Application of California Law in Non-Compete Litigation?

In a recent East Coast/West Coast conflict, courts in Massachusetts consider the application of California Law in a non-compete litigation. Massachusetts courts are not the only courts to come up against this particular issue either. Other courts around the country have also been asked to study the application of California law in litigation based on non-competition agreements. Generally speaking, non-competition agreements are not enforceable in California. So, employees who have worked in another state or in situations where the agreement contains a forum selection clause outside of the state of California are rushing to file in California court or present other state courts with the argument that California state law should be applicable. Either action would offer them the hope of avoiding mobility restrictions.

The Business Litigation Session of the Suffolk Superior Court in Massachusetts recently found themselves asking the question, “Should California law regarding non-compete agreements be applied to cases and agreements outside of the state?”

The issue was considered in connection with the case FTI, LLC, et al. v. Duffy, et al. in which three of the plaintiffs’ former employees resigned. Shortly after resigning they filed suit in California seeking a ruling that the non-compete agreements were unenforceable. Five months later, the plaintiffs filed suit in Massachusetts alleging a breach of the non-compete agreements, as well as other violations (i.e. trade secret misappropriation, breach of fiduciary duty, unfair competition, etc.) The defendants moved to stay the case pending resolution of the California suit. One former employee also moved to dismiss the claims citing a lack of personal jurisdiction. 

The Massachusetts court did not stay the case. In situations when duplicative lawsuits are filed in multiple jurisdictions, the later-filed action is typically stayed, but courts have discretion and can give preference to the later-filed action when doing so best serves the interests involved in the case. In this case, the court held that the two seemingly duplicative lawsuits actually had minimal overlap. The California case sought to void the non-compete agreement. The Massachusetts case focused on other claims. Additionally, the agreement was governed by Maryland law and a court in California would have no greater expertise or ability to apply Maryland law than a Massachusetts court. The court held that Massachusetts had an equally strong interest in the case due to the fact that the plaintiffs alleged defendants committed a number of business torts during the time of employment cited by court documents.

The Massachusetts court also denied the employee’s argument that the case lacked personal jurisdiction. The court found that the employee had sufficient minimal contacts through his supervision of six employees in the state, regular travel to the state of Massachusetts in order to fulfill supervisory duties, and that he billed more than 130 hours to the company while working in Boston in the year 2014 alone. The court also found that since the employee filed a suit in California (revealing that he was willing to travel across the nation to litigate a case) he would not be unfairly burdened by the need to defend himself in a Massachusetts court simply because he resided in New York.

If you have questions about California state law and how it applies to your non-compete agreement, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

KBP Foods Fighting Suit Claiming Labor Law Violations

Six employees of Overland Park-based KBP Foods LLC filed a lawsuit including allegations that the giant OP fast-food franchisee purposefully used faulty equipment for timekeeping. The suit claims that the company’s timekeeping system utilized a thumbprint scanner that consistently malfunctioned, which prevented their employees from clocking in when starting their shift or ending a break. Employees cite a failure to pay overtime wages, failure to pay minimum wage and failure to pay employees for all wages earned on the job.

The company owns 581 different restaurants throughout the country with KFC and Taco Bell being the most recognizable. In fact, the suit claims that KBP Foods is the largest KFC franchisee in the nation. KBP is accused of knowingly using equipment that failed to properly record time for employees’ shifts due to frequent malfunctions, including overtime hours. The lawsuit also alleges that corporate officers went so far as to put a policy in place that required employees to clock out but remain on site to complete standard (and required) closing operations.

Due to the company’s policy, many store managers consistently deleted hours worked from employee time cards/sheets in order to deprive them of wages and overtime pay for hours they completed on the job. The plaintiffs allege the company did so in a willful act intended to reduce labor costs for the company and earn incentives paid to management for maintaining overall labor costs below a designated threshold.

According to the lawsuit, when the thumbprint scanner fails to clock an employee in for their shift or at the end of a break, the manager on duty is supposed to manually enter the info into the restaurant’s back office computer, but this was rarely if ever done, resulting in employees who were underpaid and/or not paid for overtime hours worked. The timekeeping system in place also made it necessary for managers to run reports daily after the registers were closed. Plaintiffs allege that managers have the employees clock out prior to shutting down the registers in order to run the day’s reports; leaving the employees working off the clock for the closing procedures.

Plaintiffs in the suit seek class action status. They seek payment of unpaid wages, overtime wages, attorney fees and other compensation that the court deems appropriate.

If you have questions about California labor law or if you are not being paid overtime wages you have earned, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Shell Refinery has $7.7M Wage Deal on the Table for Pipeline Workers

Shell Oil owns a number of pipeline terminals and refineries. A putative class of workers pulled from both are likely to see the $7.7 million wage and hour settlement for their case approved. The California federal judge, U.S. District Judge Maxine Chesney, has already granted preliminary approval “preliminarily.”

The judge praised the settlement and advised counsel they had done a good job. She did request changes and clarifications including an amended settlement schedule to provide her with time to consider a revised version. She advised parties she would most likely allow the deal to move forward within the week.

David Berlanga, plaintiff, filed suit in January 2017 alleging wage and hour claims and listing four California energy facilities as Defendants in the case:

·      Shell Pipeline Co. LP’s terminal facility in Carson

·      Shell subsidiary Equilon Enterprises LLC’s oil refinery in Martinez

·      CRI Catalyst Co LP’s production facilities in Martinez

·      CRI Catalyst Co LP’s production facilities in Pittsburg

Allegedly, the companies did not provide rest breaks free of job duties or accurate wage statements to employees. Berlanga filed claims under the California Private Attorneys General Act as well as the state’s Unfair Competition Law. He was seeking back wages, statutory penalties, attorneys’ fees and an updated workplace policy in compliance with the law.

The class would include plant operators (since January 2013) who have been required to keep their radios on or respond to calls during their rest breaks that are mandated by state labor law. According to the law, employers must relinquish control over how employees spend time during breaks and employees must be relieved of all their job duties – including the obligation to remain on call.

The settlement is the result of a private mediation in April and will include up to $1.9 in attorney’s fees (or a quarter of the common fund). And incentive award of $7,500 for each of the six class representatives is also sought although the judge indicated this may be too high.

If you have questions about California mandated rest breaks or if you are not receiving accurate wage statements as required by law, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Settlement Between Former Employee and NFL Network Approved

A settlement was approved for a lawsuit brought against the NFL Network by a former wardrobe stylist, Jami Canton. Canton claimed a slew of labor law violations, including: sexual harassment, age discrimination, workplace retaliation, wrongful termination and defamation. The settlement was approved by Los Angeles Superior Court Judge Michael Stern after Jami Cantor filed a motion to resolve the suit seeking civil penalties. In exchange for the settlement, Cantor agreed to drop all claims.

Donovan McNabb and Eric Davis, former NFL Network analysts, were both fired in January by ESPN after a month-long investigation into claims of inappropriate behavior on the job made by Cantor. Cantor, as an aggrieved employee, will receive 25% of the approved settlement amount while the other 75% will be distributed to the state Labor & Workforce Development Agency (LWDA). The LWDA is a cabinet-level state agency responsible for coordinating workforce programs and oversight of seven different departments that deal with benefit administration and upholding and enforcing employment laws of the state of California.

Cantor filed the California lawsuit in September. In the complaint she claimed she began work in 2006 and was employed at the NFL’s Culver City studio. As part of her job, Cantor claims she was responsible for creating a wardrobe closet to make sure that talent would have clothes to wear for the NFL shows. During the course of her employment, Cantor alleged that she was subjected to numerous instances of sexual harassment at the hands of a number of different NFL employees. Claims of harassment included: inappropriate touching, inappropriate references, inappropriate comments, texted photos of a sexual nature, etc. All this while Cantor repeatedly made it clear that the advances were unwanted and not reciprocated.

Cantor claims that nothing was done in response to her complaints and that rather than assisting her with the situation, the NFL made her life more difficult by increasing her workload and decreasing her hours. In addition to the harassment claims, Cantor levied a number of other labor law violation complaints against her former employer, including: failure to pay overtime, failure to provide required meal and rest breaks, failure to reimburse for business expenses, and wrongful termination.

Cantor was fired in October of 2016. She claims she was falsely accused of stealing clothing from an employee. She also claims that internal video would prove that she had not taken anything. When she was terminated, Cantor was 51 years old. Her replacement was 30 years old.

If you have questions about overtime pay, harassment in the workplace or wrongful termination, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Cinemark Faces Certified Class of Employees Alleging Overtime and Wage Statement Violations

A class of Cinemark movie theater employees claim that the company did not comply with state law requiring pay stubs to be accurate and itemized; detailing specifically the overtime pay rates. The group of 843 eligible California employees was recently certified for class action.

The estimated 843 employees located in California and employed by Cinemark who are eligible to join the class action lawsuit is based on calculations of legal counsel on the case who made their determinations based on the popular movie theater’s disclosures regarding the number of incorrect wage statements they issued to employees.

The federal judge on the case (Amey v. Cinemark USA Inc., 2018 BL 296573, N.D. Cal., No. 13-cv-05669) certified the class on August 16th, 2018. Certification of the class means that Cinemark USA Inc. will be required to provide the names and the contact information for any employees who received non-compliant pay stubs. Class members who do not opt out will receive a share of any payout or settlement that results from the case during pre-trail negotiations, mediation or a trial win. 

Employers are required to provide employees with detailed, itemized, and accurate pay stubs (a.k.a. wage statements) in order to assist employees in regulating their pay rate and overtime pay rate. Providing accurate wage statements creates transparency and allows employees to determine when they are not receiving the right pay for their work hours or the right rate of pay for their overtime hours specifically. California labor code requires more extensive pay stub disclosures than federal law. California law allows a $50 penalty per employee for the first pay stub violation and $100 for subsequent violations. As there are 26 pay periods in a year for employers who issue pay biweekly, pay stub violations can be very costly for employers.

If you have questions about California labor law pay stub requirements or if you are not receiving overtime compensation as required by law, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Supreme Court Rules in Favor of Car Dealerships in Overtime Suit

A recent Supreme Court ruling found service advisers at car dealerships to be exempt under federal law from overtime pay requirements – much like car salesmen and mechanics. The ruling came down 5-4 that service advisers are sales people (even though they also fulfill additional duties such as greeting customers, and proposing various repair service, etc.) The ruling will affect more than 18,000 dealerships across the nation that together as a whole employ over 100,000 service advisers alone.

The case involved a Mercedes Benz dealership out of Encino, California and several of their current and former service advisers. Each side in the case interpreted the Fair Labor Standards Act differently…”any salesman…primarily engaged in selling or servicing automobiles” doesn’t have to provided overtime compensation.

The dealership’s arguments were based on their interpretation that the definition of salesman clearly included the service advisers. Their range of duties includes helping to diagnose mechanical issues, preparing price estimates for vehicle repairs, etc. Service advisers argued that they were not included in the definition of “salesman” as intended by the Fair Labor Standards Act.

In a majority opinion, Justice Clarence Thomas wrote that the “ordinary meaning of ‘salesman’ is someone who sells goods or services.” According to this ordinary meaning of the word, service advisers are, in fact, salesmen. Justice Ruth Bader Ginsburg dissented arguing that because the service advisers do not sell or repair vehicles, they should not be exempt from overtime.

The Department of Labor changed its interpretation of the Fair Labor Standards Act in 2011; which led the issue to the high court. For decades prior to the 2011 change, the department operated under the assumption that employers were not required to provide service advisers with overtime compensation.

This decision was the second time the court has ruled on this case. The earlier litigation resulted in the U.S. Court of Appeals for the 9th Circuit ruling that service advisers were entitled to overtime. In 2016, after the death of Justice Antonin Scalia, the overtime question was sidestepped by an eight-member Supreme Court; advising the appeals court to take another look at the case. The appeals court again ruled in favor of service advisers.

The Supreme Court ruling in favor of car dealerships will have affect dealerships and service advisers nationwide.

If you have questions about overtime eligibility or overtime compensation as required by employment law, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

San Diego-Based Tarr Inc. Settles Pregnancy Discrimination Lawsuit

Tarr Inc. and Zenith LLC have agreed to pay $50,000 to victims in a pregnancy discrimination lawsuit. In addition to the monetary settlement, they have agreed to offer other relief in accordance with the terms of the settlement agreement they entered with the U.S. Equal Employment Opportunity Commission (EEOC).

According to the lawsuit’s court documents, the San-Diego based company known as Zenith LLC fired a female employee just days after she advised them that she was pregnant. And this was not the only time they company exhibited outright pregnancy discrimination against an employee. They also allegedly refused to allow a different employee to return to her position with the company after taking maternity leave.

The dietary supplement company out of San Diego, California faced allegations that they were in violation of Title VII of the Civil Rights Act of 1964 (as amended by the Pregnancy Discrimination Act outlawing discrimination on the basis of pregnancy, childbirth or other medical conditions related to either). The suit was filed in the U.S. District Court for the Southern District of California after they were unable to reach a pre-litigation settlement agreement through conciliation.

When employers perceive pregnancy and motherhood as being incompatible with work and the workplace it places women at a great disadvantage. For many workers experiencing the thrilling, but nerve-wracking time during pregnancy, being fired from a job while pregnant (especially explicitly for being pregnant) is like a nightmare coming true. While pregnancy discrimination is unarguably illegal, it is a prevalent problem in today’s workplaces. When an employer exhibits this type of discrimination, they are breaking the law and victims deserve compensation.

If you are pregnant or were recently pregnant and you experienced discrimination in the workplace due to your pregnancy, please get in touch with the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.