Tag Archives: Business

Feb 08 2011
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Jury

Jury Rejects Disability Discrimination and Failure to Accommodate Claims

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In a wage and hour, failure to accommodate, and disability discrimination case, a welder alleged that his employer terminated him because of his intestinal ailment.  Cubias v. Murray’s Iron Works Inc., 7 Trials Digest 14th 14, 2010 WL 5690615, Case No. BC406749 (Cal. Superior, Verdict: July 29, 2010).

Plaintiff alleged that he was employed as an aluminum welder until defendant Murray’s Iron Works terminated his employment.  Plaintiff alleged he was harassed and terminated, when he disclosed his medical condition/disability called diverticulosis or diverticular disease., which occurred when pressure in plaintiff’s colon formed bulging pouches that can cause severe stomach cramps, aches, constipation, and/or diarrhea. Id.

Plaintiff alleged disability discrimination, failure to provide reasonable accommodation, failure to engage in the interactive process, unlawful retaliation, unlawful retaliation in violation of public policy, harassment, wrongful termination in violation of public policy, failure to prevent discrimination and harassment, failure to prevent retaliation, invasion of privacy, intentional infliction of emotional distress, and failure to pay overtime wages against defendant Murray’s Iron Works.  Id. Against defendant Irene Leisner, the Human Resources Manager and co-owner of Murray’s Iron Works, plaintiff alleged harassment, invasion of right to privacy, and intentional infliction of emotional distress for allegedly entering the men’s restroom at work and yelling at him to get back to work and to hurry up while he was using the restroom. Id. Continue reading →

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Jan 09 2011
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Attorneys' Fees, Bonuses, Class Actions, Collateral Estoppel/Res Judicata, Trial

Second District Reverses Class Action Judgment Relating to Bonuses Allegedly Due After Merger

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The Second District reversed a trial court’s judgment in favor of employees in a class action trial.  Pearline Zalewa v. Tempo Research Corporation, B210429, 2010 WL 3735240 (Cal. Ct. App. 2d Dist. Sept. 27, 2010).  Defendant  fiber-optic equipment manufacturer was sued in a class action by its former employees who claimed that the manufacturer breached an obligation to pay them annual bonuses, an obligation that allegedly continued for years after they were laid off from work during a business downturn.  Id. The court concluded that the employees were not entitled to any recovery: “All but two of the employees relinquished their right to sue when they were laid off, in return for compensation that exceeded their earned severance pay. In any event, there was no promise made to pay bonuses to the employees after they were laid off.”  Id.

The Trial Court’s Judgment

The trial court conducted a bench trial in January 2008, finding that plaintiffs were entitled to recover a direct bonus under theories of breach of contract, promissory estoppel, accounting, and unfair business practices. Id. The court deemed the bonus payments to be “wages” under the Labor Code. Id. And because the bonus payments are wages, plaintiffs were awarded prejudgment interest and attorney fees under the Labor Code. Id. The court enumerated the amount of the award for each employee, less offsets for monies already paid by defendants, plus interest. Id. The total amount of the award, including interest, was approximately $99,000, and plaintiffs’ counsel was awarded attorney fees of $881,715.  Id. Continue reading →

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Jan 09 2011
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Employee Mobility, Investigations

Immediate Steps to Take Upon an Employee’s Departure for a Competitor

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Richard C. Darwin posted a useful summary and reminder of the steps an employer should take once an employee has decided to pursue an opportunity with a direct competitor.  Darwin recommends the following nine common-sense precautionary measures to be taken right away to reduce the risk of lost or deleted evidence:

  1. Secure the defecting employee’s computer and make sure no one uses it.
  2. If the IT department recycles backup tapes, immediately suspend that practice.
  3. Check the former employee’s office or workspace for missing documents and files.
  4. Get copies of the tapes or electronic files if the building has security cameras. Continue reading →
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Jan 09 2011
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Wages

Southern District Holds That Compensation Received But Later Forfeited Under Cliff Vesting Schedule in Mandatory Investment Plan, Are Not Unpaid Wages

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In Callan v. Merrill Lynch & Co., Inc., No. 09 CV 0566 BEN (BGS), 2010 WL 3452371 (S.D. Cal. Aug. 30, 2010) (slip op.), the Southern District held that compensation plans that contained cliff vesting schedules in which awards are forfeited if employment terminates before the awards are vested did not constitute unpaid wages under the Labor Code.

Facts

Former employees of the Defendants Merrill Lynch & Co., Inc. and Merrill, Lynch, Pierce, Fenner & Smith, Inc. participated in three of Merrill Lynch’s employee compensation packages.  Id. *1. Plaintiffs alleged they were required to accept part of their wages in the form of “awards” under the plans. Id. Plaintiffs alleged the plans contain forfeiture provisions that constitute unlawful conversion and violate California’s Labor Code and Unfair Competition Law. Id. Continue reading →

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Jan 09 2011
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Verdicts

Los Angeles Superior Court Judge Awards Judgment of $3,135 in Misappropriation of Trade Secrets Case Involving Former Sales Employees

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A former employer was awarded $3,135 in compensatory damages after a Los Angeles Superior Court bench trial related to former sales employees’ alleged misappropriation of trade secrets .   LifeSource Water Systems Inc. vs. Stansfield, GC041297, 36 Trials Digest 13th 12 (Judgment Date May 4, 2009).   Plaintiff filed suit for breach of written contract, misappropriation of trade secrets, unfair competition, and interference with prospective economic advantage.  According to Trials Digest, the court issued a permanent injunction, ordered defendants to deliver all of plaintiff’s property in their possession, ordered Stansfield to pay $1,940 compensatory damages and ordered Kline to pay $1,195 compensatory damages. Continue reading →

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Jan 09 2011
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Just for Fun

Judge William Alsup Warns Litigants in Golf Club Case: “No mulligans on summary judgment or discovery will be permitted. Both sides must be ready to come out swinging.”

362.365 - My lucky golf outfit
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In Swingless Golf Club Corp. v. Taylor, No. C 08-05574 WHA, — F. Supp. 2d —-, 2010 WL 3081255 (N.D. Cal. Aug. 6, 2010), plaintiff claims patent infringement, misappropriation of trade secrets, unfair competition under Section 17200 of the California Business and Professions Code, violation of the Lanham Act, 15 U.S.C. 1125(a), and breach of contract related to the “swingless” golf club.  At the heart of the dispute is a golf club that is a:

pyrotechnic device that uses explosive charges, a wedge-shaped piston, and a trigger to blast golf balls hundreds of yards down a fairway. Designed for golfers who cannot (or would rather not) swing, this intriguing invention– which looks like a traditional golf club except that it is loaded with gunpowder . . . . Continue reading →

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Jan 09 2011
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CAFA Jurisdiction, Class Actions, Remand

Morgan Stanley Wage and Hour Class Action Remanded to San Diego Superior Court for Failure to Show Diversity or Amount in Controversy

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Judge James Lorenz faced a remand motion in Martinez v. Morgan Stanley & Co., Inc., Civil No. 09cv2937-L(JMA), 2010 WL 3123175 (S.D. Cal. Aug. 9, 2010).  The court remanded, holding that Defendants did not meet their burden of showing that it is more likely than not that the matter in controversy for the class action exceeds $5 million or that Plaintiff’s individual claims exceed $75,000.

Defendants removed this wage and hour class action from state court based on 28 U.S.C. Sections 1332 and 1441, or in the alternative, on the Class Action Fairness Act (“CAFA”), 28 U.S.C. §§ 1332(d) and 1453.  Plaintiff filed a motion to remand arguing that Defendants failed to establish the requisite diversity of citizenship and the jurisdictional amount in controversy. Continue reading →

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Jan 09 2011
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Statute of Limitations, Waiting Time Penalties

One Year Statute of Limitations Applies to Waiting Time Penalty Claim Where Wages Not Sought

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Hon. Howard R. Lloyd today issued an unpublished opinion today confirming that a one year statute of limitations pursuant to Cal. Code Civ. Proc. § 340(a) applies to a plaintiff’s claim for waiting time penalties.  Pinheiro v. ACXIOM Information Security Services, Inc., 2010 WL 3058081 (N.D. Cal. August 03, 2010) (Slip Op.)

Plaintiff argued that a three year statute of limiations applied, citing Cortez v. Purolator Air Filtration Products Co., 23 Cal.4th 163, 999 P.2d 706, 96 Cal.Rptr.2d 518 (2000), in which the plaintiff sought both unpaid wages and waiting time penalties.  The court rejected this argument and granted defendant’s motion to dismiss this claim without leave to amend.

Plaintiff Carla Pinheiro was an employee of defendant Aerotek, Inc. (Aerotek), an employment agency. She alleges that she was assigned to work as a temporary customer service representative for defendant Quest Diagnostics Clinical Laboratories, Inc. (Quest). The gravamen of Pinheiro’s complaint as to Aerotek is that Aerotek wrongfully terminated her employment (Sixth Claim for Relief) and failed to timely pay her final wages in violation of California Labor Code sections 201-203 (Seventh Claim for Relief). Plaintiff also asserts a claim against Aerotek under California Bus. & Prof.Code section 17200 (Eighth Claim for Relief) based upon the alleged failure to timely pay her final wages.

Aerotek moved to dismiss Pinheiro’s seventh and eighth claims for relief concerning the alleged failure to timely pay her final wages.

The Court found that, based upon the law as it currently stands, plaintiff’s seventh and eighth claims for relief as to Aerotek should be dismissed.

Cal. Labor Code §§ 201-203 COA

At issue was whether Pinheiro’s claim for waiting time penalties is subject to a one-year statute of limitations (Aerotek’s view) or to a three-year limitations period (Pinheiro’s position). The court held that the one-year statute of limitations under Cal.Code Civ. Proc. § 340(a) applies, and plaintiff’s seventh claim for relief therefore is time-barred. See McCoy v.Super. Ct., 157 Cal.App.4th 225, 68 Cal.Rptr.3d 483 (2008) (holding that in action seeking only waiting time penalties, and not wages, the one-year statute of limitations under Cal.Code Civ. Proc. § 340(a) applies). Cf. Ross v. U.S. Bank Nat’l Ass’n, Case No. C07-02951 SI, 2008 WL 4447713 *4 (N.D. Cal., Sept. 30, 2008) (concluding that the three-year statute of limitations period under Cal. Labor Code § 203 applied where plaintiff sought unpaid wages, as well as waiting time penalties). Plaintiff’s cited authority, Cortez v. Purolator Air Filtration Products Co., 23 Cal.4th 163, 999 P.2d 706, 96 Cal.Rptr.2d 518 (2000), in which the plaintiff sought both unpaid wages and waiting time penalties, but the Court held that this “does not compel a contrary conclusion.”

Cal. Bus. & Prof.Code § 17200 COA

The court held that remedies under California Labor Code § 203 are penalties, and not restitution, and therefore cannot be recovered under the UCL. In re Wal-Mart Stores, Inc. Wage & Hour Litig., 505 F.Supp.2d 609, 619 (N.D. Cal.2007); Tomlinson v. Indymac Bank, F.S.B., 359 F.Supp.2d 891, 895 (C.D. Cal.2005).  The court dismissed the 17200 claim as to Aerotek without leave to amend.

Alison Marie Miceli, Michael James Grace, and Graham Stephen Paul Hollis for Plaintiff.

Jonathan Morris Brenner, Caroline McIntyre, and Alison P. Danaceau for Defendants

By CHARLES H. JUNG

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Jan 09 2011
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Employee Mobility, Wrongful Termination

Employee Has Viable Tameny Claim Against New Employer for Wrongful Termination in Violation of Public Policy When Terminated by New Employer, Who Cites Alleged “Understanding” Between Old and New Employer to Honor Old Employer’s Noncompetition Agreement

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While this next case doesn’t deal directly with trade secrets, it addresses a common fact pattern in the employee mobility arena.  The Second District Court of Appeal in Silguero v. Creteguard, Inc., — Cal. Rptr. 3d —-, 2010 WL 2978222, *1 (Cal. Ct. App. 2d Dist. July 30, 2010) decided the issue of whether a terminated employee working in the area of sales has a viable claim for wrongful termination in violation of public policy under Tameny v. Atlantic Richfield Co., 27 Cal. 3d 167 (1980), against her subsequent employer when the employee’s former employer contacts the employee’s subsequent employer and informs it that the employee had signed an agreement with the former employer which prohibited the employee “from all sales activities for 18 months following either departure or termination,” and the subsequent employer terminated the employee’s employment out of “respect and understanding with colleagues in the same industry,” notwithstanding its belief that “non-compete clauses are not legally enforceable here in California .”  Silguero, 2010 WL 2978222, *1.

Citing California Business and Professions Code section 16600’s legislative declaration of California’s “settled legislative policy in favor of open competition and employee mobility” (Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 946 ( Edwards )), we conclude that the employee has a viable Tameny claim.”  Silguero, 2010 WL 2978222, *1.
The Court cited the alleged “understanding” between the old employer and the new employer to honor the old employers noncompetition agreement.  The new employer Creteguard admitted in writing that it entered into this understanding with the old employer, “although [the new employer] believe[d] that non-compete clauses are not legally enforceable here in California,” because the new employer “would like to keep the same respect and understanding with colleagues in the same industry.”

The Court reasoned that this alleged understanding is “tantamount to a no-hire agreement.” Silguero, 2010 WL 2978222, *6.  The Court concluded that such an “understanding” between the new and old employer “would be void and unenforceable under section 16600 because it ‘unfairly limit[s] the mobility of an employee’ and because [the old employer] ‘should not be ‘allowed to accomplish by indirection that which it cannot accomplish directly.’” Silguero, 2010 WL 2978222, *1 (citing VL Systems, Inc. v. Unisen, Inc., 152 Cal. App. 4th 708, 716-17 (2007).

[P]ermitting a Tameny claim against Creteguard under the circumstances of this case furthers the interest of employees in their own mobility and betterment, “‘deemed paramount to the competitive business interests of the employers, where neither the employee nor his new employer has committed any illegal act accompanying the employment change.’” (Dowell v. Biosense Webster, Inc. (2009) 179 Cal.App.4th 564, 575, quoting Diodes, Inc. v. Franzen, supra, 260 Cal.App.2d at p. 255 [in Dowell, both employees and their current employers sued a former employer to invalidate a noncompetition agreement].)  For all of the foregoing reasons, we conclude that Silguero has pleaded a viable Tameny claim against Creteguard predicated on the public policy in section 16600.

Id. *6.

The Court created a new avenue of liability for employers, who must now carefully decide how to respond to cease and desist letters from old employers.   Creteguard would almost certainly have fared better had it avoided the unnecessary editorializing in its termination letter.

By CHARLES H. JUNG

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Jan 09 2011
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Verdicts

$26 Million Verdict in Florida Trade Secrets Trial

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An Eastern District of Virginia jury returned a $26 million verdict for Florida-based mining tire design company Tire Engineering and Distribution, LLC and CEO Jordan Fishman in a trade secret case.   Plaintiffs accused the Chinese firm Shandong LingLong Rubber Co Ltd and Dubai distributor Al Dobowi Tyre Co LLC of conspiring with former Alpha Executive Sam Vance in 2005 to steal Fishman’s unique, proprietary designs for underground mining tires.  Read a news report here.  Vance failed to make an appearance.

By CHARLES H. JUNG

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