On July 13, 2020, the California Court of Appeal, First Appellate District allowed patients with severe mental illness to pursue a class action against Kaiser Foundation Health Plan for underfunding mental health care, and restricting medically necessary treatment for Kaiser patients, resulting in long waits for individual therapy, forcing them into inappropriate group treatment. The decision overturns the lower court’s ruling denying class certification of the claims brought by Susan Futterman, Acianita Lucero, and Maria Spivey.

The Court’s decision came after significant briefing by Latika Malkani and Laura Heron Weber and oral argument by Jonathan Siegel.

The Plaintiffs, Ms. Futterman, Ms. Lucero and Ms. Spivey allege that Kaiser has violated California’s Mental Health Parity Act by denying coverage for treatment to patients diagnosed with severe mental disorders. Kaiser’s system restricts individual therapy and other necessary treatment, forcing patients to wait weeks or even months for appointments, or be placed into inappropriate group therapy modalities, with devastating outcomes. They bring claims on behalf of similarly situated patients asking Kaiser to cover medically necessary treatment for patients with severe mental illness. The Court of Appeal’s decision remands the case to the lower court for reconsideration of the motion for class certification.

Susan Futterman is the widow of Fred Paroutaud, who was hospitalized and diagnosed with bipolar disorder, but was denied individual therapy and later committed suicide. Ms. Lucero was diagnosed with Major Depressive Disorder and was automatically placed in group therapy, after being told that long-term individual therapy was “not available” at Kaiser. Ms. Spivey lost her teenage daughter, Chloe Roston, to suicide. Roston suffered from mental illness for many years, but was repeatedly denied individual therapy by Kaiser, even after an attempted suicide.

Siegel LeWitter Malkani is proud to represent these deserving clients who have suffered devastating loss from Kaiser’s broken mental health care system. For more information about this case, please contact our office.

In Epic Systems Corp. v. Lewis, the Supreme Court decided that the NLRA does not protect the right of workers to engage in collective action through class-wide arbitrations, and instead, employers can compel employees to one-on-one arbitration for any workplace disputes or claims. In doing so, the Court ignored the realities of employment arbitration agreements and shifted the power squarely to employers.

Employees rarely “agree” to arbitration. Employees are often confronted with take-it-or-leave-it arbitration agreements – if the employee doesn’t sign, she doesn’t get the job. In the past, many arbitration agreements would require employees who sign the arbitration agreement to waive their right to go to court, and instead forces the employee into closed-door arbitrations. Usually the agreements include any claims – including discrimination and wage and hour claims.

As if this is not bad enough, employers have started including sections in arbitration agreements prohibiting employees from filing claims together as a class. For years, class-wide arbitrations have been an effective tool for workplace disputes – especially wage and hour claims for low-wage workers. For example, if a group of employees believes they have been misclassified or haven’t received meal and rest breaks, they have been able to band together to file a single class-wide arbitration against their employer. There is power in numbers. Where an individual employee may not have the means to hire an attorney, especially where the damages are low, a class-wide arbitration has the potential for substantial recovery and is often an attractive prospect for attorneys. In her dissent, Justice Ginsberg noted: “By joining hands in litigation, workers can spread the costs of litigation and reduce the risk of employer retaliation.” The cases before the Supreme Court challenged this practice – arguing that allowing employers to force employees into one-one-one arbitration is a violation of the right of employees to band together under the NLRA. Unfortunately, the Supreme Court disagreed and employers now have the green-light to force employees into arbitration agreements that waive class claims.

We agree with Justice Ginsberg that the Court’s decision is “egregiously wrong” and that this decision exacerbates the power imbalance between employers and employees that the NLRA was designed to correct. While this decision eviscerates an especially powerful tool for holding rogue employers accountable, our firm is committed to preserving employee rights both in court and arbitration. If you feel you have an employment claim, contact our offices today.

Jean Krasilnikoff

It is hard to even dream that FedEx would claim these folks aren’t entitled to the protections of employment status. But they did. In order to save a buck, FedEx came up with an elaborate justification to claim their employees aren’t employees.

FedEx claimed and claims that because they make these drivers buy their own trucks and scanners, pay for their own uniforms, and work whatever hours are necessary to get FedEx’s work done, the drivers aren’t employees. They claim that because they require their drivers to sign contracts saying they are independent contractors, that they are independent contractors. They claim just because they say FedEx can’t control the “manner or means” of getting the job done, regardless of what they do, that these drivers are independent contractors.

But the US Ninth Circuit Court of Appeals, in Alexander v. Fed Ex Ground Package System, 765 F.3d 981 (2014) was able to clearly distinguish between what FedEx says and what it actually does. Yes, the drivers have to buy their own trucks, but the trucks have to be exactly as required by FedEx. Yes, the drivers have to buy their own uniforms, but it has to be, well, a FedEx uniform. And FedEx says the employees have freedom to determine how to do their job, but really, they don’t. FedEx keeps tight control on exactly what these FedEx drivers do day in and day out, down to how they interact with customers and how they look.

The history of this case should make these FedEx drivers exceedingly happy that they live in the Golden State of California. This is because there were numerous class action cases against FedEx, and the courts consolidated them into multi-district litigation, where they were heard before the US district court in Illinois. There the court tossed the cases out, ruling for FedEx, that because FedEx said these drivers were independent contractors, and because FedEx claimed that the contractors had “significant entrepreneurial opportunity”, the drivers were independent contractors. On appeal, however, the Ninth Circuit held that the lower court in Illinois was wrong, under California law, explaining that traditional California law holds that if the employer has the right to control the means and methods of work, then these folks are employees. No smoke and mirrors can make it different.

There are so many instances out there where employers try to get away with providing less to their employees by calling them independent contractors. At least in California, this case is a strong strike for the rights of working people.

Jody LeWitter September 19, 2014

First, as to the bad news: Boxed in by the United States Supreme Court’s decisions on the enforceability of arbitration agreements, including in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2001), the California Supreme Court upheld the validity of class action waivers in employment arbitration agreements. The California Supreme Court overruled its previous decision in Gentry v. The Superior Court of Los Angeles, 42 Cal.4th 443 (2007) as preempted by the Federal Arbitration Act (“FAA”).

The California Supreme Court also addressed the recently developed and powerful argument that class action arbitration waivers are invalid under the National Labor Relations Act (“NLRA”), which provides workers with a right to collective organize and advocate for their rights as a group. That argument gained traction with the National Labor Relations Board (“NLRB”) in its recent decision in D.R. Horton. Inc., 357 NLRB No. 184 (2012), but unfortunately the California Supreme Court sided with the Fifth Circuit’s contrary opinion in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013). The California Supreme Court held that the NLRA was no obstacle to the applicability of the FAA to support the enforcement of class action waivers in arbitration agreements.

There is a silver lining to every cloud, and the Court’s decision in Iskanian provided one. The Court held that an employer-employee arbitration agreement cannot provide for a waiver of employees’ rights to undertake a representative action under the California Private Attorneys General Act (“PAGA”), as that would violate public policy. The Court held that the FAA did not mandate a contrary result, while explaining that “a single-claimant arbitration under the PAGA for individual penalties will not result in the penalties contemplated under the PAGA to punish and deter employer practices that violate the rights of numerous employees under the Labor Code. That plaintiff and other employees might be able to bring individual claims for Labor Code violations in separate arbitrations does not serve the purpose of the PAGA, even if an individual claim has collateral estoppel effects.” In so holding, the Court also explained that PAGA does not violate the principle of separation of power under the California Constitution.

There are several interesting things to think about moving forward after this case. As an initial matter, it remains to be seen as to whether this will result in employers inserting more arbitration agreements in employment contracts and handbooks. The reason is that, although the United States and California Supreme Courts have made it easier for employers to do so, employers still need to be careful for what they wish for. Experience has demonstrated that arbitrations are costly for the employer, and they don’t always come out the way the employer expects it to. For example, our firm has had excellent outcomes in arbitrations, including seven figure awards and awards of punitive damages.

Moreover, while Iskanian gives employers a new stick to enforce certain arbitration agreements, employees and their advocates faced with an arbitration agreement should not give up and lose hope because (1) arbitration agreements are still subject to challenge on unconscionability grounds (Iskanian did not change that), (2) PAGA provides at least some stick to enable employees to enforce their rights in “representative” actions, and (3) there are positive sides to an arbitration agreement. There is a positive side to arbitration agreements for employees because the employer generally has to pay the arbitrator’s costs if the employee wins, there is no real appeal so the employer has to pay up quickly, and the arbitration can be quicker and less expensive for the employee.

We also all need to keep tabs on whether the U.S. Supreme Court decides to hear this case to address its holdings.

July 15, 2014 Benjamin Siegel

Empire employs lots of carpet installers, and lots of them are not well educated (at least in terms of reading 11 pages of single-spaced legalese) and for many, the English in which their employment agreements are written is not their first language.

So you probably get the drift here. Empire tells its non-English speaking employees that they must sign an 11 page, single-spaced, complicated and obtuse legalese document, in order to get the job. And, they must sign pretty much all of their rights away, and it was made clear to them that there was no room for other options or changes to the contract. Oh – and this arbitration provision was buried in paragraph 36!

Mr. Samaniego signed. Later, when he determined he wasn’t being paid fairly, he sued on behalf of himself and others similarly situated (i.e. he filed a class action). Samaniego v. Empire Today LLC, ___Cal.App.4th____ (April 5, 2012).

Empire claimed Mr. Samaniego had agreed to arbitrate any claims he had against Empire. The Court of Appeals disagreed, and there is little wonder why. Empire’s agreement was a mastery of hide the ball:

1. The arbitration agreement was in the 36th paragraph;

2. The agreement to arbitrate didn’t say what the terms of the agreement were – just referred to the commercial rules of the American Arbitration Association, but did not attach them;

3. The agreement was a mind-numbing 11 page single-spaced document;

4. The agreement was incomprehensible to the average installer, and perhaps the average lawyer, chocked full of legalese. Even if an installer wanted to read it, Mr. Samaniego’s first language wasn’t English and he was far from fluent in English, and;

5. The agreement was one sided, because declaratory and injunctive claims (i.e. claims an employer might bring) could be brought in court rather than arbitration.

Arbitration agreements signed before a dispute arises – i.e. with hiring or routinely in the course of employment – just aren’t fair. Employees are taken unfair advantage of. They need a job, so they’ll sign anything, especially an incomprehensible 11 page agreement. They aren’t going to hire a lawyer to read this arbitration agreement, just like they won’t hire an accountant to read their W-4 or tax documents. They will sign what they must in order to go to work and collect a paycheck. The court made the right decision by finding this arbitration agreement unfair and unenforceable. The government should put an end to these oppressive agreements!

Jody I. LeWitter June 20, 2012

The Court of Appeals reversed the award, holding that the statistical sampling violated the bank’s due process rights.

Now the California Supreme Court has granted review of the case, presenting some hope to the class of bank employees that the Court will take a fresh look at the evidence presented at trial. In addition, all class action employees and lawyers will keep their eyes peeled for a potentially important ruling on the use of statistical evidence in a class action wage and hour case. Stay tuned!

Jody I. LeWitter May 25, 2012

In Brinker, the Court points out that, if an employee works five or more hours in a shift, the employer must do one of three things: (1) afford the employee an off duty meal period; (2) reach a voluntary agreement with an employee on a meal period waiver if one hour or less will end the shift; or (3) obtain written agreement to an on-duty meal period if circumstances permit. If it does none of the three, it is liable for premium pay.

In addition, the Court makes it clear that employers may not skirt their obligations, emphasizing that “an employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks.” The only steps an employer need not take are to “police” breaks and affirmatively ensure that no work is done.

With respect to class certification, the Court has put an abrupt halt to the disturbing trend of trial courts reaching the merits of a case at the class certification stage, before the parties have even had the opportunity to fully flesh out the evidence in a case. It clarified that a court may only look at the legal merits of a case in limited circumstances, and it reaffirmed the appropriateness of class actions in this legal area.

Lastly, the Court clarified the timing requirements for provision of meal periods, namely, that the first meal period be provided after no more than five hours of work and, for those employees who work a shift of ten hours or more, a second meal period be provided after no more than ten hours of work.

In sum, the Court clarified employees’ right to a meal period, protected class actions as a way of vindicating this right, and ensured that employers do not delay meal periods until too late in a shift.

Darin Ranahan May 9, 2012

I’m not sure what Oracle was thinking when it invited employees from other states to enjoy the sunshine in California, but then left them out in the cold when it came to the basic rights of our overtime law while working on our turf. If the courts permitted that type of conduct, wouldn’t we just be encouraging employers to import cheap labor from Montana and Utah to do our work here in California? Talk about creating sweatshops right here in the golden state.

Let’s look at Oracle’s bold practices and inability to learn a lesson. Year after year, Oracle hired “instructors” to train customers on its products. Some of these instructors lived and worked in California; some lived and worked in other states; and some lived in other states but worked part of the time in California. Oracle classified these employees as “teachers,” to make sure that these folks were exempt from overtime laws. Voila -employees worked overtime for no extra pay.

However, the employees had a better idea. They filed a class action and demanded overtime. Consequently, Oracle saw a bit of the light, and started paying its California instructors overtime under California law. Then, Oracle saw a bit more of the light, and started paying its instructors of other states overtime under federal law (the Fair Labor Standards Act, or “FLSA”)for their time spent working in states other than California. Oracle held fast on its position for paying employees from other states overtime for their time spent working in California: no overtime for this! Non-California residents thus sued for the time they spent working in California, claiming they were entitled to the protection of California law while working in California, even if they were non-residents.

What did Oracle gain for holding out on this last issue? Hopefully a good lesson that it should have settled all its claims earlier on, rather than engaging in a torturous route through the entire court system including the California Supreme Court and the federal district and appeals court.

Both the California Supreme Court, in Sullivan v. Oracle, 51 Cal.4th 1191 (2011), and the Ninth Circuit, in Sullivan v. Oracle, 662 F.3d 1265 (9th Cir. 2011), ruled for the employees. They held that California law protects employees working in California regardless of the employees’ residences in other states, and that this included the protection of California’s Unfair Business Practices Act, Ca. B & P. Section 17200 et seq.

This case demonstrates that litigating a simple issue to death is not always the wisest idea!

Jody LeWitter

April 4, 2012

Employer D.R. Horton required that its employees enter into an arbitration agreement as a condition of employment. The agreement not only mandated that employees resolve their disputes with their employer through the arbitration process, but that they do so on an individual basis, directly banishing class actions of any kind or nature, with one swoop of the pen.

An employee of D.R. Horton claimed that D.R. misclassified its employees as exempt under the Fair Labor Standards Act (“FLSA”) and sought to right this wrong through a class action. When D.R. Horton objected to the class action on the basis of its mandatory arbitration agreement, the employee filed an unfair labor practice charge with the NLRB, claiming that D.R. Horton’s agreement violated employees’ right to engage in concerted action pursuant to Section 7 of the National Labor Relations Act (“NLRA”). D.R. Horton responded that the Federal Arbitration Act’s (“FAA”) protection of the arbitration process basically trumped the NLRA’s protection of the employee’s right to organize.

The NLRB struck a blow for the employees, holding that an employer cannot bar employees from collective or class actions. This will not be the last word on this important subject. It can be expected that D.R. Horton or other employers will take this matter up in the courts, and claim that AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011) and the FAA trump the NLRA. Employers can already generally unfairly muscle employees into giving up their right to a jury trial; to require employees to give up collective actions in addition, is untenable. We hope that the courts side with the NLRB and the employees, and permit employees to show their collective muscle in class actions. Let’s also hope that a fair legislative fix is on its way!

Jody LeWitter

March 28, 2012

Class arbitration waivers are at the heart of the US Supreme Court’s decision in Concepcion. At issue in the case was a rule, established by the California Supreme Court in a 2005 opinion, Discover Bank v. Superior Court (2005) 36 Cal.4th 148, that class arbitration waivers in mandatory pre-dispute arbitration agreements are per se unconscionable, meaning that even if someone signed such an agreement, a court would not enforce it.

The plaintiffs in Concepcion had been charged $30.22 in sales tax after being provided a supposedly free phone from AT&T. They filed a class action against AT&T for false advertising and fraud by charging sales tax on phones it advertised as free.

AT&T sought to move the class action into arbitration on the basis of a mandatory pre-dispute arbitration agreement requiring that claims be brought in the parties’ individual capacities, prohibiting class proceedings. Both the trial court and the Ninth Circuit held that, based on the California Supreme Court’s Discover Bank decision, the arbitration agreement was unconscionable, meaning that they would not enforce it, allowing the class action to proceed through the court system.

In its opinion, authored by Justice Scalia, the Supreme Court overturned the lower courts’ decisions. The Court held that California’s Discover Bank rule refusing to enforce class arbitration waivers in mandatory pre-dispute arbitration agreements was preempted by the Federal Arbitration Act.

States can still hold class waivers in arbitration agreements unconscionable, and thereby unenforceable, if they go through the normal steps required in an unconscionability analysis of contracts. While this is more burdensome than the blanket Discovery Bank rule overturned by Concepcion, it can be done. The California Supreme Court, in its Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 decision, articulated several factors that go into how a court is to determine unconscionability beyond traditional unconscionability analysis, including (1) neutral arbitrators; (2) more than minimal discovery; (3) a written decision by the arbitrator; (4) all types of relief otherwise available in court; and (5) not requiring employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration process.

Have you signed an arbitration agreement? We recommend consulting a lawyer to determine how any arbitration agreements may affect your claim. Contact us for a consultation. For more information, please consult our article on mandatory pre-dispute arbitration agreements and the Concepcion case here.

Darin Ranahan July 6, 2011