Court of Appeal: Release Bars Employee's Class Action

Watkins and Brown sued Wachovia Bank for mis-classification as exempt, as well as for individual wrongful termination and wage claims. There was a lot of litigation over arbitration, discovery and the like.

Brown ultimately settled her claims and signed a release, which covered all claims, including disputed claims for overtime. The trial court granted summary judgment against her, holding she no longer could participate in the class action. On the same day, the court denied the plaintiffs' motion for class certification of the wage claims.

Watkins settled her claims and signed a release as well. However, she purported to reserve the right to press any "class claims," and to receive an enhanced payment if the class claims were successful. She also reserved the right to appeal the denial of class certification.

On appeal, Brown argued that her release did not encompass claims for unpaid wages and that she was free to have signed the general release, but still maintain her wage claim. Relying on the recent decision in Chindarah v. Pick Up Stix, covered here, the court of appeal held that a release may properly include disputed claims for wages.

Then, the court turned to Watkins. The court held that Watkins could not preserve her right to appeal since she had signed a general release. Because parties cannot confer appellate jurisdiction and a court of appeal will not issue an opinion about a moot claim, the court dismissed the appeal. That left no appeal of the denial of class certification and, maybe, some annoyed absent class members?

The court of appeal was careful to distinguish what are called "pick off" cases. In those cases, the defendant pays a class representative all that s/he claims is due and then seeks dismissal of the action against that plaintiff. The plaintiff can stay in the case if s/he has an adequate economic interest in remaining in the case, such as the interest in attorneys' fees. But the court squarely held that a plaintiff accepting a voluntary settlement of all claims is not picked off and, therefore, not entitled to maintain a class action:

We believe that it is illogical to import the law governing "pick off" cases into the context of a voluntary settlement. Often, a plaintiff brings an action as a class action precisely because the attorney‟s fees involved in bringing the action individually would exceed the value of the any judgment the plaintiff could obtain individually. (Roper, supra, 445 U.S. at p. 338, fn. 9.) In such a situation, a "pick off" settlement, which gives the plaintiff only the relatively small amount sought as damages, may be inadequate to cover the substantial attorney‟s fees incurred in pursuing the litigation. Thus, the plaintiff who has been involuntarily picked off has not obtained satisfactory
relief, and is therefore permitted to continue pursuing the class litigation
until complete relief is received. This conclusion is supported by policy considerations which seek to prevent a defendant from avoiding class liability by picking off individual plaintiffs.

This is to be distinguished from the case of a voluntarily settling plaintiff. In such a case, the plaintiff has accepted an amount the plaintiff believes is sufficient to make the plaintiff whole. By voluntarily settling, the plaintiff has agreed to accept the offered sum in full satisfaction of the plaintiff‟s claim against the defendant. There are no public policy interests implicated by a settlement voluntarily accepted.

* * *
Applied to this case, it is apparent that Watkins‟s appeal must be dismissed. She has voluntarily released her wage claim against Wachovia in exchange for a $51,000 payment. While she attempted to reserve her right to pursue her "class claim," her "class claim" is simply a procedural device by which she pursued her substantive claim for overtime wages. Having settled her substantive claim, the class claim disappears, and her appeal of the denial of class certification must be dismissed. Watkins cannot salvage her right to appeal by asserting an economic interest in class certification in terms of a right to shift her attorney‟s fees to the class, if successful. If the class obtains a judgment or settlement, such recovery would belong to the class. Having voluntarily settled, she is, by her own choice, no longer a member of the class and cannot share in any such recovery.

The opinion is Watkins v. Wachovia Corporation and the opinion is here.

Alert the Media! Arbitration Agreement Enforced

As stated by the Court of Appeal,

The arbitration provision, contained in a separate paragraph initialed by Roman, provided, "I hereby agree to submit to binding arbitration all disputes and claims arising out of the submission of this application. I further agree, in the event that I am hired by the company, that all disputes that cannot be resolved by informal internal resolution[1] which might arise out of my employment with the company, whether during or after that employment, will be submitted to binding arbitration. I agree that such arbitration shall be conducted under the rules of the American Arbitration Association. This application contains the entire agreement between the parties with regard to dispute resolution, and there are no other agreements as to dispute resolution, either oral or written."
So, the first thing that jumps to mind is that a court would say it wasn't "mutual," in that it does not say that the Company will submit all disputes to arbitration. Forgive me my cynicism, but the courts seem to find any way possible to deny enforcement of these puppies.

Not this time. The court determined that there was no one-sidedness and that both parties would have to arbitrate all claims. The court had an interesting discussion of canons of construction of contracts contained in the Civil Code supporting enforceability.

The plaintiff also argued that the employer's propounding some paper discovery and even filing a motion to compel the plaintiff's deposition was a waiver. But no:

Although Roman incurred litigation expenses in serving and filing objections to
discovery requests and opposing the demurrer and motion to compel her deposition, those expenses are insufficient, by themselves, to support a finding of waiver: "[W]aiver does not occur by mere participation in litigation"‟ if there has been no judicial litigation of the merits of arbitrable issues" and no prejudice. (Saint Agnes, supra, 31 Cal.4th at p. 1203.) "Because merely participating in litigation, by itself, does not result in a waiver, courts will not find prejudice where the party opposing arbitration shows only that it incurred court costs and legal expenses." (Ibid.; see also Groom v. Health Net (2000) 82 Cal.App.4th 1189, 1197 [expense of responding to motions or other preliminary pleadings is not type of prejudice that bars later petition to compel arbitration].) The trial court did not err in impliedly rejecting Roman‟s waiver argument.

So, there you have it, an enforceable arbitration agreement. Take a picture. The case is Roman v. Superior Court (Flo-Kem), and the opinion is here.

Court of Appeal: No Privacy on Myspace

Myspace, Facebook, Linkedin, etc. are fertile sources of information about employees and job applicants. The phenomenon of otherwise private individuals airing out their grievances, sharing personal information, etc. continues unabated. The phenomenon of the same individuals' shock and surprise that people actually read their stuff and hold it against them continues as well.

In a non-employment matter, the Court of Appeal addressed whether an essay on myspace was private such that republishing it in a newspaper without the author's permission constituted an invasion of privacy. Umm no.

Moreno was from the small town of Coalinga. After she left town, she wrote an essay about her disdain for her hometown. She neglected to consider that folks who remained in Coalinga might get offended. Her principal forwarded the posting to the local newspaper, which published it as a Letter to the Editor. And of course, although Moreno's last name is not on her myspace page, the principal helpfully supplied it.

Now Moreno also forgot that her family still lived in Coalinga, and operated a small business there. The fans of Coalinga were miffed by Moreno's letter, and drove the family out of business and out of town. She chose to sue the newspaper and principal rather than herself. No word whether her family sued her.

The Court of Appeal, upholding the trial court, held that when you post on myspace, it's not "private." As such there is no invasion of "privacy" when you use the posted information or disclose it to others. Without a private fact, there is no tort of invasion of privacy.

Interestingly, the Court of Appeal also held, albeit in an unpublished portion of the decision, that Ms. Moreno could proceed against the defendants for intentional infliction of emotional distress, possibly because of the fact that the principal intentionally supplied the posting to the newspaper out of spite? No clue. Simply reading the information and relying on it on the job may or may not supply the requisite "outrageous conduct" required for IIED. My bet is" not."

So, at least based on this case, if you put your private information out on the INtRaw3Bs, your employer is not invading your privacy by reading it. The case is Moreno v. Hanford Sentinel and the opinion is here.


Another I-9 Reminder

All of you well-educated, information-saturated folks know the new I-9 Form is effective 4/3, right? OK, then.

This one has the 6/30/09 expiration date, just like the old one. But it also has the critical 2/2/09 revision date (visible in the lower right-hand corner of the form.) Looks like you'll have to replace these new forms, too. (The expiration date is near! Alert the media!) So, you can look forward to still more newsletters and blogs nagging you about this critical issue facing employers. If you need one of these new forms, find it here.

U.S. Supreme Court: Union May Agree to Arbitration of Age Discrimination Claims

In New York City, there is a multi-employer association of building management that negotiates with a large union over building workers' wages, hours and other terms of employment. The union contract provided for arbitration of discrimination claims as follows:

NO DISCRIMINATION. There shall be no discrimination against any present or
future employee by reason of race, creed, color, age, disability, national origin, sex, union membership, or any other characteristic protected by law, including, but not limited to,claims made pursuant to Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the New York State Human Rights Law, the New York City Human Rights Code, . . . or any other similar laws, rules, or regulations. All such claims shall be subject to the grievance and arbitration procedures (Articles V and VI) as the sole and exclusive remedy for violations.Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination.

So, this is a clear agreement to arbitrate. But can a union agree with an employer that individuals' claims must be arbitrated, even though the individuals have not personally agreed to do so?

Yep. The Court decided, 5-4, that the arbitration clause was fully enforceable. To get there, the majority decided two issues. First, the Court noted that unions and employers have broad discretion to agree on terms to be included in collective bargaining agreements. Unions are the employees' designated bargaining representatives and may bargain away rights (such as to sue in lieu of arbitration) in exchange for other concessions by management.

As a result, the only way the above contractual provision could be invalid was if the ADEA prohibited mandatory arbitration of discrimination claims. But the Court already had decided that the ADEA contains nothing precluding mandatory arbitration. Hence, the Court upheld the language in the CBA:

Examination of the two federal statutes at issue in this case, therefore, yields a straightforward answer to the question presented: The NLRA provided the Union and the RAB with statutory authority to collectively bargain for arbitration of workplace discrimination claims, and Congress did not terminate that authority with respect to federal age-discrimination claims in the ADEA. Accordingly, there is no legal basis for the Court to strike down the arbitration clause in this CBA, which was freely negotiated by the Union and the RAB, and which clearly and unmistakably requires respondents to arbitrate the age discrimination claims at issue in this appeal.

The Court also refused to rule that mandatory arbitration was a waiver of substantive rights without the employees' consent. The Court made clear it does not consider arbitration in lieu of court to be a substantive change, but rather merely a change of forum.

Four justices dissented in two opinions, arguing that prior precedent precluded the majority's result. Justice Souter admitted the majority's conclusion "at least could be considered" if it weren't for precedent that, in the dissent's view, should control the question.

Anyway, this is all very interesting to students of stare decisis and Supreme Court watchers. But for you, gentle reader, all that matters is that Union contracts can require mandatory arbitration of discrimination claims, if the clause in the contract is "clear and unmistakable."

What also matters is that Congress is moving to ban arbitration of employment discrimination lawsuits, this time with a clear Democratic majority and a Democratic president. So, the odds of this case surviving Congressional action are much lower than they were a few years ago.

The opinion is 14 PENN PLAZA LLC v. PYETT and the opinion is here.