Wednesday, February 20, 2019

Fierro v. Landry's Restaurant, Inc.

Plaintiff Jorge Fierro filed the underlying action against defendant Landry's Restaurants, Inc., seeking remedies for what Fierro alleges to be Landry's Restaurants's violations of specified California labor laws and wage orders.  Fierro asserts claims on behalf of himself and on behalf of a class of individuals that he alleges is similarly situated.  Landry's Restaurants demurred to the complaint on the basis that each of the causes of action is barred by the applicable statute of limitations.

As to Fierro's individual claims, the trial court overruled the demurrer, concluding that the statute of limitations defense did not appear affirmatively on the face of the complaint.  As to the class claims, the trial court sustained the demurrer without leave to amend on the basis that a prior class action with identical class claims against Landry's Restaurants had been dismissed for failure to bring the case to trial in five years as required by Code of Civil Procedure sections 583.310 and 583.360. Under the "death knell" doctrine, Fierro appeals from that portion of the order sustaining without leave to amend the demurrer to the class claims.

Previously, we filed an opinion reversing the order on the basis that the applicable statutes of limitations on the class claims had been tolled.  However, the California Supreme Court granted review and transferred the matter to this court with directions to vacate the opinion and to reconsider the cause in light of the United States Supreme Court's opinion in China Agritech, Inc. v. Resh (2018) __ U.S. __ [138 S.Ct. 1800] (China Agritech)—an opinion issued following the filing of our opinion but before issuance of the remittitur.  After vacating our decision, we requested and received supplemental briefing from the parties as to the potential application of China Agritech to the issues presented in this appeal.

China Agritech, supra, __ U.S. __ [138 S.Ct. 1800] holds that, upon denial of class certification, a putative class member may not commence a new class action asserting the same claim, if the statute of limitations on the claim has run.  (Id. at p. __ [138 S.Ct. at p. 1804].)  The Court reasoned that the " 'efficiency and economy of litigation' " which support tolling the statutes of limitations for individual claims during the pendency of the initial class action do not support tolling the statutes of limitations for the class claims.  (Id. at p. __ [138 S.Ct. at p. 1806].) 

As we explain, the superior court's stated basis for sustaining the demurrer and dismissing the class claims is erroneous.  As we further explain, in determining whether the statutes of limitations bar Fierro's class claims, we will conclude that there is no basis on which to apply equitable (or any other form of) tolling.  Although that determination will result in at least some of the class's claims being time-barred, on the present record, we cannot say that all of the class's claims are untimely.  Thus, we will reverse the order sustaining Fierro's demurrer without leave to amend and remand for further proceedings in which the trial court can decide, on a more developed record, issues related to class certification and/or timeliness of class claims.

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Mijares v. Orange County Employees' Retirement System

A county retirement system's assessment for additional funds to pay a group of retired employees their promised benefits does not represent a retroactive liability. Government Code Sec. 31453.5 clearly gives a county retirement system broad authority to impose assessments against an employer to cover an unfunded liability, as long the employer's current and retired employees are members of the county retirement system.

Mijares v. Orange County Employees' Retirement System - filed Jan. 23, 2019, publication ordered Feb. 15, 2019, Fourth District, Div. Three 

Cite as 2019 S.O.S. 792 

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Friday, February 15, 2019

Wilmot v. Contra Costa Co. Empl. Retirement

The petition for review is granted. Further action in this matter is deferred pending consideration and disposition of a related issue in Alameda County Deputy Sheriffs' Assn. v. Alameda County Employees' Retirement Assn., S247095 (see Cal. Rules of Court, rule 8.512(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 8.520, is deferred pending further order of the court. Votes: Cantil-Sakauye, C.J., Chin, Corrigan, Liu, Cuéllar, Kruger and Groban, JJ. Review granted/holding for lead case.

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Jiminez-Sanchez v. Dark Horse Express, Inc.

Substantial evidence supports the trial court's finding that individual issues predominate in a proposed class action for claims of under payment where the plaintiffs did not show any uniform agreement between the defendant and the truck drivers who received piece-rate payments, nor any evidence of what tasks were included in the piece-rate compensation for the different categories of drivers who worked for defendant. The trial court erred in failing to consider the issue of compensation for rest breaks separately from the issue of compensation for "nonproductive time". A trial court has discretion to consider whether the remaining members of a proposed class were sufficiently numerous to justify class treatment, after determining individual questions predominated with respect to the claims of one subclass and the defense to them.

Jiminez-Sanchez v. Dark Horse Express, Inc. - filed Jan. 16, 2019, publication ordered Feb. 14, 2019, Fifth District 
Cite as 2019 S.O.S. 744 

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Friday, February 8, 2019

Goonewardene v. ADP, LLC

Under the Labor Code, an employee who believes he or she has not been paid the wages due under the applicable labor statutes and wage orders may bring a civil action against his or her employer.  (See, e.g., Lab. Code, § 1194; Martinez v. Combs (2010) 49 Cal.4th 35, 49-51; see also Lab. Code, § 2699.)  This case presents the question whether, when an employer hires an independent payroll service provider (hereafter payroll company) to take over all the payroll tasks that would otherwise be performed by an internal payroll department, the employee may bring a civil action against not only his or her employer but against the payroll company as well.

The Court of Appeal, while agreeing with prior appellate court decisions that a payroll company cannot properly be considered an employer of the hiring business’s employee that may be liable under the applicable labor statutes for failure to pay wages that are due, held that the employee may nonetheless maintain causes of action for unpaid wages against the payroll company for (1) breach of the payroll company’s contract with the employer under the third party beneficiary doctrine, (2) negligence, and (3) negligent misrepresentation.  We granted review to determine the validity of the Court of Appeal’s conclusions with respect to these three causes of action.

For the reasons discussed hereafter, we disagree with the Court of Appeal’s conclusion as to each of the proposed causes of action.

First, we conclude that the Court of Appeal erred in holding that an employee may maintain a breach of contract action against the payroll company under the third party beneficiary doctrine.  As explained, under California’s third party beneficiary doctrine, a third party — that is, an individual or entity that is not a party to a contract — may bring a breach of contract action against a party to a contract only if the third party establishes not only (1) that it is likely to benefit from the contract, but also (2) that a motivating purpose of the contracting parties is to provide a benefit to the third party, and further (3) that permitting the third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties.

Here, we conclude that whether or not a contract between an employer and a payroll company will in fact generally benefit employees with regard to the wages they receive, providing a benefit to its employees with regard to the wages they receive is ordinarily not a motivating purpose of the contracting parties.  Instead, the relevant motivating purpose of the contracting parties is to provide a benefit to the employer.  In addition, permitting each employee to name the payroll company as an additional defendant in any wage and hour lawsuit an employee may pursue would impose considerable litigation defense costs on the payroll company that inevitably would be passed on to the employer through an increased cost of the payroll company’s services, a result that would not be consistent with the objectives of the contract and the reasonable expectations of the employer or payroll company.  Accordingly, we conclude that an employee should not be viewed as a third party beneficiary who may maintain an action against the payroll company for an alleged breach of the contract between the employer and the payroll company with regard to the payment of wages.

Second, we conclude that the Court of Appeal also erred in determining that an employee who alleges that he or she has not been paid wages that are due may maintain tort causes of action for negligence and negligent misrepresentation against a payroll company.  As we explain, in light of a variety of policy considerations that are present in the wage and hour setting, we conclude that it is neither necessary nor appropriate to impose upon a payroll company a tort duty of care with regard to the obligations owed to an employee under the applicable labor statutes and wage orders and consequently that the negligence and negligent misrepresentation causes of action lack merit.

Accordingly, we conclude that the decision of the Court of Appeal should be reversed insofar as it held that plaintiff employee in this case may proceed against defendant payroll company on causes of action for breach of contract, negligence, and negligent misrepresentation.

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Thursday, February 7, 2019

The Depot, Inc. v. Caring for Montanans, Inc.

Companies that marketed health insurance plans and allegedly charged excessive premiums did not act as fiduciaries of the plans because they did not exercise discretion over plan management or control over plan assets. ERISA does not preempt state-law claims based on defendants' alleged misrepresentations that the premiums charged reflected the actual medical premium amount because the claims did not have a reference to or an impermissible connection with an ERISA. A plaintiff seeking restitution or disgorgement for alleged charges it paid for kickbacks and unrequested benefits cannot assert a claim for equitable relief under 29 U.S.C. Sec. 1132(a)(2) since restitution and disgorgement are not equitable in nature.

The Depot, Inc. v. Caring for Montanans, Inc. - filed Feb. 6, 2019 
Cite as 2019 S.O.S. 17-35597 

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EEOC v. Global Horizons

The panel reversed the district court’s orders in an enforcement action brought by the Equal Employment Opportunity Commission (“EEOC”) under Title VII of the Civil Rights Act of 1964 on behalf of Thai workers alleging discrimination charges against Green Acre Farms and Valley Fruit Orchards (the “Growers”).

The Growers retained Global Horizons, Inc., a labor contractor, to obtain temporary workers for their orchards. Global Horizons recruited workers from Thailand and brought them to the United States under the H-2A guest worker program. The district court entered a default judgment against Global Horizons after it discontinued its defense in the action; this case focuses solely on the liability of the Growers.

The district court granted in part the Growers’ Fed. R. Civ. P. 12(b)(6) motions to dismiss. The district court drew a distinction between orchard-related matters (managing, supervising, and disciplining the Thai workers at the orchards) and non-orchard-related matters (housing, feeding, transporting, and paying the workers).

The panel held that the district court erred in holding that the Growers could not be held liable under Title VII for non-orchard-related matters.

Deciding in the first instance what test to employ for determining whether an entity is a joint employer under Title VII, the panel held that the common-law agency test should be applied. Under the common-law test, the principle guidepost is the element of control. The panel rejected the chief alternative for analyzing employment relationships in the Title VII context: the economic-reality test.

The panel held that the district court correctly determined that the EEOC’s allegations were sufficient to establish that the Growers and Global Horizons were joint employers as to orchard-related matters. Applying the common-law agency test, the panel concluded that the EEOC adequately alleged that the Growers’ employment relationship with the Thai workers also subsumed non-orchard-related matters.

The panel held that the EEOC plausibly alleged Green Acre’s liability as a joint employer for the discriminatory conduct of Global Horizons. The panel further held that the EEOC plausibly alleged Green Acre’s liability under Title VII for discrimination relating to non-orchard-related matters. The panel also held that the EEOC’s allegations were thinner as they related to the liability of Valley Fruit. The panel reversed the district court’s dismissal of the EEOC’s allegations against Valley Fruit with respect to non-orchard-related matters; and directed on remand that the EEOC be permitted to amend its complaint as to Valley Fruit’s liability for non-orchard-related matters. The panel further directed that the district court should then reconsider the disparate treatment claim (and the related pattern-or practice claim) in light of the EEOC’s allegations regarding both orchard-related and non-orchard-related matters.

The panel reversed the district court’s order denying the EEOC’s motions to compel discovery regarding the Growers’ liability with respect to non-orchard-related matters. The panel also reversed the district court’s order granting the Growers’ motion for summary judgment. Finally, the panel reversed the district court’s order granting the Growers’ motions for attorneys’ fees because the Growers were no longer prevailing parties.

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