California May Ban Compulsory Arbitration Agreements

On August 22, 2018, the California Senate voted to approve AB 3080 a bill that bans mandatory arbitration agreements for all claims of employment discrimination, retaliation, and harassment, as well as wage and hour claims. The bill is currently on Governor Jerry Brown’s desk, awaiting his signature or veto. If signed, the new law would apply to any employment contracts “entered into, modified, or extended” on or after January 1, 2019.  The bill contains other major changes to laws governing disputes arising out of the employment relationship.  For purposes of this post, I focus only on the ban on arbitration agreements.

The arguments against compulsory arbitration agreements are well known.  In October 2015, the New York Times ran three-part series with articles entitled entitled Arbitration Everywhere, Stacking the Deck of JusticeA Privatization of the Justice System and In Religious Arbitration, Scripture is the Rule of Law.

Naturally, The Times used anecdotes to run through the parade of horrible wrought by subjecting unwitting consumers and employees to compulsory arbitration.

As one who makes a living as a neutral, I am, of course, biased in favor of arbitration.  This is not to say that some of the concerns are not legitimate.  But, for every concern raised about arbitration, I can find a comparable concern about the judicial process.  The real issue is, of course, money.

Plaintiffs’ attorneys, consumer advocates, and others who most strongly oppose arbitration are in my view, primarily concerned with their own financial stake in litigation.  There’s nothing wrong with this. As an arbitrator, I am concerned that banning compulsory arbitration agreements will adversely affect my income.  But let’s not harbor any illusions that most of the opposition to compulsory arbitration has much to do with concerns over the fairness of the process.  Arbitrators are far less likely to award individuals tens of millions of dollars in emotional distress and punitive damages than are juries.

Don’t believe me. Try a thought experiment.  Ask your favorite consumer attorney if she would support a system where a jury determines liability but a judge awards damages. Or, how about a system where punitive damages go to the state?  Employment cases tried before arbitrators are “less valuable” because the downside risk to the employer is much less than it would be if the same case were tried to a jury.

In any event, a ban like that included in AB 3080 is, most likely, preempted by the Federal Arbitration Act.  The preemption argument is well made in this letter submitted by Carothers DiSante and Freudenberger LLP.

Let’s see what Governor Brown does.  We know what Governor Newsome will do if he gets the same bill next year.

Should Dynamex ABC Test Apply Retroactively?

In what is, apparently, the first widely disseminated ruling, one court has already answered the question of whether the newly-established ABC test for determining independent contractor status in claims under the California Labor Code should be applied to pending cases with a resounding “yes.” Judge William Claster of the Orange County Superior Court ruled in Johnson v VCG-IS, LLC, No. 30-2015-00802813-CU-CR-CX (Cal. Super., July 18, 2018) that the new Dynamex “ABC” test should apply to this pending case in which exotic dancers working at Imperial Showgirls in Anaheim have been classified as independent contractors.  I wrote a column on this issue for the Los Angeles Daily Journal.  We are prohibited from publishing it here but the column points out some problems with Judge Claster’s analysis.  We also won’t take a position on the issue but there seems to be a good argument that the decision should not apply retroactively.  We will continue to monitor this issue.

Starbucks Forced to Compensate for Regular Tasks Performed at End of Shift

Management lawyers are already decrying another “anti-employer” decision from the California Supreme Court. But today’s decision in Troester v. Starbucks  http://www.courts.ca.gov/opinions/documents/S234969.PDF is expressly limited to its facts and, as the concurring opinions make clear:

California law does, in short, make some allowances based on considerations of practicality and reasonableness. It does not, however, permit an employer to require an employee to regularly work for nontrivial periods of time without providing compensation.

The evidence in this case was that

Starbucks’s computer software required [Plaintiff, a shift supervisor] to clock out on every closing shift before initiating the software’s “close store procedure” on a separate computer terminal in the back office. The close store procedure transmitted daily sales,profit and loss, and store inventory data to Starbucks’s corporate headquarters. After [Plaintiff] completed this task, he activated the alarm, exited the store, and locked the front door. [Plaintiff] also submitted evidence that he walked his coworkers to their cars in compliance with Starbucks’s policy. In addition, [Plaintiff] submitted evidence that he occasionally reopened the store to allow employees to retrieve items they left behind, waited with employees for their rides to arrive, or brought in store patio furniture mistakenly left outside.

The undisputed evidence was that these closing tasks required Plaintiff to work four to 10 additional minutes each day.

The District Court judge who originally granted summary judgment in this case was, presumably, at one time an attorney billing time in 6 minute increments.  Some lawyers today, many of them presumably representing employers, would likely bill $100 for a phone call lasting 6 minutes. It is hard to justify not compensating employees for “regularly occurring required tasks.”  As the opinion points out, rounding practices can easily be implemented to account for this time.  The employer focuses on the fact that the unpaid time (at the then-applicable minimum wage rate of $8/hour) added up to $102.67 for 1 shift supervisor over 17 months.  So, would paying for this time have any material effect on any given store’s bottom line?

I don’t have much of a problem with the holding in this case.  I do, however, have an issue with all the derivative claims associated with this type of case.  I also have an issue with the fact that the employer should have been entitled to rely on the DLSE policy so that the holding could have been made prospective.

Me Too Evidence in the #MeToo Era – Meeks v. AutoZone

Meeks v. AutoZone https://caselaw.findlaw.com/ca-court-of-appeal/1898175.html

The appellate court in this #employmentlaw case granted a new trial because the trial judge did not allow the admission of some #metoo evidence. The most interesting aspect of this case to me is the utter ignorance of basic evidence law by several Superior Court judges. Two successive trial judges botched the “secondary evidence” rule refusing to allow the plaintiff to testify to the contents of text messages despite the fact that the alleged harasser admitted sending “sexual” text messages to her.

On the me-too evidence, the appellate court held it was not erroneous for the trial judge to have excluded testimony regarding alleged harassment of and retaliation against another employee by a store manager (not the alleged harasser in the instant case). But, the trial judge also excluded evidence of the alleged harasser’s conduct toward other employees outside of the plaintiff’s presence.The issue of whether or not plaintiff must personally witness every act of alleged harassment in order for evidence of the alleged harassment to be admitted at trial was addressed 20 years ago in Beyda v. City of Los Angeles, 65 Cal.App.4th 511 (1998) https://caselaw.findlaw.com/ca-court-of-appeal/1289313.html personal observation is not the only way that a person can perceive, and be affected by, harassing conduct in the workplace.   One can also be affected by knowledge of that harassment.   In reaching this conclusion, we caution that mere workplace gossip is not a substitute for proof. Evidence of harassment of others, and of a plaintiff’s awareness of that harassment, is subject to the limitations of the hearsay rule.   It is not a substitute for direct testimony by the victims of those acts, or by witnesses to those acts.”

Given the admissions by the individual defendant in this case, it is inconceivable to me that the trial judge did not let admit at least some of the “me too” evidence.

The appellate court held that the trial court’s rulings had the “unfortunate result of skewing the evidence.”  Ya think?

Some tidbits for employers’ counsel from this case”

  1.  Always make the motion to preclude. You never know what some judge is going to do.
  2. The appellate court affirmed the trial court’s ruling to exclude witness statements which were taken as part of the employer’s investigation that lead to the individual manager’s termination as hearsay and on 352 grounds; and
  3. Affirmed grant of summary adjudication of retaliation claim holding “Meeks has presented no authority, and we are aware of none, holding that a single threat of an adverse employment action, never carried out, could itself constitute an adverse employment action under the standard articulated in Yanowitz and its progeny.”

Severe or Pervasive?

Under the Fair Employment and Housing Act, an employee with a disability can sue his or her employer and supervisors for disability harassment.   The employee must prove the harassment was either “severe OR pervasive.”  (This standard is often misquoted as “severe AND pervasive.”)

Plaintiff is a correctional officer at a state prison who stutters. Between 2006 -2008, some of the prison’s employees mocked or mimicked his stutter about a dozen times.  A supervisor participated in the mocking and mimicking of Plaintiff’s stutter.  According to a senior prison official who testified at trial, this mocking reflected the prison culture.

Plaintiff sued the California Department of Corrections and Rehabilitation and the supervisor for disability harassment and related claims. The trial court granted summary judgment for Defendants. The 4th Appellate District reversed in an unpublished opinion.

The case went to trial and a jury found Defendants harassed Plaintiff because of his disability and found the harassment both severe and pervasive.  Plaintiff had no economic damages. The jury awarded him $500,000 in noneconomic damages. The trial court found the damage award to be excessive and granted defendants’ motion for a new trial solely as to that issue. Both parties appealed.

I will write more about this case in my article – “The Neutral Corner” published monthly in the Los Angeles Daily Journal.  For now, one of the key takeaways from this case is the discussion of the the “severe or pervasive” standard.

Here is the evidence the court found sufficient to constitute both severe AND pervasive harassment.  Again, either prong would have sufficed to impose liability on Defendants.

As far as the harassing conduct being severe, Caldera described the conduct he was subjected to as: demeaning, embarrassing, harmful, and hurtful. Caldera testified that every time Grove mocked or mimicked his stutter, he did so in front of others. Grove’s harassing conduct over the prison’s radio system was heard by about 50 employees and appears to have been particularly egregious. The shift change incident occurred in front of about 24 employees. The training incident occurred in front of an unknown number of supervisors. Dr. Jordan testified that the harassing conduct was at times done in a mean spirited and harmful manner. A psychologist testified that the harassment caused Caldera to experience psychological disorders. Based on the totality of circumstances, a jury could reasonably find that the harassing conduct was “‘severe.'”

As far as the harassing conduct being pervasive, Dr. Jordan said that he witnessed the harassing conduct on at least 12 occasions. Caldera estimated that Grove had mocked or mimicked his stutter anywhere from five to 15 times. Although neither Dr. Jordan nor Caldera provided exact dates as to when each incident occurred, their testimony reasonably indicates that the harassing conduct roughly took place over a two- year time frame from 2006 to 2008. . . . Dr. Jordan further testified the harassing conduct was so pervasive that he regarded it as part of the culture at the prison. Dr. Jordan’s testimony was also bolstered by the testimony of Sergeant Lara, who witnessed the harassing conduct during the training class.

It seems striking to us that the harassment was so pervasive within the institution that Grove apparently felt he could openly mimic Caldera’s stutter in front of his peers (a group of prison supervisors) without any sense of shame or fear of reprisal. It appears plain to us there was sufficient evidence upon which the jury could reasonably determine that the harassing conduct was “pervasive.”  

Given the summary of this record, one wonders why two Attorneys General, Harris and Becerra, thought it was worth spending taxpayer money to defend against this conduct.  Who knows if reasonable settlement offers were made?  Many, if not most, employers would have a hard time paying a significant sum of money to a current employee whose stutter or accent or limp was mocked a dozen times or so over a two-year period.  Perhaps this case will cause employers to step up training not just to address METOO sexual harassment issues but other types of harassment as well.  Could the state have fired this supervisor?  Would termination for mocking a subordinate’s stutter have survived the grievance process?  What training did the Department of Corrections provide on equity issues?  Why is their a prison doctor who tolerates “harassing conduct done in a mean spirited and harmful manner without doing anything about it?  As usual, this case generates more questions and food for thought than the holdings on the various issues would indicate.

The judge granted a motion for new trial unless Plaintiff accepted a reduction in damages to $100,000 but did not file a timely statement of decision.  More on that later.  Also, the court called out the State for misrepresenting a holding of a case.  Yikes! More on that later too.

http://www.courts.ca.gov/opinions/documents/G053168.PDF

I Will Never Use That Mediator Again

In my last post, I offered a list of mediators’ common pet peeves with attorneys. So, I think it’s only fair that I post a similar list of reasons lawyers give for not using a mediator again.

Prejudging or Evaluating too Early– Especially in an area where a mediator is a bona fide expert in the issues involved in the case, it is easy and tempting for the mediator to reach a conclusion and attempt to drive the parties to that pre-determined conclusion. Even if the case ends up there, the worst mistake is for the mediator to drive the train rather than act as the conductor.

Personalizing – The mediator’s job is to assist the parties in reaching a settlement. It’s not to be well-liked. Nor is it to demonstrate that the mediator is the smartest person in the room. Avoid petty personal conflicts with counsel.

Coming Unprepared to the Mediation – Mediators complain about lawyers who are unprepared. One of the biggest sins a mediator can make is not preparing for the mediation. I conduct pre-mediation calls with each side separately so I can prepare for both legal issues and personal issues that are likely to arise.

Giving up too Early – Achieving a negotiated resolution in a litigated case is hard work. Persistence is required. A mediator who is perceived as punching a time clock or watching the clock to bill for every second of time is unlikely to be rehired. Often, after a lengthy session, the parties are primed to settle. They just need a cooling off period. Perhaps they cannot concede in person after heated, protracted negotiations. The mediator who does not make the timely follow up phone call is unlikely to get repeat business.

Embarrassing the Lawyer in front of the Client – Oops. I did this once by mistake. Counsel had been sanctioned by the court in a discovery dispute. During the mediation, she repeatedly cast aspersions on opposing counsel. I eventually reminded her that opposing counsel was not the one sanctioned by the court. Apparently, counsel had not told her client about the sanctions. Didn’t settle that case. Didn’t get hired again. Mediators need to be aware of when to discuss issues with attorneys outside the presence of the client. I am now keenly aware of what I should and should not say to attorneys in the presence of a client.

Appearing to be anything other than Neutral –A settlement does not necessarily equal a successful mediation. I am aware of cases which have settled when the parties kicked the mediator out of the room. Most parties and counsel care about the process. Were they treated with respect? Did the mediator empathize with their position? Did the mediator allow each party to say everything the party wanted to say? Did the mediator understand the legal issues? Did the mediator give best efforts in trying to persuade the other party? Mediators who provide a good process will be hired again. Those who do not won’t.

What would you add to the list?