Mcle Self-study: the Top Employment Cases of 2023

• Jurisdiction: United States,Federal,California
• Author: Andrew H. Friedman
• Citation: Vol. 38 No. 1
• Publication year: 2024

MCLE SELF-STUDY: THE TOP EMPLOYMENT CASES OF 2023

AUTHORS^*

Andrew H. Friedman

Ramit Mizrahi

Anthony J. Oncidi

Much like the torrential flooding in the state last winter, 2023 brought about a deluge of employment decisions. Most were predictably favorable to employees as Governor Gavin Newsom and President Joe Biden's appointments and nominations to the bench made their marks, but there were some exceptions. Here, we cherry pick some of the more consequential and interesting decisions of the year.

ACCOMMODATION

In Groff v. DeJoy,¹ Gerald Groff, an Evangelical Christian who did not work on Sundays, took a mail delivery job with the USPS at a time when postal service employees were not required to work on Sundays. However, when the USPS began Sunday deliveries for Amazon, he was called upon to work that day. That prompted his resignation after he had received progressive discipline for refusing to work the Sunday shifts. Groff sued the USPS for violating Title VII, alleging it

could have accommodated him without undue hardship on conducting its business.

The district court and the Third Circuit ruled in favor of the USPS, holding that requiring an employer "to bear more than a de minimis cost to provide a religious accommodation is an undue hardship." The lower courts held that exempting Groff from Sunday work had "imposed on his coworkers, disrupted the workplace and workflow, and diminished employee morale." In this unanimous decision, the U.S. Supreme Court clarified earlier precedent, Trans World Airlines, Inc. v. Hardison,² by holding that an employer can show "undue hardship" only by demonstrating that the burden of granting a religious accommodation would result in substantial increased costs in conducting its particular business.

In Hodges v. Cedars-Sinai Medical Center,³ the court of appeal affirmed summary judgment in favor of an employer on an employee's disability discrimination and retaliation claims. The defendant hospital had required plaintiff Deanna Hodges, as a condition of continued employment, to get a flu vaccine unless she obtained a valid exemption. Her doctor wrote a note recommending an exemption for various reasons, including her history of cancer and general allergies. None of the reasons was a medically recognized contraindication to getting the flu vaccine. The hospital denied the exemption request. Hodges still refused to get the vaccine, and the hospital fired her. The court of appeal rejected the plaintiff's contention that an employer is bound to accept an employee's subjective belief that she is disabled. Instead, it found that Hodges failed to demonstrate either that she had a disability or that the hospital perceived her as having a disability.

ARBITRATION

In 2022, employers prematurely hailed Viking River Cruises, Inc. v. Moriana⁴ as the magic bullet that would allow them to use arbitration agreements to finally and completely end, or at least limit, the bane of their existence: PAGA claims. In 2023, however, a unanimous California Supreme Court, in the highly anticipated decision, Adolph v. Uber Technologies, Inc.,⁵ shattered that dream. The California court seized on a passage in Justice Sonia Sotomayor's concurring opinion in Viking River: "Of course, if this Court's understanding of state law is wrong, California courts, in an appropriate case, will have the last word."⁶ And noting that it was "not bound by the high court's interpretation of California law," it held that "an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA."⁷ Come the November 2024 election, employers will try, once again, to defang PAGA—this time, via a business-backed and trial lawyer-opposed voter initiative: the California Fair Pay and Employer Accountability Act of 2024.⁸

In addition to Adolph v. Uber, the California state and federal courts once again issued hundreds of arbitration decisions in 2023. Here is a very small sampling:

In Murrey v. Superior Court,⁹ the court of appeal rejected an employee's argument that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021¹⁰ exempted from arbitration her sexual harassment and retaliation action—a case she had filed approximately one year before the legislation was enacted. The court accepted her argument that "the highly secretive and one-sided provisions of her arbitration agreement [made] it both procedurally and substantively unconscionable."¹¹ It found that the arbitration agreement was procedurally unconscionable "because it was offered on a take-it-or-leave-it basis" and that the employee's "onboarding experience presented a higher degree of oppressiveness than other situations where a new hire is provided copies of the agreement and given ample time to review the documents, ask questions about the terms, or request a modification,"¹² because the employee had a short period of time to click boxes on her computer and electronically sign her unmodifiable electronic arbitration agreement and other lengthy documents. The court found that the agreement was substantively unconscionable, in part, because it required each party to bear the "reasonable cost of compliance" with discovery requests, which imposed an obligation beyond the Discovery Act in violation of Armendariz v. Foundation Health Psychcare Services, Inc.¹³ In addition, the court found substantive unconscionability in the agreement's superficially neutral discovery restrictions, noting: "Seemingly neutral limitations on discovery in employment disputes may be nonmutual in effect. This is because the employer already has in its possession many of the documents relevant to an employment discrimination case as well as having in its employ many of the relevant witnesses."¹⁴ Finally, the court also found substantive unconscionability in the agreement's exclusion of claims that employers are most likely to bring: time limits on the hearing, and limits on witnesses, as well as the confidentiality provision.

In Hernandez v. Meridian Management Services, LLC,¹⁵ the court of appeal refused to allow nonsignatories to an arbitration agreement to piggyback off of the arbitration agreement between an employee and her employer to compel her employment claims against them into arbitration. The court rejected the nonsignatories' equitable estoppel, agency, and third-party beneficiary theories.

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In another victory for employees, in Vaughn v. Tesla, Inc.,¹⁶ the court of appeal held that the Fair Employment and Housing Act¹⁷ can be the basis of public injunction claims and that the Federal Arbitration Act (FAA)¹⁸ does not allow for that substantive right to be waived by an arbitration agreement. On April 12, 2023, the California Supreme Court denied Tesla's petition for review.

In a victory for employers, in Chamber of Commerce v. Bonta,¹⁹ a panel of the Ninth Circuit struck down California's AB 51. The law imposed civil and criminal penalties on employers that required employees to sign arbitration agreements. The same panel previously held that the FAA preempted much of the law but declined to strike down AB 51's penalties for employers who had failed to get an employee to sign. In dissent, Judge Sandra Ikuta eviscerated the majority's "torturous ruling" which, she said, was analogous to a statute making it unlawful for a drug dealer to attempt to sell drugs, but lawful if the drug dealer had succeeded in the transaction. However, after Viking River, the panel voted to rehear the case and Judge William A. Fletcher switched sides. Now writing for the majority, Judge Ikuta noted that AB 51 singled out arbitration agreements in violation of the FAA.

In Doe v. Superior Court of City and County of San Francisco,²⁰ yet another court of appeal examined section 1281.98(a)(1) of the California Code of Civil Procedure, which provides that, if the fees or costs of arbitration are not paid within 30 days after the due date, the drafting party is in material breach of the arbitration agreement and waives its right to compel arbitration. Consistent with prior decisions, the court held that statutory provision is to be strictly construed and strictly enforced. It explained: "[W]e strictly enforce the...