Court of Appeal: Statutory PDL Maximum Isn't

In California, employees disabled by pregnancy are entitled to up to four months of job-protected leave during any period in which they are disabled.  The leave has not length of service requirement.  There is no employer job-site requirement either.  And those employees eligible for California Family Rights Act leave may have up to 12 weeks of that for baby bonding.   The California Family Rights Act does not include pregnancy disability as a "serious health condition."   So, time under that law does not run during pregnancy disability.  Get it?  If not, don't feel like you're the Lone Ranger. It's one of California's most confusing sets of laws.

So, what happens when an employee is disabled by pregnancy and uses up all four months of PDL before delivering the baby, or before  she is able to return to work?  We know the 12 weeeks of FMLA leave (if employee is eligible) are exhausted, because FMLA does run during pregnancy disability.  The CFRA time did not start to run yet unless the employer and employee agree, because pregnancy disability is not a covered condition under CFRA.  Can it be that a worker in California could run out of medical leave and be denied reinstatement?

Nah. The PDL statute's four months of leave, and the potential for seven months of combined PDL/CFRA, are not the last word on leaves for those with long periods of pregnancy disability.  How can this be?

Swissport gave its employee, Ana Sanchez, nineteen weeks of leave. That's all the four months of PDL and then tacked on her unused vacation time.  But Fuentes had not yet given birth.  She was due in October. But, her leave exhausted in July, Swissport terminated her employment. Sanchez sued, claiming, among other things, that Swissport owed her more leave as a form of "reasonable accommodation" under California's anti-disability discrimination provisions contained in the Fair Employment and Housing Act.  The trial court dismissed her case because Swissport had provided her with all statutory leave to which she was entitled.

Leave in excess of statute, however, can be a form of "reasonable accommodation" under disability discrimination law.  Under California law it has to be reasonably definite in duration and effective, meaning that it is likely that at the end of a reasonably definite leave, the employee will be able to perform her essential job functions, with or without accommodation.

So, stautes collide; judges have to sort out the wreckage.  Here, the Court of Appeal decided that the limiting language in the PDL statute does not "supplant" the general obligation to grant reasonable accommodation to an employee with a disability.  That also means that the employee is not entitled to indefinite leave, or additional leave that would cause undue hardship.  In this case, however, the employer discharged the employee for exceeding four months of leave, without any "interactive process" or attempt to accommodate.

The bottom line, then, is that most employees disabled by pregnancy will be entitled to leave until they recover from childbirth, unless the period of leave sought is indefinite, or undue hardship would result.

This case is Sanchez v. Swissport and the opinion is here.

Dukes v. Walmart Fallout

Eveyone knows about the Dukes v. Walmart case (post is here). Well, Ellis v. Costco is another "big box" retailer case, in which female managers challenged Costco's promotion practices.

According to the opinion, Costco does not document or set concrete standards re promotion to General Manager and it always promotes from within the ranks of its AGMs.  Several female Costco employees brought a nationwide class action, claiming Costco's promotion practices discriminated against women.

The Ninth Circuit reversed the district court's grant of class certification.  The opinion finds many errors with the district court's reasoning, mainly because of Dukes' interpretation of the class action standards in federal court (Rule 23).   For example, the district court failed to conduct a "rigorous analysis" regarding whether a common question of law or fact would affect the entire proposed class's rights to recovery. The court of appeals also held the district court did not consider whether individual circumstances rendered the plaintiffs incapable of proving the "typicality" element.  Costco put forward evidence regarding the named plaintiffs that appeared to explain individualized reasons why each plaintiff did not succeed.

The court of appeals also rejected certification under Rule 23(b), which permits class certification in cases where the relief sought is primarily an injunction rather than damages.  Again, relying on Dukes, the court of appeals noted Walmart precludes certification under Rule 23(b)(2) when each class member would be entitled to an award of money damages. Moreover, former employees cannot bring claims for injunctive relief, as injunctions operate prospectively and former employees will have no stake in them.

There is more. But this case places into focus that Dukes will have a profound effect on large employment law class actions in federal court. It remains to be seen how California courts deal with Dukes, but the state's courts do rely on federal law when evaluating class actions.

The case is Ellis v. Costco and the opinion is here.

Supreme Court Rules on Dukes v. Walmart

The U.S. Supreme Court issues its opinion in Dukes v. Walmart.  Here is the opinion.

Wal-Mart, the country's largest employer, faces the largest employment law class action ever.  We've posted about it a number of times as it made its way through the courts.  The U.S. Supreme Court decided to review the case to see if the Federal Rules of Civil Procedure authorizes a class action under the facts presented.  

The facts that give rise to the discrimination claims are as follows:

Pay and promotion decisions at Wal-Mart are generally committed to local managers’ broad discretion, which is exercised “in a largely subjective manner.” 222 F. R. D. 137, 145 (ND Cal. 2004). Local store managers may increase the wages of hourly employees (within limits) with only limited corporate oversight. As for salaried employees, such as store managers and their deputies, higher corporate authorities have discretion to set their pay within preestablished ranges. 

Promotions work in a similar fashion. Wal-Mart permits store managers to apply their own subjective criteria when selecting candidates as “support managers,” which isthe first step on the path to management. Admission to Wal-Mart’s management training program, however, does require that a candidate meet certain objective criteria,including an above-average performance rating, at least one year’s tenure in the applicant’s current position, and a willingness to relocate. But except for those requirements, regional and district managers have discretion to use their own judgment when selecting candidates for management training. Promotion to higher office—e.g., assistant manager, co-manager, or store manager—is similarly at the discretion of the employee’s superiors after prescribed objective factors are satisfied.

Thus, there is no "corporate wide" policy of intentional or even unintentional discrimination. Rather, the plaintiffs asserted the following theory regarding class-wide discrimination on behalf of hundreds of thousands of store level employees and supervisors:

local managers’ discretion over pay and promotions is exercised disproportionately in favor of men, leading to anunlawful disparate impact on female employees, see 42 U. S. C. §2000e–2(k). And, respondents say, because Wal-Mart is aware of this effect, its refusal to cabin its managers’ authority amounts to disparate treatment, see §2000e–2(a). . . . [T}the discrimination to which they have been subjected is common to all Wal-Mart’s female employees. The basic theory of their case is that a strong and uniform “corporate culture” permits bias against women to infect, perhaps subconsciously, the discretionary decisionmaking of each one of Wal-Mart’s thousands of managers—thereby making every woman at the company the victim of one common discriminatory practice.

The plaintiffs sought injunctive relief, monetary relief that is considered "equitable" such as back pay, and punitive damages. They did not seek individual compensatory damages for emotional distress or front pay, because doing so would be unauthorized by Federal Rule of Civil Procedure 23.

Federal Rule of Civil Procedure 23,  contains a number of requirements.  The plaintiff must satisfy all of the 23(a) provisions:

“(1) the class is so numerous that joinder of all members is impracticable,“(2) there are questions of law or fact common to the class, “(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and “(4) the representative parties will fairly and adequately protect the interests of the class”

The Supreme Court held that there was insufficient common law or fact questions.  5-4, the Court explained what "common questions of law or fact" means:

Commonality requires the plaintiff to demonstrate that the class members “have suffered the same injury,” Falcon, supra, at 157. This does not mean merely that they have all suffered a violation of the same provision of law. Title VII, for example, can be violated in many ways—by intentional discrimination, or by hiring and promotion criteria that result in disparate impact, and by the use of these practices on the part of many different superiors in a single company. Quite obviously,the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwideresolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.

The  Court, 5-4, squarely rejected that a common policy of decentralized decisions can support a class action where the standard requries proof of common issues of fact:

The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of allowing discretion by local supervisors over employment matters.On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices.

To sustain a class action under the federal rules, the plaintiff must establish one of the elements under Rule 23(b).  The plaintiffs in Dukes relied on Rule 23(b)(2):

Rule 23(b)(2) allows class treatment when “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” 

Therefore, Dukes did not rely on (b)(3), which is the familiar standard permitting damages when "common issues" predominate.  This is the basis for most class actions seeking money.  Unlike (b)(2), classes under (b)(3) are entitled to "opt out," and must receive adequate notice.  Rule 23(b)(2) is more concerned with injunctive and declaratory relief.

The question was whether the monetary relief that the plaintiffs sought was authorized under  Rule 23(b)(2). The Court (9-0) held that it was not:

Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class. It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant.

The Supreme Court held that "backpay" was not authorized generally by Rule 23(b)(2), and the only monetary relief available would be when it was intertwined with a particular injunction.  In Dukes' case, the injunction would not be common to each member of the class, anyway, so there could be no common monetary relief either.

So, we'll have an article, and you'll be hearing a lot about this case in the coming days.  I hope this brief summary was helpful.  It will result in less blockbuster class actions in federal court.  However, it does not necessarily mean that smaller class actions will be limited when there is a common practice causing a common injury.

Ninth Circuit Explains "BFOQ" Defense in Sex Discrimination Case

Title VII of the Civil Rights Act of 1964 prohibits discrimination based on sex and other criteria. But there are some defenses to discrimination. One of these is the "BFOQ" or bona fide occupational qualification.

As the court of appeals explained in Breiner v. Nevada Dept. of Corrections, the BFOQ defense is "an 'extremely narrow exception to the general prohibition of discrimination on the basis of sex' that may be invoked 'only when the essence of the business operation would be undermined' by hiring individuals of both sexes."

So, the Nevada prison system was beset by a number of instances of male corrections officers engaging in sexual conduct with female inmates. A guard impregnated an inmate, which came to the attention of administration. The inmates purposely traded favors for better treatment.

Nevada's response, in part, was to exclude males from certain jobs, including "Corrections Lieutenant" at women's prisons. The thought was that hiring only female lieutenants would cut down corruption caused by female inmates' solicitations. Some male corrections officers sued, saying they were denied promotional opportunities at the female prisons.

The Ninth Circuit reversed the prison systems' summary judgment victory. The court did not believe that Nevada adequately supported its justification for discriminating against male candidates for hiring at women's prisons.

This opinion explains in detail the BFOQ defense and the employer's difficulty proving it. Much of the opinion focuses on prison cases, but the BFOQ defense and its burdens will be applicable to all businesses seeking to establish a sufficient justification for hiring women or men exclusively in a particular setting.

The case is Breiner v. Department of Corrections and the opinion is here.