Category: Uncategorized

Author: Wendy Hillger

An Uber driver filed a complaint against Uber Technologies, Inc., asserting she was an employee of the ride-hailing company and thus owed back-wages and employee expenses. Uber has consistently maintained that its drivers are independent contractors. The California Labor Commission disagreed, and ruled recently that Uber is an employer.

The California Labor Commission examined the numerous factors identified by the Supreme Court (S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341) to evaluate the relationship between the driver and Uber. The commissioner noted that Uber maintains a substantial amount of control over its drivers: such as the equipment they must use (an Uber-provided iPhone), the fares they can charge, the model of cars they drive, and, to some extent, how often they work. Uber also does not allow drivers to negotiate their percentage of the fare and thus controlled their wages.
Uber was ordered to have to pay its employee reimbursable expenses and interest in the amount of $4,152. Uber did dodge a bullet by being spared from having to pay the driver an hourly wage, liquidated damages or waiting time penalties for this employee. The employee failed in her burden of proof on these issues by not providing the commissioner with her pay records.

The decision was appealed in the San Francisco County Superior Court on June 16, 2015, in the matter of CGC-15-546378. A copy of the Order is HERE. A timeline for the Superior Court’s ruling is unknown, but if the Labor Commission’s Order is upheld, the decision will have wide-ranging impacts upon the ride-hailing company and its competitors like Lyft.
For information as to whether your company may be improperly classifying its workers as independent contractors, please contact Ad Astra Law Group LLP.

Author: David Nied

It no doubt was extremely distressing for Ellen Pao to lose her pioneering gender discrimination lawsuit against her former employer, Kleiner Perkins Caufield & Byers, LLC, earlier this spring.  On Friday, however, the pain got worse.  San Francisco Superior Court Judge Harold Kahn awarded KPCB nearly $276,000 in costs against Ms. Pao.  How did this happen?

One of the tools available to litigants in California is the ability to make a pre-trial offer to settle a case pursuant to California Code of Civil Procedure section 998.  If you do better than your offer at trial, you can ask the court to have many of the costs that you incurred after the offer was made shifted to the “loser.”  KPCB decided in November 2014, several months before trial and before it had incurred most of its costs, to offer Ms. Pao nearly $1 million dollars under section 998.  Ms. Pao decided not to take the offer.  Her gamble didn’t pay off.

After the trial concluded, KPCB submitted a cost bill to the court totaling nearly $1 million dollars, the vast majority of which consisted of expert witness fees.  Ms. Pao opposed the bill on a number of grounds, some of which worked and some of which didn’t.  Most importantly, Ms. Pao argued that a recent California Supreme Court decision, Williams v. Chino Valley Independent Fire District, 61 Cal. 4^th 97 (2015), precluded an award of costs against her because her lawsuit was not frivolous, which is the standard that applies when a successful defendant seeks to recover its costs under the Fair Employment and Housing Act.  Not so, said Judge Kahn.  Section 998 is different—it is a separate and distinct statute that a prior appellate court had found did not conflict with the FEHA.  Judge Kahn concluded that KPCB’s 998 offer of nearly $1 million was made in good faith and not token.  Although not addressed directly in the court’s order, the problem with the offer from Ms. Pao’s perspective is that it probably did not come anywhere close to covering her attorneys’ fees after nearly three years of hard-fought litigation.  Such is the dilemma that plaintiffs in a FEHA lawsuit face.

So what about those expert witness fees totaling nearly $865,000?  In determining whether the amounts were reasonable, Judge Kahn considered the parties’ respective resources in an effort to “scale” the expert fee award.  Conceding that his evaluation required a “rough” approximation of the parties financial positions, Judge Kahn noted that KPCB had “vastly” greater resources than Ms. Pao—but that Ms. Pao was not indigent.  Ultimately, Judge Kahn awarded KPCB expert witness fees that approximated what Ms. Pao herself had spent on her own experts.  And that is how you get to a cost award of nearly $276,000.

It might be of some solace to Ms. Pao that she was able to knock down KPCB’s request by $670,000, but it still can’t feel good.  And while a spokesman from KPCB described the ruling as a “fair result,” most savvy defense lawyers will recognize that the award probably won’t deter many employees from pursuing lawsuits under FEHA, since most of them have minimal economic resources.

Written by Keenan W. Ng

With Congress coming back from its summer recess, it will be focusing on a few cybersecurity related bills. One of the most controversial of these bills is the Cybersecurity Information Sharing Act of 2014 (“the Act”), introduced by Senator Dianne Feinstein (D-CA) and Senator Saxby Chambliss (R-GA) for the fourth consecutive year. The Act is supposed to “improve cybersecurity in the United Sates through enhanced sharing of information about cybersecurity threats, and for other purposes.” While some of the ideas and the language behind the Act seem reasonable and commonsense, the devil is in the details- or rather, the definitions in the Act- and could have some very interesting implications for individuals and businesses.

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Author: Michael S. Dorsi

Effective December 1, 2015, new amendments to Federal Rule of Civil Procedure 26 took effect. Notably, Rule 26(b)(1) now requires that discovery be “proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, . . . and whether the burden or expense of the proposed discovery outweighs its likely benefit.”

Initial published responses viewed this rule as pro-defendant.[1] Some suggested that this was a rule designed to address large company versus company disputes not appropriate for other types of cases.[2] Plaintiff-side employment lawyers were particularly concerned because their cases often require defendants to disclose far more in discovery than their clients disclose.

However, it seems that the first high profile test of this new rule came out in favor of employment class action plaintiffs—at least at the magistrate judge level. In O’Connor v. Uber Technologies, Inc. (N.D. Cal. Case No.  13-cv-03826-EMC (DMR)), Uber propounded an interrogatory and five requests for production of documents concerning all communications with over 1,700 of the putative class members.[3]

Invoking the new proportionality requirement in Rule 26(b), Magistrate Judge Donna Ryu held that “ Uber’s wildly overbroad discovery requests fail Rule 26(b)’s proportionality requirements.”[4] Judge Ryu continued, “While Uber may be entitled to conduct discovery that is probative of the Borello factors, it may do so through appropriately targeted means, rather than calling for information about every class member contact with class counsel. Again, Uber fails to meet Rule 26(b)’s proportionality test.”[5]

Concerned employee-side plaintiffs lawyers should of course remain vigilant, but there is a lesson from O’Connor v. Uber concerning discovery. Deep-pocketed defendants will often try to outspend a plaintiff. The new proportionality requirement in Rule 26 can help individuals and less deep-pocketed litigants fight back.

 

 

[1] See, e.g., Henry J. Kelston, FRCP Discovery Amendments Prove Highly Controversial, Law360.com, available at www.law360.com/articles/512821/frcp-discovery-amendments-prove-highly-controversial (discussing comments by Prof’s Paul Carrington and Arthur Miller)

[2] See, e.g., id. (“To the extent that excessive discovery costs are a problem, the problem exists in a very small percentage of high-stakes and, often, highly contentious cases.”)

[3] See O’Connor v. Uber Technologies, Inc. (N.D. Cal. Case No.  13-cv-03826-EMC (DMR)) (Dkt. No. 458.),

[4] Id. at p. 6:10–11.

[5] Id. at p. 7:8–11.

Author: Katy M. Young

Unauthorized access of a computer system can be civilly or criminally actionable under the Computer Fraud and Abuse Act (“CFAA”). One of the most-cited CFAA cases is U.S. v. Nosal, a criminal case brought by the U.S. Attorneys’ Office against David Nosal, formerly a high-level recruiter with Korn-Ferry. The company that Mr. Nosal worked for was high-profile enough to catch the U.S. Attorney’s attention when Korn-Ferry alleged that after leaving his employment with the firm, Nosal accessed the firm’s computer data without authorization. The U.S. Attorney’s office thus brought suit against Mr. Nosal using the criminal application of the CFAA.

The most recent high-profile CFAA case that caught the U.S. Attorney’s attention and resulted in criminal charges was the St. Louis Cardinals/Houston Astros hacking scandal. The Scouting Director for the Cardinals, Chris Correa, plead guilty to five counts of criminal violations of the CFAA for illegally accessing the Ground Control database maintained by former Cardinals executive Jeff Luhnow in his capacity as an executive for the Houston Astros. You can read all about the guilty plea here: http://www.cbssports.com/mlb/eye-on-baseball/25442384/report-former-cardinals-exec-to-plead-guilty-in-astros-hacking

Obviously, America’s pastime is high-profile enough to warrant the government spending resources to prosecute what is essentially private business espionage. But aside from baseball, what is it that catches the government’s attention in these kinds of cases? Ad Astra represents a law firm that has accused another law firm of hacking their third party cloud storage database of client files. The case is filed in State Court in Southern California but has not yet drawn the U.S. Attorney’s attention, although it has been covered by The Daily Journal and Law 360, both legal news outlets. Although not as high-profile as major league baseball, a hacking claim between opposing lawyers should draw the ire of government lawyers in the U.S. Attorney’s office who share Ad Astra’s concern for our esteemed profession. For the time being, Ad Astra will move forward with the civil claims under the CFAA and wait to see if the statute will be applied against the defendants in a criminal law context.

Author: David Nied

It has been almost eight years since the Journal of Empirical Legal Studies published “Let’s Not Make A Deal: An Empirical Study of Decision Making in Unsuccessful Settlement Negotiations.” The study compared verdict outcomes with pre-trial settlement negotiations in over 2,000 cases between 2002 and 2005. The results of the study support the conclusion that it usually is better to settle a case than to go to trial. In support of this conclusion, consider the following:

• Plaintiffs recovered less at trial than they would have recovered by settling in 61% of the cases;
• Defendants did worse by going to trial rather than settling in 24% of cases;
• Both sides made the right decision to go to trial in only 15% of the cases (i.e., the verdict was between plaintiff’s last settlement demand and defendant’s last offer);
• On average, plaintiffs who made the wrong decision to go to trial recovered $43,000 less than the defendant’s last offer;
• On average, defendants who made the wrong decision to go to trial ended up liable for $1.1 million more than they had offered;
• Plaintiffs were more likely to make “poor” decisions to go to trial in contingency fee cases; and
• Defendants were more likely to make “poor” decisions to go to trial where insurance coverage was generally unavailable.

So, although defendants make fewer bad decisions to go to trial, a bad decision is much more expensive on average. Interestingly, the study also found that making the wrong decision to go trial has actually increased over time based on a study of trial outcomes over 40 years through 2004. (You can read more about the study in a New York Times article. You also can purchase a copy of the article at Wiley.)

We do our best to help our clients understand the risks of proceeding to trial. That includes explaining that no two juries are the same and that not all jurors will see a case the same way a client might see it. And, especially for plaintiffs, it includes the likelihood of making the wrong decision. In most cases, it is better to make a deal.

Author: Regina Franco

By law, spouses are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other. Family Code § 721. This fiduciary duty arises on the date of marriage and does not end just because divorce proceedings have begun.

Among the issues requiring resolution through divorce is property division. In order to effectuate a division of property within the parameters of the law, parties must comply with the disclosure requirements of the Family Code. Parties are required to exchange complete and accurate declarations of disclosures listing all assets and debts in which a party has an interest regardless of whether the characterization of the asset or debt is separate or community property. When making disclosures, parties must uphold their fiduciary duties owed to each other and once disclosures are exchanged, the fiduciary duty requires that the parties update and augment their disclosures to the extent there have been any material changes so that when the parties enter into an agreement regarding property division, each has full and complete knowledge of the relevant underlying facts.  Family Code § 2100.

The Court will not enter a judgment of divorce unless the disclosure requirements have been met. Completing and exchanging declarations of disclosures are not only a technical step to getting divorced, but a very serious requirement. A violation of the disclosure requirements or a breach of the fiduciary duty could result in an award of 100% of the undisclosed asset to the complying spouse or a set aside of a judgment of divorce. There is no question that full disclosure is not only best practice, but also is mandated by law.

 

Author: Sean Gentry

With the passage in California of Proposition 64 legalizing recreational use of marijuana for persons aged 21 years or older under state law (though not under federal law) and allowing for the sale of marijuana in certain circumstances, employers will want to review and potentially revisit their testing procedures and workplace policies.  Despite the new legal uses of marijuana, employers can still implement and enforce policies than ban marijuana (along with alcohol and other drugs) and intoxication from the workplace.  Employers may still take disciplinary action against employees that violate these policies, up to and including termination, even if the use of the marijuana is for medical purposes.

As for pre-employment drug screening, testing is permissible if it is administered on a fair and consistent basis for all applicants.  Employers can choose not to hire applicants that test positive, again even if the marijuana use is for medical purposes.  However, employers should not test their current employees.  Such drug screening is only permissible in select circumstances where the employer has reasonable grounds for suspicion of drug use in the workplace.  An accident is not an automatic grounds for suspicion or for such a test.  In San Francisco the criteria for such drug screening of employees is even higher.  Nonetheless, larger employers may be required to provide certain reasonable accommodations for employees seeking help for substance abuse problems and should not take adverse actions against the employee while they are seeking treatment.  If you have questions regarding this new law or workplace drug policies generally, or if you need help with designing or administering workplace policies and procedures, Ad Astra can help employers navigate these issues.

 

Author: Sean Gentry

The U.S. Supreme Court has agreed to hear cases regarding class action waivers in employment agreements.  In the past, the Supreme Court has upheld such waivers of class action claims, where employers have their employees sign agreements to arbitrate those claims individually if they should arise (not as part of a class) under the Federal Arbitration Act.  However, recent cases in the U.S. Circuit Courts have weighed in on whether these waivers are enforceable in light of the National Labor Relations Act, which has created a split among the courts on whether the waivers were valid under the National Labor Relations Board’s decisions in D.R. Horton, Inc. (2012) and Murphy Oil USA, Inc. (2014).  This split includes the Ninth Circuit here in California (Morris v. Ernst & Young) and the Seventh Circuit (Epic Systems Corp. v. Lewis), which both agreed with the NLRB’s decisions to invalidate the waivers under the NLRA, against the Fifth Circuit (National Labor Relations Board v. Murphy Oil USA, Inc.), which did not.  The Supreme Court’s decision on this matter will hopefully bring some certainty for employers about how effective the use of these waivers will be going forward, and whether to use arbitration clauses in their employment agreements.