Court of Appeal: Class Certification Denied in Independent Contractor Case

Ali brought a class action on behalf of taxi drivers. The primary claim was that the drivers were misclassified as independent contractors. Ali sought class certification, which the trial court denied.

The Court of Appeal affirmed, on the ground that common issues did not predominate. The company submitted over 40 declarations demonstrating that each putative class member experienced different working conditions and degrees of control by the company. Therefore, the case was not amenable to class treatment.

This case demonstrates that a motion for class certification may be defeated where declarations demonstrate numerous differences among each putative plaintiff's treatment. If the plaintiff cannot generalize about all employees by pointing to a few, a trial court may find that a class action is not suitable.

The case is Ali v. USA Cab LTD and the opinion is here.

Ninth Circuit Limits Federal Anti-Hacking Law

Brekka was an employee of LVRC Holdings, LLC. While employed, he was fully authorized to use the employer's network. He emailed several confidential documents to his personal email account during his employment. The employer discovered this activity after Brekka left LVRC. The employer sued Brekka under the federal Computer Fraud and Abuse Act. The CFAA provides for criminal penalties and a civil action against those who:

intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains— . . . (C) information from any protected computer if the conduct involved an interstate or foreign communication . . . . 18 U.S.C. § 1030(a)(2). . . .
or who

knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct
furthers the intended fraud and obtains anything of value . . . .
18 U.S.C. § 1030(a)(4).

The issue was whether Brekka exceeded authorization during his employment by sending out company information to his personal account. The court of appeals, agreeing with the district court said he did not.

The court held that an employee's self-dealing is not "exceeding" authorization under the CFAA. Rather, a violation occurs only when the employee (1) does not have authorization to access the files or (2) accesses them after authorization is terminated.

This decision does not affect any state law violations or torts that the employer might bring. It underscores the need for employers to have in place effective policies and procedures for limiting computer access, particularly after employees depart.

The case is LVRC Holdings LLC v. Brekka and the opinion is here.

Court of Appeal Explains Safe Harbor Period for Obtaining Sanctions

Most folks who read this blog don't care about sanctions. Like some of the courts. So, I'll make this quick. The employer settled a wrongful termination lawsuit with the employee. The employee tried to reopen the case four years after the settlement. The motion to reopen the case was frivolous.

The defendant filed a motion for sanctions because the plaintiff's motion was frivolous. To bring a motion for sanctions, you have to wait 21 days to see if the other side will withdraw its frivolous papers (called a "safe harbor"). But the court denied the plaintiff's motion too quickly to give the plaintiff the full 21-day opportunity to see the error of his ways and withdraw it. Therefore, the defendant could not successfully bring the motion for sanctions unless it (1) asked the court to delay the hearing on the frivolous motion. Or (2) the defendant could have gone into court and asked the court to shorten the "safe harbor" period. So, the defendant, victim of legally meritless litigation, has to spend more money and time changing the hearing dates too. Grrreatttt!

In fairness to the court of appeal that reversed the award of sanctions, the statute says what it says. But the statute is not a big deterrent to those who file legally frivolous papers. The Legislature probably will now go about amending it. Stop giggling.

The case is Li v. Majestic Industry Hills LLC and the opinion is here.

Ninth Circuit: Subjective Criteria Cannot Be Used at Prima Facie Stage

Nicholson was a pilot for Cape Air. The airline rated her as unqualified to fly certain aircraft because of "CRM" skills, which included her communication and cooperation skills with her crew. She was the only female pilot in the Pacific area of operations. She had a personal relationship with one of the other pilots.

Once disqualified from flying a certain type of plane, she did not bid on other types of aircraft and was fired for job abandonment. She sued for sex discrimination under Title VII.

The court reversed the district court's grant of summary judgment. The court disagreed with the district court's determination that Nicholson was unqualified - an element of the prima facie case:
This court has long held that subjective criteria should not be considered in determining whether a plaintiff is “qualified” for purposes of establishing a prima facie case under McDonnell Douglas. Instead, “[t]he qualifications that are most appropriately considered at step one [of McDonnell Douglas] are those to which objective criteria can be applied . . . .” Lynn v. Regents of Univ. of Cal., 656 F.2d 1337, 1345 n.8 (9th Cir. 1981).
The court also found a genuine issue of material fact regarding pretext. Sometimes the court requires specific evidence when there is only circumstantial evidence (rather than direct evidence of discrimination such as sex-based comments). But here, the court picked from its patchwork of jurisprudence on what amount of evidence is required to show pretext, and settled on its most employee-friendly standard:
To avoid summary judgment at this step, however, the plaintiff must only demonstrate that there is a genuine dispute of material fact regarding pretext.
The amount of evidence required to do so is minimal. “We have held that very little evidence is necessary to raise a genuine issue of fact regarding an employer’s motive; any indication of discriminatory motive may suffice to raise a question that can only be resolved by a fact-finder. When the evidence, direct or circumstantial, consists of more than the McDonnell Douglas presumption, a factual question will almost always exist with respect to any claim of a nondiscriminatory reason.” McGinest v. GTE Serv. Corp., 360 F.3d 1103, 1124 (9th Cir. 2004)
The court found sufficient evidence of pretext. Under the above formulation of the law, how could it not? In fact, the court said that the evidence supporting the prima face case alone in this case would have been sufficient.

I'm pointing this out because it's time for the Ninth Circuit to articulate a clear standard regarding summary judgment in discrimination cases. Here's what the court said in another case in 2006:
To establish that a defendant's nondiscriminatory explanation is a pretext for discrimination, plaintiffs may rely on circumstantial evidence, which we previously have said must be "specific" and "substantial" to create a genuine issue of material fact. n7 Godwin v. Hunt Wesson, Inc., 150 F.3d 1217, 1222 (9th Cir. 1998) ("Such [circumstantial] evidence of 'pretense' must be 'specific' and 'substantial' in order to create a triable issue with respect to whether the employer intended to discriminate on the basis of sex.").
Cornwell v. Electra Cent. Credit Union, 439 F.3d 1018, 1029 (9th Cir. Or. 2006).

The court in Cornwell then went on to note that Godwin may have been undermined by later decisions:

Although there may be some tension in our post-Costa cases on this point -- several of our cases decided after Costa repeat the Godwin requirement that a plaintiff's circumstantial evidence of pretext must be "specific" and "substantial" n9 -- this panel may not overturn Ninth Circuit precedents in the absence of "intervening higher authority" that is "clearly irreconcilable" with a prior circuit holding, see Miller v. Gammie, 335 F.3d 889, 893 (9th Cir. 2003) (en banc), because that power is generally reserved to our en banc panels. See Miller, 335 F.3d at 899; United States v. Hayes, 231 F.3d 1132, 1139-40 (9th Cir. 2000); United States v. Washington, 872 F.2d 874, 880 (9th Cir. 1989). Whether or not the precedential weight of Godwin has been diminished to any degree by the Supreme Court's decision in Costa, or by our decision in McGinest, we conclude that Cornwell's evidence is sufficient to create a genuine issue of material fact regarding the motives for his demotion under either the Godwin standard which would require "specific" and "substantial" circumstantial evidence of pretext, or the McGinest standard, which would not.
Cornwell v. Electra Cent. Credit Union, 439 F.3d 1018, 1031 (9th Cir. Or. 2006).

The Cornwell court seems to be politely suggesting that there is a patchwork of decisions and they cannot really be reconciled without an en banc intervention, followed by Supreme Court clarification of its prior holdings. Just sayin'.

The case is Nicholson v. Hyannis Air Service, Inc. and the opinion is here.