Thursday, April 19, 2007

California Arbitration Agreements Do Not Always Have to Comply with Armendariz

In California, arbitration agreements will be deemed "unconscionable" if they concern discrimination or "public policy" causes of action, unless they comply with the procedural requirements set forth in Armendariz v. Foundation Health Psychcare Services.

Armendariz requires, among other things, "neutral arbitrators, more than minimal discovery, a written award, and all of the types of relief that would otherwise be available in court and, in addition, "'do[] not require employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration forum.'"

Many an arbitration agreement has been invalidated under Armendariz, either because the arbitration agreement shifted costs to the employee, did not provide for discovery, or unduly limited remedies. There also is the argument that Armendariz requires "mutuality," which means that if an agreement is not entirely mutual, it is invalid as unconscionable.

Well, in Giuliano v. Inland Empire Personnel, the plaintiff sued for breach of contract, alleging he was not paid bonuses or severance to which he was entitled. He signed an arbitration agreement that probably would have failed under Armendariz. But the Court of Appeal here said that because no FEHA or public policy claim was at issue, Armendariz did not apply.

This decision is significant, because many employers are sued for breach of contract, fraud, and other causes of action not involving discrimination or harassment If Armendariz does not apply, employers will have significant freedom to include in these arbitration agreements terms that would not normally be upheld under Armendariz, e.g., a waiver of entitlement to punitive or tort damages, short statute of limitations, carve-outs permitting the employer to seek injunctive relief, etc. Employers seeking to change arbitration provisions must have them carefully reviewed by counsel - not kidding.


Monday, April 16, 2007

Ca Supreme Court: Three-Year Statute of Limitations for Meal Periods Claims

Murphy v. Kenneth Cole Productions was supposed to be the case in which the California Supreme Court once and for all held that meal period penalties are in fact penalties and not wages. Wrong again! The high court unanimously held that meal period premiums are "wages," not penalties. So much for all the press on the hotly divided court at oral argument.

Anyway, so what? Well.....wage claims are covered by a three-year statute of limitations; penalty claims are covered by a one-year statute. Three years is three times longer than one year, which may result in larger claims and larger awards .

If you care about such things, this case kind of smarts. But wait...there's more.

The Supreme Court also held that appeals of Labor Commissioner decisions to Superior Courts may include new claims not litigated on the administrative level. That means that employees may lose a claim at the Labor Commissioner level, appeal, and assert entirely new theories in court for the first time as part of the simple appeal "de novo" process. I suppose it also means that employers may appeal Labor Commissioner decisions and face entirely new claims at the Superior Court level.


Monday, April 09, 2007

One for the Employment Litigators

The plaintiff sued the SF Housing authority and lost. (Demps v. SF Housing Authority). Employment law practitioners will like the thorough legal discussion of the retaliation claim. This also is one of the rare opinions where the court said that the plaintiff failed to make out a prima facie case of discrimination because the plaintiff "was not performing competently."

Also - the court in Demps finally overruled its old decision in Biljac Associates v. First Interstate Bank. No longer may trial courts refuse to rule on objections to evidence at summary judgment hearings by saying, "I'm only relying on admissible evidence."

Disclosure of employees' names and addresses in wage/hour class actions upheld

Employers involved in wage and hour class actions likely will NOT be able to successfully object to (pre-certification) disclosure of names and addresses of putative class members.

We previously covered Pioneer Electronics v. Superior Court (Olmstead), in which the California Supreme Court said that disclosure of class contact information was OK if the putative class member had the opportunity to "opt out" of disclosure. But Pioneer was a consumer class action, not an employment law case. Everyone knows employees have reasonable expectations of privacy in personnel information. Employment cases are different. Pioneer won't apply, right?

Wrong. The Court of Appeal in Belaire-West Landscape v. Superior Court (Rodriguez) applied Pioneer to a wage and hour class action. The Court briefly touched on the difference between an employee's privacy interest in personnel records voluntarily disclosed to an employer, but basically said that the ability to "opt out" of disclosure was sufficient protection of that privacy interest.

The disclosure of putative class members' names and addresses may be significant, depending on how the plaintiffs' bar uses the information. Maybe there will be a backlash against the plaintiffs' bar for bothering employees at home. Maybe plaintiffs will submit a lot more hostile declarations in support of class certification motions. Time will tell.