce Hartford’s lien where the employee abandons or forgets to present evidence on a portion of his/her claim. 

 

The outcome works, at least for this case.   For reasons unknown, plaintiff chose not to present evidence of her lost wages claim at trial.  The court noted that “allowing the employee to manipulate the employer’s reimbursement rights by selectively seeking only certain items of damages from a third party tortfeasor would undermine the system created by the Legislature.”

 

But the outcome is certainly not perfect for every case.  In some cases a carrier will pay a greater sum in damages than are available in the civil action, perhaps because insurance coverage is limited or because the jury awards a lower amount in damages than the carrier paid in worker comp.  In those cases, allowing the carrier to collect a disproportionate amount against the judgment may line up with what the statute says, but it certainly doesn’t feel like justice.

 

Starting January 1, 2018, California will prohibit employers from asking job applicants about salary history; applicants can still voluntarily disclose that information.  The law also says: “An employer shall not rely on the salary history information of an applicant for employment as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant.”  So, when the employer wants to offer the applicant a higher salary to entice them to accept a job offer, what reference point should the employer use?!  Perhaps ask Salary.com, or related online services, which can provide plenty of valuable reference points.

Can an attorney really tell a witness not to talk to the other side? Generally, No. Under ABA Model Rule 3.4, a lawyer shall not request a person other than a client to refrain from voluntarily giving relevant information to another party unless: (1) the person is a relative or an employee or other agent of a client; and (2) the lawyer reasonably believes that the person’s interests will not be adversely affected by refraining from giving such information. While ABA Rules are not controlling for California attorneys, I recommend treating this rule as though it were controlling!

Howeth v. Coffelt, DCA4/1, December 8, 2017

In this case, neighbors had a disagreement about the use of a common driveway.  One sued, and they eventually settled.  The settlement included a stipulation for entry of judgment, but also purported to allow the parties to seed a $1,000 in court if one or the other neighbor breached the settlement.  When problems erupted again, Howeth sought a $12,000 penalty by motion against Coffelt.  The trial court denied the motion for lack of continuing jurisdiction over the settlement agreement.  Howeth appealed.  Held: Appeal dismissed for lack of jurisdiction.

Instead of filing a new action for breach of the settlement agreement, Howeth added to the pain by appealing.  But a party can’t appeal from a non-appealable judgment.  California’s Code of Civil Proc. enumerates what orders and judgments are appealable.  A judgment entered based on a settlement is a consent judgment.  A consent judgment is usually intended to end the matter fully and completely.  Therefore, consent judgments, including related post-judgment motions, are not generally appealable.

The court noted two exceptions.  For example, in class action cases where the parties settle the dispute but agree that plaintiff’s attorney will seek attorney’s fees by a motion to the trial court, the trial court’s ruling on that motion is appealable.  Ruiz v. California State Automobile Association.  The Ruiz court reasoned that while the judgment was a  consent judgment, “the Agreement expressly contemplated further court proceedings and a separate ruling on the attorney fee and incentive payment issues,” and was there distinguishable.

Here the parties did not contemplate further proceedings or separate rulings.  The case was supposed to be finished.  The court could have stopped there, but went on to point out other problems with Howeth’s position.

Another reason that Howeth could not appeal the trial court’s order was that he was not seeking to enforce the judgment–which could be done by contempt proceeding–but was seeking to enforce the underlying settlement agreement, which provided by damages in the case of breach.  To be appealable, a post-judgment order must affect the judgment or be related to its enforcement.  The court found that the motion sought to enforce the settlement agreement not the judgment, and the order denying that request was therefore not appealable.  If a post-trial motion could be used to litigate subsequent controversies, the court felt, then one party would be denied the normal due process like the ability to take discovery.

Finally, the court discussed Code of Civil Procedure section 664.6 which permits a court to “retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.” The court held that the application of section 664.6 is irrelevant to the issue of whether the trial court’s order is appealable.  The court held that 664.6 ensures that the trial court has jurisdiction to enforce the full performance of the terms of the settlement agreement, but not to “summarily enforce the terms of a settlement agreement as applied to new disputes that arise after a final judgment is entered.” (Emphasis added.)

To protect one’s client, it is essential to think through what the judgment should say and how it can be enforced if something goes wrong.  For example, if the judgment properly defines the obligations of the parties, the parties can invoke the court’s contempt power when one party violates the court’s judgment.  Contempt proceedings include the power to present evidence and the court’s power to investigate.  However, a contempt must be proved beyond a reasonable doubt–a very high standard–because contempt proceedings are quasi-criminal.  When contempt is found the court has the power to impose fines and imprisonment.

 

Skillin v. Rady Children’s Hospital, December 6, 2017, DCA4/1

ERISA was passed in 1974 to ensure proper management of employee plan contributions. It doesn’t guarantee benefits–there is no set amount that must be contributed, and no guarantee that investments will produce a specific return.  ERISA is about proper oversight and procedures.  And to ensure uniformity, some ERISA sections preempt state labor law.  For example, ERISA section 514(e) preempts state laws that “would directly or indirectly prohibit or restrict the inclusion in any plan of an automatic contribution arrangement.”  In this case, Mr. Skillin claimed that his employer, a children’s hospital, deducted too much money from his paycheck.  According to him, the excessive deductions violated Labor Code sections 221-224, which in turn made his wage statements inaccurate.  The appellate court rejected these claims.

ERISA was passed in 1974 to ensure proper management of employee plan contributions. It doesn’t guarantee benefits–there is no set amount that must be contributed, and no guarantee that investments will produce a specific return.  ERISA is about proper oversight and procedures.  And to ensure uniformity, some ERISA sections preempt state labor law.  For example, ERISA section 514(e) preempts state laws that “would directly or indirectly prohibit or restrict the inclusion in any plan of an automatic contribution arrangement.”  In this case, Mr. Skillin claimed that his employer, a children’s hospital, deducted too much money from his paycheck.  According to him, the excessive deductions violated Labor Code sections 221-224, which in turn made his wage statements inaccurate.  The appellate court rejected these claims in a decision that is not that satisfying.

Here, Mr. Skillin started working at Hospital in 1997.  While the opinion isn’t explicit on this point, he elected to participate in the hospital’s retirement plan (versus being automatically enrolled).  He also contributed a flat rate of $700 per month.  In 2009, the hospital adopted an automatic enrollment program for new hires; and, unless they chose a different contribution level, the plan required new hires to contribute 3 per cent of their pretax earnings to the retirement plan.  Until 2014, Hospital allowed the pre-2009 employees to continue contributing flat dollar amounts.  At that point, the hospital decided to require these employees to convert from a flat dollar amount to a percentage contributions.  But the hospital attempted to set the contribution rate for these employees at a percentage that basically equaled the flat dollar figure.  In converting Mr. Skillin to the new method, the hospital notified Mr. Skillin that it would deduct 18% from his paycheck; it then provided a corrected notice that the percentage would be only 11%. However, ultimately the hospital deducted 18%, or about $1300.   Under California law, an employer is strictly limited in what it can deduct from an employee’s paycheck.

The court acknowledged that it could find no case interpreting ERISA section 514(e).  In finding that employee’s claim was preempted by 514(e) as a matter of first impression, the court felt that “a law requiring written authorization for wage deductions is incompatible with permitting automatic contribution arrangements in which employees are treated as having opted in.”

While there was no dissent, here’s how a dissent might have read: Plaintiff is a long-standing employee who opted into the hospital’s plan before the hospital instituted automatic enrollment for new hires. Requiring the hospital to deduct the correct amount from Mr. Skillin’s wages has no bearing on whether hospital can automatically enroll subsequent employees.  Further, the hospital deducted more than it said it would.  Therefore, even if Mr. Skillin had been automatically enrolled into the hospital’s plan, applying state labor laws to ensure that hospital deducted the amount that the hospital itself said it would deduct, or the amount that the employee previously had authorized, would not prohibit, restrict or in any way impact whether the hospital could maintain a retirement plan that automatically enrolled employees into the plan.  Not to mention that denying an employee immediate access to $600 of his income could create a real hardship.