Federal Civil Procedure

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In 2009, a tragic accident occurred at a manufacturing plant in Orange County when a water heater exploded and killed two employees. The incident was duly investigated by Cal OSHA, and criminal charges were eventually brought against two individuals. Then the Orange County District Attorney decided to seek huge civil penalties against the employer under California’s Unfair Competition Law (“UCL”). The trial judge was prepared to allow the case to go forward, but the Court of Appeal issued a writ of mandate dismissing the case on the grounds that  federal OSHA law preempted, and did not allow an exception for, claims under the state UCL. The District Attorney appealed.

The California Supreme Court will now decide whether workplace safety issues can properly be characterized and challenged as “unfair competition”,  and, in any event, whether federal law preempts and prohibits state prosecutors’ attempts to extract monetary fines outside of the traditional OSHA enforcement mechanism. The case will be argued on November 7, 2017 in Sacramento. Fox Rothschild LLP is representing the employer.

Copyright: ximagination / 123RF Stock Photo
Copyright: ximagination / 123RF Stock Photo

We’ve written throughout the year about new employment laws that take effect in California in 2015. But as the year winds down, here’s a handy list of the most significant ones (with links to our earlier entries).

  1. Many California employers will be required to provide Paid Sick Leave starting July 1, 2015. We wrote about the law generally here, about some specific challenges it imposes here, and about how it compares to a similar law in effect in San Francisco here. [Update: November 24, 2014: The DLSE has issued a new notice to post by January 1, 2014. Download it here.]
  2. California Labor Code § 2810.3 will require businesses to automatically share liability with a “labor contractor,” such as a temporary staffing agency, if the agency fails to pay wages or provide workers’ compensation insurance to its employees who are assigned to work at the business.
  3. Expanding the definition of “national origin” under the Fair Employment and Housing Act to include the circumstances under which someone got their driver’s license (i.e. if they got a type of license provided to undocumented workers).
  4. AB 1443 extends the protections under the FEHA to interns.
  5. AB 2503 requires that mandatory sexual harassment training include information on bullying.
  6. AB 2617 prohibits mandatory arbitration agreements from including claims for violations of certain civil code sections dealing with violence or threats of violence based on sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation or political affiliation. It seems to us to be a clear violation of the Federal Arbitration Act, but California courts and legislatures have been fighting that battle for years.
  7. AB 326 – Sometimes technology advances more quickly than legislation. Employers must report workplace deaths or serious illnesses or injuries to Cal OSHA immediately. That’s not changing. But where the old law says the reports must be made by telephone or telegraph, the new law says by telephone or e-mail. Who knew that the job outlook for telegraph operators could get any bleaker?
  8. New minimum wages in San Francisco ($11.05 effective January 1, 2015), Oakland ($12.25 effective March 2, 2015), San Jose ($10.30 effective January 1, 2015), San Diego ($9.75 effective January 1, 2015), and hotels within the City of Los Angeles ($15.37 effective July 1, 2015 or July 1, 2016, depending on the number of hotel rooms).
  9. The minimum pay for exempt computer professionals increases to $41.27 per hour, $7,165.12 per month, or $85,981.40 per year.

Here are steps employers can take to better protect themselves:

  • Make sure personnel policies and handbooks are up to date;
  • Train managers to understand that certain issues, such as requests to accommodate a disability, leave requests, deciding who’s exempt from overtime requirements, etc., should be escalated to someone with specialized knowledge;
  • If you use labor contractors or temporary employment agencies, consider the steps outlined here; and
  • Most importantly, continue following our widely acclaimed blog for further updates on California employment law.

In the meantime, we’ll wait to learn which employment laws are being taken off the books to make room for these new ones.

No need to post that NLRB poster by April 30th.  Here’s an update from Chip Zuver:

As most of you are already aware, the NLRB issued a rule requiring employers covered by the National Labor Relations Act (the Act) to post a notice advising employees of their rights under the Act, irrespective whether the employer was union or non-union. The notice posting rule was scheduled to go into effect on April 30, 2012.

The National Association of Manufacturers and the South Carolina Chamber of Commerce filed suit claiming the rule exceeded the NLRB’s authority. In March 2012, a federal district judge in D.C. ruled that the NLRB had the authority to require employers to post a notice advising employees of their organizational rights. The National Association of Manufacturers then sought to enjoin the implementation of the rule pending its appeal of the district court judge’s decision. The judge rejected the request. However, last Friday, a federal district judge in South Carolina concluded that the NLRB exceeded its authority in requiring employers to post the notice. This created a split in the federal courts. Then this morning, the U.S. Court of Appeals for the D.C. stepped in and enjoined enforcement of the notice pending the D.C. Circuit’s resolution of the matter on the merits.  That means employers do not need to post the notice at this time.

Chances are that the court will not reach a decision on this matter before December 2012. Therefore, employers have at least a temporary reprieve before the notice must be posted. 

As we said before, we love federal court.  And yesterday the United States Supreme Court made it easier for us to get there.  In Hertz Corporation v. Friend the Court recognized a bright line rule regarding a corporation’s principal place of business:

[W]e conclude that the phrase "principal place of business" refers to the place where the corporation’s high level officers direct, control, and coordinate the corporation’s activities. Lower federal courts have often metaphorically called that place the corporation’s "nerve center." See, e.g., Wisconsin Knife Works v. National Metal Crafters, 781 F. 2d 1280, 1282 (CA7 1986); Scot Typewriter Co. v. Underwood Corp., 170 F. Supp. 862, 865 (SDNY 1959) (Weinfeld, J.). We believe that the "nerve center" will typically be found at a corporation’s headquarters.

Before this decision, much time was spent comparing and contrasting how much business a corporate defendant had in one state versus another.  Now, absent a showing of jurisdictional manipulation, the inquiry is simple:

[T]he courts should instead take as the "nerve center" the place of actual direction, control, and coordination.

 

 

We love federal court.  Hence, we love removing actions to federal court. But the road to removal is paved with opportunities for remand.  One primary issue is how to demonstrate that the amount in controversy requirement has been met.  Typically, the plaintiff’s complaint will not pray for any specific amount of money.  So, defense counsel must rely on other evidence for its valuation analysis.

But in trying to show that the plaintiff’s case is theoretically worth at least $75,000, attorneys sometimes overlook a crucial bit of evidence: the pre-litigation settlement demand. In assessing the amount in controversy, a plaintiff’s settlement demand is relevant. Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002). Indeed, in the Ninth Circuit, such evidence may by itself be sufficient to establish the jurisdictional minimum. Id. Moreover, settlement demands (including those otherwise inadmissible in California court) are admissible:

[Federal] Rule [of Evidence] 408 disallows use of settlement letters to prove “liability for or invalidity of the claim or its amount.”  We agree with the district court that Rule 408 is inapplicable because this evidence was not offered to establish the amount of [defendant’s] liability, but merely to indicate [plaintiff’s] assessment of the value of the [claim].

Cohn, 281 F.3d at 840; see also also Simmons v. PCR Tech., 209 F. Supp. 2d 1029, 1033 (N.D. Cal. 2002) (admitting evidence of a settlement demand that was otherwise inadmissible under California Evidence Code § 1152).