Daugherty v. City & Co. of SF

Daugherty v. City & Co. of SF (CA1/3 A145863, filed 5/30/18, pub. ord. 6/22/18) the Public Safety Officers Procedural Bill of Rights Act

Under the Public Safety Officers Procedural Bill of Rights Act (POBRA) (Gov. Code, § 3300 et seq.), no punitive action may be taken against a public safety officer for any alleged act, omission, or other misconduct unless the investigation is completed within one year of “the public agency’s discovery by a person authorized to initiate an investigation of the allegation of an act, omission, or other misconduct,” subject to certain statutory exceptions.  (§ 3304, subd. (d)(1).)  One such exception provides that the one-year time period is tolled while the act, omission, or other alleged misconduct is also the “subject” of a pending criminal investigation or prosecution.  (Id., subd. (d)(2)(A).)

This case arises out of a criminal corruption investigation of officers in the San Francisco Police Department (SFPD).  The investigation began in 2011 and was led by the United States Attorney’s Office (USAO), with the assistance of select members of the criminal unit of SFPD’s Internal Affairs Division (IAD-Crim).  During the course of the investigation, search warrants of the cellphone records of former SFPD Sergeant Ian Furminger—the central figure in the corruption scheme—led to the discovery in about December 2012 of racist, sexist, homophobic, and anti-Semitic text messages between Furminger and nine SFPD officers.

The criminal case proceeded to trial and resulted in a verdict against Furminger and a codefendant for conspiracy to commit theft, conspiracy against civil rights and wire fraud.  Three days after the verdict, on December 8, 2014, the text messages were released by the USAO to the administrative unit of SFPD’s Internal Affairs Division (IAD-Admin).  After IAD-Admin completed its investigation of the text messages, the chief of police issued disciplinary charges against respondents in April 2015.

While the disciplinary proceedings were pending, respondent Rain O. Daugherty went to court and filed a petition for writ of mandate and complaint for extraordinary relief, seeking to rescind the disciplinary charges on the grounds that they were untimely.  The remaining respondents joined in Daugherty’s petition.  The trial court granted the writ petition and complaint, finding the one-year statute of limitations began to accrue in December 2012 when the misconduct was discovered, and thus, the investigation of respondents’ misconduct was not completed in a timely manner.

For the reasons discussed below, we conclude the one-year statute of limitations did not begin to run until the text messages were released by the USAO to IAD-Admin, because before then, the alleged misconduct was not and could not be discovered by the “person[s] authorized to initiate an investigation” for purposes of section 3304, subdivision (d)(1).  We alternatively conclude the one-year statute of limitations was tolled until the verdict in the criminal corruption case because the text messages were the “subject” of the criminal investigation within the meaning of section 3304, subdivision (d)(2)(A).  Thus, the April 2015 notices of discipline were timely.  Because the trial court’s contrary conclusions were based on errors of law or were not supported by substantial evidence, we reverse.

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AHMC Healthcare, Inc. v. Superior Court

AHMC Healthcare, Inc. v. Superior Court (CA2/4 B285655 6/25/18) Wage & Hour/Rounding Time

State law requires employers to pay their employees for all time the employees are at work and subject to the employers’ control.  (Mendiola v. CPS Security Solutions, Inc. (2015) 60 Cal.4th 833, 839.)  The issue in this case is whether an employer’s use of a payroll system that automatically rounds employee time up or down to the nearest quarter hour, and thus provides a less than exact measure of employee work time, violates California law.  In the underlying matter, both employers and employees moved for summary adjudication on the issue, and the trial court denied both motions.  Petitioners AHMC Healthcare, Inc., AHMC, Inc., AHMC Anaheim Regional Medical Center, L.P. (Anaheim), and AHMC San Gabriel Valley Medical Center, L.P. (San Gabriel) sought a writ of mandate directing the trial court to grant its motion, contending they had established as a matter of undisputed fact that their system was neutral on its face and as applied.  We agree the undisputed facts established that petitioners’ system was in compliance with California law.  Accordingly, we grant the writ.

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Janus v. AFSCME

Janus v. AFSCME (US 16–1466 6/27/18) Public Sector Employee Agency Fees/First Amendment

Illinois law permits public employees to unionize. If a majority of the employees in a bargaining unit vote to be represented by a union, that union is designated as the exclusive representative of all the employees, even those who do not join. Only the union may engage in collective bargaining; individual employees may not be represented by another agent or negotiate directly with their employer. Nonmembers are required to pay what is generally called an “agency fee,” i.e., a percentage of the full union dues. Under Abood v. Detroit Bd. of Ed., 431 U. S. 209, 235–236, this fee may cover union expenditures attributable to those activities “germane” to the union’s collective bargaining activities (chargeable expenditures), but may not cover the union’s political and ideological projects (nonchargeable expenditures). The union sets the agency fee annually and then sends nonmembers a notice explaining the basis for the fee and the breakdown of expenditures. Here it was 78.06% of full union dues. Petitioner Mark Janus is a state employee whose unit is represented by a public-sector union (Union), one of the respondents. He refused to join the Union because he opposes many of its positions, including those taken in collective bargaining. Illinois’ Governor, similarly opposed to many of these positions, filed suit challenging the constitutionality of the state law authorizing agency fees. The state attorney general, another respondent, intervened to defend the law, while Janus moved to intervene on the Governor’s side. The District Court dismissed the Governor’s challenge for lack of standing, but it simultaneously allowed Janus to file his own complaint challenging the constitutionality of agency fees.

The District Court granted respondents’ motion to dismiss on the ground that the claim was foreclosed by Abood. The Seventh Circuit affirmed.

Held:

1. The District Court had jurisdiction over petitioner’s suit. Petitioner was undisputedly injured in fact by Illinois’ agency-fee scheme and his injuries can be redressed by a favorable court decision. For jurisdictional purposes, the court permissibly treated his amended complaint in intervention as the operative complaint in a new lawsuit. United States ex rel. Texas Portland Cement Co. v. McCord, 233 U. S. 157, distinguished. Pp. 6–7.

2. The State’s extraction of agency fees from nonconsenting public sector employees violates the First Amendment. Abood erred in concluding otherwise, and stare decisis cannot support it. Abood is therefore overruled. Pp. 7–47.

(a) Abood’s holding is inconsistent with standard First Amendment principles. Pp. 7–18.

(1) Forcing free and independent individuals to endorse ideas they find objectionable raises serious First Amendment concerns. E.g., West Virginia Bd. of Ed. v. Barnette, 319 U. S. 624, 633. That includes compelling a person to subsidize the speech of other private speakers. E.g., Knox v. Service Employees, 567 U. S. 298, 309. In Knox and Harris v. Quinn, 573 U. S. ___, the Court applied an “exacting” scrutiny standard in judging the constitutionality of agency fees rather than the more traditional strict scrutiny. Even under the more permissive standard, Illinois’ scheme cannot survive. Pp. 7–11.

(2) Neither of Abood’s two justifications for agency fees passes muster under this standard. First, agency fees cannot be upheld on the ground that they promote an interest in “labor peace.” The Abood Court’s fears of conflict and disruption if employees were represented by more than one union have proved to be unfounded: Exclusive representation of all the employees in a unit and the exaction of agency fees are not inextricably linked. To the contrary, in the Federal Government and the 28 States with laws prohibiting agency fees, millions of public employees are represented by unions that effectively serve as the exclusive representatives of all the employees. Whatever may have been the case 41 years ago when Abood was decided, it is thus now undeniable that “labor peace” can readily be achieved through less restrictive means than the assessment of agency fees.

Second, avoiding “the risk of ‘free riders,’ ” Abood, supra, at 224, is not a compelling state interest. Free-rider “arguments . . . are generally insufficient to overcome First Amendment objections,” Knox, supra, at 311, and the statutory requirement that unions represent members and nonmembers alike does not justify different treatment. As is evident in non-agency-fee jurisdictions, unions are quite willing to represent nonmembers in the absence of agency fees. And their duty of fair representation is a necessary concomitant of the authority that a union seeks when it chooses to be the exclusive representative. In any event, States can avoid free riders through less restrictive means than the imposition of agency fees. Pp. 11–18.

(b) Respondents’ alternative justifications for Abood are similarly unavailing. Pp. 18–26.

(1) The Union claims that Abood is supported by the First Amendment’s original meaning. But neither founding-era evidence nor dictum in Connick v. Myers, 461 U. S. 138, 143, supports the view that the First Amendment was originally understood to allow States to force public employees to subsidize a private third party. If anything, the opposite is true. Pp. 18–22.

(2) Nor does Pickering v. Board of Ed. of Township High School Dist. 205, Will Cty., 391 U. S. 563, provide a basis for Abood. Abood was not based on Pickering, and for good reasons. First, Pickering’s framework was developed for use in cases involving “one employee’s speech and its impact on that employee’s public responsibilities,” United States v. Treasury Employees, 513 U. S. 454, 467, while Abood and other agency-fee cases involve a blanket requirement that all employees subsidize private speech with which they may not agree. Second, Pickering’s framework was designed to determine whether a public employee’s speech interferes with the effective operation of a government office, not what happens when the government compels speech or speech subsidies in support of third parties. Third, the categorization schemes of Pickering and Abood do not line up. For example, under Abood, nonmembers cannot be charged for speech that concerns political or ideological issues; but under Pickering, an employee’s free speech interests on such issues could be overcome if outweighed by the employer’s interests. Pp. 22–26.

(c) Even under some form of Pickering, Illinois’ agency-fee arrangement would not survive. Pp. 26–33.

(1) Respondents compare union speech in collective bargaining and grievance proceedings to speech “pursuant to [an employee’s] official duties,” Garcetti v. Ceballos, 547 U. S. 410, 421, which the State may require of its employees. But in those situations, the employee’s words are really the words of the employer, whereas here the union is speaking on behalf of the employees. Garcetti therefore does not apply. Pp. 26–27.

(2) Nor does the union speech at issue cover only matters of private concern, which the State may also generally regulate under Pickering. To the contrary, union speech covers critically important and public matters such as the State’s budget crisis, taxes, and collective bargaining issues related to education, child welfare, healthcare, and minority rights. Pp. 27–31.

(3) The government’s proffered interests must therefore justify the heavy burden of agency fees on nonmembers’ First Amendment interests. They do not. The state interests asserted in Abood— promoting “labor peace” and avoiding free riders—clearly do not, as explained earlier. And the new interests asserted in Harris and here—bargaining with an adequately funded agent and improving the efficiency of the work force—do not suffice either. Experience shows that unions can be effective even without agency fees. Pp. 31– 33.

(d) Stare decisis does not require retention of Abood. An analysis of several important factors that should be taken into account in deciding whether to overrule a past decision supports this conclusion. Pp. 33–47.

(1) Abood was poorly reasoned, and those arguing for retaining it have recast its reasoning, which further undermines its stare decisis effect, e.g., Citizens United v. Federal Election Comm’n, 558 U. S. 310, 363. Abood relied on Railway Employes v. Hanson, 351 U. S. 225, and Machinists v. Street, 367 U. S. 740, both of which involved private-sector collective-bargaining agreements where the government merely authorized agency fees. Abood did not appreciate the very different First Amendment question that arises when a State requires its employees to pay agency fees. Abood also judged the constitutionality of public-sector agency fees using Hanson’s deferential standard, which is inappropriate in deciding free speech issues. Nor did Abood take into account the difference between the effects of agency fees in public- and private-sector collective bargaining, anticipate administrative problems with classifying union expenses as chargeable or nonchargeable, foresee practical problems faced by nonmembers wishing to challenge those decisions, or understand the inherently political nature of public-sector bargaining. Pp. 35–38.

(2) Abood’s lack of workability also weighs against it. Its line between chargeable and nonchargeable expenditures has proved to be impossible to draw with precision, as even respondents recognize. See, e.g., Lehnert v. Ferris Faculty Assn., 500 U. S. 507, 519. What is more, a nonmember objecting to union chargeability determinations will have much trouble determining the accuracy of the union’s reported expenditures, which are often expressed in extremely broad and vague terms. Pp. 38–41.

(3) Developments since Abood, both factual and legal, have “eroded” the decision’s “underpinnings” and left it an outlier among the Court’s First Amendment cases. United States v. Gaudin, 515 U. S. 506, 521. Abood relied on an assumption that “the principle of exclusive representation in the public sector is dependent on a union or agency shop,” Harris, 573 U. S., at ___–___, but experience has shown otherwise. It was also decided when public-sector unionism was a relatively new phenomenon. Today, however, public-sector union membership has surpassed that in the private sector, and that ascendency corresponds with a parallel increase in public spending. Abood is also an anomaly in the Court’s First Amendment jurisprudence, where exacting scrutiny, if not a more demanding standard, generally applies. Overruling Abood will also end the oddity of allowing public employers to compel union support (which is not supported by any tradition) but not to compel party support (which is supported by tradition), see, e.g., Elrod v. Burns, 427 U. S. 347. Pp. 42–44.

(4) Reliance on Abood does not carry decisive weight. The uncertain status of Abood, known to unions for years; the lack of clarity it provides; the short-term nature of collective-bargaining agreements; and the ability of unions to protect themselves if an agency-fee provision was crucial to its bargain undermine the force of reliance. Pp. 44–47.

3. For these reasons, States and public-sector unions may no longer extract agency fees from nonconsenting employees. The First Amendment is violated when money is taken from nonconsenting employees for a public-sector union; employees must choose to support the union before anything is taken from them. Accordingly, neither an agency fee nor any other form of payment to a public-sector union may be deducted from an employee, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay. Pp. 48–49.

851 F. 3d 746, reversed and remanded.

ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, and, GORSUCH, JJ., joined. SOTOMAYOR, J., filed a dissenting opinion. KAGAN, J., filed a dissenting opinion, in which GINSBURG, BREYER, and SOTOMAYOR, JJ., joined.

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Wisconsin Central Ltd. v. United States

Wisconsin Central Ltd. v. United States (US 17-530 6/21/18) Employee stock options not taxable “compensation” under Railroad Retirement Tax Act

As the Great Depression took its toll, struggling railroad pension funds reached the brink of insolvency. During that time before the rise of the modern interstate highway system, privately owned railroads employed large numbers of Americans and provided services vital to the nation’s commerce. To address the emergency, Congress adopted the Railroad Retirement Tax Act of 1937. That legislation federalized private railroad pension plans and it remains in force even today. Under the law’s terms, private railroads and their employees pay a tax based on employees’ incomes. In return, the federal government provides employees a pension often more generous than the social security system supplies employees in other industries.

This case arises from a peculiar feature of the statute and its history. At the time of the Act’s adoption, railroads compensated employees not just with money but also with food, lodging, railroad tickets, and the like. Because railroads typically didn’t count these in-kind benefits when calculating an employee’s pension on retirement, neither did Congress in its new statutory pension scheme. Nor did Congress seek to tax these in-kind benefits. Instead, it limited its levies to employee “compensation,” and defined that term to capture only “any form of money remuneration.”

It’s this limitation that poses today’s question. To encourage employee performance and to align employee and corporate goals, some railroads have (like employers in many fields) adopted employee stock option plans. The government argues that these stock options qualify as a form of “compensation” subject to taxation under the Act. In its view, stock options can easily be converted into money and so qualify as “money remuneration.” The railroads and their employees reply that stock options aren’t “money remuneration” and remind the Court that when Congress passed the Act it sought to mimic existing industry pension practices that generally took no notice of in-kind benefits. Who has the better of it?

Held: Employee stock options are not taxable “compensation” under the Railroad Retirement Tax Act because they are not “money remuneration.”

When Congress adopted the Act in 1937, “money” was understood as currency “issued by [a] recognized authority as a medium of exchange.” Pretty obviously, stock options do not fall within that definition. While stock can be bought or sold for money, it isn’t usually considered a medium of exchange. Few people value goods and services in terms of stock, or buy groceries and pay rent with stock. Adding the word “remuneration” also does not alter the meaning of the phrase. When the statute speaks of taxing “any form of money remuneration,” it indicates Congress wanted to tax monetary compensation in any of the many forms an employer might choose. It does not prove that Congress wanted to tax things, like stock, that are not money at all.

The broader statutory context points to this conclusion. For example, the 1939 Internal Revenue Code, adopted just two years later, also treated “money” and “stock” as different things. See, e.g., §27(d). And a companion statute enacted by the same Congress, the Federal Insurance Contributions Act, taxes “all remuneration,” including benefits “paid in any medium other than cash.” §3121(a). The Congress that enacted both of these pension schemes knew well the difference between “money” and “all” forms of remuneration and its choice to use the narrower term in the context of railroad pensions alone requires respect, not disregard.

Even the IRS (then the Bureau of Internal Revenue) seems to have understood all this back in 1938. Shortly after the Railroad Retirement Tax Act’s enactment, the IRS issued a regulation explaining that the Act taxes “all remuneration in money, or in something which may be used in lieu of money (scrip and merchandise orders, for example).” The regulation said the Act covered things like “[s]alaries, wages, commissions, fees, [and] bonuses.” But the regulation nowhere suggested that stock was taxable.

In light of these textual and structural clues and others, the Court thinks it’s clear enough that the term “money” unambiguously excludes “stock.”

Pp. 2–8. 856 F. 3d 490, reversed and remanded.

GORSUCH, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, and ALITO, JJ., joined. BREYER, J., filed a dissenting opinion, in which GINSBURG, SOTOMAYOR, and KAGAN, JJ., joined.

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Hipsher v. Los Angeles County Employees etc.

Hipsher v. Los Angeles County Employees etc. (CA2/4 B276486 6/19/18) Public Pension forfeiture/Due Process

The Public Employees’ Pension Reform Act of 2013 (Gov. Code, § 7522 et seq. [PEPRA] was enacted, in part, to curb abuses in public pensions systems throughout the state.  (Alameda County Deputy Sheriff’s Assn. v. Alameda County Employees’ Retirement Assn. (2018) 19 Cal.App.5th 61, 75 (Alameda), review granted Mar. 28, 2018, S247095.)  Section 7522.72 provides a mechanism whereby a public pensioner forfeits a portion of his or her retirement benefits following a conviction of a felony offense that occurred in the performance of his or her official duties.

Shortly after appellant Tod Hipsher retired from the Los Angeles County Fire Department, he was convicted of a federal felony for directing an offshore gambling operation (18 U.S.C. § 1955). Respondent, the Los Angeles County Employees Retirement Association (LACERA), subsequently reduced Hipsher’s vested retirement benefits based on the determination by the County of Los Angeles (County) that his gambling conduct was committed in the scope of his official duties (§ 7522.72).  Hipsher challenged LACERA’s forfeiture determination by a petition for writ of mandate and a complaint seeking declaratory relief.  The trial court entered a mixed judgment.  It issued a peremptory writ of mandate directing the County to afford adequate due process protections before reducing Hipsher’s retirement benefits, while finding in favor of the defendants with respect to Hipsher’s cause of action for declaratory relief.

Hipsher contends section 7522.72 is unconstitutional as applied to him because it impaired his contractual right to his vested pension, and is an unlawful ex post facto law.  The County disagrees and contends it owes Hipsher no additional due process and is not bound by the trial court judgment because it was not named as a respondent in the peremptory writ. 
          
We conclude section 7522.72 is constitutionally sound, but that LACERA, not the County, bears the burden to afford Hipsher the requisite due process protections in determining whether his conviction falls within the scope of the statute.  Accordingly, we modify the judgment to require the County to provide the requisite due process, while affirming the remainder of the judgment.

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ASARCO v. United Steel

ASARCO v. United Steel (9th Cir. 16-16363 6/19/18) Arbitration/Reform of Collective Bargaining Agreement

The panel affirmed the district court’s order affirming an arbitration award in favor of a union, which sought relief concerning a pension provision in the parties’ collective bargaining agreement.

The employer asserted that the arbitrator reformed the collective bargaining agreement in contravention of a no-add provision in the agreement. The district court held that the arbitrator was authorized to reform the agreement, despite the no-add provision, based on a finding of mutual mistake.

The panel held that the employer did not properly preserve its objection to the arbitrator’s jurisdiction because the employer conceded that the union’s grievance was arbitrable and failed to expressly preserve the right to contest jurisdiction in a judicial proceeding. The panel further held that the arbitration award drew its essence from the collective bargaining agreement, and the arbitrator did not exceed his authority in reforming the agreement. In addition, the arbitrator’s award did not violate public policy.

Dissenting, Judge Ikuta wrote that, in light of the no-add provision, the arbitrator exceeded his authority under the collective bargaining agreement.

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Newland v. County of Los Angeles

Newland v. County of Los Angeles (CA2/5 B277638 6/18/18) Respondeat Superior/vehicle Use Exception

An employee driving home from work on a day that he did not have any job duties outside of the office injured a third party.  After a jury trial, the trial court imposed liability on the employer based on evidence that the employee regularly used his personal vehicle for work on other days.  The employer contends there was no substantial evidence to support finding that the employee was driving in the course and scope of his employment at the time of the accident, because he was not required to use a personal vehicle that day.
          
We agree that an employee must be driving a personal vehicle in the course and scope of his employment at the time of the accident to extend vicarious liability to an employer.  Liability may be imposed on an employer for an employee’s tortious conduct while driving to or from work, if at the time of the accident, the employee’s use of a personal vehicle was required by the employer or otherwise provided a benefit to the employer.  The evidence showed that the employee in this case was driving a routine commute to and from work on the day of the accident.  He was not required to use his personal vehicle for work purposes that day, and his employer did not otherwise benefit from his use of a personal vehicle that day.  The employer is entitled to judgment as a matter of law.  We reverse the judgment with directions.

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