California Employment Law Notes

• Publication year: 2021
• Author: By Anthony J. Oncidi

CALIFORNIA EMPLOYMENT LAW NOTES

By Anthony J. Oncidi

Anthony J. Oncidi is a partner in and the Chair of the Labor and Employment Department of Proskauer Rose LLP in Los Angeles, where he exclusively represents employers and management in all areas of employment and labor law. Mr. Oncidi has authored this column since 1990. His telephone number is (310) 284-5690 and his email address is aoncidi@proskauer.com.

BOARD OF DIRECTORS QUOTA LAW MAY BE UNCONSTITUTIONAL

Meland v. Weber, 2 F.4th 838 (9th Cir. 2021)

In 2018, the California Legislature enacted Senate Bill 826, which requires all corporations headquartered in California to have a minimum number of females on their boards of directors; corporations that fail to comply with SB 826 are subject to monetary penalties. One shareholder of OSI Systems, Inc., Creighton Meland, brought an action challenging the constitutionality of SB 826 on the ground that it requires shareholders to discriminate on the basis of sex when exercising their voting rights in violation of the Fourteenth Amendment. The district court granted a motion to dismiss Meland's complaint for lack of Article III standing, reasoning that Meland had not suffered an injury in fact. In this opinion, the Ninth Circuit reversed the district court, holding that to the extent Meland's allegations that SB 826 "requires or encourages" him to discriminate on the basis of sex, he has suffered a concrete personal injury sufficient to confer Article III standing. The Court further held that Meland's "injury is ongoing and neither speculative or hypothetical, and the district court can grant meaningful relief."

2:1 RATIO OF PUNITIVE TO COMPENSATORY DAMAGES WAS APPROPRIATE

Contreras-Velazquez v. Family Health Ctrs. of San Diego, Inc., 62 Cal. App. 5th 88 (2021)

Rosario Contreras-Velazquez sued her former employer, Family Health Centers (FHC), for disability discrimination after she suffered a work-related injury and was terminated. A jury found FHC not liable, but the trial court ordered a new trial as to three claims; after the retrial, the jury awarded Contreras-Velazquez $916,645 in compensatory damages and $5 million in punitive damages, which the trial court reduced to $1.83 million (a 2:1 ratio of punitive to compensatory damages). In this appeal, the Court of Appeal affirmed the trial court's order reducing the punitive damages award, holding that FHC had engaged in misconduct that was "somewhat or moderately reprehensible" by inflicting emotional and mental distress upon Contreras-Velazquez for which the jury awarded her $750,000 in damages. However, because the emotional distress damages award was "substantial," it appears to have contained a punitive element. "Given all of these factors, we conclude the trial court did not err in determining the constitutional maximum ratio for a punitive damages award was twice the amount of the compensatory damages award." See also Briley v. City of W. Covina, 2021 WL 2708945 (Cal. Ct. App. 2021) ($3.5 million emotional distress damages jury award was "shockingly disproportionate to the evidence of harm" and should have been no more than $1.1 million, which is still "high"); Rubio v. CIA Wheel Group, 63 Cal. App. 5th 82 (2021) (deceased employee's estate was properly awarded $500,000 in punitive damages even though non-economic damages could not be awarded after employee's death-punitive damages award was properly based upon more than just $15,000 in economic damages).

HIGH SCHOOL FOOTBALL COACH'S TITLE VII CLAIM WAS PROPERLY DISMISSED

Kennedy v. Bremerton Sch. Dist., 991 F.3d 1004 (9th Cir. 2021)

Joseph Kennedy, a football coach at a public high school, was not rehired after he repeatedly kneeled with team members (some of whom may have felt pressured to join him) and prayed at mid-field following games. The school district warned Kennedy that his actions, which attracted media attention, could be perceived as endorsement of religion by the school district and that they interfered with the performance of job duties. Kennedy sued for violation of Title VII and his First Amendment rights. The district court granted the school district's motion for summary judgment on the ground that the school's actions were justified due to the risk of an Establishment Clause violation if Kennedy were allowed to continue with his religious conduct. The Ninth Circuit affirmed, holding that the school district had not violated Kennedy's First Amendment rights nor his rights under Title VII; the Court held that Kennedy had failed to make out a prima facie case of disparate treatment based upon his religious beliefs.

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THIRD PARTY WAS NOT LIABLE FOR AIDING AND ABETTING HARASSMENT

Smith v. BP Lubricants USA, Inc., 64 Cal. App. 5th 138 (2021)

Robert Smith's employer, Jiffy Lube, held a presentation for its employees to learn about a new Castrol product. A Castrol employee (Gus Pumarol) made several comments during the presentation that Smith considered to be racist and offensive. Smith sued Castrol (a dba of BP Lubricants) and Pumarol for racial harassment under the Fair Employment and Housing Act and discrimination under the Unruh Act; Smith also sued Pumarol for intentional infliction of emotional distress (IIED). The trial court sustained BP and Pumarol's demurrer without leave to amend. The Court of Appeal reversed the dismissal of the IIED and Unruh Act claims, but affirmed dismissal of the FEHA claim on the ground that there were no allegations that BP and Pumarol had aided and abetted Smith's employer (Jiffy Lube) in harassing him. As for the other claims, the Court held that a reasonable jury could find that Pumarol's comments were sufficiently extreme and outrageous to have resulted in an infliction of emotional distress upon Smith. The Court reversed dismissal of the Unruh Act claim on the ground that a business establishment (Castrol) could face liability under the Act for its racially harassing conduct directed toward a customer. See also Moreno v. Bassi, 65 Cal. App. 5th 244 (2021) (plaintiff who lost all FEHA claims and prevailed on a minimum wage claim in the amount of $16 was entitled to reasonable attorney's fees pursuant to Cal. Lab. Code § 1194 rather than Cal. Code Civ. Proc. § 1031; cost recovery is limited to...