Tuesday, January 15, 2019

Supreme Court Favors Delegation Clauses, But Courts Retain Jurisdiction Over Formation Disputes

On January 8, 2019, the Supreme Court reversed the Fifth Circuit decision in Henry Schein, Inc. v. Archer and White Sales, Inc., Case No. 17-1272. 

The case is a business dispute in which plaintiff Archer and White seeks both money damages and injunctive relief. Defendant Schein moved to compel arbitration and Archer and White opposed, arguing that the dispute was not subject to arbitration because the complaint seeks injunctive relief, at least in part. The relevant contract provision states:


Disputes. This agreement shall be governed by the laws of the State of North Carolina. Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief and disputes related to trademarks, trade secrets, or other intellectual property of [Schein]), shall be resolved by binding arbitration in accordance with the arbitration rules of the American Arbitration Association. The place of arbitration shall be in Charlotte, North Carolina.

Schein argued that because of the contract's express incorporation of the American Arbitration Association's rules, the parties agreed that questions of arbitrability, including the arbitrability issue raised by Archer and White, would be decided by an arbitrator. Archer and White responded that because they seek injunctive relief, which is excluded in the above provision, the court may resolve a threshold question of arbitrability if the argument for arbitration is "wholly groundless." The district court agreed and Schein's motion to compel was denied. The Fifth Circuit affirmed, citing its own precedent for a "wholly groundless" exception to enforcing a delegation clause. 



In his first Opinion, Justice Kavanaugh writes for a unanimous Supreme Court that when parties contract to delegate arbitrability questions to an arbitrator, a court may not override this agreement even if the court believes that arbitrability of the particular dispute is "wholly groundless." He explains that "[j]ust as a court may not decide a merits question that the parties have delegated to an arbitrator, a court may not decide an arbitrability question that the parties have delegated to an arbitrator."

However, citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995), and Rent-a-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010), the Opinion clearly states that courts retain the power to decide whether there is "clear and unmistakable evidence" of a meeting of the minds to delegate arbitrability questions to an arbitrator. Rather than ordering the lower courts to grant Schein's motion to compel, the Court remanded to the Fifth Circuit to consider, in the first instance, the issue of whether the contract in fact delegated the arbitrability question to the arbitrator.

In employment law, workers' rights attorneys generally seek to avoid arbitration because of the ways in which arbitration agreements are being used not only to stop workers and consumers from vindicating their rights in a concerted manner, but also to exert control over the dispute resolution process, primarily by companies building repeat-customer relationships with certain preferred arbitrators.    

The Supreme Court's decision in Schein is prompting defense attorneys to advise their employer clients to review their arbitration agreements and include a clearly worded delegation clause. However, employers cannot circumnavigate the courts merely through the presence of a provision attempting to delegate questions of arbitrability to an arbitrator. Workers remain able to argue defenses to formation of such an agreement, and courts must hear these arguments. Workers, if you can argue that the defendant lacks "clear and unmistakable evidence" that the parties agreed to arbitrate, or that the parties agreed to delegate issues of arbitrability to an arbitrator, the Supreme Court has made clear, unanimously, that this argument must be heard by the court before compelling arbitration.

Thursday, December 20, 2018

Ninth Circuit Holds Catholic School Teacher fired after Cancer Diagnosis Can Sue School for Discrimination, Not Barred by First Amendment


On December 17, 2018, the Ninth Circuit reversed a decision by the United States District Court for the Central District of California in Biel v. St. James School, A Corp., et al., Case No. 17-55180.

Plaintiff Kristen Biel, a fifth-grade teacher for Defendant, filed a claim under the Americans with Disabilities Act (“ADA”) when St. James Catholic School fired her after she told the School that she had breast cancer and needed time off from work to undergo chemotherapy. The district court dismissed Biel’s claims at summary judgment—holding that her lawsuit under the ADA was barred by the First Amendment’s “ministerial exception.” After her case was dismissed, Plaintiff Biel appealed to the Ninth Circuit.

In November 2013, Plaintiff Biel received a positive teaching evaluation from the School’s principal, noting that Biel was “very good” at promoting a safe and caring learning environment for her students. Less than six months after that evaluation, Biel was diagnosed with breast cancer. When she disclosed her diagnosis to the School’s administrators, she was told her employment contract would not be renewed because “it was not fair … to have two teachers for the children during the school year.”

Biel sued St. James in the United States District Court for the Central District of California, alleging that her termination violated the ADA, which prohibits employment discrimination based on disability. St. James moved for summary judgment, arguing that the First Amendment’s ministerial exception to generally applicable employment laws barred Biel’s ADA claims. The district court agreed and granted summary judgment for St. James.

On appeal, the Ninth Circuit reversed, finding that the total circumstances of Biel’s employment did not qualify her as a minister for the purposes of the ministerial exception.

In Hosanna-Tabor, the only case where the U.S. Supreme Court has applied the ministerial exception, the Court focused on four major considerations to determine if the ministerial exception applied: (1) whether the employer held the employee out as a minister, (2) whether the employee’s title reflected ministerial substance and training, (3) whether the employee held herself out as a minister, and (4) whether the employee’s job duties included “important religious functions.” Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, 565 U.S. 171, 192 (2012).

In Hosanna-Tabor, Cheryl Perich, a teacher for a Lutheran school, was fired after she was diagnosed with narcolepsy and brought ADA claims against the school. The Supreme Court found that the ministerial exception did apply because Perich was more than just a teacher in the Lutheran school. She had a special title of “Minister of Religion” conferred to her by the congregation and distinct from other teachers. Perich led her students in daily prayer, and she also led the school wide mass that occurred twice each school year. Perich claimed a federal tax benefit for employees earning compensation in the "exercise of the ministry" on her tax returns, and she also had to complete extensive religion training in the Lutheran doctrine that took her six years to complete in order to be a commissioned minister. In light of these circumstances, the Supreme Court held that Perish was a minister covered by the ministerial exception.

The Ninth Circuit found that Biel, by contrast, had no sort of credentials, training or titles like Perich. Biel was Catholic, but St. James Catholic School did not require its employees to be Catholic to teach. Biel did not have any extensive training in religion or the Catholic pedagogy. Biel taught all fifth-grade subjects, including a thirty-minute religion class using a workbook on the Catholic faith prescribed by the school administrators. And while Biel joined her students in prayer twice daily, Biel did not lead her students in prayer, and her only job duties at the School’s monthly mass were to keep her class orderly and quiet.

After a holistic examination of her training and duties demonstrated that Biel had a limited role in her student’s spiritual lives, the Ninth Circuit held the ministerial exception did not apply, reversing and remanding her case back to the district court. Biel’s lawyer, Andrew Pletcher, said Biel is still struggling with cancer but is delighted by the Ninth Circuit's ruling.




Friday, November 30, 2018

New York Times Investigation Supports Bryan Schwartz Law's Race Harassment Class Action Against Tesla


One year ago, Bryan Schwartz Law, along with co-counsel Larry Organ and the California Civil Rights Law Group, filed a rare racial harassment class action, because use of the "N-word" and other harassment are so common at Tesla's Fremont auto manufacturing plant. Today, after an in-depth investigation, the New York Times published a feature discussing the disturbing pattern at Tesla.


The story begins:

Owen Diaz had seen swastikas in the bathrooms at Tesla’s electric-car plant, and he had tried to ignore racist taunts around the factory. "You hear, ‘Hey, boy, come here,’ ‘N-i-g-g-e-r,’ you know, all this," said Mr. Diaz, who is African-American.

Similar accounts of race harassment follow, profiling a number of the witnesses in Bryan Schwartz Law’s case. 

If you have information about race harassment at Tesla, contact Bryan Schwartz Law today.



Wednesday, November 21, 2018

Pass the Gravy, But Don't Hold the Wages


Tomorrow, many Americans will prepare their Thanksgiving feast from a box of assembled ingredients, opting to skip the crowded grocery store frenzy by ordering their Thanksgiving meal from a meal kit delivery service. However, customers may be left with a bad taste in their mouths to learn that many of the workers that assemble their meals are being subjected to unsafe, unlawful working conditions and unfairly compensated for their work. 

That is the subject of a recent class action lawsuit filed in Northern California against Blue Apron, claiming that Blue Apron failed to pay workers overtime and failed to provide them with mandatory meal and rest breaks.

Meal kit delivery services are growing in popularity, and there are number of brands to choose from like Blue Apron, Martha and Marley Spoon, HelloFresh, or Sun Basket. Forbes reports the trend for these online meal-kit delivery services will continue, forecasting online sales of meal kits to top $10 billion by 2020, up from about $1 billion in 2015. These meal kit delivery services have capitalized on their success by reinventing dinner, making it easy and accessible for cooks of all skill levels. 

However, there is one group of people who have plenty of complaints about this new industry: the workers

Blue Apron employs over 1000 employees at their warehouse center in Richmond, California where nearly 8 million meal kits are assembled each month. Even under fair conditions, the job is difficult. Blue Apron workers assemble the perishable meal kit boxes inside warehouses kept at a temperature below 40 degrees. According to an investigative report by Buzzfeed, Blue Apron employees reported working 12 hour shifts, five to six days each week on the assembly line in order to meet production deadlines. 

On October 5, 2018, a class action lawsuit was filed against Blue Apron in the Alameda County Superior Court, alleging that Blue Apron failed to properly pay its workers, failed to provide its workers with meal and rest breaks, and failed to provide workers with accurate itemized wage statements. The lawsuit covers all Blue Apron hourly employees that work/worked in California from October 5, 2014 to the present. Plaintiff and the putative class are represented by the Turley & Mara Law Firm, APLC. The case was removed to the United States District Court for the Northern District of California on November 19, 2018 (Fairley v. Blue Apron, Inc., Case No. 3:18-cv-07000).

If you believe you have been subjected to employment discrimination, unfair pay or unsafe working conditions, please contact Bryan Schwartz Law today. 




Ignorance of the Law is no Excuse


“Ignorance of the law is no excuse,” particularly when it comes to an employer’s responsibility to pay its workers according to current wage laws. That’s the upshot from the California Court of Appeal’s opinion in Diaz v. Grill Concepts Services, Inc., 23 Cal. App. 5th 859 (2018).

In Diaz, the employer claimed its failure to pay timely its workers was not “willful” – an element of proof for a waiting time penalty claim under Labor Code § 203 – because the employer was purportedly unable “to locate” an amendment to a local Los Angeles ordinance. This amendment to the local wage law required employers to pay certain hotel workers a specific living wage which exceeded the state minimum wage law. The court was unpersuaded.

The court explained several circumstances under which an employer’s failure to pay all wages due upon termination or resignation are not “willful,” including: (1) uncertainty in the law, (2) representations from a taxing authority that no further payment is warranted, and (3) “the employer’s ‘good faith mistaken belief that wages are not owed’ grounded in a ‘good faith dispute,’ which exists when the ‘employer presents a defense, based in law or fact which, if successful, would preclude any recovery on the part of the employee.” Id. at 868. None applied in this case.

To the contrary, the “undisputed facts show that Grill Concepts suspected it was underpaying its employees and went so far as to confirm that the living wage law was in the midst of being amended, but then did nothing else.” Id. at 869. The employer just kept running the same web search which failed to produce information about the amended statute. Id. Because the employer ignored multiple, obvious ways to inform itself of a change in the living wage law, the court affirmed that the employer’s “inability to locate the amended ordinance does not preclude the finding that its failure to pay was willful” for purposes of establishing Labor Code § 203 waiting time penalty liability. Id. [1]

While it should not have taken a court of appeal to state the obvious, nevertheless, workers and workers’ advocates should find comfort in knowing that California courts will not allow an employer to bury its head in the sand to avoid properly paying its workers.

If your employer refuses to pay you earned wages because it claims not to know the law, please contact Bryan Schwartz Law for a free case evaluation to determine if we can assist you.




[1] The court also rejected the employer’s argument that the amended statute was unconstitutionally vague, in part because of “the absence of any evidence that any other hotelier or restauranteur had any problem reading the ordinance to pay its employees the proper living wage.” Id. at 873. In addition, the court rejected the employer’s misreading of Labor Code § 203 as purportedly allowing a trial court to waive waiting time penalties “for equitable reasons” when the relevant statutory language lacks any such discretionary authority and instead includes language mandating the imposition of such penalties upon a finding of willful violation, as was the case here. Id. at 874-75.

Tuesday, October 23, 2018

Bryan Schwartz Law Submits Amici Curiae Brief on Behalf of Impact Fund and 12 Leading Non-Profits: the Ninth Circuit Should Support Courts' Broad Power to Protect Those Who Assert Statutory Rights, in Acosta v. Austin Electrical Services

When a worker has the courage to step forward to assert his or her statutory rights - like the right to be paid the minimum wage and overtime under the federal Fair Labor Standards Act (FLSA) - he or she must be free from intimidation by corporate defendants. Courts must retain the prerogative to intervene on behalf of  individuals and class and collective action members, to prevent wrongdoing companies from engaging in misleading and coercive communications with witnesses and potential claimants, designed to suppress participation in actions asserting important, protected rights. 

In Acosta v. Austin Electrical Services, LLC, 322 F.Supp.3d 951 (D.Ariz. 2018), the District Court issued a preliminary injunction (among other things) striking declarations a company gathered in trying to beat back a FLSA lawsuit, because the declarations it gathered from its workers were based upon misleading communications. As in other similar cases against other companies, when it pressured employees into signing declarations to use in its defense, Austin Electrical did not tell the workers the details of the lawsuit, who was representing the workers, what they might stand to gain in the suit (recovering unpaid wages), or other important details. The company appealed to the Ninth Circuit Court of Appeal.

In the amicus brief supporting the U.S. Department of Labor, Bryan Schwartz Law, along with Nichols Kaster and Apollo Law, on behalf of the Impact Fund and a dozen other leading non-profits, detailed the many cases in which courts have properly exercised their authority to curtail defendants' improper conduct in lawsuits. For example, employers overreach when confronted by FLSA claims if they begin contacting alleged collective action members without providing them full and complete information about their rights, the lawsuit, and the employer's potentially adverse interests. In addition to describing the strong, historic protections for those asserting FLSA claims, and examples of employer practices that courts intervene to stop, the amicus brief details best practices to guide courts in ensuring robust protections for those bravely asserting wage claims.


If you are seeking to assert wage claims and are facing an employer who seeks to retaliate or keep you and others from protecting your rights, contact Bryan@BryanSchwartzLaw.com.

Monday, October 1, 2018

Governor Brown Signs Wave of Sexual Harassment Legislation



Yesterday, Governor Jerry Brown signed into law numerous amendments to the sexual harassment provisions of the California Fair Employment and Housing Act (“FEHA”). The bills were part of a wave of sexual-harassment-related legislation resulting from the groundswell of public support for the #Metoo movement. While the Governor vetoed many of the sexual-harassment-related bills that made it to his desk, the signed bills provide important new protections for employees in California. This blog post discusses some of these bills.

I.                   SB 1300 clarifies and expands employee rights under FEHA.

Governor Brown signed SB 1300, a bill which clarifies and strengthens the rights of employees who seek to shed light on workplace harassment and other discrimination.  

A.   A single instance of sexually harassing conduct may trigger a triable sexual harassment claim.

Perhaps most importantly, SB 1300 clarifies the “severe or pervasive” legal standard for proving sexual harassment claims (sexual, or otherwise, under the FEHA). Under the FEHA (and the federal Civil Rights Act of 1964, Title VII), sexual harassment is actionable if the sexual conduct is so “severe or pervasive” as to create a hostile work environment. “Severe or pervasive” harassment alone triggers the action, unlike other discrimination and retaliation claims, which may become actionable only if the employee experiences a tangible loss or denial of job benefits. See 2 Cal. Code. Regs. § 11034, subd. (f); Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 67-68 (1986); Lyle v. Warner Bros. Television Prods., 38 Cal.4th 264, 279, 284 (2006).

SB 1300 clarifies that under FEHA’s “severe or pervasive” standard, “a single incident of harassing conduct is sufficient to create a triable issue regarding the existence of a hostile work environment if the harassing conduct has unreasonably interfered with the plaintiff’s work performance or created an intimidating, hostile, or offensive working environment.” Id. The legislature rejected the “stray remarks doctrine,” affirming the decision in Reid v. Google, Inc., 50 Cal.4th 512 (2010) – in other words, a single harassing remark should not be dismissed as being merely a “stray remark,” for the purpose of assessing an employer’s liability. It is also no defense for an employer that a particular occupation may have had more frequent sexual commentary or conduct in the past (disapproving Kelley v. Conco Companies, 196 Cal.App.4th 191 (2011)). Indeed, the Legislature went so far as to declare expressly that: “Harassment cases are rarely appropriate for disposition on summary judgment.” Id., subd. (e) (citing and adopting Nazir v. United Airlines, Inc., 178 Cal.App.4th 243 (2009). 

SB 1300 makes it more likely that victims of sexual harassment will get their day in court. What action may constitute “severe” or “pervasive” harassment has often been highly contested in sexual harassment cases, and unfortunately, in the past, some courts have ruled that workplace behavior that most women would find abusive was neither “severe or pervasive.” For example, in Brooks v. City of San Mateo, 229 F.3d 917 (9th Cir. 2000) the Ninth Circuit Court of Appeals held that a single incident in which a fellow employee touched a plaintiff's breast under her sweater, while very offensive, did not rise to the level of “severe or pervasive” harassment for which Title VII and FEHA offer a remedy. On this basis, the appellate court upheld the district court’s grant of summary judgment for the employer, which meant that the plaintiff’s claims could not proceed to trial. Notably, last year, Alex Kozinski, who penned Brooks, stepped down from his seat on the Ninth Circuit rather than face an investigation into complaints of harassment by numerous women, including his former employees. SB 1300 expressly overturns Brooks’s nauseating “single grope” rule for claims brought under FEHA. Gov’t Code § 12923, subd. (b).

B.     Employers have a duty to prevent third party harassment of all stripes.

SB 1300 creates liability for employers who fail to prevent unlawful harassment of employees by non-employees where the employer knew or should have known of the discrimination and failed to take appropriate remedial action. This provision now extends not only to sexual harassment, but all forms of harassment based on a protected status. Gov’t Code § 12940.

C.    Employers may not obtain costs for plaintiffs’ worthy FEHA claims.

FEHA authorizes a court in certain circumstances and in its discretion to award the prevailing party in a civil action reasonable attorney’s fees and costs, including expert witness fees. California Code of Civil Procedure section 998 permits defendants to recover defense costs if a jury awards a smaller award to the plaintiff than the defendant previously offered in settlement. A defendant’s section 998 offer in a FEHA case used to have the effect of exerting pressure on a plaintiff to accept a settlement rather than face the prospect of covering defendant’s costs, even if the plaintiff prevailed at trial.

SB 1300 provides that a defendant may only receive fees and costs, regardless of any settlement offer, if a case is “frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.” Gov’t Code § 12965, subd. (b). The new law allows plaintiffs with worthy claims to seek their day in court without worrying about being on the hook for defendants’ fees and costs.

D.    Release of claims agreements and non-disparagement agreements related sexual harassment claims are unlawful.

SB 1300 prohibits employers from requiring employees to sign non-disparagement agreements as well as release of claims agreements as a condition of employment, continued employment, a raise, or bonus. Gov’t Code § 12964.5. These provisions will prevent employers from coercing or tricking employees into signing agreements that effectively silence them discussing workplace harassment or that strip them of their right to bring a claim under FEHA.

II.                SB 820 prohibits confidentiality provisions in sexual harassment settlements.  

It has become a common practice for employers to condition settlement of sexual harassment disputes on a complaining employee’s silence. Going forward, such provisions are expressly void and unenforceable for claims that have been filed in an administrative action or in court. SB 820 prohibits employers from conditioning settlement of certain claims of sexual assault, sexual harassment, or harassment or discrimination on the employee’s silence. The bill does allow for a provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, including pleadings filed in court to be included within a settlement agreement upon the request of the claimant. However, this provision does not apply if a government agency or public official is a party to the settlement agreement. This bill extends to disputes beyond the employment context, and takes effect on January 1, 2019.

III.             AB 3109 voids contracts and settlement provisions that seek to waive a party’s right to testify in a government proceeding concerning alleged criminal conduct or sexual harassment.

AB 3109 makes void and unenforceable any contract or settlement provision that waives a party’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or alleged sexual harassment, when the party has been required or requested to attend the proceeding. Civil Code § 1670.11. Like SB 1300 and SB 820, AB 3109 frees employees who have experienced sexual harassment and others to share their experiences with the public. This law takes effect on January 1, 2019.

IV.             SB 1343 brings sexual harassment training to more workplaces.

Employers of five or more employees, including temporary or seasonal employees, are now required to provide at least two hours of sexual harassment training to supervisory employees and at least one hour of sexual harassment training to non-supervisory employees by January 1, 2020, and every two years thereafter. See SB 1343; Gov’t Code §§ 12950, 12950.1. This is a major expansion of FEHA’s sexual harassment training requirements, as the law previously extended training only to supervisory employees of employers with fifty or more employees. This expansion recognizes the value of educating all employees that they have a right to work in an environment free of sexual harassment and associated retaliation. 

V.                Conclusion

In the words of Martin Luther King, Jr. “Darkness cannot drive out darkness; only light can do that.” California’s new laws will ensure that more victims of workplace harassment and others have their day in court and can more freely shed light on problems that persist in California workplaces.


If you have been a victim of sexual harassment or unwanted sexual advances in the workplace, please contact Bryan Schwartz Law today.