Retaliation for Filing a Class Action Warranted $6.6 Million Punitive Damages Award -- Marlo v. United Parcel Service

Plaintiff Michael Marlo was a UPS shipping supervisor who claimed that he was owed unpaid overtime wages because UPS had misclassified the position as salaried-exempt.  In fact, he signed on as the named plaintiff in a class action lawsuit.  

And then he got fired.  

The class action apparently sputtered out after the District Court denied class certification.  However, Marlo brought a separate lawsuit alleging that he was wrongfully terminated in retaliation for his involvement in the case.  A jury not only agreed with him but awarded $15.9 million in punitive damages (which was later reduced to $6.6 million).    

Although the Ninth Circuit's opinion upholding this $6.6 Million punitive damage award is unpublished, it nevertheless contains an interesting analysis as to when personnel decisions by individual managers may trigger punitive damages against the corporate employer.     

Further, Robinson viewed part of his role as maintaining a company “culture”—in essence, a company policy—of supervisors acting as “owners” subject to a salary, rather than the overtime pay sought by Marlo. Marlo’s lawsuit, which initially sought $400 million in class-wide damages, threatened to upend that culture. Robinson discussed the potential impact of Marlo’s lawsuit with his senior staff and expressed his displeasure that other supervisors were filing similar lawsuits. He viewed the lawsuit as a “distraction” that had a negative effect on employee morale. The jury could thus reasonably conclude that Robinson’s decision to terminate Marlo was a policymaking decision aimed at protecting the company “culture.”   

In other words, the court seemed to endorse the theory that a self-conscious "corporate culture" is tantamount to a corporate "policy."  And efforts to sustain or protect that culture may therefore amount to "policy making" decisions sufficient to trigger company-wide liability for punitive damages.

Nine Employees May Be Sufficient to Constitute a Class -- Hendershot v. Ready to Roll Transportation, Inc.

To most people the term "class action" invokes an image of hundreds or thousands of people seeking a remedy against a large corporate defendant.   As a result, it never occurs to many small and mid-size businesses (or their workers) that they may be sued in a class action.  

However, in Hendershot v. Ready To Roll Transportation, Inc., the Second District Court of Appeal reminded lower courts that there is no fixed minimum number of employees necessary to constitute a certifiable class.  Rather, the test under California law is merely whether it would otherwise be "impracticable" to individually join all the employees with the same type of claim into the lawsuit.  

The requirement of Code of Civil Procedure Section 382 that there be ‘many’ parties to a class action suit is indefinite and has been construed liberally. No set number is required as a matter of law for the maintenance of a class action. Thus, our Supreme Court has upheld a class representing the 10 beneficiaries of a trust in an action for removal of the trustees. [¶] The ultimate issue in evaluating this factor is whether the class is too large to make joinder practicable. ‘Impracticality’ does not mean ‘impossibility,’ but only the difficulty or inconvenience of joining all members of the class.”

Based on this analysis, the lower court was found to have improperly denied class certification based on its finding that there would ultimately be only nine employees in the proposed class.

Courts have repeatedly recognized that class actions are a generally superior method for enforcing the Labor Code and collecting allegedly unpaid wages.  This is due to a variety of factors, including the economies of scale in pooling claims, avoiding redundant issues of proof, and overcoming the fear of retaliation by current employees.  

The Hendershot opinion is a timely reminder that employers should not jump to the conclusion that they are too small to be the target of a class action.  

 

Is Political Affiliation the New Black When it Comes to Discrimination?

Most lay people are thoroughly familiar with the usual categories of "protected" characteristics which cannot be considered in denying workplace opportunities -- e.g., race, gender, religion, disability, etc.  Less familiar is California's ban on discrimination based on one's political affiliations or activities.  

According to a new academic study, however, discrimination based on partisan politics is not only already rampant but rapidly increasing.  Dana Milbank of the Washington Post recently summarized the findings as follows: 


It has long been agreed that race is the deepest divide in American society. But that is no longer true, say Shanto Iyengar and Sean Westwood, the academics who led the study. Using a variety of social science methods (for example, having study participants review résumés of people that make both their race and party affiliation clear), they document that “the level of partisan animus in the American public exceeds racial hostility.”

Americans now discriminate more on the basis of party than on race, gender or any of the other divides we typically think of — and that discrimination extends beyond politics into personal relationships and non-political behaviors. Americans increasingly live in neighborhoods with like-minded partisans, marry fellow partisans and disapprove of their children marrying mates from the other party, and they are more likely to choose partners based on partisanship than physical or personality attributes.

“Unlike race, gender and other social divides where group-related attitudes and behaviors are constrained by social norms, there are no corresponding pressures to temper disapproval of political opponents,” they conclude. “If anything, the rhetoric and actions of political leaders demonstrate that hostility directed at the opposition is acceptable, even appropriate. Partisans therefore feel free to express animus and engage in discriminatory behavior toward opposing partisans.”

My guess is that the only reason political discrimination claims are not being filed is because practically no one is aware that this is, in fact, illegal under California law.  If this study is correct in concluding that animus against members of the "other" party already pervades our society it can only be a matter of time before such discrimination generates its own litigation boomlet.  

 

Bans on Re-employment In Settlement Agreements May be Unenforceable -- Golden v. California Emergency Physicians Medical Group

Employers prefer to include a "no re-hire" provision in their settlement agreements with former employees.  This provision usually states that the former employee will agree never to re-apply for employment and, if he does, the employer will be entitled to reject his application.  

The rationale for these clauses is that any refusal to hire the plaintiff in the future could be characterized as "retaliation" for having raising protected complaints in the prior lawsuit.  And why would an employer want to settle one lawsuit only to set itself up for another?

But the validity of such "no re-hire" clauses has been cast in doubt by the Ninth Circuit opinion in Golden v. California Emergency Physicians Medical Group.  As the Ninth Circuit explained, the problem with these provisions is that they may be at odds with section 16600 of the California Business and Professions Code, which provides that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

In reviewing the case law interpreting section 16600, the Ninth Circuit found that California's ban on employment restraints is extremely broad in its scope and extremely "stark" in its prohibition.  As a result, the statute does not merely ban traditional "non-compete" agreements in which an employee is precluded from working for a competitor.  Rather,

[T]he crux of the inquiry under section 16600 is not whether the contract constituted a covenant not to compete, but rather whether it imposes “a restraint of a substantial character” regardless of “the form in which it is cast.

Having articulated this standard, the Court declined to apply it to the specific agreement before it, which involved a settlement agreement by a physician that bound him to never again work for "a large consortium of over 1000 physicians."    Instead, it remanded to the district court with directions to determine if the restraint was "of a substantial character," and therefore void.

It is unclear how this "substantial character" standard may be fleshed out over time.  However, relevant factors would presumably include the market share of the employer, the number of viable alternative employment opportunities in the market, and the employee's degree of specialization.  If the foreclosed employment opportunities, in the context of the specific employee and industry, are "substantial" then any "no re-hire" agreement will be void.