Tag Archives: Los Angeles County Superior Court

Second District Orders Published Serpa v. California Surety Investigations, Inc.

Old crest of the club.

Old crest of the club. (Photo credit: Wikipedia)

Today, the Second District ordered published Serpa v. California Surety Investigations, Inc., et al., No. B237363, __ Cal. App. 4th __ (filed Mar. 21, 2013, modified Apr. 19, 2013).  At the trial court level, the court denied defendants’  motion to compel arbitration, finding the agreement to arbitrate lacked mutuality.  Defendants argued that the requisite mutuality was provided by the bilateral arbitration provisions in the employee handbook, incorporated by reference into the arbitration agreement.  The trial court rejected this argument because defendant could change the handbook at its sole discretion and without notice.  The Second District reversed.

The motion to compel arbitration was based on three documents: (1) “Acknowledgment of Receipt of Arbitration and Agreement to Arbitrate”; (2) “Acknowledgment of Receipt of Employee Handbook”; and (3) a copy of the employee handbook.  Plaintiff contended the agreement to arbitrate is one-sided because it requires her to submit claims against her employer to arbitration but does not require her employer to arbitrate its claims against her: “I understand and agree that if my employment is terminated or my employment status is otherwise changed or any other dispute arises concerning my employment . . . , I will submit any such dispute exclusively to binding arbitration.”

The Court of Appeal agreed that if “that the full extent of the agreement, we would likely agree it lacked mutuality because it requires Serpa to submit to arbitration ‘any such disputes’ involving her employment without imposing a similar obligation on CSI.”

However, because the agreement incorporated the arbitration policy in the employee handbook, the Court concluded that this “salvages the agreement by establishing an unmistakable mutual obligation on the part of CSI and Serpa to arbitrate ‘any dispute’ arising out of her employment.”  Plaintiff argued that the while the arbitration policy in the handbook establishes a bilateral obligation to arbitrate, she insisted that the mutual obligation is illusory because, the employer is authorized to alter the terms of any policy contained in the handbook at its sole discretion and without notice.  The Court disagreed, reasoning that the right to alter the terms was limited by the covenant of good faith and fair dealing implied in every contract.

The implied covenant of good faith prevents one contracting party from “unfairly frustrating the other party‟s right to receive the benefits of the agreement actually made.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349; accord, American Express Bank, FSB v. Kayatta (2010) 190 Cal.App.4th 563, 570.) Thus, it has long been the rule that a provision in an agreement permitting one party to modify contract terms does not, standing alone, render a contract illusory because the party with that authority may not change the agreement in such a manner as to frustrate the purpose of the contract. (See Perdue v. Crocker National Bank (1985) 38 Cal.3d 913, 923 [“„where a contract confers on one party a discretionary power affecting the rights of the other, a duty is imposed to exercise that discretion in good faith and in accordance with fair dealing‟”]; see generally Asmus v. Pacific Bell (2000) 23 Cal.4th 1, 16 [employer‟s right to unilaterally modify employment agreement does not make agreement illusory]; Badie v. Bank of America (1998) 67 Cal.App.4th 779, 787-788 [contracting party with unilateral right to modify contract does not have “carte blanche to make any kind of change whatsoever”; unilateral right to modify, when limited by the implied covenant of good faith and fair dealing, requires the party holding the power to affect the other party‟s rights to exercise it in a manner consistent with the reasonable contemplation of the parties at the time of the contract].) Application of the implied covenant of good faith and fair dealing is no different in the arbitration context. In 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199 (24 Hour Fitness), a former employee brought an action against the company, doing business as 24 Hour Nautilus, for sexual harassment and related torts. The employer moved to compel arbitration based on an arbitration policy in its employee handbook, which also contained a provision allowing the company to amend the handbook at its sole discretion. The 24 Hour Fitness court rejected the plaintiff‟s contention the unilateral right-to-amend provision made the arbitration agreement illusory and thus unconscionable. Observing the parties to an arbitration agreement, like any contract, are bound by the contract‟s implied covenant of good faith, the court explained, “Nautilus‟s discretionary power to modify the terms of the personnel handbook on [written] notice indisputably carries with it the duty to exercise that right fairly and in good faith. [Citation.] So construed, the modification provision does not render the contract illusory.” (Id. at p. 1214.)

Judges & Attorneys

Presiding Justice Perluss delivered the opinion for the court, with Associate Justices Woods and Jackson concurring.

Appeal from an order of the Superior Court of Los Angeles County, Judge Ruth Ann Kwan.

Paul, Plevin, Sullivan & Connaughton, Fred M. Plevin, Jeffrey P. Ames and Matthew R. Jedreski for Defendants and Appellants, California Surety Investigations, Inc., Two Jinn, Inc., Aladdin Bail Bonds and Peter Holdsworth.

Stevens, Carlberg & McMillan and Daniel P. Stevens for Plaintiff and Respondent Valerie Serpa.

By CHARLES H. JUNG

Advertisements
Tagged , , , , , , , , , , , , , , , , , ,

Employers Must Pay Piece Rate Workers Separate Hourly Compensation, Even Where Employer Maintains Minimum Wage Floor

Mercedes-Benz Motor Shop

Mercedes-Benz Motor Shop (Photo credit: Visionstyler Press)

The Second District published today Gonzalez v. Downtown LA Motors, LP, et al., Case No. B235292, __ Cal. App. 4th __ (2d Dist. Mar. 6, 2013).  Gonzalez is a wage and hour class action where the question presented was whether California’s minimum wage law requires an employer that compensates its automotive service technicians on a “piece-rate” basis for repair work must also pay those technicians a separate hourly minimum wage for time spent during their work shifts waiting for vehicles to repair or performing other non-repair tasks directed by the employer.  Defendant automobile dealership contended it was not required to pay the technicians a separate hourly minimum wage for such time because it ensured that a technician’s total compensation for a pay period never fell below what the employer refers to as the “minimum wage floor” — the total number of hours the technician was at work during the pay period (including hours spent waiting for repair work or performing non-repair tasks), multiplied by the applicable minimum wage rate.  The employer supplemented pay, if necessary, to cover any shortfall.

The Court of Appeal concluded that class members were entitled to separate hourly compensation for time spent waiting for repair work or performing other non-repair tasks directed by the employer during their work shifts, as well as penalties under Labor Code section 203, subdivision (a).  You can read more about the Gonzalez opinion here.

Judges and Attorneys

Associate Justice Victoria M. Chavez wrote the opinion for the court, with Presiding Justice Roger W. Boren and Associate Justice Judith Ashmann-Gerst concurring.  Appeal was taken from a judgment of Hon. Mary H. Strobel of the Superior Court of Los Angeles County.

Dickstein Shapiro, Arthur F. Silbergeld and Jennifer A. Awrey; Greines, Martin, Stein & Richland, Robin Meadow, Cynthia E. Tobisman, and Alana H. Rotter for Defendants and Appellants.

Gartenberg Gelfand Hayton & Selden and Aaron C. Gundzik; Law Offices of Neal J. Fialkow and Neal J. Fialkow for Plaintiffs and Respondents.

Curiale Hirschfeld Kraemer LLP and Felicia R. Reid for National Automobile Dealers Association as Amicus Curiae on behalf of Defendants and Appellants.

Nossaman LLP and John T. Kennedy for California Automotive Business Coalition as Amicus Curiae on behalf of Defendants and Appellants.

Fine, Boggs & Perkins LLP, John P. Boggs and David J. Reese for California New Car Dealers Association and Alliance of Automobile Manufacturers as Amicus Curiae on behalf of Defendants and Appellants.

Altshuler Berzon LLP, Eve H. Cervantez and Eileen B. Goldsmith for California Employment Lawyers Association as Amicus Curiae on behalf of Plaintiffs and Respondents.

By CHARLES H. JUNG

Tagged , , , , , , , , , , ,

Press Quotes About Analysis of Compton v. Superior Court

Armendariz: Besta Berri 2009 4906

Armendariz: Besta Berri 2009 4906 (Photo credit: dantzan)

The author’s analysis of the Compton v. Superior Court, No. B236669, — Cal.Rptr.3d —-, 2013 WL 1120619 (2d Dist. Mar 19, 2013), was quoted in legal press today:

“In both cases, the First and Second districts applied Armendariz and invalidated arbitration agreements for lack of mutuality,” said Charles Jung, a Nassiri & Jung LLP attorney. “At least as far as California courts are concerned, Armendariz is alive and well, and it appears that this is going to continue to be the case until the California Supreme Court overrules it.”

In light of the latest ruling, plaintiffs and their attorneys looking to defeat mandatory arbitration agreements will keep an eagle eye out for any type of one-sidedness, according to Jung.

“The Compton ruling creates an avenue for employees to argue that mandatory agreements are unlawfully one-sided and that under Armendariz, they should be stricken,” he said. “For employers, it suggests the way to make arbitration agreements enforceable is by making them simple and even-handed. Employers can’t have their cake and eat it too.”

“The California Supreme Court really has its work cut out for it,” Jung said. “The challenge for the California Supreme Court is to try to preserve what it can of California’s public policy, yet not fall afoul of and directly contradict or simply ignore the U.S. Supreme Court. It’s a very tricky position for the court to be in.”

Tagged , , , , , , , , , , ,

Second District Holds That Hotel Service Charge Reform Ordinance Is Not Preempted by Labor Code’s Tip Provisions

Cute toiletries at Four Points by Sheraton
Image by drcw via Flickr

Yesterday, the Second District issued an opinion addressing the validity of the Hotel Service Charge Reform Ordinance (Ordinance) enacted by the City of Los Angeles, which requires non-unionized hotels in the Century Corridor near Los Angeles International Airport (LAX) to pass along mandatory service charges to workers who render the services for which the charges have been collected.  Garcia v. Four Points Sheraton LAX, et al., Nos. B210720, B210716, B210719, B210726, B210730, — Cal. Rptr. 3d —-, 2010 WL 3491954 (Cal. Ct. App. 2d Dist. Sept. 8, 2010). Continue reading

Tagged , , , , , , ,

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

Water Filtration
Image by QuintanaRoo via Flickr

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

Tagged , , , , , , ,
Advertisements