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Ninth Circuit Upholds Dismissal When Employee Deleted Computer Files
The federal Ninth Circuit Court of Appeals recently decided a case in which the employee had made complaints of financial and reporting irregularities by his employer. Interestingly, the employer sued the employee for a determination that it could terminate the employee without violating the False Claims Act, the Sarbanes-Oxley Act, and disability discrimination laws. The employee in turn filed a cross-complaint against the employer claiming violations of those same laws and retaliation for whistleblowing. The employee also filed a complaint with the Department of Labor ("DOL") asserting the same whistleblowing allegations. The court granted the employer's motion to dismiss the employee's case and issued monetary sanctions on the ground that the employee had intentionally deleted 2,200 computer files related to his claims. It also found that the court could halt proceedings brought by the DOL which were based on the same facts and disputes, were already adjudicated, and involved parties that were related to each other, that is the employee and the DOL. Leon v. IDX Systems Corporation, 9th Cir. Case Nos. 04-35983, 05-35426 (September 20, 2006).
Ninth Circuit Applies Sovereign Immunity to Casino as "Arm of the Tribe"
The Ninth Circuit held that a casino owned and operated by a Native American tribe is an "arm of the tribe" and thus has sovereign immunity from being sued by a terminated employee. Accordingly, the court upheld the dismissal of an employee alleging he was terminated in retaliation for reporting that there were rats in the casino's restaurant and for applying to a civil court for guardianship of his three tribal children. Allen v. Gold Country Casino, 9th Cir. Case No. 05-15332 (September 29, 2006).
Ninth Circuit Finds No Federal Preemption of State Law Prohibiting Funds for Union Avoidance
The Ninth Circuit rejected a federal preemption challenge and upheld a California law prohibiting certain state contractors, recipients of state grants, and employers who receive more than $10,000 per year in state funds from using those state funds to assist or deter unionization efforts by employees. The court held that the state law does not conflict with federal law, namely the National Labor Relations Act, and thus is enforceable. The court also held that the law does not violate an employer's right to free speech. Chamber of Commerce v. Lockyer, 9th Cir. (en banc), Case No. 03-55166 (September 21, 2006).
Ninth Circuit Holds Employer's Policy For Hearing Test Is Discriminatory
After finding that the representative plaintiff was a proper class plaintiff, the Ninth Circuit held that the employer had violated the Americans with Disabilities Act by categorically excluding individuals from being employed as package car drivers if they could not pass a hearing test required by the Department of Transportation ("DOT") for drivers of larger trucks (over 10,0001 pounds). In concluding that the hearing standard was not a business necessity, the court noted that the evidence was inconclusive as to whether substantially all deaf package car drivers posed an increased risk of accidents (compared to non-deaf drivers) and that no practical criteria existed for determining which deaf drivers may present a greater risk and which do not. Bates v. United Parcel Service, 9th Cir. Case No. 04-17295 (October 10, 2006).
Prison Not Given Special Exception To Sexual Harassment Claims
The Ninth Circuit addressed the issue of whether the state Department of Corrections can be held liable for the prison officials' failure to correct a hostile work environment resulting from sexual harassment by male prisoners of the female guards. After examining the lewd conduct of the prisoners, the female guards' complaints of such conduct, and the administration's failure to take immediate corrective action once it knew of the conduct, the court concluded that it would not carve out an exception for sexual harassment by non-employees at a prison. Freitag v. Ayers, 9th Cir. Case No. 03-16702 (September 13, 2006).
Employees' Claims For Invasion Of Privacy Survive Despite Lack of Recording
The Court of Appeal recently held that two employees can proceed with a claim for invasion of privacy when their employer placed a motion-activated video camera in the office that they shared, even though the employees were not recorded or viewed by the camera since the camera was disconnected during the day. These two employees were not advised about the camera because they were considered to be part of a group of employees who "gossiped" and might inadvertently tip off the person they were trying to catch logging onto pornographic websites at night. The court noted that a plaintiff in such a lawsuit does not need to establish that she was actually viewed or recorded but need only show that there was an intrusion into her private affairs. Importantly, the court found that no evidence suggested that these employees should not have had an expectation of privacy in their office. Hernandez v. Hillsides, Inc., Cal.App.Ct. (2nd Dist.) Case No. B183713 (September 14, 2006).
Non-Compete Agreements Narrowed Again
The Court of Appeal addressed the enforceability of a non-compete clause in an agreement to sell a business that prohibited the seller from soliciting the buyer's customers and employees for one year. Although California law prohibiting non-compete agreements provides an exception for agreements relating to the sale of a business (so that the seller cannot engage in competition to diminish the value of the business being sold), the court did not uphold the non-compete/non-solicitation agreement in this case because it was overbroad and included all employees and customers of the business, not just those who were former employees or customers of the sold business. Strategix, Ltd. V. Infrocrossing West, Inc., Cal.App.Ct. (4th Dist.) Case No. G036177 (September 11, 2006).
Termination of Employee Not Returned To Work After 12 Weeks of CFRA Leave Upheld
The Court of Appeal upheld the trials court's summary judgment in favor of the employer on the grounds that the employer did not violate the California Family Rights Act ("CFRA") when it did not reinstate an employee who was not returned to work after 12 weeks of CFRA leave and a legitimate nondiscriminatory reason for terminating the employee existed. The court also found that the terminated employee was not entitled to any pro rata percentage of her bonus because the bonus plan clearly provided that she must be employed on a specific date and she was terminated for cause prior to that date. Neisendorf v. Levi Strauss & Co., Cal.App.Ct. (1st Dist.) Case No. A109826 (August 29, 2006).
Court Finds Couriers Are Employees, Not Independent Contractors
The California Court of Appeal recently reviewed a stop order imposed by the Department of Industrial Relations on a company that provides courier services to businesses, because the company did not carry workers' compensation insurance for its workers. The court ruled that there was substantial evidence to support the Department's decision that the couriers were employees and not independent contractors as argued by the defendant company. The trial court based its decision primarily on the fact that the couriers were not engaged in occupations or businesses distinct from that of the company and because the company retains control over the operations of the couriers as a whole. JKH Enterprises, Inc. v. Dept. of Industrial Relations, Cal.App.Ct. (6th Dist.) Case No. H028762 (August 22, 2006).
Court Approves Deductions from Commissions for Chargebacks
The California Court of Appeal addressed a class action filed by employees attacking the employer's sales commission plan which allowed for chargebacks of previously paid commissions when a sale was later cancelled. The commission plan provided that, once a sales associate obtained and submitted a service order, the order was considered "booked" and the sales associate received an advanced payment for a percentage of the anticipated commissions. The sales associate then had ongoing responsibilities with the customers. A commission was defined as being "earned" once there has been delivery, acceptance, and payment on the sale. The court found that it was proper for an employer to reduce a sales person's future commissions by the amount previously advanced on a sale that is later cancelled so long as that sale is attributable to a particular sales associate and the practice is clearly stated in the plan. Koehl v. Verio, Inc., Cal.App.Ct. (1st Dist) Case No. A108972 (September 13, 2006).
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