Will Sundance Face Morgain in Court Regarding Arbitration Agreement?

Does the FAA require a party resisting arbitration on the grounds of waiver to show they suffered prejudice from a failure to compel arbitration sooner?

The Case: Morgan v. Sundance Inc.

The Court: California Superior Court

The Case No.: 142 S.Ct. 1708

Plaintiff in the Case: Morgan v. Sundance Inc.

The plaintiff in the case, Plaintiff Robyn Morgan, worked at a Taco Bell franchise owned by Sundance Inc. Morgan signed an agreement stating any employment dispute would be argued direction with the defendant. However, Morgan later filed a nationwide collective action alleging that Sundance violated federal overtime pay laws.

Defendant in the Case: Morgan v. Sundance Inc.

The defendant in the case, Sundance, Inc., ran the Taco Bell franchise where Morgan worked. When Morgan filed suit, the defendant initially defended against the suit, filing a motion to dismiss, and cooperating with mediation. After eight months, Defendant moved to stay litigation and compel arbitration under the Federal Arbitration Act (FAA). Plaintiff argued that Defendant waived the right to arbitration by engaging in litigation. The court denied the defendant’s motion. However, the Court of Appeals for the Eighth Circuit reversed the finding because the plaintiff did not show prejudice, so the defendant did not waive its right to compel arbitration.

The Case: Morgan v. Sundance Inc.

To resolve a circuit split, the United States Supreme Court granted certiorari regarding whether federal courts may adopt an arbitration-specific waiver rule demanding a showing of prejudice (similar to the Eighth Circuit, and a number of other circuits). When considered by the United States Supreme Court, the case was vacated and remanded with the court noting that outside the arbitration context, federal courts assessing waivers generally do not consider prejudice. While the FAA’s policy favors arbitration, it does not go so far as to allow federal courts to create arbitration-specific variants of federal laws and procedural rules (like the procedural rules regarding the waiver). The court held that the federal policy being considered intends to treat arbitration contracts like all other contracts - not foster arbitration. The case was remanded to the California court so they could decide if the Defendant waived their right to seek arbitration.

If you have questions about how to file an overtime class action or PAGA lawsuit, please contact Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Security Employees Allege Unpaid Meal & Rest Breaks

In recent news, unpaid meal- and rest-break premiums may serve as the basis for waiting-time penalties and inaccurate wage statement claims for a group of California security workers.

The Case: Naranjo v. Spectrum Security Services, Inc.

The Court: Court of Appeals of California, Second District, Division Four

The Case No.: S258966

The Plaintiff: Naranjo v. Spectrum Security Services, Inc.

The plaintiffs in the case allege that their employer violated labor law, specifically citing violations of California Labor Code § 226 which [sets] forth the requirement for employers to furnish accurate wage statements; and California Labor Code § 203 which [sets] forth the requirements for the timely distribution of all wages earned upon an employee’s departure from a job.

The Defendant: Naranjo v. Spectrum Security Services, Inc.

The Defendant in the case, Spectrum Security Services, Inc. provides security services (and related services) to clients on a contract basis, including a variety of federal departments and agencies.

The Case: Naranjo v. Spectrum Security Services, Inc.

The Second Appellate District Court of Appeal originally held that under Labor Code section 226.7, missed-break premium pay is not a “wage” for purposes of Labor Code sections 203 and 226. Finding that the failure to timely pay or report such payments can never support penalties under either section 203 or 226.However, in May 2022, the California Supreme Court reversed the Second Appellate District Court of Appeal’s finding, making clear that meal and rest period premiums are a type of “wage” and must therefore be accurately reflected on wage statements as well as being accurately paid out when the employee leaves the job (or is fired from the job). The California Supreme Court remanded Naranjo back to the Court of Appeal to determine if any missed-break “premium pay” supported any derivative Section 203 waiting time penalties or Section 226 wage statement penalties where the relevant conditions are met. In order to meet this standard for accurately reporting premium pay on all wage statements, both employers and employees will need to be diligent.

If you have questions about inaccurate overtime pay calculations, inaccurate wage statements, or other employment law violations, please contact Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Our experienced California employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

When Can the ABC Test be Applied?

In a recent California employment law case, the question is asked, “When can the ABC test be applied? Do workers need to establish they were hired before the ABC test applies?”

The Case: Mejia v. Roussos Constr., Inc.

The Court: Calif. App. 5th

The Case No.: C087709 Super. Ct. No. 34201600190824 COEDS

The Plaintiff: Mejia v. Roussos Constr., Inc.

The plaintiffs in the case, Mejia v. Roussos Constr., Inc., are unlicensed flooring installers. The plaintiffs worked for Roussos Construction installing floors. According to court documents, there were three people who worked “between” the plaintiffs and the company, Roussos. The plaintiffs refer to these three individuals as “supervisors.” Roussos referred to these three individuals as “subcontractors.”

The Defendant: Mejia v. Roussos Constr., Inc.

Roussos Construction is a general contractor. At trial, Roussos maintained that they use independent contractors (the three referred to by plaintiffs as supervisors and by the company as subcontractors) licensed to perform work outside of Roussos Construction’s contractor’s license, and that the subcontractors hired the plaintiffs, paid the plaintiffs, and are responsible for complying with applicable labor laws in regards to the plaintiffs.

The Case: Mejia v. Roussos Constr., Inc.

The parties involved in the case, Mejia v. Roussos Constr., Inc., disagreed about appropriate jury instruction with Roussos arguing that the ABC Test used to determine employee vs. independent contractor status can only be applied after it is established that the workers were hired by Roussos or by Roussos’ agent. The plaintiffs in the case argued that case law does not establish a “hiring test” alongside the ABC Test articulated in the Dynamex Ops. W. v. Superior Court, 4 Cal. 5th 903 (2018), the California Supreme Court opinion that led to the adoption of the ABC Test in California. In the end, the trial court agreed with the defendant, instructing the jury to make a predicate finding of whether or not Roussos Construction was the hiring entity. After receiving this instruction, the jury returned a verdict in favor of the defendant on all counts.

Do Workers Need to Establish They Were Hired Before the ABC Test Applies?

The Court of Appeals reversed the judgment on the wage and hour counts involving the ABC Test holding that there was no “threshold hiring entity test” created or intended by the Dynamex court. In conclusion, the Court of Appeals found that workers do not need to establish they were hired before the ABC Test can be applied.

If you have questions about California employment law or if you need to file a wage and hour lawsuit, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys can assist you in various law firm offices in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

California Wage and Hour Lawsuit: CAFA Amount in Controversy Requirement

In recent news, Ninth Circuit reversed the district court’s decision that defendant, Roadrunner, failed to meet the burden to establish the required $5 million minimum for the CAFA amount in controversy requirement and remanded to district court for further proceedings.

The Case: Jauregui v. Roadrunner Transportation Services, Inc.

The Court: U.S. Court of Appeals for the Ninth Circuit

The Case No.: 22-55058

The Plaintiff: Jauregui v. Roadrunner Transportation Services, Inc.

The plaintiff in the case, Griselda Jauregui, filed a putative class action against Roadrunner Transportation Services on behalf of all Roadrunner and former California hourly workers. The plaintiff alleged violations of California labor law, primarily wage and hour violations.

The Defendant: Jauregui v. Roadrunner Transportation Services, Inc.

When the Defendant, Roadrunner, removed the case to federal court, invoking jurisdiction under CAFA, the plaintiff responded with a motion to remand for lack of jurisdiction. The district court found that Roadrunner failed to meet its burden to establish the requisite $5 million minimum for the amount in controversy, and remanded the matter to state court.

The Case Continues: Jauregui v. Roadrunner Transportation Services, Inc.

Roadrunner relied heavily on their senior payroll lead’s conclusion that company payroll data and the plaintiff’s allegations held the amount in controversy to be in excess of $14.7 million. Before granting the motion to remand, the district court independently evaluated Roadrunner’s calculations for each of the seven claims/alleged violations. The district court found that Roadrunner sufficiently demonstrated the claimed amount for 2 of the seven claims, but the district court disagreed with the defendant’s calculations for the other 5 claims, and assigned each of these 5 claims with a value of $0. The Ninth Circuit court reversed the district court’s decision to remand based on what they identified as two primary errors: putting a “thumb on the scale” against removal, and assigning a $0 value to claims because they disagreed with one or more assumptions involved in the defendant’s estimates. The Ninth Circuit also held that nothing in CAFA or case law compels this type of drastic response when a district court disagrees with a single assumption underlying a claim valuation. According to the panel, Roadrunner met the CAFA amount in controversy requirements. If the lowest hourly wage rate identified by the district court is used the minimum wage claim is reasonably valued at $4.5 million. The two other claims accepted by the district court were valued at $2.1 million. These two claims’ values combined is more than enough to establish jurisdiction under CAFA without even considering the valuation of the additional claims that the district court valued at $0. Based on this, the panel remanded the matter to district court for additional proceedings.

If you have questions about California employment law or if you need to discuss wage and hour violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

California Resident Seeking to Challenge Non-Compete

Michael Jed Sewell, a California resident, responded to a breach of employment agreement claim with his own breach of contract, unjust enrichment, and California wage and hour claims.

The Case: LGCY Power, LLC v. Superior Court

The Court: Court of Appeal of the State of California, Fifth Appellate District

The Case No.: 20 ECG 01508

The Breach of Employment Agreement Claim:

A Utah limited liability company formed in Delaware and headquartered in Salt Lake City, Utah, LGCY, filed suit against Michael Jed Sewell, a California resident, and six other LGCY executives and managers after they left the company and started a competing company. Sewell was a former sales representative and eventually a sales manager for LGCY. In 2015, Sewell signed a “Solar Representative Agreement,” which included language about noncompetition, non solicitation and confidentiality as well as Utah choice of law and forum provisions. Four years later, in 2019, Sewell and several others at the company left to form a competing solar sales company. LGCY filed suit in Utah State Court against all seven former executives and managers citing breach of their employment agreements, breach of fiduciary duty, misappropriation of trade secrets, etc. Four of the defendants (not including Sewell) filed a joint cross-complaint against LGCY in the Utah court proceeding unsuccessfully seeking to dismiss LGCY’s action.

Filing a Cross-Complaint in California to Defend Against Claims:

Sewell did not join the cross complaint filed by four of his co-defendants in Utah court. Instead, Sewell filed a complaint in Fresno County Superior Court. Sewell’s complaint alleges almost identical claims as those filed by his co defendants in Utah.

Can Sewell File a Cross Complaint in California?

According to the Court of Appeal, California Labor Code Section 925 allows for an exception to California’s compulsory cross-complaint statute (Code Civ. Proc., Section 426.30) enabling an employee who comes within Section 925’s purview to file a California complaint based on allegations related to causes of action an employer filed against them in a pending action in a sister state. Additionally, the clause does not require California to extend credit or apply the sister state’s compulsory cross-complaint statute. LGCY petitioned for a writ of mandate, but their attempt to get Sewell’s California action dismissed was unsuccessful. The court found that the company did not demonstrate that the Fresno County Superior Court erred in overruling its demurrer.

The Findings of the Court:

The Court of Appeal denied LGCY’s writ petition based on Cal. Lab. Code Section 925 being an exception to Cal. Code Civ. Proc. Section 426.30(a), the compulsory cross-complaint rule that LGCY argued required Sewell to file cross claims in the Utah action. The court found that Sewell satisfied the requirement of Section 925 requesting the trial court void the contract under the statute (voiding the contract required a judicial determination). The court also noted that the changes in Sewell’s work responsibilities, title, and compensation since Section 925 went into effect sufficiently qualified the contract for the application of the statute. The California court also rejected LGCY’s claim that the full faith and credit clause of the U.S. Constitution required them to recognize Utah’s compulsory cross-complaint statute.

If you have questions about California employment law or need help filing a California employment law complaint, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Former Credit One Bank HR Generalist’s Disability Suit Proceeds After Ninth Circuit Reversal

Due to District Judge Jennifer A. Dorsey’s reversal, a former HR Generalist’s disability claim against Credit One Bank will proceed.

The Case: Karen Shields v. Credit One Bank, N.A.

The Court: U.S. Court of Appeals for the Ninth Circuit

The Case No.: 20-15647

The Plaintiff: Karen Shields v. Credit One Bank, N.A.

The plaintiff in the case, Karen Shields, was an HR Generalist for Credit One Bank. After she took a medical leave of absence (citing an accommodation under the ADA), Shields claims her position was eliminated. According to Shields, her employer failed to accommodate her disability. Instead of allowing or providing appropriate accommodations after Shields underwent a bone biopsy surgery on her right shoulder and arm, the plaintiff claims that her employer terminated her from her human resources job.

The Defendant: Karen Shields v. Credit One Bank, N.A.

The defendant in the case, Credit One Bank, argued that Shields failed to plead a disability because she didn’t adequately support a claim showing a physical or mental impairment that would “substantially limit one or more major life activities.” The district court granted the Defendant’s motion to dismiss based on the argument that Shields failed to adequately establish she had an “impairment” or “permanent or long term effects from an impairment.”

The Case: Karen Shields v. Credit One Bank, N.A.

However, the Ninth Circuit reversed the district court’s dismissal. The Ninth Circuit noted that the broadened ADA and applicable EEOC regulations protect effects of “an impairment lasting or expected to last fewer than six months (29 CFR § 1630.2(j)(1)(ix)). Additionally, the Ninth Circuit court held that Shields, the plaintiff in the case, adequately alleged a disability under the ADA standards.

If you have questions about California employment law or need to file a wage and hour lawsuit, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Physician’s Whistleblower Claims to Proceed Against UCLA

In recent news, the Court of Appeal reversed the district court's grant of summary judgment in favor of defendants, the Regents of the University of California (and others), in the whistleblower retaliation action brought by Arnold Scheer, M.D., M.P.H., plaintiff.

The Case: Scheer v. The Regents of the Univ. of Cal. 76

The Court: Court of Appeal of State of California, Second Appellate District Division Three

The Case No.: B303379

The Plaintiff: Scheer v. The Regents of the Univ. of Cal. 76

The plaintiff in the case, Scheer, brought whistleblower claims in three causes of action. Scheer alleged violations under Labor Code Section 1102.5, Government Code Section 8547 et seq., and Health and Safety Code Section 1278.5. According to court documents, Dr. Scheer alleged the company retaliated against him for whistleblowing about various issues and concerns connected to patient safety, mismanagement, fraud, illegal conduct, and economic waste.

The Defendant: Scheer v. The Regents of the Univ. of Cal. 76

The defendant in the case, the Regents of the University of California, successfully moved for summary judgment in the trial court, but the Court of Appeal reversed the decision, holding that the wrong standard was applied to the case in trial court, and citing Lawson v. PPG Architectural Finishes, Inc., 12 Cal. 5th 703 (2022).

Summary of the Case: Scheer v. The Regents of the Univ. of Cal. 76

In Lawson v. PPG Architectural Finishes, Inc. (2022) 12 Cal.5th 703, the California Supreme Court clarified the legal framework that applies to claims under Labor Code Section 1102.5. The recent opinion requires the plaintiff to meet a less burdensome standard for whistleblower claims under Section 1102.5. While Lawson did not specifically discuss Government Code Section 8547.10, the case did require the state Supreme Court to analyze nearly identical language, so the appellate court concluded Lawson’s legal framework can be applied to the Government Code claim in Scheer v. The Regents of the Univ. of California. The Court of Appeal found that the Defendants based their argument seeking summary adjudication of Scheer’s Labor and Government Code claims on a legal standard inconsistent with Lawson. Based on this contradiction, the court reversed and remanded the claims. Regarding Scheer’s Health and Safety Code section 1278.5, the appellate court concluded that Lawson didn’t change the legal framework. However, the appellate court concluded there was a triable issue of material fact regarding the stated reasons for termination, so this claim was also reversed and remanded for further proceedings.

If you have questions about California employment law, retaliation, or need help filing a California whistleblower lawsuit, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.