Cutting Edge Developments in California Employment Law”

INSTITUTE FOR CORPORATE COUNSEL

“CUTTING EDGE DEVELOPMENTS IN CALIFORNIA EMPLOYMENT LAW”

March 20-21, 2003

Greenberg Traurig, LLP By Diana P. Scott Chau T. Vo 2450 Colorado Avenue, Suite 400E Santa Monica, California 90404 (310) 586-7700 [email protected] Age Discrimination

Esberg v. Union Oil Company of California, 28 Cal.4th 262, 121 C.R. 262 (2002) A 53 year old employee, with his employer’s prior approval, pursued an undergraduate degree at his employer’s expense. Three years later, when the employee sought employer-paid post graduate education, the company denied funding, claiming that the employee was “too old to invest in.” Employee then brought suit claiming unlawful age discrimination on the ground that the California Fair Employment and Housing Act prohibited an employer from discriminating on the basis of age in the terms, conditions, or privileges of employment. The court held that, while the prohibition against age discrimination in employment contained in the FEHA extends to hiring, discharge, suspension, and demotion, it did not extend to an employer’s age discrimination in the provision of benefits such as educational assistance. The court reasoned that Government Code Section 12940, which prohibits an employer’s discrimination in terms, conditions, or privileges of employment, did not include age as one of the prohibited bases of discrimination, while Government Code Sections 12941 and 12941.1, which do prohibit age discrimination, did not apply to discrimination in the terms, conditions or privileges of employment.

Disability Discrimination

Bagatti v. Department of Rehabilitation, 97 Cal.App.4th 344, 118 C.R.2d 443 (3rd Dist. 2002)

Plaintiff alleged that her employer engaged in unlawful employment practice under Gov. Code 12940, subd. (m), by failing to accommodate her polio disability. She alleged that as a result of her severe polio, she was unable to walk long distances, that her job duties required her to transport herself long distances within the work site and that she was substantially impaired in her ability to move around her work site as needed. The trial court had sustained defendant’s demurrer without leave to amend and entered judgment dismissing plaintiff’s complaint. Plaintiff timely filed a notice of appeal. The Court of Appeals held that the FEHA’s accommodation requirement, unlike the ADA’s, is not tied to a showing of ability to perform essential job functions. Rather, the ADA’s provisions defining reasonable accommodation are materially different from the FEHA provisions, and the interpretative Federal Equal Employment Opportunities Commission statement was issued to interpret the ADA and was not a part of the FEHA statement relied on by the defendant. Moreover, the ADA incorporated statutory restrictions on the duty to accommodate while the FEHA did not. Unlike the ADA provision, Gov. Code § 12940, subd. (m), does not require that a reasonable accommodation for disability be made only where the person is a qualified individual able to perform the essential functions of the job as defined in 42 U.S.C. § 12111, nor is there any requirement in Gov. Code § 12940, subd. (m), that an employee has a right to assert the duty of reasonable accommodation only where some kind of adverse employment action is taken against the employee.

2 Barrios v. California Interscholastic Federation, 277 F.3d 1128 (9th Cir. 2002)

A paraplegic assistant baseball coach sued the California Interscholastic Federation (CIF) and the California Interscholastic Federation Southern Section, asserting claims of discrimination under the Americans With Disabilities Act (ADA) and state law. Following settlement, the coach moved for attorneys’ fees and costs as the prevailing party. The District Court denied the motion. The Ninth Circuit reversed, holding that the victory was not de minimis and thus supported a fee award. Monetary damages alone disqualified the settlement from being characterized as de minimis and a legally enforceable policy change memorialized in the settlement agreement significantly altered the legal relationship between the coach and the CIF, further precluding a de minimis finding.

Chevron U.S.A., Inc. v. Echazabal, 536 U.S. 73, 122 S.Ct. 2045 (2002)

Plaintiff worked through independent contractors at one of Chevron U.S.A., Inc.’s oil refineries until Chevron refused to hire him because of a liver condition – which its doctors said would be exacerbated by continued exposure to toxins at the refinery. The contractor employing plaintiff laid him off in response to Chevron’s request that it reassign him to a job without exposure to toxins or remove him from the refinery. Plaintiff filed suit, claiming, among other things, that Chevron’s actions violated the Americans with Disabilities Act of 1990. Chevron defended under an Equal Employment Opportunity Commission regulation permitting an employer to defend an ADA claim on the ground that a worker’s disability on the job would pose a direct threat to his health. The Supreme Court held that the ADA permitted such regulation and thus that employers could invoke the ADA’s “direct threat” defense in “threat-to-self” as well as in “threat-to-others” situations.

Hernandez v. Hughes Missile Systems Co., 292 F.3d 1038 (9th Cir. 2002), amended 298 F.3d 1030 (2002)

Although the ADA does not protect an employee or applicant who is currently engaging in illegal drug use, it does protect qualified individuals with a drug addiction who have been successfully rehabilitated. Thus, an employer’s unwritten policy against rehiring former employees who were terminated for any violation of its misconduct rules, although not unlawful on its face, violated the ADA as it applied to former drug addicts, whose only work-related offense was testing positive for drugs because of their addiction, but who are successfully rehabilitated.

Toyota Motor Manufacturing Kentucky, Inc. v. Williams, 534 U.S. 184, 122 S.Ct 681 (2002)

Former employee, who had worked as an automobile assembly line worker, sued former employer under the Americans with Disabilities Act alleging that employer failed to reasonably accommodate her carpal tunnel syndrome. The Supreme Court held that to be substantially limited in performing manual tasks, an individual must have an impairment that prevents or

3 severely restricts the individual from doing activities that are of central importance to most people’s daily lives. Thus, employee’s carpal tunnel syndrome was a “disability” within the meaning of the ADA only if it restricted the performance of manual tasks of central importance to plaintiff’s daily life. Employee’s inability to do work with her hands and arms extended at or above shoulder level was not sufficient proof that she was substantially limited in the major life activity of performing manual tasks. Moreover, the U.S. Supreme Court found that the Court of Appeals applied the wrong standard in determining whether the employee’s carpal tunnel syndrome caused her to be substantially limited in the major life activity of performing manual tasks when it focused on her inability to perform manual tasks associated only with her job. Reversed and remanded for further proceedings.

U.S. Airways, Inc. v. Barnett, 535 U.S. 391, 122 S.Ct. 1516 (2002)

Plaintiff injured his back while working as a cargo handler for U.S. Airways, Inc. He was then transferred to a less physically demanding mailroom position. This new position then later became open to seniority-based employee bidding under U.S. Airways’ seniority system, and employees senior to plaintiff planned to bid on the job. When U.S. Airways refused plaintiff’s request to accommodate his disability by allowing him to remain in the mailroom, plaintiff lost his job and filed a lawsuit under the ADA. The Supreme Court held that an employer’s showing that a requested accommodation conflicts with seniority rules is ordinarily sufficient to show that an accommodation is not reasonable as a matter of law, unless the employee could present evidence of special circumstance, such as the employer, having retained the right to change the system unilaterally, exercises the right fairly frequently, thus reducing employee expectation that the system will be followed, that makes the seniority rule exception reasonable in the particular case.

National Origin Discrimination

Kang v. U. Lim America, Inc., 296 F.3d 810 (9th Cir. 2002)

Employee, a United States citizen of Korean national origin, alleged that he and his other Korean co-workers were subjected to verbal and physical abuse and discriminatorily long work hours by their Korean supervisor. Employee brought suit against his former employer alleging national origin discrimination and harassment in violation of Title VII. The district court granted summary judgment in favor of employer and employee appealed. To prevail on a Title VII harassment claim premised on national origin discrimination, the employee must show: (1) that he was subjected to verbal or physical conduct because of his national origin; (2) that the conduct was unwelcome; and (3) that the conduct was sufficiently severe or pervasive to alter the conditions of plaintiff’s employment and create an abusive work environment. Generally, a plaintiff alleging racial or national origin harassment presents facts showing that he was subjected to racial epithets in the workplace. However, employee alleged that he and other Korean workers were subjected to physical and verbal abuse because their supervisor viewed their national origin as superior. The Ninth Circuit noted that while the form was unusual, such stereotyping was an evil at which the statute was aimed. By presenting evidence that the

4 supervisor abused employee because of his stereotypical notions that Korean workers were better than the rest, that the supervisor did not subject any of the corporation’s Mexican workers to any abuse, that the physical and verbal abuse were in fact unwelcome, and that such abuse was objectively offensive, the court held that employee presented evidence sufficient enough to survive summary judgment.

Race Discrimination

Aragon v. Republic Silver State Disposal, Inc., 292 F.3d 654 (9th Cir. 2002)

A white male part-time sanitation employee brought a Title VII action against his former employer, alleging racial discrimination, after he was laid off. In order to establish a prima facie claim of racial discrimination, pursuant to Title VII, an employee must show that (1) he belongs to a protected class, (2) he was qualified for the position, (3) he was subjected to an adverse employment action and (4) similarly situated individuals outside the employee’s protected class were treated more favorably. The court held that plaintiff failed to present “substantial and specific” evidence of pretext necessary to survive summary judgment. Employer’s proffered reasons, that it laid off plaintiff due to a seasonal downturn in trash volume and due to plaintiff’s poor job performance, were not inconsistent and thus did not support an inference of pretext. The fact that three of plaintiff’s four co-workers, who were laid off at the same time as plaintiff, were also white was insufficient to raise an inference of pretext. Moreover, white and white- looking sanitation workers who were laid off at the same time as plaintiff did not have more seniority than their non-white part-time counterparts who were retained by employer thus precluding an inference of pretext on that ground.

Elsayed Mukhtar v. California State University, 299 F.3d 1053 (9th Cir. 2002)

A professor sued a state university under Title VII, alleging that, in denying him tenure, it discriminated against him on the basis of race. To establish racial discrimination in the employment context, the professor had to demonstrate that the reason the university gave for denying him tenure--lack of scholarly achievement--was mere pretext for illegal racial discrimination. However, the court found that the professor could not show pretext without the expert witness testimony that was ultimately found to be unreliable and therefore inadmissible. The remaining evidence, six professors’ testimony that they believed he was qualified for a tenure appointment, a recommendation by an outside expert who was hired to evaluate the professor, the professor’s instructional achievement, book-length dissertation, and article recommended for publication, indicated, at most, a mere difference of academic opinion--not discrimination--and did not undermine the university's nondiscriminatory reason for denying tenure.

Freeman v. Oakland Unified School District, 291 F.3d 632 (9th Cir. 2002)

An African-American teacher brought an action against the school district alleging race-based employment discrimination and retaliation claims. The district court granted summary judgment

5 in favor of the school district after finding that the teacher had not exhausted his administrative remedies as to the claims raised in his complaint. The Ninth Circuit affirmed. The teacher’s allegations in the Title VII race discrimination complaint were not “like or reasonably related to” his allegations in the EEOC charge so as to sufficiently exhaust the teacher’s administrative remedies. The allegations in the teacher’s EEOC charge pertained solely to discrimination in the context of an annual election among school faculty while the complaint alleged race-based employment discrimination.

Lyons v. England, 307 F.3d 1092 (9th Cir. 2002)

Male African-American military veterans brought an action against the Secretary of the Navy, alleging that they had been subjected to disparate treatment because of their race and that they had suffered retaliation, in violation of Title VII. The Ninth Circuit held that the District Court erred in granting summary judgment on the ground of non-exhaustion of administrative remedies. A Title VII plaintiff's claims are considered to be reasonably related to his allegations in his Equal Employment Opportunity Commission (EEOC) charge to the extent that those claims are consistent with plaintiff's original theory of the case, as reflected in plaintiff's factual allegations and his assessment as to why the employer's conduct is unlawful. The allegations recorded in the veterans' EEOC charges reflected their original theory of the case that the Secretary discriminated against them over the course of several years by denying them favorable temporary assignments, that because they had been denied those assignments, they were disadvantaged in terms of their ability to obtain promotion to positions higher than GS-12, and that the Secretary had discriminated against them by issuing promotions to two specific GS-13 positions on a non competitive basis.

Religious Discrimination

Friedman v. Southern California Permanente Medical Group, 102 Cal.App.4th 39, 125 C.R.2d 663 (2001)

Computer contractor brought an action against his prospective employer for religious creed discrimination and retaliation in violation of the FEHA after defendant withdrew a permanent offer of employment when plaintiff refused to be immunized against mumps. Plaintiff had refused to be immunized on the ground that he was a strict vegan and the vaccine for mumps was grown in chicken embryos. The Court of Appeal affirmed defendant’s demurrer, holding that veganism was not a religious creed within the meaning of the FEHA. While veganism compelled plaintiff to live in accord with strict dictates of behavior, it reflected a moral and secular, rather than religious, philosophy of the value of animal life, and thus was not a “religious creed” within the meaning of Cal. Code Regs., tit. 2, § 7293.1, which expressly requires that the belief, observance, or practice occupy a place of importance in the employee's life parallel to that of traditionally recognized religions.

Lawson v. State of Washington, 296 F.3d 799 (9th Cir. 2002)

6 A former cadet in the state patrol academy resigned because the patrol's requirements of saluting the flag and taking an oath of allegiance conflicted with his beliefs as a Jehovah's Witness. After resigning, the cadet sued the state, state patrol, patrol chief and patrol captain, alleging religious discrimination and failure to accommodate under Title VII. To establish a Title VII religious accommodation claim, an employee must first establish a prima facie case by showing that: (1) he had a bona fide religious belief, the practice of which conflicted with his employment duties; (2) he informed his employer of his beliefs and the conflict; and (3) the employer threatened him with or subjected him to discriminatory treatment, including discharge, because of his inability to fulfill the job requirements. The Court of Appeals held that the cadet voluntarily resigned from the state patrol in spite of the fact that the patrol’s personnel manual threatened discipline for failure to take the oath and salute the flag and that he was offered no accommodation. The former cadet had no claim for constructive discharge because he had informed his advisor during their first meeting of his decision to voluntarily resign, and there was no mention of discipline if he refused to comply with the requirements.

Silo v. CHW Medical Foundation, 27 Cal.4th 1097, 119 C.R.2d 698 (2002)

A file clerk employed by defendant, a Roman Catholic hospital, was terminated for discussing another religion, evangelical Christianity, in the workplace. The employee brought an action against the hospital alleging several causes of action, including wrongful termination in violation of public policy and employment discrimination under the California Fair Employment and Housing Act (FEHA). The Supreme Court held that the hospital was not liable under the circumstances because although there was a clear, constitutionally based state policy against religious discrimination in employment (Cal. Const., art. I, § 8), there was also a countervailing policy in the free exercise of religion clause of U.S. Const., 1st Amend., and Cal. Const., art. I, § 4, that permitted religious organizations to define themselves and their religious message. Since there was no clear public policy against religious organizations prohibiting what they consider to be inappropriate religious speech in the workplace, there could be no liability in tort for such an organization terminating an employee who engages in such speech.

Sex Discrimination and Harassment

B.K.B. v. Maui Police Department, 276 F.3d 1091 (9th Cir. 2002)

A female police officer sued the police department and county in state court, alleging race and sex discrimination in violation of Title VII. During trial, the District Court permitted testimony regarding the officer’s sexual practices. Plaintiff moved for mistrial but the District Court denied the motion. The District Court did instruct the jury to disregard the testimony about the officer’s fantasies and autoerotic sexual practices, but the jury returned a verdict for defendants. The Court of Appeals held that the District Court's instruction to the jury failed to cure prejudice to employee, who was thus entitled to a new trial. The instruction was neither as forceful nor as comprehensive as warranted under circumstances, and, no matter what the instruction, it was impossible to dispel the prejudicial effect of the evidence.

7 Costa v. Desert Palace, Inc., 299 F.3d 838 (9th Cir. 2002), cert. granted, 123 S. Ct. 816 (Jan. 10, 2003)

Employer, Caesars Palace Hotel and Casino ("Caesars"), terminated plaintiff, the only woman in her bargaining unit, citing disciplinary problems. Plaintiff argued, and the jury agreed, that sex was "a motivating factor" in her termination. Because Caesars failed to establish that she would have been terminated without consideration of her sex, the jury awarded back pay and compensatory damages. The trial court had given the jury a “mixed motive” instruction rather than a “pretext” instruction. On appeal, Caesars argued that the “mixed motive” instruction was improper and that plaintiff should have been held to a special, higher standard of “direct evidence,” a threshold it claims she did not meet. The Ninth Circuit disagreed, holding that Title VII imposed no special or heightened evidentiary burden on a plaintiff in a so-called “mixed- motive” case. Rather, the plaintiff in any Title VII case may establish a violation through a preponderance of evidence (whether direct or circumstantial) that a protected characteristic played a “motivating factor.”

The U.S. Supreme Court has granted certiorari to review the Ninth Circuit’s decision.

Department of Health Services v. Superior Court (McGinnis), 41 P.3d 1, 117 C.R.2d 166 (2002) Review granted (Feb. 13, 2002)

A public employee filed a claim for sexual harassment and sexual discrimination against her employer and her former supervisor pursuant to the California Fair Employment and Housing Act (FEHA). Defendant argued that the “Burlington/Faragher” defense, available to an employer in Title VII sexual harassment cases where the offending conduct is committed by a supervisor, no tangible employment action is taken against the employee, and the employer demonstrates that (1) the employer exercised reasonable care to prevent and promptly correct sexually harassing behavior, and (2) the plaintiff employee unreasonably failed to take advantage of the corrective or preventive opportunities provided by the employer or otherwise failed to avoid harm, was equally available in cases brought under the FEHA. The Court of Appeals held that because FEHA is distinguishable from Title VII in several critical respects, the defense was inapplicable to state claims. Specifically, California law exhibits a clear intent to hold employers strictly liable for the harassing conduct of supervisory employees, even though the employer did not know, and did not have reason to know, of the supervisor's conduct.

The Supreme Court is set to review the decision.

Herberg v. California Institute of Fine Arts, 101 Cal.App.4th 142, 124 C.R.2d 1 (2002)

An employee of an art institute was depicted in two students' vulgar and sexually explicit drawing that was displayed in a student exhibition in the gallery of the institute for approximately 24 hours. The employee sued the art institute for sexual harassment. The Court of Appeal affirmed the trial court’s grant of summary judgment in favor of the art institute, holding that the alleged harassment was not sufficiently severe or pervasive to alter the conditions of

8 plaintiffs' employment and create a hostile work environment within the meaning of the FEHA. Although a single incident of harassment may be sufficient to establish an employer's liability, such an incident must be severe in the extreme and generally must include either physical violence or the threat thereof. In this particular case, plaintiff was neither physically touched nor subjected to any sort of verbal abuse and the intent of the drawing was to make a point about representational art rather than to harass plaintiff.

Kohler v. Interstate Brands Corp., 103 Cal.App.4th 1096, 127 C.R.2d 366 (3rd Dist. 2002)

An employee filed a workers' compensation claim alleging harassment based on a co-worker’s physical and verbal abuse. Subsequently, she commenced an action by filing a civil complaint against her employer and co-worker, claiming damages under the FEHA. Two weeks later, the employee attended a hearing before the Workers' Compensation Appeals Board (WCAB) and on that same day signed with the employer a compromise and release agreement for settlement in the amount of $4,000. The release stated that the employee sought settlement for "injury arising out of and in the course of employment to psyche/stress" and included a general release of “all claims and causes of action” against the employer. The employer was unaware of the FEHA action at the time the release was signed and approved. The court of appeals affirmed the trial court’s grant of summary judgment in favor of the employer in the FEMA action on the ground that it fell within the scope of plaintiff's signed standard workers' compensation compromise and release agreement. Since the employer had no knowledge of the litigation, the employee bore the burden of expressly excepting the action from the broad language of a workers' compensation release. Otherwise, absent extrinsic evidence of a contrary intent, the employer was entitled to rely on the broad language of the release as settling all claims, including those arising under the FEHA.

Rene v. MGM Grand Hotel, Inc., 305 F.3d 1061 (9th Cir. 2002)

A homosexual male former employee sued his former employer, a casino in Las Vegas, alleging sexual harassment by male supervisors and coworkers in violation of Title VII. On rehearing en banc, the Court of Appeals held that employee's allegations that he was subjected to severe, pervasive, and unwelcome physical conduct of a sexual nature in the workplace stated a viable claim of sexual discrimination under Title VII, even if that employee also alleged that the motivation for discrimination was his sexual orientation. Neither the employee's sexual orientation nor the fact that the harasser is, or may be, motivated by hostility based on the employee's sexual orientation is relevant for purposes of Title VII and thus neither provided nor precluded a cause of action for sexual harassment. Rather, discrimination in violation of Title VII can take place between members of same sex, not merely between members of the opposite sex, and it is enough that the harasser have engaged in severe or pervasive unwelcome physical conduct of a sexual nature. Accordingly, summary judgment in favor of employer was reversed.

9 Salazar v. Diversified Paratransit, Inc., 103 Cal.App.4th 131, 126 C.R.2d 475 (2002), Rev. granted (2003)

Female bus driver who was sexually harassed by a passenger during the course of her employment brought an action against her employer and supervisor, alleging sexual harassment in violation of the California Fair Employment and Housing Act (FEHA). The trial court granted defendants' motion for nonsuit and entered judgment in favor of defendants on the ground that the FEHA did not apply to harassment by customers and clients. The Court of Appeal affirmed holding that the FEHA did not create employer liability when a non-employee client or customer sexually harasses an employee. The Court noted that the Legislature had considered legislation in 1984 that would have amended the statute to make an employer liable for harassment under such circumstances, but rejected that amendment and did not enact it into law. Thus, the FEHA created no employer liability for failure to protect an employee from harassment by client or customer.

The case is currently set for review by Supreme Court.

Stout v. Potter, 276 F.3d 1118 (9th Cir. 2002)

Female postal inspectors brought a Title VII action against the postmaster general, alleging denial of promotion on the basis of sex. The Court of Appeals affirmed summary judgment in favor of defendant, holding that the female inspectors failed to establish a prima facie case of disparate impact under Title VII. The fact that none of the 6 female postal inspectors out of the 38 total applicants for promotion was initially selected among the 10 to be interviewed for promotion did not establish a prima facie case. The second round of screening applicants occurred due to unexpected circumstances and the failure to be selected in the first round did not foreclose an applicant's consideration for interview in the second round. Moreover, 2 female applicants were granted interviews in the second round and 1 of the 2 females chosen in the second round received a promotion, while 3 of the 32 initial male applicants received a promotion. The court also held that, absent evidence to show that the women were measured lower than men on the neutral criteria involved in the screening decision, the fact that none of the 6 female postal inspectors out of the 38 total applicants for promotion was initially selected among the 10 to be interviewed did not establish that the facially gender-neutral screening process excluded female applicants due to gender.

Rieger v. Clayleo C. Arnold, 2002 DJDAR 14216

Plaintiff sued her former employer, an attorney, as well as the attorney’s professional law corporation and office manager, under a “hostile” work environment theory. The issue in front of the court of appeals was whether the trial court erred in admitting evidence of plaintiff’s prior sexual conduct in violation of Evidence Code § 1106, subd. (b), which excludes evidence of prior sexual conduct in civil actions for sexual harassment, sexual assault, or sexual battery, unless the evidence concerns plaintiff’s sexual conduct with the alleged perpetrator. The court held that the term “perpetrator” was properly understood to include both a named defendant, as

10 well as any other actor whose conduct the plaintiff seeks to ascribe to the employing entity. Otherwise, the employing entity would otherwise be “hamstrung” with imputed liability against which it could not effectively defend. Such interpretation was consistent with the legislative intent to allow a defense based on genuinely probative evidence.

Retaliation

Akers v. County of San Diego, 95 Cal.App.4th 1441, 116 C.R.2d 602 (2002)

Plaintiff worked as a county deputy district attorney in the family protection division where she prosecuted domestic violence cases and eventually developed an excellent reputation. After the county was informed that she was pregnant, plaintiff was transferred to a branch assignment where she would no longer be working on domestic violence cases and would have a different chain of command. Four months after plaintiff lodged a complaint against the county, the county issued a negative performance review and counseling memorandum, accusing plaintiff of incompetence, dishonesty, and insubordination.

Plaintiff eventually resigned and filed a suit for gender and pregnancy discrimination, violation of the family leave statutes, wrongful termination in violation of public policy, and unlawful retaliation under the Fair Employment and Housing Act (FEHA) and Lab. Code, § 1102.5. On appeal, defendant argued, among other things, that plaintiff did not show that she had suffered an adverse employment action. The Court of Appeals disagreed. Although plaintiff did not prove a denial of a specific promotional opportunity, there was evidence showing she left the district attorney's office because of the adverse actions taken against her and the severe damage to her reputation within the office. The district attorney had also told plaintiff she would never work in the domestic violence arena again, an area in which she excelled. Taking into account the totality of the circumstances, including the language used in the performance evaluation and counseling memorandum, and the fact that top management demonstrated its willingness to use this information in significant employment decisions against her, the court held that there was sufficient evidence for a jury to find that the county’s retaliatory actions would preclude reasonable promotional opportunities and therefore constitute adverse employment actions under FEHA.

Walrath v. Sprinkel, 99 Cal.App.4th 1237, 121 C.R.2d 806 (2002)

A former employee of a publishing company brought an action against his former supervisor, alleging wrongful termination, age discrimination in violation of the Fair Employment and Housing Act (FEHA), retaliation, and intentional infliction of emotional distress. Plaintiff alleged that the supervisor retaliated against him for complaining about being passed over for younger workers by ousting him from his office and moving his office furniture and possessions into an open area. Plaintiff also alleged that the younger employees were moved into the electronic pre-press department while older employees were left in the conventional pre-press department. The Court of Appeal reversed the trial court’s grant of summary judgment in favor of defendant. While a supervisor may not be sued individually for employment discrimination under Gov. Code, § 12940, subd. (a), which applies only to "an employer," an individual

11 supervisor may be liable to an employee pursuant to Gov. Code, § 12940, subd. (h), which governs retaliation, and which applies to "any employer, labor organization, employment agency, or person." Thus, plaintiff adequately pled a cause of action for retaliation in violation of the public policy and summary judgment was improper.

Arbitration

Circuit City Stores, Inc. v. Adams, 279 F.3d 889 (9th Cir. 2002)

An employee of Circuit City filed a state court lawsuit against Circuit City and three co-workers alleging sexual harassment, retaliation, constructive discharge, and intentional infliction of emotional distress under the California Fair Employment and Housing Act ("FEHA") and discrimination based on sexual orientation under Cal. Labor Code § 1102.1. Circuit City responded by filing a petition in the federal district court for the Northern District of California to stay the state court proceedings and compel arbitration pursuant to the Dispute Resolution Agreement (the “DRA”) the employee signed when he applied for employment. On remand after the U.S. Supreme Court held that the Federal Arbitration Act applies to most employment contracts, the Ninth Circuit held that Circuit City’s arbitration provision was unconscionable under California contract law principles. The DRA was procedurally unconscionable because it was a "contract of adhesion" -- it was a standard form contract, drafted by the employer, the party with superior bargaining power, which relegated to the employee the option of either adhering to its terms without modification or rejecting the contract entirely. It was also substantively unconscionable in that it unilaterally forced employees to arbitrate all employment- related claims against the employer but did not require the employer to arbitrate its claims against employees. Further, it limited the relief available to employees, required an employee to split the arbitrator's fees with the employer, and imposed a strict one year statute of limitations on arbitrating claims, which deprived an employee of the benefit of the continuing violation doctrine available in suits under the FEHA.

Circuit City Stores, Inc. v. Ahmed, 283 F.3d 1198 (9th Cir. 2002)

An employee of Circuit City filed a state court action asserting claims under the California Fair Employment and Housing Act (FEHA), and Circuit City sought to compel arbitration under the Federal Arbitration Act (FAA). The case raised issues identical to those addressed in Adams, above, except that the employee here was given a meaningful opportunity to opt out of the binding arbitration program. The Ninth Circuit held that in light of the employee's meaningful opportunity to opt out, the arbitration agreement was not procedurally unconscionable and thus enforceable. Moreover, and apart from its non-adhesive nature, the court also found that the arbitration agreement in Ahmed lacked any other indicia of procedural unconscionability. The terms of the arbitration agreement were clearly spelled out in the written materials and a videotape presentation, the employee was encouraged to contact Circuit City representatives or to consult an attorney prior to deciding whether to participate in the program, and he was given 30 days to decide whether to participate in the program.

12 EEOC v. Luce, Forward, Hamilton & Scripps, 303 F.3d 994 (9th Cir. 2002)

A law firm refused to hire a prospective employee as a full-time legal secretary because he refused to sign an agreement to arbitrate claims arising from his employment. The Equal Employment Opportunity Commission (EEOC), on the employee’s behalf, sued the law firm under Title VII and other statutes, alleging that it had retaliated against employee by requiring him to sign an arbitration agreement as a condition of employment. The Ninth Circuit held that Duffield, which held that employers may not through compulsory arbitration agreements compel individuals to waive their Title VII right to a judicial forum, was no longer good law, having been “implicitly overruled” by Circuit City v. Adams. Instead, unifying case law in the Ninth Circuit and bringing the Circuit in line with other Circuit Court decisions and the Supreme Courts of California and Nevada, the Ninth Circuit held that an employer could require appropriate compulsory arbitration of Title VII claims of its applicants and employees as a condition of employment, and could enforce those arbitration agreements against current employees, as long as the agreements complied with traditional principles of contract law.

EEOC v. Waffle House, Inc., 534 U.S. 279, 122 S.Ct. 754 (2002)

Employees of Waffle House, Inc. were required to sign an agreement requiring employment disputes to be settled by binding arbitration. After one of the employees suffered a seizure and was fired by Waffle House, he filed a timely discrimination charge with the Equal Employment Opportunity Commission (EEOC) alleging that his discharge violated Title I of the Americans with Disabilities Act of 1990 (ADA). The EEOC subsequently filed an enforcement suit, to which the employee was not a party, alleging that Waffle House's employment practices, including the employee’s discharge "because of his disability," violated the ADA. Waffle House petitioned under the Federal Arbitration Act (FAA) to stay the EEOC’s suit and compel arbitration.

The issue before the U.S. Supreme Court was whether the fact that the employee had signed the mandatory arbitration agreement limited the remedies available to the EEOC. The Court held that an agreement between an employer and an employee to arbitrate employment-related disputes did not bar the EEOC from pursuing victim-specific judicial relief, such as back pay, reinstatement and damages, in an ADA enforcement action. Congress had amended Title VII in 1991 to allow the recovery of compensatory and punitive damages by a "complaining party" -- a term which includes both private plaintiffs and the EEOC. Moreover, there was no language in the statutes or applicable case law suggesting that the existence of an arbitration agreement between private parties materially changed the EEOC’s statutory function or the remedies that were otherwise available.

Mercuro v. Superior Court (Countrywide Securities Corp.), 96 Cal.App.4th 167, 116 C.R.2d 671 (2002), rev. denied (2002)

A former employee of a securities corporation and his wife brought an action against the corporation, alleging age and disability discrimination, fraud, and wrongful termination in

13 violation of public policy. The corporation filed a motion to compel arbitration under the arbitration agreements, including an application for a license from the National Association of Securities Dealers (NASD) and a separate arbitration agreement, the employee had signed. The court held that the arbitration agreement was both procedurally and substantively unconscionable and thus unenforceable. The agreement was procedurally unconscionable because the employee was made to understand that he would not be able to make a living with the corporation if he did not sign it. It was substantively unconscionable because it required employees to arbitrate most claims of interest to employees but exempted from arbitration most claims of interest to the corporation. The agreement also imposed certain disadvantages on the employee by requiring that the arbitrator be chosen by the National Arbitration Forum.

Fittante v. Palm Springs Motors, Inc. 2003 DJDAR 869

Plaintiff, a service technician, applied for employment at an automobile dealership in Palm Springs. The job application included a provision for arbitrating disputes between plaintiff and the company. Employer eventually terminated plaintiff on the ground that he had defrauded a vehicle repair customer and plaintiff filed suit alleging causes of action for fraud in the inducement, defamation, and wrongful termination in violation of public policy under Labor Code Section 970. The employer responded by filing a petition to compel arbitration. The court of appeals held that the arbitration agreement was enforceable under Armendariz because it provided for neutral arbitrators, provided for more than minimal discovery, required a written award by reference to the California Arbitration Act, and did not restrict the remedies available to the employee. Moreover, because the agreement did not expressly provide for the payment of fees and costs, it was still capable of a construction consistent with the dictates of Armendariz and could be enforced, in spite of the fact that it was required as a condition of employment. The court also held that the arbitration agreement, while one of adhesion, was not unconscionable and that the one invalid term, a one-sided appeal provision, was severable from the remainder of the agreement.

FMLA and CFRA

Bailey v. Southwest Gas Co., 275 F.3d 1181 (9th Cir. 2002)

Following her termination, a former customer service representative brought an action against her former employer alleging violation of the Family and Medical Leave Act (FMLA) and retaliatory discharge under Nevada law. The Ninth Circuit affirmed the District Court’s grant of summary judgment on the FMLA claim in favor of the employer after employee refused to provide medical information. The employee had informed her employer that she was taking medication that made her tired and which interfered with her ability to work overtime but the medical certification form she submitted was only partially completed by her physician. The form indicated that the employee could work "full duty," but did not state how the medication would affect employee's ability to work overtime or establish that the employee had a serious medical condition. It was not unlawful for the employer to require that the employee explain her use of soporific medicine while at work, and her refusal to provide the additional information

14 was not a protected activity. The employer could, therefore, consider her failure to cooperate in making its decision to terminate her for insubordination.

Funkhouser v. Wells Fargo Bank, 289 F.3d 1137 (9th Cir. 2002)

In the wake of a merger with Northwest Bank, Wells Fargo changed its employee sick-time and vacation policy. Employees brought a class action lawsuit against Wells Fargo, alleging that the change in the policies violated the Family and Medical Leave Act (FMLA) because the new policies abrogated the unused sick days the employees had accumulated under the company’s pre-merger sick-time and vacation policies. The Court of Appeals held that the employees’ allegations that Wells Fargo switched to a vacation and sick day policy and a short- term disability policy that were less favorable to them and resulted in their losing their accumulated sick time, failed to state claim for violation of the FMLA. The new policies exceeded the 12 week minimum medical leave required by the FMLA and thus complied with the statute’s minimum requirements. The Ninth Circuit also held that because the sick-time and vacation policies constituted "payroll practices," they were exempt from ERISA.

Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81, 122 S.Ct. 1155 (2002)

The Family Medical Leave Act guarantees qualifying employees 12 weeks of unpaid leave each year and encourages businesses to adopt more generous policies. Employer granted employee 30 weeks of medical leave under its more generous policy. However, it refused her request for additional leave or permission to work part time and terminated her when she did not return to work. Employee then sued, alleging that CFR section 825.700(a) required her employer to grant her 12 additional weeks of leave because it had not informed her that the 30-week absence would count against her FMLA entitlement. CFR Section 825.700(a) provides that leave taken by an employee does not count against that employee’s FMLA entitlement if the employer does not designate the leave as FMLA leave. The Supreme Court held that the regulation was contrary to FMLA and beyond the authority of the Secretary of Labor. The regulation penalized an employer’s failure to provide timely notice of a FMLA designation by denying an employer credit from leave granted before the giving of FMLA notice. However, such penalty was unconnected to any prejudice the employee might have suffered from the employer's lapse and was thus incompatible with the FMLA's comprehensive remedial mechanism.

Tomlinson v. Qualcomm, Inc., 97 Cal.App.4th 934, 118 C.R.2d 822 (2002)

An employee, who had signed an at-will employment agreement when she was hired by defendant, was laid off while she was on family leave. Employee sued her employer for breach of contract, pregnancy discrimination, and retaliation in violation of the Moore-Brown-Roberti Family Rights Act (Family Rights Act), termination of employment in violation of public policy, and unfair business practices. The Court of Appeal affirmed the trial court’s grant of non suit in favor of employer, holding that persons who are on family leave authorized by the Family Rights Act are not immunized from layoff during the leave, since a valid regulation adopted to

15 implement the act provides that the act's guaranty of reinstatement after such leave does not preclude an employer from terminating the employee as part of a work force reduction.

Tameny Tort

Grant-Burton v. Covenant Care, Inc., 99 Cal.App.4th 1361, 122 C.R.2d 204 (2002)

A former marketing director filed an action against her former employer, alleging, among other things, that she was wrongfully terminated in violation of public policy for participating in a group discussion about the fairness of her employer’s bonus system. The trial court granted the employer's motion for summary judgment. The Court of Appeals reversed, holding that plaintiff's claim was based on a policy that was sufficient to support a claim of tortious discharge, Labor Code section 232, which expressly forbids the termination of an employee for disclosing the amount of his or her wages, which included bonuses.

Phillips v. St. Mary Regional Medical Center, 96 Cal.App.4th 218, 116 C.R.2d 770 (2002)

A social worker brought a wrongful termination action against a medical center, which was a nonprofit religious corporation. Plaintiff alleged that he was fired in retaliation for filing a complaint for race and sex discrimination with the Department of Fair Employment and Housing and the Equal Employment Opportunity Commission, and that this retaliation constituted wrongful discharge in violation of the public policies embodied in the Fair Employment and Housing Act, Cal. Const., art. I, § 8, and title VII of the Civil Rights Act of 1964. The trial court sustained defendant's demurrer without leave to amend based on the religious-entity exemption contained in the version of the FEHA in effect at the time of plaintiff’s termination. The Court of Appeal reversed holding, in part, that although the public policies under the FEHA and Title VII are in direct conflict with regard to the scope of the religious-entity exemption, a plaintiff may rely on Title VII as a source of public policy for a state common law cause of action for wrongful termination.

Silo v. CHW Medical Foundation, 27 Cal.4th 1097, 119 C.R.2d 698 (2002)

16 Implied Contract and Implied Covenant

Kelly v. SkyTel Communications, 32 Fed. Appx. 283, 2002 WL 461363 (9th Cir. 2002)

Employee who was given only half of her requested sales commission sued her employer for breach of contract and promissory fraud. The Ninth Circuit found that the compensation agreement between employee and the company did not allow the company unlimited discretion in awarding over-the-maximum sales commissions. Although the agreement granted the company the sole power to select the means and criteria used to determine award, it also contemplated that the company would exercise its discretion in a manner consistent with its promise to provide incentive compensation for employee’s extraordinary effort. Accordingly, the Ninth Circuit held that, despite the employer’s retention of some discretion, a fact issue existed as to whether the company breached the implied covenant of good faith and fair dealing by acting arbitrarily and on the basis of inadequate information when it decided to give the employee only half of her requested commission, and thus precluded summary judgment.

McCollum v. Xcare.Net.Inc., 212 F.S.2d 1142 (U.S.D.C. N.D. Cal. 2002)

Former sales manager sued her employer alleging that her employer's refusal to pay her certain commissions constituted a breach of contract and violated California statutes. The Court found that fact issues were raised concerning, inter alia, the unconscionability of the company’s compensation plan and plaintiff’s breach of implied covenant claim. Genuine issues of material fact, including whether the sales incentive compensation plan was a standard policy which the sales manager could not negotiate and whether the employer could nullify earned commissions under the plan by reassigning an account after a sales contract was signed, precluded summary judgment on the issue of whether the plan was procedurally and substantively unconscionable. There were also disputed questions of fact of whether an e-mail from plaintiff's supervisor was intended to frustrate plaintiff's legitimate expectations under the commission plan thus constituting a breach of the implied covenant of good faith and fair dealing.

Privacy Rights

TBG Insurance Services Corporation v. Superior Court (Zieminski), 96 Cal.App.4th 443, 117 C.R.2d 115 (2002), rev. denied (2002)

An executive brought a wrongful termination action against his former employer, an insurance company. Plaintiff had been provided with a computer for use at work and another computer for working at home. Plaintiff had signed defendant's policy statement regarding the use of the company’s computer and in doing so had agreed to use the computers only for business purposes and not for any improper, obscene, or other inappropriate purpose. The company’s stated reason for firing plaintiff was that he had violated the company’s policy by accessing pornographic Web sites while he was at work. Defendant moved to compel plaintiff to produce the home computer. Plaintiff opposed the motion, claiming that the computer contained personal information, and that production of the computer would invade his constitutional right of privacy. The Court of

17 Appeal held that defendant's advance notice to plaintiff, by way of the policy statement, and plaintiff’s written consent to the policy defeated employee’s claim that he had a reasonable expectation of privacy in the home computer.

Workers Compensation

Palestini v. General Dynamics Corp., 99 Cal.App.4th 80, 120 C.R.2d 741 (2002)

A husband and wife brought a personal injury and loss of consortium action against the husband's former employers, General Dynamics Corporation and Hughes Missile Systems Company, in connection with the husband's testicular cancer and other injuries. Plaintiffs alleged that the injuries were caused by the husband's chronic exposure to carcinogenic chemicals in his work as a plastics fabricator and pled, in general terms, facts showing that defendants knew that the husband had suffered work-related injuries, that defendants concealed their knowledge of the causal relationship between these reactions and the carcinogenic properties of the chemicals that caused these reactions, that the husband's injuries were aggravated as a result of the concealment, and that the husband was repeatedly told by defendants in response to his inquiries that the chemicals he was using were safe. The Court of Appeal held that plaintiffs' complaint stated facts sufficient to constitute a cause of action under Lab. Code, § 3602, subd. (b)(2), which provides an exception to the exclusive remedy provisions of the Workers' Compensation Act.

Wage and Hour

Bothell v. Phase Metrics, Inc., 299 F.3d 1120 (9th Cir. 2002)

Field service engineer sought overtime compensation and other damages under the Fair Labor Standards Act (FLSA) and California state law. The District Court granted summary judgment for the employer based on the finding that the employee was an exempt administrative employee under the FLSA and California law. The Ninth Circuit reversed, finding that fact issues existed as to whether plaintiff’s primary duty involved the performance of non-manual work directly related to management policies or general business operations, the extent to which plaintiff was permitted to make decisions, and the importance of the decisions over which he had control decision making authority, as well as the nature of his employment and daily activities.

Sav-On Drug Stores, Inc. v. Superior Court (Rocher), 97 Cal.App.4th 1070, 118 C.R.2d 792 (2002), Rev. granted, 125 Cal.Rptr.2d 439 (2002)

Operations and assistant managers of a drug store chain brought an action against the chain on the ground that it wrongfully failed to pay plaintiffs’ overtime wages. The Court of Appeal issued a writ of mandate commanding the trial court to vacate its order granting class certification and to enter a new order denying class certification. Defendant had shown that the action involved an estimated 1,400 operating managers and assistant managers and approximately 300 stores and that there were wide variations in the types of stores and the types

18 of activities and amounts of time per week spent on different types of activities by the employees in those stores. Since defendant had demonstrated there would be individualized fact issues as to each member of the class to determine whether that member spent more than one-half of his or her workweek on activities constituting exempt work, the primary test of the exemption from overtime compensation, the trial court abused its discretion in granting plaintiffs’ motion for class certification.

The appellate court’s determination to deny class certification is currently pending before the California Supreme Court for review.

Limitations Periods

National Railroad Passenger Corp. v. Morgan, 536 U.S. 101, 122 S.Ct. 2061 (2002)

An African-American employee brought an action against his former employer, a railroad, for racial discrimination and retaliation under Title VII on the ground that he had been subjected to discrete discriminatory and retaliatory acts and had experienced a racially hostile work environment throughout his employment. The District Court granted partial summary judgment to the railroad and entered judgment on the jury verdict in favor of the railroad on the ground that the company could not be liable for conduct occurring outside the 300-day filing period. Employee appealed. The Ninth Circuit reversed and remanded and certiorari was granted. The Supreme Court held that to the extent that the employee sought to recover for discrete acts of alleged discrimination, only acts occurring within 300 days of date that the employee filed his charge with the Equal Employment Opportunity Commission were actionable under Title VII. Thus, the Supreme Court reversed the Court of Appeal’s application of the continuing violation doctrine to what it termed “serial violations”. However, because the very nature of hostile environment claims involves repeated conduct, the employee could recover on his hostile work environment theory for acts occurring more than 300 days before charge was filed with EEOC, as long as the acts were part of the same hostile work environment and at least one occurred within the 300-day period.

Birschstein v. New United Motor Manufacturing Co., 92 Cal.App.4th 994,

cert. denied, 2002 DAR 626 (2002)

The California Supreme Court declined to review the First District’s decision that applied the continuing violation principle to a sexual harassment claim. A coworker had engaged in a series of overt acts of sexual harassment against plaintiff. Subsequently, a significant part of the coworker's behavior consisted of staring at plaintiff at her work station on the assembly line. The employee brought an action against her employer for sexual harassment in violation of the California Fair Employment and Housing Act. The trial court granted the employer's motion for summary judgment on the ground that the employee's conduct was not actionable as a matter of law. The Court of Appeal reversed holding that plaintiff's claims of sexual harassment and retaliation were actionable. Although the coworker's behavior primarily consisted of staring at plaintiff, sexual harassment resulting in the creation of a hostile work environment did not need

19 to involve sexual advances. Rather, sexual harassment sufficiently showed itself in the form of intimidation and hostility if it interfered with an individual's work performance. Moreover, the coworker’s repeated acts of staring at plaintiff could qualify as actionable sexual harassment as a matter of law, especially in view of his prior overt acts of sexual harassment.

Cucuzza v. City of Santa Clara, 2002 DJDAR 14531

Plaintiff sued her former employer for sexual discrimination under the California Fair Employment and Housing Act on the ground that the City had unlawfully discriminated against her by limiting her job duties to clerical and administrative tasks and assigning technical duties to less qualified men. The court of appeals affirmed the trial court’s grant of summary judgment in favor of the employer on the ground that the statute of limitations barred any action on most of the adverse actions alleged. The continuing violation doctrine did not apply and summary judgment was properly granted because, on the record before the court, the alleged adverse actions were a collection of isolated employment decisions and, even assuming the employer’s conduct was sufficiently similar and frequent enough to constitute a single course of conduct, plaintiff’s situation had reached permanence well over a year before plaintiff commenced her lawsuit.

Attorneys’ Fees

Chambers v. Kay, 29 Cal.4th 142, 126 C.R.2d 536 (2002)

Plaintiff paid a monthly fee to defendant for use of defendant’s office space and facilities but otherwise maintained a separate practice. Plaintiff agreed to participate as co-counsel in a sexual harassment suit in return for a percentage of the attorneys’ fees received. Neither plaintiff nor defendant obtained the client's consent to the proposed fee division. Plaintiff eventually sued defendant for, inter alia, breach of contract. The trial court granted summary judgment in favor of defendant, finding that the fee-sharing agreement was unenforceable as violative of Rules of Professional Conduct, Rule 2-200, which requires disclosure to and written consent of the client of a fee splitting arrangement. Both the Court of Appeals and the Supreme Court affirmed the judgment as to the unenforceability of the agreement. Rule 2-200 precluded plaintiff from sharing in the fees obtained since the client’s consent was never obtained. The court further held that because plaintiff and defendant maintained independent law practices and were, therefore not partners, the fee arrangement did not fall within the exception of Rule 2-200 applicable to partners, associates, or employees.

Smith v. Rae-Venter Law Group, 29 Cal.4th 345, 127 C.R.2d 516 (2002)

The California Labor Commissioner awarded plaintiff, an attorney who had resigned from a law firm, vacation pay and expense reimbursement, but rejected plaintiff’s claims for a bonus and statutory waiting time penalties. Plaintiff appealed to the superior court which granted plaintiff the same relief with the exception that interest was added onto plaintiff's nonwage claims. The law firm moved for statutory attorneys’ fees and costs under Lab. Code, § 98.2, subd. (c), on the

20 ground that plaintiff was unsuccessful in his appeal from the Commissioner's decision. The Supreme Court awarded the employer fees and costs finding that plaintiff was not successful on appeal. The judgment plaintiff had obtained on appeal to the trial court was no more favorable to him than the earlier administrative award. The judgment and the award were identical, in dollar amount and in elements of damage, except that the judgment included prejudgment interest on the nonwage claims and the Commissioner's award did not. Thus, where a judgment resulting from an appeal on a wage claim is no more favorable than the initial administrative award, the employee must pay the employer’s fees and costs.

Covenants Not to Compete

Advanced Bionics Corp. v. Medtronic, Inc., 2002 DJDAR 14247

Employee signed a noncompetition agreement upon accepting employment with a Minnesota corporation. The employee then resigned and began working with a competitor in California. The employee and his new employer filed a declaratory relief action in California against the former employer seeking to prevent the former employer from taking any action in any other court to enforce the noncompetition agreement, which they alleged was unenforceable under California law. Subsequently, the former employer filed an action in Minnesota and the employee and the new employer sought a temporary restraining order in the California action to prohibit the former employer from taking any further steps in the Minnesota action. The trial court issued the TRO and the court of appeal affirmed.

The Supreme Court reversed, holding that although California has a strong interest in protecting its employees from noncompetition agreements, this policy interest did not justify issuance of a TRO against the parties in the Minnesota proceeding. While California courts have the power to issue orders that assist in protecting their jurisdiction, enjoining a parallel action in a different state presented sovereignty concerns that compel California courts to use judicial restraint when determining whether they may properly issue a TRO against parties pursuing an action in a foreign jurisdiction. In this particular case, there was no exceptional circumstance that outweighed the threat to judicial restraint and comity principles and the TRO was thus improperly issued.