Storm's California Employment Law

5 years

2009-07-01T21:01:54Z

I started this blog 5 years ago. I can’t believe it’s been that long. Thanks to all my readers!

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Is Ricci Bad For Employers?

2009-06-30T18:28:56Z

Ilya Somin says yes.

I agree. I think the Court said you’re between a rock and a hard place; we’re picking the hard place for you.

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Upcoming 5th Anniversary

2009-06-28T19:45:53Z

This blog is rapidly approaching its 5th anniversary. It’s hard for me to believe that it’s been that long. This is the third different software platform I’ve used, staring with Blogger, then TypePad, and finally WordPress. I have gone through numerous design changes and used different hosting companies. I’ve even changed law firms. I’m proud to say, though, that I’ve more or less been able to preserve my original concept: information about legislation and court cases in California, with original reporting from time to time. Instead of just stenography, I’ve provided analysis; yet, I believe I have provided that analysis without delving too far into politics or favoring one side of the bar too much over the other.

I’m also proud to say that this site was the first one to focus on issues of California’s specific employment law world. In fact, this is one of the earliest legal blogs period. Before I began this site, I did legal blogging back almost 10 years ago when people first started transitioning from directly editing webpages to using software to keep “logs.”

Despite that long history, this site has always been about the issues. I only put up advertisements very briefly, and this has never been primarily about marketing my services. That is something that is even more rare in the blogging world, and I would say it correlates more directly to age. The people who have been doing this the longest seem to be the most likely to be doing it for its own sake instead of trying to keep up with the latest way to market overheard at a CLE conference on seen on TV.

Thanks for reading. I have no plans to change the core mission of this site or to stop doing this any time soon.

However, I do have plans for a companion site in the works. We’ll see.

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FLIR Systems v. Parrish

2009-06-23T22:59:56Z

This is not the decision I was hoping for. It’s close, but it’s not quite there.

Here’s the problem with this case: the facts are so overwhelmingly good for Parrish that it’s wishful thinking to assume this will happen to you. FLIR filed their case based on “inevitable disclosure” of trade secrets. That isn’t the law in California, even though it is the majority rule. FLIR engaged in all kinds of rough litigation tactics, but, though that’s mentioned, something tells me that’s hardly a sufficient element of what happened here. What is significant is that the Court of Appeal repeats that the CEO of FLIR testified that he did not “think it would be good, healthy for them [respondents] to go and directly compete with us.” Lewis stated that FLIR “couldn’t tolerate a direct competitive threat by [respondents] because it would fly in the face of everything that we spent 200 million dollars to buy.” (Slip. Op. at 5 and 16.) Derivative shareholder lawsuit on your mind, Mr. Lewis? Oy.

Better, there was no evidence of any threatened misappropriation. The best FLIR could muster was that Parrish had downloaded some information while working for them and had made some comments about patent filings after he departed. In the IP world, that has to ring absurd, because the whole point of patents is that you get the ability to prevent others from using your patent in exchange for disclosing what you did. Trade secrets, on the other hand, are things you keep secret, but it someone figures it out fairly, you can’t stop them from using it.

In the end, the award in favor of Parrish for $1,641,216,78 in attorneys’ fees and costs was affirmed, with an order for the trial court to have a hearing on costs and fees on appeal. Coupled with the fact that Parrish now appears to have a slam dunk collaterally estopped case for malicious prosecution based on this opinion—and FLIR’s actions, according to the Court, caused Raytheon to stop doing business with Parrish—and the fact that they have their own attorneys to pay, this is not a good day for FLIR. Or is it?

If FLIR is a $200 million dollar company as their CEO claimed (more or less, roughly, in that area, etc.), then they can probably take this hit, and, regardless of what else happens, they were successful in keeping Parrish and his partner from starting a competing business. (Slip. Op. at 3.) Now they just have a better idea of whether that was worth it or not.

The factual strength of Parrish’s case, combined with the fact that, at the end of the day, FLIR succeeded in what they wanted to do, is another reason why I’m not entirely satisfied with this case. FLIR takes the hit here, in theory, but what they do is more or less standard practice. Most defendants can’t afford to hire Wilson, Sonsini to defend them, and, if they can, they don’t have hundreds of thousands to spend on fees. In a run-of-the-mill case, the issue is not actually some scientifically advanced high tech thing like infrared scopes, but the highly dubious “customer list,” which are not, of course, in and of itself a trade secret. Ironically, this law is often used as a substitute for California’s unique objection to noncompete agreements. It is ironic because those were abolished to foster competition, but the result has been even scarier litigation under the UTSA which has much more powerful remedies than your average noncompete agreement gives rise to.

It’s simply an anticompetitive trick, and, apparently, even when the Court of Appeal throws the book at you and you have terrible facts, you can still get the outcome you want: no competition.

Finally, I would add that of course I support an employer’s right to protect its trade secrets. But just as employers make the case that frivolous litigation under the FEHA and wage/hour laws hardens the hearts and minds of the courts to the actual real and worthy cases, I think the same is true here. FLIR doesn’t make filing a bona fide trade secrets claim legally harder that it was last week, but it shows you the depths of the abyss you stand on if things go bad, which probably does chill its use for legitimate claims more than anticompetitive ones. How can I say that? The latter group know what they want to do and just need a price tag. The former face a cracked egg problem of their own, and this may go into their worst case cost calculus regardless. In other words, instead of pricing what you have to pay to achieve the goal of putting your competitor out of business, your are pricing what it takes to protect your secrets. Should a legitimate claimant worry about this case? Arguably no, but I guess it at least functions as a bookend.

Having said that, I’m hopeful that the Court of Appeal will deliver an even stronger blow in a case with very different facts, but arising under the same law and for the same anticompetitive reasons coming up in July.

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CA Unemployment at 11.5%

2009-06-19T17:01:15Z

According to KQED. And remember, this is a U3 like number, meaning it doesn’t include underemployed or people who have stopped looking for work.

As such, the economic impact isn’t fully captured by this number, though my cursory look at BLS data shows a pretty strong correlation between this number and the other measures.

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Great Blog

2009-06-16T00:09:38Z

I worked in a bankruptcy court as a Judicial Extern in 2003, but otherwise, I don’t have much connection with the field. I am a newsie though, and I have to say, while reading up on the Chrysler sale, I came across Steven Jakubowski’s brilliant blog The Bankruptcy Litigation Blog. It’s one of the best of any kind out there. Take a look.

He even found a way to work Rashi in, recently. How can I top that?

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Bruce Nye on Arbitration

2009-06-10T16:03:56Z

Go read.

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LA Times on Hillside

2009-06-04T18:32:36Z

Over two years after the Supreme Court granted review, it heard oral arguments in the first significant private employer workplace privacy case* to come before it. The L.A. Times’s report is here.

This is the analysis:

The justices’ queries and remarks suggested that they believe workers have the right to expect some privacy in their offices, but left open the question of whether the women who sued had suffered enough to win their case.

One exchange cited to bolster this analysis was this:

Chief Justice Ronald M. George appeared dubious of the company’s contention that an employee could never sue for loss of privacy if the worker was not the target of the surveillance. George cited a hypothetical of a camera placed in a company bathroom because of reports that people were engaging in lewd acts there.

If Justice George really asked this question, then he probably doesn’t know that this Larry Craig scenario is not allowed by statute. It’s the less extreme office “invasion” scenario that’s really in question here, because it isn’t covered by the statute.

I find it extremely dubious to base a prediction on an outcome (in this court especially) based on the oral arguments, though it did appear to give the right result in the Prop 8 case.

Click on the box to the right to see older posts about this case.

* Remember: Saunders was about invasion of privacy by a non-employer.

UPDATE:

Another quote:

Justice Joyce L. Kennard said the company had “a pretty big hurdle” in trying to argue that the case was not covered by a prior ruling that said employees in an office had a reasonable expectation of privacy.

Apparently, Justice Kennard is not finding the distinction between an outside party invading privacy in someone’s office and the employer who owns or controls and is responsible for the premises. I sure hope that if this right of privacy is created, which is, by the way, against the majority rule in the U.S. (not that that makes a difference in California), we get some clarity on how this meshes with other liabilities that occur in the workplace.

This has “mess” written all over it.

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Chau v. Starbucks Corp.

2009-06-03T16:31:20Z

The significant language in this case is on page 16:

…the legal principles prohibiting an employer from requiring an employee to share his or her personal top with the employer’s agent (”mandatory tip pooling”) do not logically apply to an employer policy requiring equitable apportionment of the proceeds in a collective tip box (”tip apportionment”)

So—shift supervisors can share in tip proceeds like the advance sheets say? Not so fast.

This is what you might call a highly fact intensive situation. It’s hard to say, of course, what was outcome determinative in this case, but here are three important things to consider before rewriting your employee handbooks:

(1) Starbucks has a relatively complex formula and procedure for allocating tips and placing the tip container.

(2) Starbucks shift supervisors were in the record as performing the same tasks as the Baristas about 90% of the time and only having “reporting” authority to the managers.

Those two were in the opinion. Then there’s this:

(3) Starbucks may not have invented the tip jar, but they may it ubiquitous. It’s been in the news, it’s been on TV, and we all know that it’s not quite the same thing as a personal tip. In other words, we have socially understood expectations and rules about the Starbucks tip jars that we may not in other situations. I know the case law was said to be irrelevant, but much section 351 case law discusses “intent.”

So, unless you have these things all going for you, I think it might be inviting disaster to just label this a “liberalization” of tip pooling rules. We may or may not get a more definitive rule from the California Supreme Court, but an amendment to the law from the Legislature telling us exactly how this is supposed to work in the modern workplace would be best.

P.S. Instead of citing evidence on the record, or taking judicial notice of some kind of market data, the Court cites another court case for the seemingly factual proposition that “‘tipping the providers of personal service’ is a ‘well-accepted part’ of our daily lives.” Does anyone else have a problem with this?

I don’t have as much of a problem with that as just saying it, though in this particular case, it doesn’t seem to be something objectionable, but I don’t want to create that slippery slope. Why is case law citable for facts?

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Legislative Update

2009-05-29T22:25:17Z

The Legislature has, understandably, been spending a lot of time rejecting almost every spending bill. Details here in the Bee. SB 810 (universal healthcare) was shot down as well. Employers will still be stuck administering health plans.

AB 227 appears to have stalled.

AB 335 has passed the assembly.

AB 527 was more or less defanged and went on to the Senate.

AB 842 was suspended in committee. Toast.

AB 1000 was suspended in committee. Toast.

AB 1001 was suspended in committee. Fried.

One upside of the continued budget woes, is that it looks like the Legislature will be only very minimally tinkering with employment laws this year.

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Sonic-Calabasas A, Inc. v. Moreno

2009-05-29T20:35:02Z

Short version: valid arbitration agreements preclude Berman hearings if not explicit carveout is included. This is more or less the DLSE’s interpretation (Manual 36.3 et seq.), believe it or not.

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Dress Code? [Off topic]

2009-05-22T18:02:06Z

I usually delete the ABA’s Friday e-mail, which as per usual amounts to a BigLaw e-Gossip rag. But I was interested in this:

Male Judges Advise Women Lawyers to Lose the Distracting ‘Ally McBeal’ Look

I’ve often commented on what I thought was a double standard in courtroom dress. Men all know what to wear: a suit and tie. Some men go to court appearing color blind, uncoordinated, and committing fashion faux-pas like brown belts and black shoes. The only time I have ever seen a lawyer appear in Court without a tie was when he was in a full arm cast that held his arm up to the side, and the Judge still ribbed him about it.

Most women attorneys appear professional, of course. But the way women diverge in attire is much different than cheap materials and bad coordination. There’s just a wide divergence in what happens. It’s just an observation. I’m surprised that male judges are the ones speaking out and I find it weird… creepy even that they call it “distracting.”

If you get “distracted” by the female form, maybe that’s your problem. My problem is that the decorum isn’t there. I think there are hundreds of different ways I could dress that would not be “distracting” that would still be inappropriate for a court. But the reality is, we all put on a certain uniform.

Maybe an example will clarify. If I work at Taco Bell, I might find it “distracting” if a female employee wore a short skirt, but it wouldn’t be inappropriate if she had a Taco Bell uniform shirt on. If she came to work in the most undistracting figure concealing clothes ever, but didn’t have her Taco Bell uniform on, how is that ok?

Anyway, this is what you get when you blog. I’m sure I stepped in it here, but oh well.

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In re Tobacco II Cases

2009-05-20T16:41:33Z

CalBizLit and The UCL Practitioner have some excellent posts up on the Tobacco cases and there’s no need for me to duplicate their great work.

In the employment context, this would appear to allow employees to sue on behalf of other employees under the UCL without showing that the other employees had standing and get restitution. Of course, that’s kind of circular because if they have something to be given back (e.g. wages), they would appear to have standing. There are probably other instances I’m not thinking of yet. But what about the commonality of interest question? Does this moot Brinker’s class cert aspect? Not in theory, I guess—but it might in many actual cases. Once again I’ll plead for this Court to address these issues and make a clear rule when it decides that case.

I just thought I would add that this outcome is exactly in line with what Prop 64 proponents argued: that the only thing it did was eliminate Trevor Law Group-like situations. This ruling does not undo that. You still can’t set up front groups. You just need lead plaintiffs, same as you would anyway—just with anyone else in the class. And the Pyrrhic argument used to apply Prop 64 retroactively—that it didn’t change substantive rights—has come around to bite. If Prop 64 was supposed to go much further, it needed to be clearer in that regard, and, apparently, a political calculation about what could pass about what was clean enough to get through the courts was made. It’s up to you to judge if that calculation was proved wrong by this outcome.

I’m not sure that this is on the top of voter concerns right now, or that a case against tobacco companies is a good causus belli, but if the “mischief” does come back, send a new prop to the voters. Hell, that’s the only way we govern in California.

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California Constitutional Reform and Employment Law

2009-05-18T20:19:04Z

Check out this article in the Economist. A Constitutional convention is both exciting and scary, but the mess our state is in is just scary. None of the proposals seem to aim much at the Court system or the state’s civil liberties, but there is definitely movement to eliminate certain state agencies and boards.

What changes would you like to see in the state constitution? What impact do you think this will have on our practice?

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Chavez v. Los Angeles Added to Track List

2009-05-16T18:54:31Z

Docket here.

Although I apparently glossed over it when it was in the Court of Appeal, I’ve decided this is a case worth keeping an eye on. Here’s the issue:

Does Code of Civil Procedure section 1033 permit a trial court to deny Government Code section 12965 attorney fees to the prevailing plaintiff in an action under the Fair Employment and Housing Act (Gov. Code, section 12900 et seq.) if the judgment obtained in a court with jurisdiction over “unlimited” civil cases (see Code Civ. Proc., section 88) could have been rendered in a court with jurisdiction over “limited” civil cases (see Code Civ. Proc., section 85, subd. (a))?

If the Supreme Court says yes, then will plaintiffs still file FEHA cases where the damages are less than $25,000? Employers will argue that in low value cases it’s appropriate for the more streamlined limited civil procedure, which will keep costs down. Keeping costs down will also reduce the negotiating leverage generated by the costs of discovery and potential attorneys’ fees in unlimited civil cases. Plaintiffs will point out that will seriously hamper enforcement of the policies embedded in the FEHA.

This could be huge. Sorry I missed it before.

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