September 20, 2021

Key California Employment Law Cases: August 2021

Zuniga v. Alexandria Care Ctr., LLC, 67 Cal. App. 5th 871 (2021)

Summary: An expert may rely on inadmissible evidence to form an opinion if the source is reliable.

Facts: Plaintiff Rosalinda Zuniga was employed by Defendant Alexandria Care as a housekeeper. Plaintiff filed a complaint in December 2013 asserting, among other claims, a claim under the California Labor Code Private Attorneys General Act (“PAGA”) for various alleged wage-and-hour violations. At the bench trial on her PAGA claim, Plaintiff intended to rely on testimony from various witnesses, including the expert opinion testimony of Dr. Richard Drogin, who performed statistical analyses of Defendant’s timekeeping and payroll records, and the testimony of Dean Van Dyke regarding the conversion of Defendant’s timekeeping and payroll records from portable document format (“PDF”) into computer-readable spreadsheets (“Excel”) by Van Dyke’s company, iBridge LLC. Van Dyke, who was neither a statistician nor computer engineer, and who had not participated in converting the PDF documents, testified generally in his deposition as to iBridge’s conversion processes. Drogin testified regarding the timekeeping and payroll data he reviewed, which was contained in the iBridge-prepared spreadsheets. The trial court ruled that Van Dyke was not qualified to be an expert and that he did not provide the proper foundation necessary for admitting the spreadsheets, and based on this excluded the spreadsheets and Van Dyke’s testimony from evidence. After Plaintiff rested her case, Defendant filed a motion for judgment. The trial court granted Defendant’s motion, and in doing so ruled that it would not consider Drogin’s testimony because it relied on the inadmissible iBridge-prepared spreadsheets. Plaintiff appealed.

Court’s Decision: The California Court of Appeal reversed the judgment for Defendant and remanded the case for a new trial. First, the court held that there was no abuse of discretion in excluding the iBridge-prepared spreadsheets because Plaintiff, through the testimony of Van Dyke, failed to provide the foundational testimony necessary to authenticate them. Van Dyke had no hands-on or supervisory involvement in the conversion of Defendant’s PDF documents into Excel spreadsheets, had no substantive conversations with the team that prepared the spreadsheets, and did not review the finished product or validate the results. Second, the court held that the trial court erred by excluding Drogin’s testimony, rejecting the contention that Drogin’s use of the iBridge-prepared spreadsheets rendered his opinion inadmissible. The court explained that California Evidence Code section 801 does not limit experts to the use of admissible evidence in forming an opinion. Instead, it provides that the basis of the opinion must be reliable. Issues with the accuracy of iBridge’s conversion work, therefore, went to the weight of Drogin’s testimony, not its admissibility.

Practical Implications: This case is an important reminder to employers defending wage-and-hour class actions not to overlook proper authentication of records, such as timekeeping or payroll records, being introduced as evidence and relied upon by expert witnesses.

Wasito v. Kazali, No. B308826, 2021 WL 3878319 (Cal. Ct. App. Aug. 31, 2021)

Summary: Employer’s section 998 offer of judgment before paying bonuses concededly owed was invalid.

Facts: Plaintiffs Subiono Wasito and Enny Soenjoto were employed as resident managers of a motel owned by Defendants Adi, Santy, and Harry Kazali. Plaintiffs were each paid biweekly salaries and annual bonuses. Defendants closed the motel and terminated Plaintiffs. Thereafter, Plaintiffs demanded their unpaid wages. In response, Defendants paid their biweekly salaries but not their annual bonuses despite conceding that Plaintiffs were owed the annual bonuses. Plaintiffs filed a complaint seeking unpaid wages, including the bonuses. Defendants made a California Code of Civil Procedure section 998 offer, which Plaintiffs let expire. Afterwards, Defendants sent Plaintiffs a check in the amount of the bonuses, which they both accepted. The case proceeded to trial and the jury found, among other things, that Defendants owed Plaintiffs unpaid wages and did not pay the bonuses when due. Both parties filed a memorandum of costs and moved to tax costs. The trial court found that application of the cost-shifting provisions of section 998 would violate Labor Code section 206.5 because the offer amounted to withholding undisputed compensation while attempting to settle all claims. Plaintiffs moved for attorney’s fees pursuant to Labor Code section 218.5. The court granted the motion in part and awarded attorney’s fees. Defendants appealed.

Court’s Decision: The court affirmed.The court explained that Defendants conceded that they owed bonuses to the employees; therefore, Defendants were required to pay the bonuses before seeking settlement of the wage claims. Defendants made the section 998 offer before paying the conceded bonuses, and therefore, the offer was invalid. Because the offer was invalid, the cost-shifting provisions of section 998(c) did not apply.

Practical Implications: Section 998 offers are a powerful, but procedurally complex, litigation tool. Only if all applicable procedural rules are followed can a defendant employer reap the full benefit of a successful section 998 offer. 

Herrera v. Doctors Med. Ctr. of Modesto, Inc., 67 Cal. App. 5th 538 (2021)

Summary: PAGA claims are not subject to arbitration pursuant to predispute arbitration agreements.

Facts: Plaintiffs Christine Herrera and Geri Rothstein were former employees of Defendant Doctors Medical Center of Modesto, Inc., who worked as registered nurses and were promoted to shift managers. Registered nurses employed by Defendant, including Plaintiffs, were represented by the California Nurses Association and covered by a collective bargaining agreement (“CBA”), which included a mandatory arbitration provision. In 2010, Plaintiffs also signed individual arbitration agreements. In May 2019, Plaintiffs’ counsel mailed to the California Labor and Workforce Development Agency (“LWDA”) and Defendant a notice pursuant to the California Labor Code Private Attorneys General Act (“PAGA”) alleging violations of various California Labor Code provisions governing wages, meal periods, rest periods, reimbursement of business expenses, and accurate wage statements. Plaintiffs later filed a PAGA action against Defendant seeking civil penalties. Defendant filed a petition to compel arbitration and stay the lawsuit based on the arbitration provisions in the CBA and the individual arbitration agreements. The trial court denied the petition to compel arbitration, and Defendant appealed.    

Court’s Decision: The California Court of Appeal affirmed. First, the court held that the individual arbitration agreements could not be enforced as to the PAGA claims asserted in the complaint because the LWDA did not consent to arbitration, and Plaintiffs did not consent to arbitration after they became authorized to pursue the PAGA claims. Second, the court held that federal preemption did not compel arbitration in this case because Plaintiffs’ PAGA claims fell outside the Federal Arbitration Act’s coverage under the California Supreme Court’s holding in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014). Third, the court rejected Defendant’s arguments based on the CBA because of Defendant’s procedural failures on appeal in affirmatively demonstrating that the trial court erred.

Practical Implications: This case serves as yet another reminder that predispute arbitration agreements will not be enforced in PAGA cases for civil penalties.