LaborSphere, Author at Laborsphere

Is Relief on the Horizon for California Employers Attempting to Enforce Arbitration Agreements as Class Waivers?

In California, a hotbed of wage and hour class and collective action filings, a recent appellate court opinion provides some long-awaited good news for employers attempting to enforce arbitration agreements as class waivers. In Reyes v. Liberman Broadcasting, Inc., plaintiff Jesus Reyes worked for Liberman Broadcasting, Inc. from April to September 2009. Pre-hire, Reyes executed an arbitration agreement. In May 2010, he filed a class action alleging wage and hour violations on behalf of a putative class of security officers. When it initially answered the Complaint, Liberman failed to raise the issue of arbitration. In July 2011, Liberman filed a motion to compel Reyes to arbitrate his wage and hour claims as an individual (versus holding a role as a class representative). The court denied the motion, finding that Liberman had waived its rights via the delay. This led Liberman to appeal, resulting in a decision further interpreting the U.S. Supreme Court’s April 2011 decision in AT&T Mobility v. Concepcion, which held that the Federal Arbitration Act preempts state laws that invalidate class action arbitration waivers. To date, courts have to date [delete] been split on whether Concepcion overruled the California case of Gentry v. Superior Court, which required class arbitration under certain circumstances. However, last Friday, the appellate court, in Reyes, reversed the lower court’s denial of Liberman’s motion to compel arbitration. In so ruling, the Second District Court of Appeal held, “an arbitration agreement silent on the issue of class arbitration may have the same effect as an express class waiver.” (The Second District Court of Appeal declined to decide whether the Gentry case remains good law following the Concepcion ruling, holding instead that Reyes failed to show that the Gentry factors made the arbitration agreement unenforceable.)

The Court of Appeal also held that although Liberman did not mention the arbitration agreement in its answer and had previously engaged in discovery in the case, the company did not waive its right to compel arbitration. In so holding, the appellate court found that Liberman reasonably concluded it could not enforce the arbitration agreement before the Concepcion decision, given the fact that several California decisions pre-Concepcion appeared to require class arbitration in similar contexts. The Court of Appeal opined, the “risk [of compelled class arbitration] diminished substantially when Concepcion changed the legal landscape, and Liberman promptly informed Reyes of its intent to arbitrate one month after the [Concepcion] decision and filed its motion to compel a month later.” Accordingly, the opinion stated, “Liberman did not act inconsistently with a right to arbitrate by not moving to compel until after Concepcion.”

The body of law on enforcing arbitration agreements as class waivers is still developing post-Concepcion, but perhaps Reyes v. Liberman Broadcasting, Inc. indicates that there is some relief on the horizon.

To Compel Discovery Of A Party’s Social Media Content In Pennsylvania, There Must Be A Hook

Pennsylvania trial courts have been particularly active in the past few years in issuing opinions regarding how much, if any, of a party’s non-public Facebook and other social media content are subject to discovery in litigation. A July 2012 opinion issued by Judge Wettick in Allegheny County, Trail v. Lesko, highlights these increasing discovery disputes and outlines the recent trends of the courts addressing the disputes. As Judge Wettick found, courts have compelled very broad access to social media content in cases where one party has articulated that the publicly available portions of the other party’s social media site contains information relevant to the prosecution or defense of a claim.

Although there are no appellate court opinions on this subject matter in Pennsylvania, there are several trial court opinions. On the one hand, some of the cases permit very broad access to Facebook and other social media content. For example, at least three written opinions in Pennsylvania since 2010 have required the party from whom discovery is sought to provide his or her username, password or other login information to the requesting party. In these cases, the requesting party provided the court with specific evidence from the individual’s publicly accessible pages showing the likelihood that full access to the social media account would garner further relevant information. In Zimmerman v. Weis Markets, Inc., the plaintiff claimed personal injuries from a workplace injury and his public profile said he enjoyed “ridin” and “bike stunts” and showed pictures of him with a black eye and his motorcycle both before and after the workplace accident at issue in the litigation. And, as one Pennsylvania trial court put it in McMillen v. Hummingbird Speedway Inc., “[w]here there is an indication that a person’s social network sites contain information relevant to the prosecution or defense of a lawsuit, . . . and given [the case law’s] admonition that the courts should allow litigants to utilize ‘all rational means for ascertaining the truth,’ . . . and the law’s general dispreference for the allowance of privileges, access to those sites should be freely granted.”

On the other hand, a number of Pennsylvania trial courts, in written opinions, have completely denied any and all access to a party’s social media content. Many of the requesting parties in these cases failed to identify any compelling or specific reason for obtaining access to the other party’s non-public social media content. These courts have concluded that the mere fact that a party has a social media account, without anything more, is insufficient to justify broad discovery access to the account.

In Trail, Judge Wettick provides a comprehensive review of Pennsylvania’s case law addressing this question. Judge Wettick also highlights cases from a number of other jurisdictions, which are generally consistent with the approach of Pennsylvania courts that have addressed this question in that the other jurisdictions tend to require some factual predicate suggesting the existence of relevant information prior to ordering access to the information being sought. Unlike Pennsylvania, though, some other jurisdictions have sought to establish more of a middle ground between wholesale denial of the request for social media content and unlimited access to the user’s profile. Judge Wettick reached what is perhaps the obvious conclusion from these cases: litigants seeking access through discovery to a party’s Facebook or other social media content must show that there is a sufficient likelihood that the discovery requested will provide relevant evidence that is not otherwise available. Further, Judge Wettick said the court must consider the level of intrusiveness as balanced against the need for the discovery. Although courts are still wrestling with this question and the answer will continue to evolve, the courts seem to fall back on the age-old principle that discovery should not be an unbridled fishing expedition into a party’s private information. However, with a big enough hook (i.e., publicly accessibly portions of the social networking site suggesting that further relevant postings are likely to be found by access to non-public portions), Pennsylvania courts are willing to provide very broad access to a party’s social media content.

Understanding the Pool Lift Issue – David Raizman Quoted in Lodging Hospitality Online Story of the Day

Los Angeles partner David Raizman was quoted in Lodging Hospitality Online’s story of the day “Understanding the Pool Lift Issue”. David wrote on this issue earlier this year after the DOJ’S action extended to January 31, 2013, a compliance deadline that had been March 15, 2012 and was then extended to May 21, 2012. To read the full story click here.

Discrimination Claims Based on Denial of Religious Clothing Is “Low Hanging Fruit” to EEOC

At a recent workshop for attorneys, the Equal Employment Opportunity Commission provided guidance on what employers should consider when enforcing a dress code policy on religious clothing.

A senior EEOC attorney described cases involving religious clothing and grooming policies as “low hanging fruit” for EEOC enforcement efforts. Among the cases the EEOC is investigating are claims of religious discrimination where employees have been disciplined or otherwise disadvantaged for donning Muslim head scarves, Sikh turbans and yarmulkes. The EEOC is also pursuing cases involving religious tattoos. In one case, EEOC recently sued a Burger King restaurant for religious discrimination because it fired a female cashier, who is a Christian Pentecostal, for refusing to wear uniform pants. A tenet of the Christian Pentecostal faith is that its members should not wear the clothing of the opposite sex. The woman’s offer to wear a skirt of modest length was rejected and she was discharged.

EEOC acknowledges that employers can have and enforce a dress code, but when it comes to dealing with employees who wear clothing for religious reasons or have special grooming requirements EEOC takes the position that exceptions to the policy may be required as an accommodation. Under Title VII of the Civil Rights Act of 1964, an employer is required to accommodate an employee’s religious belief unless doing so would create an “undue hardship.” According to the EEOC attorney, an undue hardship is “anything that would cause more than a de minims cost on the employer’s operation.”

Employers should be careful about arguing that absolute enforcement of a dress code policy is a business necessity. The EEOC will scrutinize an employer’s ban on religious clothing that the employer justifies based in its desire to convey a certain image to customers and the public. EEOC and the courts have recognized undue hardships where the religious clothing creates a safety hazard or where the garb may be mistaken as being the employer’s “message” to customers and clients. However, employers should tread cautiously. In one case, a court found that a county library discriminated on the basis of religion when it fired a librarian because she refused to remove a “cross necklace.” The court held that library patrons were unlikely to believe that the cross was part of the county’s message.

Employers should review their dress code policies to ensure they are not discriminatory and that they recognize the possibility of accommodating religious clothing, jewelry and tattoos. In addition, managers should be educated to understand the employer’s rights and responsibilities when faced with an employee’s request to wear a religious article that may conflict with the dress code policy.

California Rejects Enforcement of Restrictive Covenant in Employment Agreement

A California Court of Appeal recently rejected a covenant not to compete included in an employment agreement, although it was related to a transaction for the sale of goodwill of a business – one of the well-recognized exceptions to the general rule in California that limits restrictive covenants.

In Fillpoint, LLC v. Maas, No. G045057 (Cal. Ct. App. Aug. 24, 2012), Michael Maas, a shareholder in Crave Entertainment Group, Inc., sold his shares in the company when it was acquired by Handleman Company. That transaction was executed through a stock purchase agreement which contained a three year covenant not to compete. A month later, Maas entered into an employment agreement, which contained a one year covenant not to compete that became effective as of the date of the termination of his employment with Crave. Three years after the sales transaction, Maas resigned from Crave and began working for a competing company. Handleman’s successor, Fillpoint, LLC, sued Maas for breaching his employment agreement (as well as his new employer for interference with contract).

Fillmore argued that the restrictive covenant in Maas’ employment agreement was enforceable because it fell within the sale of goodwill exception contained in California Business and Professional Code section 16600. The Court of Appeal rejected that argument and found that, although the stock purchase agreement and employment agreement constitute a single transaction and each agreement referenced the other, only the purchase agreement was focused on protecting the acquired goodwill. In contrast, the Court of Appeal stated that the covenant contained in the employment agreement impermissibly targeted an employee’s fundamental right to pursue his or her profession and was therefore unenforceable.

This recent decision reaffirms the limited scope of the exceptions to the general rule in California that covenants not to compete are unenforceable. Therefore, employers must be mindful when drafting such covenants to ensure that they fall squarely within one or more of the recognized exceptions.