Mcle Self-study: the Top Cases of 2022
| Publication year | 2023 |
| Author | Ramit Mizrahi |
AUTHORS*
Ramit Mizrahi
Andrew H. Friedman
Anthony J. Oncidi
The year 2022 not only continued our new normal of a deluge of employment decisions, but it also brought some blockbuster decisions in employment law. Although this cornucopia of decisions contained some important ones helping employers, pro-employee decisions predominated.
No case made greater shockwaves this year than Viking River Cruises, Inc. v. Moriana.1 In an 8-1 opinion authored by Justice Alito, the U.S. Supreme Court held that that the Federal Arbitration Act (FAA)2 preempts the California Supreme Court's central holding in Iskanian v. CLS Transport. Los Angeles, LLC3 that actions brought under the Labor Code Private Attorneys General Act of 2004 (PAGA)4 could not be divided into individual and representative claims through an agreement to arbitrate. Thus, the employer defendant was entitled to enforce the arbitration agreement between it and a former employee insofar as the agreement mandated arbitration of the employee's individual PAGA claim. The Court further held that the plaintiff employee's non-individual PAGA claims had to be dismissed because "PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding."5 This landmark opinion means that, at least for now, arbitration agreements with waivers of the right to bring representative PAGA claims for violations suffered by other alleged aggrieved employees will be enforced—just like class action waivers. However, Justice Sotomayor's concurrence casts doubt on Viking River's long-term impact. Although she voted with the majority, her concurrence provides a roadmap for plaintiffs' attorneys and lawmakers to circumvent the Court's decision. For example, Justice Sotomayor suggested that California courts could interpret California law or, alternately, the Legislature could amend PAGA, to permit an employee to litigate representative PAGA claims on behalf of other employees, even after the employee lost individual standing once the employee's claims were compelled to arbitration.
While Viking River is a substantial win for employers, multiple other arbitration cases are clear employee wins. In Morgan v. Sundance, Inc.,6 a unanimous opinion authored by Justice Kagan, the Supreme Court held that prejudice is not a condition of finding that a party, by litigating too long, waived its right to stay litigation or compel arbitration under the FAA. In light of Morgan, the California Supreme Court is revisiting its controversial decision in St. Agnes Med. Ctr. v. PacifiCare of Cal. (a non-employment case)7 in which it held that prejudice is a condition of finding that a party, by litigating too long, waived its right to compel arbitration.8
Two cases confirm that governmental entities are not bound by the arbitration agreements signed by workers. In Dep't of Fair Employment and Hous. v. Cisco Sys., Inc.,9 the Court of Appeal held that the Department of Fair Employment and Housing (DFEH) (now called the Civil Rights Department or CRD) was not required to arbitrate claims of discrimination and retaliation that it brought against Cisco based on an arbitration agreement the affected employee signed. The court rejected the employer's argument that the DFEH was the employee's proxy in the action and was not acting independently, holding that the DFEH was not a signatory to the agreement between the employer and employee, did not have an agency relationship with the employee, was not his alter ego, and did not assume his obligations.
Similarly, People v. Maplebear, Inc.10 involved an enforcement action brought by the San Diego City Attorney against Instacart (the DBA name of Maplebear, Inc.) under
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the Unfair Competition Law11 based on Instacart's alleged misclassification of its shoppers as independent contractors. Instacart sought to compel into arbitration the City Attorney's requests for injunctive relief and restitution, arguing that, while the City was not a signatory to the shoppers' arbitration agreements, it was still bound by them because the shoppers were the real parties in interest. The trial court denied the motion and Instacart appealed. The Court of Appeal affirmed, holding that the City was acting in its own law enforcement capacity, seeking to vindicate pubic harms and to protect the public, and that no individual shopper had any control over the litigation.
Two Court of Appeal cases confirmed that recent amendments to the California Arbitration Act meant to ensure timely payment of arbitration fees, as codified in Cal. Code Civ. Proc. §§ 1281.97 to 1281.99, are not preempted by federal law. Gallo v. Wood Ranch USA, Inc.12 held that the FAA does not preempt these provisions setting forth procedures for sharing payment of arbitration-related fees and costs and providing remedies for non-compliance because they further the objectives of the FAA. Espinoza v. Superior Court13 also confirmed that this statutory provision is not preempted by the FAA, and that the deadline for employers to pay arbitration fees must be applied strictly, with no exceptions for inadvertence, substantial compliance, or lack of prejudice.
Cal. Lab. Code § 1102.5 protects employee whistleblowers and their family members. It has an employee-friendly burden of proof, laid out in Cal. Lab. Code § 1102.6: "[O]nce it has been demonstrated by a preponderance of the evidence that an activity proscribed by [s]ection 1102.5 was a contributing factor in the alleged prohibited action against the employee, the employer shall have the burden of proof to demonstrate by clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in activities protected by [s]ection 1102.5." Despite this clear framework, some appellate courts had imposed the McDonnell Douglas burden-shifting test14 when evaluating section 1102.5 claims, disregarding section 1102.6. In Lawson v. PPG Architectural Finishes, Inc.,15 a unanimous decision written by Justice Leondra Kruger, the California Supreme Court held that the McDonnell Douglas burden-shifting test does not apply to Cal. Lab. Code § 1102.5 claims. Rather, section 1102.6 provides the governing framework for the presentation and evaluation of such claims. Lawson promises to make it easier for plaintiffs to prevail, both at summary judgment and at trial. However, that has not yet been demonstrated to be the case.16
There have been three published California appellate decisions and one published Ninth Circuit case to date applying Lawson. In Scheer v. Regents of the Univ. of Cal.17, the Court of Appeal held that Lawson's reasoning applied to the California Whistleblower Protection Act,18 as it contains language that is virtually identical to that in Cal. Lab. Code § 1102.6. In Vatalaro v. County of Sacramento,19 the Court of Appeal affirmed summary judgment in a section 1102.5 case in which the trial court had applied the McDonnell Douglas burden-shifting test, as it held that, applying Lawson, the employer had presented sufficient undisputed clear and convincing evidence to satisfy its burden under section 1102.6. In Francis v. City of Los Angeles20, the Court of Appeal affirmed a judgment in favor of a defendant employer who had prevailed at trial, holding that there was no substantial evidence of an adverse employment action under section 1102.5, such that nonsuit should have been granted. Finally, in Killgore v. SpecPro Prof'l Servs., LLC,21 the Ninth Circuit reversed summary judgment with respect to a plaintiff-employee's Cal. Lab. Code § 1102.5(b) and wrongful termination claims, holding that the trial court erred when it deemed disclosures unprotected because they were made in the normal course of the plaintiff's job duties to a supervisor who did not necessarily have the authority to investigate, discover, or correct the violations, and when it found that the plaintiff did not have a reasonable belief that he was disclosing a violation of law. (It affirmed summary judgment as to the Cal. Lab. Code § 1102.5(c) claim because the plaintiff was fired before he had a chance to refuse to act unlawfully.)
The U.S. Supreme Court and the Ninth Circuit both confirmed the rights of service members under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).22 Torres v. Texas Dep't of Pub. Safety23 involved a Texas state trooper and Army Reservist who suffered constrictive bronchitis as a result of his...
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