CDF Attorneys Convince Court to Invalidate Use of Representative Testimony in Class Action Trial

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CDF is pleased to report its recent victory in Duran v. U.S. Bank, a seminal decision striking down the use of statistical sampling and representative testimony to establish liability and restitution in a class action trial involving claims of alleged misclassification and unpaid overtime.  Reversing a $15 million judgment awarded to a class of business banking officers (BBOs), the court held that the trial court’s use of statistical sampling and representative testimony to extrapolate liability and restitution from a sample group of 21 witnesses to a class of 260 bankers violated U.S. Bank’s constitutional due process rights.  The court held that this trial plan improperly prevented U.S. Bank from presenting relevant evidence to contest classwide liability and to challenge the claims of individual class members outside of the sample.  The court also held the trial court erred in focusing on U.S. Bank’s policies and uniform exempt classification in maintaining class treatment.  Because the validity of each class member’s exempt misclassification claim required individual analysis, class treatment was improper and unmanageable.  As a result, the court, in addition to reversing the judgment, ordered that the class had to be decertified.  This case is significant because it is the first known California appellate decision reviewing a trial verdict in an overtime misclassification case, where the trial court employed one of the purported “innovative procedural tools” (statistical sampling) to manage class action trials referenced by the California Supreme Court in Sav-On Drug Stores, Inc. v. Superior Court, 34 Cal.4th 319, 339 (2004).  The Court stated that “while innovation is to be encouraged, the rights of the parties may not be sacrificed for the sake of expediency.”  

Background

This case was originally filed as a putative class action alleging claims of misclassification brought under various provisions of the California Labor Code, as well as conversion and unfair competition under Business & Professions Code § 17200 (the “UCL” claim).  U.S. Bank claimed that the BBOs were properly classified under the administrative exemption, commissioned salesperson exemption, and outside sales exemption.  In opposing class certification, U.S. Bank argued that individual issues predominated as shown by the declarations of over 70 putative class members, in addition to deposition testimony of the four prior named class representatives, who all stated under oath that they spent a majority of their time outside U.S. Bank premises, and were therefore properly classified as exempt.  After certifying the class, the trial court granted Plaintiffs’ motion for summary adjudication as to the administrative and commissioned salesperson exemptions.  Just months before trial, Plaintiffs dismissed their legal claims and proceeded to a bench trial only on the equitable UCL claim that was premised on the alleged Labor Code violations and U.S. Bank’s defense based on the outside salesperson exemption. 

The “Fatally Flawed” Trial Plan Violated U.S. Bank’s Due Process Rights

Although the trial court requested briefing and proposals from both parties as to an appropriate trial management plan, it ultimately decided to implement a trial plan that was neither proposed by the parties nor endorsed by their experts.  Over U.S. Bank’s objections, the trial court determined that it would take a random sample of 20 class members (drawn out of a “hat”) plus the two named plaintiffs to testify at trial to determine both classwide liability and damages.  The trial court also selected 5 class members as “alternates” in case any of the 20 originally drawn class members were unavailable.  After this random witness group (“RWG”) was selected, however, the trial court ordered a second opt-out notice to be sent to the class because Plaintiffs had chosen to dismiss their legal claims.  U.S. Bank argued that any member of the RWG group that opted out after receiving the second opt-out notice should be required to provide deposition and trial testimony to maintain the integrity of the original sample and ensure statistical reliability of the  extrapolation process.  Four of the 20 class members (or 20%) of the RWG opted out, while only 5 of the remaining 250 (or 2%) absent class members opted out.  Notwithstanding the disproportionately higher opt-out rate among the RWG, the trial court denied U.S. Bank’s motion to allow two of the RWG witnesses to opt back into the class.  When those witnesses were later called to testify by U.S. Bank as to their percipient knowledge of other RWG members, they were precluded from testifying as to their own BBO experiences.

Consistent with its determination that the trial plan only allowed for testimony and evidentiary submissions regarding the RWG, the trial court steadfastly rejected U.S. Bank’s repeated attempts to introduce relevant evidence from absent class members outside of the RWG, including sworn deposition testimony and declarations from nearly one-third of the class (including that of the four prior named class representatives) indicating they spent a majority of their time outside of their offices and were therefore properly classified as exempt.  At the conclusion of the liability phase, the trial court concluded that the two plaintiffs and all 19 class members in the RWG were misclassified (one RWG member failed to appear at trial and was then treated as an absent class member) and therefore extrapolated those liability findings to conclude that all 260 members of the class were misclassified.  In Phase II of the trial, the trial court accepted Plaintiffs’ experts’ testimony that concluded, using the testimony provided by the RWG and the two named plaintiffs, at a 95% confidence level, that the class members worked an average of 11.87 hours of overtime per week, with a margin of error of 5.14 hours or 43.3%.  This “average” hours of weekly overtime was then extrapolated to the remaining 239 absent class members.

The Court of Appeal found the lower court’s trial methodology to be both legally unprecedented and statistically unsound.  The court was extremely troubled that U.S. Bank was “hobbled” in its ability to prove its affirmative defense not only as to individual absent class members but as to classwide liability because it was “prohibited from introducing evidence pertaining to any non-RWG members, evidence that arguably would have shown some class members were either properly classified or did not work overtime.”  The trial court’s blind adherence to its trial plan sacrificed “fair and accessible justice” for convenience and efficiency. The court noted that neither state nor federal law supported the use of statistical sampling or representative evidence to determine liability in a misclassification case where time spent performing exempt duties may differ between employees.  Experts from both sides agree that, statistically speaking, even if 21 out of the 21 testifying class members were found to be misclassified, up to 13% of the class could nonetheless be properly classified.  Hence, there is no statistical basis to conclude that 100% of the class is misclassified based on a fact-finding process involving only a small sample of class members.  The court explained that using statistics to determine classwide liability in a misclassification case is problematic because a certified class that included both injured and uninjured class members would necessarily require individual mini-trials to determine which class members fell in which category.

Significantly, the court stated that  “due process principles require individualized inquiries where the applicability of an exemption turns on the specific circumstances of each employee, even in cases where the employer’s misclassification may be willful.”  The court distinguished this case from Bell v. Farmers Insurance, 115 Cal.App.4th 715 (2004) (Bell III), where this same court had approved the use of statistical sampling to determine classwide damages.  The trial court in Bell III had conducted an appropriate pilot study to determine an appropriate sample size and desired margin of error at the outset.  Importantly, both parties’ experts largely agreed on the sampling methodology and proposed margin of error.  In contrast, the trial court in Duran committed a number of errors in its unscientific and inconsistent use of statistics in its trial plan, including arbitrarily using a 20-member sample group without any surveys or pilot studies, permitting selection bias by allowing randomly selected members to opt out and for including the two non-randomly selected class representatives in its sample, arbitrarily using a mid-point to determine average work hours for class members who provided a range of hours worked, and failing to extrapolate results unfavorable to Plaintiffs (such as a RWG member signing a release that prevented him from personal recovery, or that a RWG member was properly classified for two weeks of his employment).  These and other errors resulted in a statistically invalid and inaccurate judgment, as evidenced by the 43.3% margin of error associated with the 11.87 “average” overtime hours worked.  This meant that the overtime hours worked by class members could range anywhere from 6.73 hours to 17 hours per week.  Using the low end of this margin of error meant that the $15 million judgment awarded to the class could actually be half as much and still fall within the undisputed margin of error.  While the court again declined to issue a bright-line rule as to an unconstitutional level of inaccuracy, it noted its consistent rejection of results containing a large margin of error, such as 32% in Bell III’s calculation of double-time damages, and 43.3% in Duran.

In concluding that the multitude of errors committed by the trial court resulted in serious due process violations, the Court of Appeal found persuasive the reasoning and analysis laid out in the recent U.S. Supreme Court opinion in Wal-Mart Stores v. Dukes, which had rejected a similar “trial by formula” theory advanced by plaintiffs to determine liability and damages from a sample group to the class as a whole in a gender discrimination class action.  The Court’s parallel reasoning and analysis of Dukes dispels any contention that the holding in Dukes would be limited to federal cases or discrimination claims.

Individual Analysis Required to Determine Exempt Classification Compels Decertification

The court acknowledged that Sav-On held there was not a requirement that “courts assess an employer’s affirmative exemption defense against every class member’s claim before certifying an overtime class action,” but concluded this passage does not apply to the trial phase of a class action lawsuit.  In so doing, the Duran court addressed the problem frequently ignored by many trial courts that certified class actions with no indication as to how a class action trial would be properly managed that comported with a defendant’s due process rights.  The court concluded that the evidence at trial showed that because BBOs were not monitored or tracked in any way, the “only way to determine with certainty if an individual BBO spent more time inside or outside the office would be to question him or her individually.”  The court held that the trial court erred in failing to grant U.S. Bank’s second motion to decertify at the close of the liability phase of trial because it erroneously relied on U.S. Bank’s policies (primarily its uniform classification of BBOs as exempt) and ignored variances in admissible evidence that “cast serious doubts as to the prevalence of common issues affecting liability.” 

This case is a welcome development to California employers that have been besieged with wage-and-hour class actions in the last decade.  It calls into question the viability of using statistical sampling and representative testimony in misclassification cases where a proper exemption inquiry turns on an individual analysis.  It also forces trial courts to carefully consider trial management issues and due process arguments that have been largely ignored at the class certification stage.  The entirety of the Duran opinion can be read here.

CDF represented U.S. Bank during the entire pendency of the case at the trial court level and on appeal.

Oral Argument Scheduled in Kirby v. Immoos

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The California Supreme Court has scheduled oral argument in Kirby v. Immoos for March 6, 2012 at 9:00 a.m. in San Francisco.   This case involves the important issue of whether employers may recover their attorneys' fees after prevailing in a case alleging denial of meal and rest breaks.  The plaintiffs in Kirby had brought a lawsuit alleging unpaid overtime wages under Labor Code section 1194 as well as claims for missed meal and rest breaks under Labor Code section 226.7.  The employer prevailed and sought to recover its attorneys' fees under Labor Code section 218.5, which on its face is a bilateral fee-shifting provision that allows a prevailing party to recover its fees in wage cases, except in certain circumstances.  One of the circumstances excepted from section 218.5 is claims for unpaid overtime covered by section 1194.  Section 1194 has its own fee-shifting provision and provides that only a prevailing plaintiff may recover fees.

The lower court in Kirby held that based on these two Labor Code sections, the prevailing employer was entitled to its fees incurred in defending the meal and rest break claims, but not fees incurred in defending the overtime claim.  The Supreme Court granted review and is expected to decide whether a prevailing employer may properly recover fees for meal and rest break violations under section 218.5, and whether fees are precluded if the meal and rest break claims are brought in the same lawsuit as claims for overtime governed by section 1194.  Stay tuned for the outcome of this case.

California Court Says Professional Recruiters Are Exempt Commissioned Salespersons

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In Muldrew v. Surrex Solutions, a California court held this week that certain professional recruiters qualified for California’s commissioned salesperson exemption, thereby defeating their claim for alleged unpaid overtime wages.  Surrex Solutions is in the business of recruiting—locating qualified candidates to fill job positions for Surrex’s clients.  The plaintiffs in the case worked as recruiters for Surrex.  In that capacity, they located qualified candidates and tried to place them with Surrex clients.  Surrex’s clients paid Surrex a fee (generally a percentage of a placed employee’s annual compensation) if they hired a candidate proposed by Surrex.  Surrex in turn paid the recruiter a percentage of the fee as “commission.”  The plaintiffs in Surrex filed a lawsuit alleging that they worked overtime hours without being paid overtime compensation.  Surrex defended the suit on the ground that the recruiters were exempt commissioned salespersons and not entitled to overtime compensation under California law. 

California’s commissioned salesperson exemption provides an exemption from overtime pay for employees who earn more than one and one-half times the minimum wage and whose total compensation is derived more than 50% from commissions.  Courts have held that in order to qualify for the exemption, an employee must be principally engaged in sales duties and must be paid a percentage of the price of goods sold.  The plaintiffs in the case argued that they did not meet the test for exemption because they were not engaged in “sales” and their pay was not based on a percentage of the price of a product.  The court rejected both arguments.

First, the court held that the recruiters’ job duties constituted “selling” within the meaning of the exemption.  The recruiters’ job was essentially to locate and “sell” a candidate to Surrex clients.  The court further held that job duties such as researching candidates and meeting with them were directly related to and part of their sales duties.

Second, the court held that Surrex’s method of paying its recruiters satisfied the definition of “commission” pay.  Surrex placed two types of candidates with its clients:  employees and consultants.  If a candidate was hired as an employee by a Surrex client, then Surrex received a flat fee for the placement and in turn paid a percentage of that fee to the recruiter.  The plaintiffs conceded that this payment qualified as a “commission” for purposes of the exemption.  The plaintiffs, however, challenged the payment system used in the case of a consultant who was placed with a client. In the case of consultants, Surrex employed them and provided their services to clients based on hourly rates.  Surrex then paid the recruiter a percentage of the “adjusted gross profit” earned by Surrex (revenue minus Surrex’s costs associated with employing the consultant).  The plaintiffs argued that because the formula considered factors other than a straight percentage of the fee, it could not be considered commission pay.  The court rejected this argument, holding that the concept of commissions is broad enough to include a formula such as Surrex’s that takes into account a reduction for overhead in calculating commission pay.

Finally, the court rejected the plaintiffs’ argument that Surrex’s commission plan was not really a bona fide commission plan because it involved paying the recruiters a guaranteed draw against commissions.  The plaintiffs argued that the plan was designed in a way to ensure that recruiters would essentially earn close to the amount of the draw.  The court rejected this argument, holding that Surrex produced evidence showing that recruiters’ commission often far exceeded the draw amount.  The court held that this evidence was sufficient to support a finding that Surrex’s commission plan was a bona fide commission plan.

The Muldrow v. Surrex decision is a positive one for California employers, in that it rejects an overly restrictive interpretation of elements of the commissioned salesperson exemption.  Employers who rely on the exemption for certain employees are reminded, however, that satisfying the exemption is more complex than it seems.  Given the litigation climate in California concerning overtime exemptions, it is advisable to have commissioned salesperson classifications reviewed by counsel.

Supreme Court Confirms Ministerial Exception to Discrimination Laws

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On January 11, 2012 the United States Supreme Court issued its decision in Hosanna-Tabor v. Equal Employment Opportunity Commission, confirming a “ministerial” exception to discrimination laws.

Cheryl Perich worked as a “called” teacher for Hosanna-Tabor Evangelical Lutheran Church and School.  The term “called” means that she underwent a religious “commission” to teach for the school.  Perich developed narcolepsy and began the 2004-2005 school year on disability leave.  In January 2005 she notified the school principal that she would be able to report to work in February.  The principal responded that he had already hired another teacher to work in February.  The principal also expressed concern that Perich was not ready to return to the classroom.  The Church offered to pay a portion of Perich’s medical insurance costs in exchange for her resignation.  Perich refused to resign and told the principal she had spoken with an attorney and intended to assert her legal rights.  The Church then terminated Perich for insubordination and disruptive behavior.

Perich next filed a charge with the Equal Employment Opportunity Commission alleging she was terminated in retaliation for threatening to file a lawsuit in violation of the Americans with Disabilities Act.  At the District Court level Hosanna-Tabor argued that the lawsuit was barred by the “ministerial” exception to the ADA provided by the First Amendment.  The District Court agreed and granted summary judgment in Hosanna-Tabor’s favor.  The Sixth Circuit Court of Appeals vacated that decision because it found that Perich was not a minister under the exception.

The U.S. Supreme Court overturned the Court of Appeals’ decision and held that there is a ministerial exception to the ADA and that Perich was included within that exception.  The Supreme Court explained that the Free Exercise and Establishment Clauses of the First Amendment provide a “ministerial” exception to the ADA.  The Court wrote that imposing an unwanted minister on a religious group infringes on the group’s right to shape its own faith and mission through its appointments.  The Court further explained that Perich was a minister because she had a significant amount of religious training followed by a formal religious commissioning by the school, she held herself out as a minister, and her job duties included conveying the Church’s message in religious instruction.  Therefore, the Court concluded that Perich fell within the “ministerial” exception and could not make a discrimination claim against Hosanna-Tabor.

The Court’s ruling is a positive one for religious organizations.  It assures them a greater freedom to make employment decisions.  However, the Court did not provide much guidance regarding what organizations qualify as a “religious organization” or which employees would qualify as “ministers” to fit within the “ministerial” exception.  Organizations that have concerns about whether they fit within this exception may want to consult with counsel before relying on the exception in making employment decisions.

California Supreme Court Issues Long Awaited Administrative Exemption Decision

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Today the California Supreme Court issued its decision in Harris v. Superior Court (Liberty Mutual Insurance Co.), a case addressing whether insurance claims adjusters qualify for the administrative exemption under California law.  The Court's decision focused solely on the issue of the "administrative/production worker dichotomy" and whether employees who fall on the "production" side can qualify for the administrative exemption.  [By way of background, the administrative/production worker dichotomy is a doctrine whereby the court looks at the employee's duties as compared to the business of the employer.  If the employee's work centers on "producing" the product or service the company chiefly exists to provide, then the employee is a production worker.  Thus, in the insurance context, if the company is solely in the business of adjusting claims, the claims handlers who provide that very service are production workers.]  The lower court held that because the claims adjusters at issue serviced individual claims and did not provide advice on general policies or operations of the company, they were production workers and could not qualify for the administrative exemption as a matter of law. 

Today, the California Supreme Court reversed, holding that the lower court erred in applying the administrative/production worker dichotomy so simplistically and using it to hold that claims adjusters were non-exempt as a matter of law.  The Court did not go so far as to eliminate the administrative/production worker analysis, but made clear that this analysis was not dispositive of whether an employee qualifies for the administrative exemption.  The Court emphasized that this was the error of the lower court.  The lower court relied heavily on an earlier decision, Bell v. Farmer's Insurance Exchange, which had similarly applied the administrative/production worker dichotomy to find that claims adjusters were non-exempt production workers.   The Supreme Court today held that the lower court's reliance on Bell was misplaced, given that the Bell case dealt with an older version of the applicable Wage Order--a version that provided very little guidance on the meaning of an administrative employee, justifying the court in that case in resorting to guidance outside the Wage Order (such as caselaw and opinion letters on the administrative/production worker dichotomy) to interpret the exemption.  In contrast, in this case, the applicable Wage Order (4-2001) contains much more explanation of the administrative exemption and also specifically incorporated several federal regulations interpreting the exemption.  As such, the starting point for analyzing the exemption should simply be the express language of the Wage Order and referenced regulations, and not the judicially created administrative/production worker dichotomy.  Notably, the Court declined to decide whether the claims adjusters at issue actually qualified for the administrative exemption.  However, the Court cited with approval several federal cases finding claims adjusters to be administratively exempt.  The Court noted that an employee's role in "servicing" a company, such as a claims adjuster does, may well be exempt if sufficiently important and the employee's duties involve the regular use of discretion and independent judgment.  The Court suggested that an employee does not have to advise the company on its overall policies or operations in order to meet the test for exemption.  Nonetheless, the Court made clear that its ruling was limited to holding that the lower court erred in finding that the "production" worker analysis barred exempt status as a matter of law.  The Court held that the trial court on remand would have to undertake a factually intensive analysis of the claims adjusters' actual duties (regardless of whether deemed "production" duties) and determine whether they meet the test for exemption as defined in the Wage Order and the regulations incorporated therein.

The Court's decision in Harris is a positive one in that it limits both the application and importance of the administrative/production worker dichotomy--a doctrine that has been used by many courts to find employees did not qualify for the administrative exemption.  However, the Court's decision falls short in providing much specific guidance (and certainly not any bright lines) on how to define or apply the administrative exemption.  It seems clear that determination of exempt status will continue to necessitate an individualized fact-intensive inquiry based on the circumstances involved in any particular case.  The full text of the Harris case is available here. 

Court Favorably Resolves Claims for Reporting Time and Split Shift Pay

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This week, a California court summarily adjudicated claims for reporting time pay and split shift pay brought by former employees of AirTouch Cellular.  The employees claimed that AirTouch owed them reporting time pay for having to show up to scheduled meetings that were less than 2 hours long.  The employees also claimed that AirTouch failed to pay them split shift pay on days when they worked split shifts.  The trial court threw out the claims and awarded attorneys' fees to AirTouch under Labor Code section 218.5.  A California appellate court agreed with the trial court's rulings on the reporting time and split shift claims, but reversed the award of attorneys' fees.

As for the reporting time pay claim, the facts were undisputed that on certain occasions the employees were required to attend scheduled meetings that were less than two hours in length, and that was their entire "work" for the day.  The plaintiffs claimed that California's wage orders required AirTouch to pay them for a minimum of two hours as reporting time pay.  The court disagreed, holding that reporting time pay is only required where an employee is furnished with less than half the scheduled day's work.  Because the employees' scheduled day was two hours or less, as long as the employees were furnished and paid for at least half of that time, no additional reporting time pay was owed.

As for the split shift claim, the facts were similarly undisputed that the employees on occasion worked a split shift.  However, the parties disputed whether a split shift premium was owed in the circumstances.  California's wage orders state as follows:  "When an employee works a split shift, one hour's pay at the minimum wage shall be paid in addition to the minimum wage for that workday..."  AirTouch's position was that because the employees' regular wages were well over the minimum wage, they were paid more than the minimum wage for all hours worked plus one additional hour and, as a result, there was no requirement to pay an additional split shift premium.  The court agreed, endorsing the following example: 

"As an example, on November 26, 2005, Krofta worked a total of eight hours.  Because he was making $10.58 per hour at the time, he was paid a total of $84.64 (8 x $10.58).  The minimum wage at the time was $6.75, so a minimum wage worker would be paid wages of $54 (8 x $6.75) plus, pursuant to subdivision 4(C), one additional ―hour‘s pay at the minimum wage, for a total of $60.75 ($54 + $6.75).  AirTouch contended that since subdivision 4(C) by itself required no greater payment for the workday than $60.75, the pay for an employee who earned more than that amount (like Krofta) would not be affected.  We agree that this analysis, which was followed by the trial court, is correct."

The court's analysis of these split shift and reporting time pay issues is favorable for California employers confronting these claims.  Notably, the court also issued a favorable ruling on the validity of another employee's release of claims.  The employe had signed a general release in favor of AirTouch and AirTouch argued that the release barred the employee's claims for reporting time and split shift pay.  The employee argued that Labor Code section 206.5 invalidated the release.  The court disagreed, holding that Labor Code section 206.5 only invalidates a release of wage claims where the entitlement to wages is undisputed.  Because the employee's reporting time and split shift claims were far from conceded by AirTouch, the claims were in dispute and could be included in the scope of an otherwise valid general release.

While the court issued favorable rulings on the foregoing issues, the court also issued an unfavorable ruling on the issue of an employer's ability to recover attorneys' fees for defeating a wage claim.  The trial court had awarded AirTouch its attorneys' fees under Labor Code section 218.5's fee shifting provision.  The appellate court reversed, holding that section 218.5 did not apply and that claims for reporting time pay and split shift pay fall under Labor Code section 1194 (which applies to actions to recover minimum wage and overtime compensation).  Because Labor Code section 1194 has a one-way fee shifting provision (entitling only a prevailing employee to recover fees and not a prevailing employer), the court held that AirTouch was not entitled to recover its fees. 

This author predicts more litigation and court decisions regarding all of these issues addressed by the court in the AirTouch case.  We will continue to keep you posted of such developments.  In the meantime, the Aleman v. AirTouch case is available here. 

Brinker Decision Likely Delayed Until April 2012

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The California Supreme Court is required by court rule to issue decisions ninety days after they are submitted.  The Court previously submitted the Brinker case for decision after the November 8 oral argument, which is why most expected a final ruling by early February 2012.  Eariler this week, the California Supreme Court vacated the November 8 submission of the matter based on its earlier decision to allow further briefing on the issue of whether the eventual decision will operate prospectively or retroactively.  The Court has now ruled that additional briefing will be completed by January 13, 2012 and the matter submitted at that time.  As a result, the Court will now have until April 13 to issue its decision, assuming no additional delays.  We will continue to keep you updated.

California Court Applies Ministerial Exception to FEHA

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In Henry v. Red Hill Evangelical Lutheran, the plaintiff was a preschool teacher and the director of preschool education at a private preschool run by a Tustin, California Lutheran church.  The school terminated her employment after if found that the plaintiff was living with her boyfriend and raising their children together, without being married.  The school required that all students and teachers be "practicing Christians."  The school felt that the plaintiff's lifestyle was violating the church teaching and commitment to live as a practicing Christian.  It decided to end the employment relationship on this ground. 

The plaintiff, Sara Henry, subsequently sued and alleged that her termination violated the California Fair Employment and Housing Act 's prohibition against marital discrimination.  The Lutheran school argued that the lawsuit was barred because FEHA's definition of "employer" does not include a non-profit religious corporation.  The school further argued that Henry could not allege a common law wrongful termination action either in this situation, whether it is based on FEHA or the California Constitution.  The court agreed, holding that the ministerial exception to FEHA set forth in section 12926(d) of the Government Code barred the claim and that the California Constitution did not support the lawsuit either. 

This is one of the first California published opinions to discuss the ministerial exception to FEHA.  Although the case appears clear cut on its face, it is plausible that the decision may have been different if the plaintiff had been able to present evidence that the school was aware of other teachers/administrators who were not living their lives as "practicing Christians" in accordance with the principles of the school and church.  Religious institutions dealing with similar situations should be aware not only of the scope of coverage of the ministerial exception, but also that should apply their religious principles equally and fairly in order to receive a similar result as in Red Hill Evangelical Lutheran, under similar factual circumstances.  Lawyers advising religious institutions should understand that good plaintiffs' attorneys will attempt to be very aggressive in discovery proceedings to uncover evidence of unequal treatment. 

A copy of the full opinion is available here.

No Duty to Accommodate Employee Who Isn’t Qualified for Job

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In Johnson v. Board of Trustees, the Ninth Circuit elaborated on the limits of an employer’s duty to accommodate a disabled employee.  Trish Johnson was a special education teacher in Idaho with a history of depression and bipolar disease.  Johnson’s position required a state teaching certificate, which in turn required certified teachers to meet a minimum level of continuing education credits in a five year period.  When her contract came up for renewal in the fall of 2007, Johnson had not completed the continuing education requirements because she suffered a major depressive episode over the summer, so she petitioned the school board to seek provisional authorization from the state to allow her to teach temporarily without a license.  The Board denied her request because 1) she had five years to obtain the credits and 2) the Board only petitioned the state when there was no certified teacher available to fill a position.  A certified teacher was available and was hired.

Johnson brought suit for disability discrimination, a suit summarily dismissed by the trial court.  On review by the Ninth Circuit, the Court agreed that Johnson's claim should be dismissed.  The Court held that in order to prevail on a claim for disability discrimination or failure to accommodate, the plaintiff must establish that she was a "qualified individual with a disability."  To establish this, the plaintiff must show that she 1) has the experience, education and skills required by the job and 2) can perform the essential functions of the job, with or without a reasonable accommodation.  The Board argued that Johnson failed to establish that she met the requirements of the job, and there was therefore no need to accommodate her disability.  Johnson countered that because she could have obtained her teaching certificate with an accommodation of additional time, the Board was required to accommodate her ability to obtain her teaching certificate.  The Court disagreed, and held that there is no duty to accommodate an employee’s efforts to meet the job skills requirement.  By way of a straightforward example, the Court noted that under the EEOC guidelines, a law firm that requires incoming attorneys to be members of the bar need not accommodate a visually impaired attorney who fails to pass the bar exam.  On the other hand, the firm is required to provide a reasonable accommodation to a visually impaired –  but otherwise qualified – bar member.  Simply summarized, guidance by the EEOC “explicitly disclaims any requirement of providing reasonable accommodation to disabled individuals who fail to meet the job prerequisites on their own.” 
Since the job requirement itself was neither discriminatory nor had a disparate impact on disabled individuals, the district court’s ruling was allowed to stand.  The Johnson case is available here.

Court Allows Post Oral Argument Briefing in Brinker

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In a relatively rare circumstance, the California Supreme Court has allowed the California Employment Law Council to file a post oral argument amicus brief.  The supplemental brief was filed on December 2 and addresses the limited issue of whether the Court's ruling on the "rolling 5 hour" issue will be retroactive or prospective only.  Many who watched the oral argument gleaned that at least some of the Justices surprisingly seemed to be leaning toward a finding that California law requires a meal break to be provided on a rolling basis for every 5 consecutive hours worked.  (This is a different and separate issue than the main issue being decided by the Court--what it means to "provide" a meal break.)  If that is in fact the ruling of the Court, it would mean that an employee who takes an early lunch and then works five more hours would be entitled to another meal break.  Most lawyers, employers, and courts have not interpreted the law in this fashion.  Thus, if the Court rules in this manner and the ruling is retroactive, it is sure to expose California employers to a new onslaught of lawsuits on this meal break issue as well as potentially huge liability.  The California Employment Law Council's amicus brief argues against such a result and suggests that any such ruling should operate prospectively only.   The parties to the case have 30 days (from December 2) to file responsive briefs.  Given the allowance of supplemental briefing, it is unlikely a decision will be rendered in Brinker much earlier than the February deadline.