Justia California Court of Appeals Opinion Summaries

Several individuals who were employed by the City and County of San Francisco and were at least 40 years old when hired brought a class action lawsuit alleging that the City’s method for calculating disability retirement benefits under its retirement system discriminated against employees based on age. The system employs two formulas; Formula 1 is used if it yields a benefit exceeding a percentage threshold, while Formula 2 is used if the threshold is not met. Plaintiffs argued that Formula 2, which imputes years of service until age 60, resulted in lower benefits for those who entered the retirement system at age 40 or older, in violation of the California Fair Employment and Housing Act (FEHA).After initial proceedings in the San Francisco City and County Superior Court—including a demurrer sustained on statute of limitations grounds and subsequent reversal by the Court of Appeal—the plaintiffs filed an amended complaint asserting FEHA claims for disparate treatment and disparate impact, as well as claims for declaratory relief, breach of contract, and equal protection violations. The trial court certified a class and denied summary judgment due to triable issues of fact. A bench trial followed, where both parties presented expert testimony on whether Formula 2 disparately impacted older employees.The Court of Appeal of the State of California, First Appellate District, Division Four, reviewed the trial court’s findings. It affirmed the judgment, holding that plaintiffs failed to prove intentional age discrimination or disparate impact under FEHA. The court found that Formula 2 was motivated by pension status and credited years of service, not by age, and that plaintiffs’ evidence was insufficient as it was based on hypothetical calculations rather than actual data. The trial court’s denial of plaintiffs’ request to amend their complaint after trial was also upheld, as any alleged error was not reversible on the record. The judgment in favor of the City was affirmed. View "Carroll v. City and County of San Francisco" on Justia Law

Jessica Garcia and other former employees brought a class action against The Merchant of Tennis, Inc., alleging failure to pay wages and other employment violations under California and federal law. In response, Merchant entered into approximately 954 individual settlement agreements (ISAs) with current and former employees, providing cash payments in exchange for waivers of their claims. Garcia, who had not signed an ISA, sought class certification and also moved to invalidate the ISAs, arguing that Merchant had obtained them through fraud and coercion, such as misrepresenting the scope of litigation and the claims being released.The Superior Court of San Bernardino County partially granted Garcia’s motion, finding the ISAs voidable at the election of each settling putative class member. The court ordered that curative notices be sent to those who had signed ISAs, allowing them to revoke their agreements and join the class action. However, the parties could not agree on the notice’s language, specifically whether it should inform class members that they might be required to repay the settlement amount if Merchant prevailed in the action. The trial court ruled that the notice did not need to include such repayment language, reasoning that federal cases suggested repayment was not required before joining the suit and that repayment could be treated as an offset to any judgment.The Court of Appeal of the State of California, Fourth Appellate District, Division Two reviewed the trial court’s order. It held that under California Civil Code sections 1689, 1691, and 1693, class members who rescind their ISAs may be required to repay Merchant the consideration received if Merchant prevails, but such repayment can be delayed until the conclusion of litigation. The trial court retains discretion to adjust equities between the parties at judgment. The writ of mandate was granted, directing the trial court to reconsider the curative notice in accordance with these principles. View "The Merchant of Tennis v. Superior Ct." on Justia Law

A former hourly, nonexempt employee of a large lumber manufacturer filed a class action in October 2018 alleging wage and hour violations on behalf of eight classes of present and former employees. Many employees had signed arbitration agreements that precluded class actions and required arbitration of employment-related disputes, but neither the named plaintiff nor other named plaintiffs were signatories. Throughout several years of litigation, the employer did not identify signatory employees or produce the signed arbitration agreements, despite being ordered to do so. The employer participated in extensive discovery and litigation regarding all putative class members, including those who had signed the agreements.The Superior Court of Shasta County reviewed the case and, after extensive discovery disputes, granted class certification for eight classes in November 2022. Following class certification, the employer produced over 3,000 signed arbitration agreements and promptly moved to compel arbitration for class members who had signed the agreements. The plaintiffs opposed this, arguing the employer had waived its right to compel arbitration due to its prior litigation conduct, including failure to produce agreements and treating signatory employees as class members throughout discovery. The trial court denied the employer’s motion to compel arbitration, finding waiver under the St. Agnes test, and granted sanctions precluding the employer from presenting evidence of the arbitration agreements or arguing that class members had signed them.Upon appeal, the Court of Appeal of the State of California, Third Appellate District, affirmed the order denying the motion to compel arbitration and dismissed the appeal from the sanctions order. The main holding was that the employer had waived its contractual right to compel arbitration by conduct that was inconsistent with an intent to arbitrate, including withholding the agreements and treating signatory employees as class members, as established by clear and convincing evidence. The court dismissed the appeal regarding sanctions for lack of appellate jurisdiction. View "Sierra Pacific Industries Wage and Hour Cases" on Justia Law

The plaintiff, who worked as a truck driver for the defendants for approximately nine months in 2018, brought claims alleging that the defendants failed to provide required meal and rest breaks, failed to reimburse necessary work-related expenses, and violated California’s unfair competition law. The plaintiff also filed a representative claim for civil penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA), all arising from his employment as a driver.The Superior Court of Sutter County denied the plaintiff’s motion for class certification on the meal break, rest break, expense reimbursement, and unfair competition claims. In particular, the court found that the plaintiff failed to present substantial evidence of a common policy of discouraging breaks or of a community of interest among the proposed class members. The court relied on declarations from other drivers indicating they were not discouraged from taking breaks and noting variability in their experiences. The court also granted the defendants’ motion to strike the PAGA claim on manageability grounds, reasoning that adjudicating the claim would require individual testimony from 75 drivers and would be unmanageable.The California Court of Appeal, Third Appellate District, affirmed in part and reversed in part. It affirmed the denial of class certification for the rest break and expense reimbursement claims, finding insufficient evidence of commonality. However, it reversed the denial of class certification for the meal break and derivative unfair competition claims, holding that the trial court failed to apply the burden-shifting framework required by Donohue v. AMN Services, LLC when time records show missed or unrecorded meal breaks. Additionally, the appellate court reversed the order striking the PAGA claim, holding that trial courts lack inherent authority to strike PAGA claims solely based on manageability concerns, as clarified in Estrada v. Royalty Carpet Mills, Inc. The case was remanded for further proceedings, including consideration of whether the PAGA claim is preempted by federal law. View "Dieves v. Butte Sand Trucking Co." on Justia Law

A former hourly employee brought a class action lawsuit against his former employer, a large wood products company, alleging various wage and hour violations under California law. The proposed classes included both employees who had signed arbitration agreements and those who had not. While some nonexempt employees had signed arbitration agreements requiring individual arbitration and waiving class actions, the named plaintiffs had not. The employer did not initially assert arbitration as a defense and, when ordered by the court to produce copies of signed arbitration agreements for putative class members, failed to do so for several years.During the course of discovery in the Superior Court of Shasta County, the employer repeatedly resisted requests to identify or produce arbitration agreements for employees who had signed them, leading to multiple discovery sanctions. The employer participated in extensive discovery and mediation involving employees who had signed arbitration agreements, without distinguishing them from other putative class members. Only after class certification did the employer finally produce thousands of signed arbitration agreements and immediately moved to compel arbitration for those employees. Plaintiffs opposed, arguing the employer had waived its right to arbitrate by years of litigation conduct inconsistent with an intent to arbitrate, and sought evidentiary and issue sanctions for delayed production.The California Court of Appeal, Third Appellate District, reviewed the case. Applying the California Supreme Court’s standard from Quach v. California Commerce Club, Inc., the appellate court held that the employer waived its right to compel arbitration by clear and convincing evidence. The employer’s prolonged failure to produce arbitration agreements and its conduct throughout litigation was inconsistent with an intention to enforce arbitration. The order denying the motion to compel arbitration was affirmed, and the appeal from the order granting evidentiary and issue sanctions was dismissed as nonappealable. View "Sierra Pacific Industries Wage and Hour Cases" on Justia Law

The case concerns challenges to groundwater replenishment charges imposed by a water district in a desert region where groundwater is the main source of potable water. The water district operates three areas of benefit (AOBs) and levies replenishment charges on customers who pump significant groundwater. Domestic customers do not pay these charges directly, but their payments for drinking water are allocated to the replenishment funds through the district’s enterprise fund system. Plaintiffs, including a taxpayer association, alleged that the replenishment charges were unconstitutionally structured, resulting in higher rates for certain AOBs and unfair subsidies for others, benefitting large agricultural businesses.The litigation began with a combined petition and class action in the Superior Court of Riverside County, which was dismissed because the court found the validation statutes applied and the statute of limitations had expired. Subsequent reverse validation actions for later fiscal years were timely filed and consolidated. The Superior Court, in rulings by two judges, found the replenishment charges to be unconstitutional taxes because they did not satisfy the requirements of California Constitution Article XIII C, Section 1, subdivision (e)(2). Specifically, the court found that the district failed to show the allocation of replenishment costs bore a fair or reasonable relationship to the burdens or benefits received by each AOB, and thus the charges were not exempt from being classified as taxes. The court awarded substantial refunds to affected ratepayers and enjoined the district from imposing similar unconstitutional charges in the future.The California Court of Appeal, Fourth Appellate District, Division Two, reviewed both the district’s appeal of the remedies and liability findings and the taxpayer association’s cross-appeal on procedural grounds. The appellate court affirmed in full, holding that the replenishment charges were unconstitutional, the remedies were proper, and that the validation statutes applied to these charges, thus barring untimely claims for earlier years. The appellate court also found no error in the trial court’s grant of refund and injunctive relief. View "Howard Jarvis Taxpayers Assn. v. Coachella Valley Water Dist." on Justia Law

Several employees of the City and County of San Francisco who joined the city’s retirement system at age 40 or older and later retired due to disability challenged the method used to calculate their disability retirement benefits. The city’s retirement system uses two formulas: Formula 1, which provides a higher benefit if certain thresholds are met, and Formula 2, which imputes service years until age 60 but caps the benefit at a percentage of final compensation. Plaintiffs argued that Formula 2 discriminates against employees who enter the system at age 40 or above, in violation of the California Fair Employment and Housing Act (FEHA).Initially, the San Francisco City and County Superior Court sustained the city’s demurrer, finding the plaintiffs had not timely filed an administrative charge. The California Court of Appeal reversed that decision, allowing the case to proceed. After class certification and cross-motions for summary judgment, the trial court found triable issues and held a bench trial. At trial, plaintiffs presented expert testimony based on hypothetical calculations, while the city’s expert criticized the lack of actual data analysis and highlighted factors such as breaks in service and purchased credits.The California Court of Appeal, First Appellate District, Division Four, reviewed the trial court’s post-trial decision. The appellate court affirmed the trial court’s judgment, holding that the plaintiffs failed to prove intentional age discrimination or disparate impact under FEHA. The court found substantial evidence that Formula 2 was motivated by pension status and credited years of service, not age. The plaintiffs’ evidence was insufficient because it relied on hypotheticals rather than actual data showing a disproportionate adverse effect on the protected group. The appellate court also affirmed the denial of leave to amend the complaint, finding no reversible error. The judgment in favor of the city was affirmed. View "Carroll v. City & County of S.F." on Justia Law

Cocoa AJ Holdings, LLC is the developer of a mixed-use condominium project in San Francisco known as GS Heritage Place, which includes both timeshare and whole residential units. Stephen Schneider owns a timeshare interest in one of the fractional units and has voting rights in the homeowners association. In 2018, Schneider filed a class action lawsuit against Cocoa and others, alleging improper management practices, including the use of fractional units as hotel rooms and misallocation of expenses. The parties settled that lawsuit in 2020, with Schneider agreeing not to disparage Cocoa or solicit further claims against it, and to cooperate constructively in future dealings.In 2022, Schneider initiated another lawsuit against Cocoa. In response, Cocoa filed a cross-complaint against Schneider, alleging intentional interference with prospective economic advantage, breach of contract (the settlement agreement), unjust enrichment, and defamation. Cocoa claimed Schneider engaged in a campaign to prevent the sale of unsold units as whole units, formed unofficial owner groups, made disparaging statements, and threatened litigation, all of which allegedly violated the prior settlement agreement and harmed Cocoa’s economic interests.Schneider moved to strike the cross-complaint under California’s anti-SLAPP statute (Code of Civil Procedure section 425.16), arguing that Cocoa’s claims arose from his protected activities—namely, petitioning the courts and speaking on matters of public interest related to association management. The Superior Court of the City and County of San Francisco granted Schneider’s motion, finding that all claims in the cross-complaint arose from protected activity and that Cocoa failed to show a probability of prevailing on the merits.The California Court of Appeal, First Appellate District, Division Three, affirmed the trial court’s order. The court held that Cocoa’s claims were based on Schneider’s protected litigation and association management activities, and that Cocoa did not establish a likelihood of success on any of its claims. View "Cocoa AJ Holdings, LLC v. Schneider" on Justia Law

The City of Los Angeles implemented the recycLA program in 2017, establishing exclusive franchise agreements with private waste haulers to provide waste collection services for commercial and multi-unit residential properties. Under these agreements, haulers paid the City a percentage of their gross receipts as a franchise fee. Several property owners and tenants who paid for waste hauling services under this system filed a consolidated class action against the City, alleging that the franchise fees were actually an unlawful tax imposed without voter approval, in violation of Proposition 218 and related constitutional provisions. The plaintiffs sought refunds of the alleged illegal taxes and declaratory relief regarding the validity of the fees.The Superior Court of Los Angeles County considered the plaintiffs’ motion for class certification. While the court found the proposed class sufficiently numerous and ascertainable, and agreed that the question of whether the franchise fees constituted an illegal tax was subject to common proof, it identified a fundamental problem: not all proposed class members suffered an economic loss, as some landlords and property owners may have passed the cost of the fees on to tenants. The court concluded that entitlement to refunds was not susceptible to common proof and that individual issues predominated over common ones. It also found that a class action was not the superior method for resolving the dispute, due to the risk of unjust enrichment and the complexity of determining who actually bore the cost of the fees. The court denied class certification.On appeal, the California Court of Appeal, Second Appellate District, Division Four, reviewed the trial court’s order under the substantial evidence standard. The appellate court affirmed the denial of class certification, holding that the trial court did not err in finding that individual issues predominated and that class treatment was not superior. The order denying class certification was affirmed. View "Leeds v. City of L.A." on Justia Law

Plaintiff was employed by a staffing company and assigned to work at a warehousing and logistics firm, performing duties as a materials handler and forklift operator. He filed a class action and a separate representative action alleging various wage and hour violations, including claims for unpaid minimum wages, waiting time penalties, and civil penalties under the Private Attorneys General Act (PAGA). The two cases were consolidated. The plaintiff and his direct employer had entered into an arbitration agreement, which referenced the American Arbitration Association (AAA) rules but did not explicitly state that the arbitrator would decide issues of arbitrability.The defendants moved in the Superior Court of Los Angeles County to compel arbitration of the plaintiff’s individual claims, dismiss class allegations, and stay judicial proceedings. They argued that the arbitration agreement was governed by the Federal Arbitration Act (FAA) and that the AAA rules incorporated into the agreement delegated arbitrability issues to the arbitrator. The plaintiff opposed, asserting exemption from the FAA as a transportation worker and arguing that certain claims, including those under PAGA and for unpaid wages, were not arbitrable under California law. The trial court found the FAA did not apply, applied California law, and held that the agreement did not clearly and unmistakably delegate arbitrability to the arbitrator. The court compelled arbitration of some claims but allowed others, including minimum wage and PAGA claims, to proceed in court.On appeal, the California Court of Appeal, Second Appellate District, Division Eight, affirmed the trial court’s order. The court held that, in the context of a mandatory employment arbitration agreement, mere incorporation of AAA rules without explicit language in the agreement is not clear and unmistakable evidence of intent to delegate arbitrability to the arbitrator. The court also held that claims for waiting time penalties based on minimum wage violations and all PAGA claims were not arbitrable under California law when the FAA does not apply. View "Villalobos v. Maersk, Inc." on Justia Law