2004-19

Driver Covered by CBA Must Arbitrate Claim for Defamation

The Court of Appeal reversed the trial court ruling and entered a new order granting the employer's petition to compel arbitration of the employee's claims in Ruiz v. Sysco Food Services, 2004 DJDAR 11715 (September 21, 2004) (Fourth Appellate District, Division One) (1). Ruiz worked for Sysco as a driver and had a Sysco work jacket that had a rodeo patch (which he had won) sewed onto it. In 1998, Ruiz lent the jacket to Gamez, a newly hired employee, when Gamez was told not to wear a different logo jacket on the job. Gamez did not return the jacket, despite several requests by Ruiz.

By April, 2001, Gamez became Ruiz's supervisor and Ruiz was the Union shop steward. Ruiz again asked for the jacket and Gamez said it had been thrown away as a rag. However, just days later, Gamez brought the jacket to work, threw it on the counter, and made a comment about it not stinking anymore, and then left the room. The facts that follow are greatly in dispute and become the subject of Ruiz's claims in the lawsuit.

According to a declaration filed by Ruiz, Ruiz claims that he responded to Gamez's action by removing a patch from the jacket with a knife, cutting two rips in the jacket and then putting the knife and patch in his briefcase. When Gamez returned, he told him he did not like him and only had to work for him and then tore the jacket with his hands and threw it in the trash, while the knife remained put away.

In contrast, according to Gamez, Ruiz cut up the jacket in front of him in a threatening manner. Ruiz claims in the lawsuit that Gamez falsely stated to his supervisor, William Robinson, that Ruiz brandished a knife at him and had cut the jacket with a knife in a slashing manner only a few feet away from him. Gamez inquired of Robinson whether immediate action was needed under the CBA. Consequently, a meeting was held with the parties where Gamez repeated his account of the story. Ruiz returned to work and then went home and was later informed that he was suspended pending an investigation. The complaint further alleges that the police were called after Ruiz went home, whereby Gamez repeated the allegations and other employees allegedly learned of the incident and derogatory comments about Ruiz around the office. Ruiz was terminated the next day for alleged violent and threatening conduct.

Ruiz filed a grievance in accordance with the CBA. The arbitrator determined that the investigation resulting in Ruiz's termination had not been fair and compete under the standard of the CBA so as to support the termination and also noted that the knife was never recovered and there was a dispute about how big it was and where and how it was used. Accordingly, Ruiz was reinstated.

Ruiz subsequently filed suit alleging defamation, false light, intentional and negligent infliction of emotional distress, all arising from the investigation and its aftermath. Sysco removed the action to federal court and unsuccessfully opposed the motion to remand. The district court remanded the case, finding that the claims did not arise under or require interpretation of the CBA, and thus there was no basis for jurisdiction. Once in state court, Sysco filed a petition to compel arbitration under the CBA which was denied by the trial court on the grounds that: (1) the CBA did not contain language that compelled arbitration of Ruiz's claims; (2) the CBA did not contemplate resolution of such claims; and (3) the claims arise from allegations outside the investigation conducted by Sysco. Consequently, the trial court found that there was no valid agreement to arbitrate and that Ruiz's claims were not subject to the FAA.

On appeal, the main issue became "whether the allegations in Ruiz's complaint fall within the scope of the issues addressed by the CBA, such that arbitration may be compelled due to an effective waiver of a judicial remedy." Id. at 11717. The Court began its analysis by reiterating the rule that not every dispute concerning employment or tangentially involving a collective bargaining agreement will be preempted by federal employment or arbitration law. Rather, the test to be applied is whether "the alleged state law tort invokes nonnegotiable state-law rights, ?independent of any right established by contract, or, instead, whether evaluation of the tort claims is inextricably intertwined with consideration of the terms of the labor contract.'" Id. at 11717

Evaluation of the Tort Claims is Inextricably Intertwined with Consideration of the Terms of the CBA

In reaching its conclusion that the claims were inextricably intertwined with the terms of the CBA, the Court pointed to the fact that Ruiz's claims are all based on the alleged defamatory conduct and resulting emotional distress from the employer's conduct of the investigation, the interviews carried out in connection with the jacket incident and the subsequent notification to the police of the alleged false accusations. Therefore, the Court explained that because the CBA required the employer to conduct a fair and complete investigation to determine if "just cause" was present, this Court must now determine whether resolution of Ruiz's claims will necessarily be "inextricably intertwined with consideration" of the terms of the CBA.

Article 14 of the CBA explains when a grievance may be submitted to arbitration and includes "any difference of opinion or dispute between the Employer and [an employee] regarding the interpretation of this Agreement." Ruiz argues that his tort claims are not arbitrable because the CBA does not specifically address claims of defamation or emotional distress. The Court noted however that this argument is flawed because it fails to recognize that an interpretation of the CBA is required to evaluate those specific claims.

The Court ultimately determined that, in the present case, evaluation of the tort claims is inextricably intertwined with consideration of the terms of the CBA, based on the following:

"the express and implied terms of the CBA must be considered in determining the merits of the defamation and emotional distress allegations, because they arose in connection with and are inextricable from the actual disciplinary or investigative procedures involved, as set forth in the CBA...[i]t will be necessary to engage in an interpretation of the CBA to determine whether the investigation and publications are actionable under the stringent standards applicable to defamation claims (actual malice) and emotional distress (conduct outside the bounds of what a civilized society will tolerate)."

Consequently, the Court noted that due to the factual context and nature of the proceedings in which the claims arose, "this is most appropriately done by an arbitrator, not the court system" and the claims generally fall within the scope of the arbitration clause in the CBA.

The CBA Requires Binding and Mandatory Arbitration of Ruiz's Claims

Next, the Court rejected Ruiz's claim that there was no mandatory agreement to arbitrate, due to the permissive "may" language in the CBA. Specifically, Article 14 the CBA continues after the language noted above and provides: [I]f a representative of the Employer and the Union cannot settle a grievance as outlined above, the matter may be referred to arbitration..." In concluding that this provision compelled arbitration of Ruiz's claims, the Court reasoned that the provisions of the CBA must be read in context of the entire agreement and since the CBA does not provide an optional procedure, and there has already been a termination-related grievance, the CBA sets out a mandatory arbitration provision that is properly subject to the instant motion to compel. Moreover, the Court concluded that the trial court properly had the arbitrability question before it because the CBA does not support a clear and unmistakable intent to divest the Court of its authority to determine whether arbitration is proper (2).

The Court Need Not Decide Whether Ruiz is a "Transportation Worker" and Therefore Exempt from the FAA's Coverage

Ruiz argued that even if arbitration could otherwise be compelled by the coverage provision of the FAA, section 2, he is nevertheless exempt from it as a "transportation worker" identified in the FAA exemption provision, section 1. The Court noted that the "sparse record in this case makes it difficult to apply this transportation worker exemption language. (FAA, ?1)." Regardless however, the Court explained that Ruiz's claims do not hinge upon the performance of his specific job duties, but rather go right to the more generalized issue regarding the way in which the investigation surrounding his termination was conducted. Accordingly, the Court concluded that there is no need to resolve the question of whether Ruiz should be considered a "transportation worker" under the FAA, and "the fact-specific preemption/exemption debate here is moot." Id. at 11720. Rather, the Court explained that under both the FAA and California Law , arbitration is strongly favored and any doubts as to whether the issues in dispute are arbitrable should be resolved in favor of arbitration.

As such, the Court concluded that it was not necessary to resolve the instant case "on the basis of potential coverage of [Ruiz's] claims by the FAA (federal preemption of state procedures; FAA ?2), or alternatively, exemption from the FAA's reach within the meaning of the FAA, section 1 as interpreted by Circuit City..." Rather, when as here, California principles of contract interpretation govern the outcome of the petition to compel, nothing in the FAA needs to alter that outcome.

Consequently, because Ruiz was an employee subject to arbitrate his workplace disputes he had the burden to demonstrate legislative intent precluding him from waiving a judicial forum for resolving the dispute at issue. As was demonstrated above, Ruiz was unable to meet that burden and therefore, the matter must be submitted to arbitration.

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Television Writers May Sue for A Pattern and Practice of Company-Wide Age Discrimination

In Alch v. Superior Court, 2004 DJDAR 11543 (September 16, 2004) (Second Appellate District, Division Eight) (3) the Court of Appeal permitted writers, who are over the age of forty and members of the Writers Guild of America (WGA), to assert claims that each of the networks and studios have maintained, for many years, a system-wide policy or practice of age discrimination.

Twenty-three current class actions were filed after the dismissal of a class action age discrimination lawsuit was filed by some of the same plaintiffs, against all of the same defendants in federal court (referred to as the "Wynn" case).

In the current actions, writers allege that the networks have a youth-oriented corporate culture that indiscriminately favors youth over age and experience and that they have engaged in a pattern and practice of intentional age discrimination for many years.

The Wynn action involved 51 writers who filed a single class action lawsuit in federal court against all of the networks, studios and talent agencies which are parties to this appeal and writ action. They alleged an industry-wise pattern and practice of age discrimination under the ADEA, FEHA and New York Human Rights Law. On motions, several claims were dismissed with prejudice, the plaintiff class was not certified, and the cases were severed, in that all claims alleging company-wide discrimination must be brought separately against each employer.

The current lawsuits involve writers who filed 23 class action suits now before this court. Like the federal action, the 23 complaints allege a pattern and practice of age discrimination. The class action allegations of each complaint define the class as all members of the WGA who were at least 40 years of age and either applied and were rejected or were deterred from applying, for television writing opportunities with that employer. The writers also brought similar claims against the talent agencies. The writers assert causes of action against the employers for FEHA violations, as well as aiding and abetting claims under the FEHA.

A series of motions and demurrers were filed, with the relevant rulings and holdings explained below.

Government Code section 12965(b) Does Not Bar the Writers Who Were Plaintiffs in the Wynn Action from Filing a FEHA Class Action in State Court

Gov't Code section 12965(b) prohibits a state class action under FEHA if the persons claiming to be aggrieved "have filed" a comparable class action in the federal courts. The writers argued (in their appeals to the talent agency suits and in their writ petition in the employer lawsuits) and this Court agreed, that the only logical reading of this section is that "the provision bars a state class action only when a comparable federal claim is pending."

Specifically, section 12965(b) governs FEHA actions, and states, in pertinent part:

"Those actions [civil actions under FEHA] may not be filed as class actions or may not be maintained as class actions by the person or persons claiming to be aggrieved where those persons have filed a civil class action in the federal courts alleging a comparable claim of employment discrimination against the same defendant or defendants."

At the onset, the Court points out that section 12965(b) has not been previously construed by the courts and the parties point to no assistance in the legislative history to guide this Court in its analysis. However, because there is ambiguity in the language, the provision must be interpreted liberally to accomplish FEHA's purpose and to adhere to the principles of statutory construction, including the "avoidance of absurd results." Id. at 11549. Consequently, the Court concluded that "the Legislature intended to forbid the filing or maintaining of a FEHA class action in state court if a comparable action has been filed and is pending in federal court - that is, duplicative parallel litigation." Id. The statute was intended to proscribe concurrent, not successive, class actions.

The Claims of Deterred Applicants are Not Barred by FEHA's One-Year Statute of Limitations Due to the Continuing Violation Doctrine

The Court agreed with the writers who contend that the trial court erred in concluding that the one-year FEHA statute of limitations barred the claims of non-applicants or "deterred applicants," those who did not apply for positions during the statutory period, because of an allegedly long-entrenched policy of discrimination against older writers.

In reaching this conclusion, the Court noted that the outcome depends on an application of the "continuing violation doctrine." However, before starting down this path of analysis, the Court observed that the continuing violation doctrine "is arguably the most muddled area in all of employment discrimination law." Id. at 11551. In the present case, the trial court incorrectly relied on the teachings articulated in Richards v. CH2M Hill, 26 Cal.4th 798 to conclude that the writers claims were barred. Richards held that an employer's series of unlawful actions against an employee, begins to run when the employee is on notice that further efforts to end his employer's unlawful conduct will be futile. Obviously, if that standard were applied in the present case, the writers claims would be barred as they have alleged that the policies in question have been entrenched for many years.

The Richards theory does not fit this case because Richards applied to a series of discriminatory acts directed at an individual, not to a systematic corporate policy of discrimination, as alleged here. In concluding that the principles articulated in Richards have no application to the present case, this Court noted that in the present case, "the question is not, as it was in Richards, the employer's liability ?for actions that take place outside the limitations period...' The question is the employer's liability for enforcing a discriminatory policy during the limitations period." Id. at 11553. Further, Richards involved a series of discriminatory acts directed at an individual, whereas here, these cases allege a systematic company-wide discrimination against a class of persons. Id.

Accordingly, the Richards test is entirely inapposite to a case of continuing systematic discrimination against a class. Rather, "a continuing violation may be found when a corporate policy is initiated before the limitations period, but continues in effect within that period to the detriment of the employee." Id. at 11554.

Therefore, if the employers and agencies enforced a discriminatory policy during the limitations period, claims are timely filed both by writers who applied for jobs during that period and were rejected and by writers who were deterred from applying for jobs during that period. Id. at 11555.

The Writers Have Properly Pled Classwide Claims Alleging a Pattern and Practice of Discrimination Under the FEHA And Are Not Required to Plead Individual Prima Facie Cases of Discrimination

After rejecting the writers' FEHA class claim, the court ruled that the deterred applicant writers could amend specifically to state individual FEHA claims which were not barred by the statute of limitations. In addition, actual applicants could amend to plead FEHA claims under the McDonnel Douglas framework, specifically averring the employer and the position applied for, as well as the age classification. However, when the writers amended their complaints they alleged no individual FEHA claims, choosing to stand on their classwide claims of a pattern and practice of discrimination.

The employers assert that FEHA does not permit a pattern and practice claim and that the writers are required to plead individual discrimination claims. This court concluded that the writers may assert a pattern and practice of discrimination under the FEHA and are not required to plead individual prima facie cases of discrimination under the McDonnell Douglas model. Id. The Court explained that nothing in the FEHA prohibits such claims and in addition, noted that "plaintiffs in a class action need not prove each class plaintiff was a victim of discrimination; they must prove the existence of a discriminatory policy and, if they do so, they are entitled to classwide relief." Id. at 11556.

The Writers Have Sufficiently Pled the Talent Agencies Liability for Aiding and Abetting Violations Under the FEHA

The writers aiding and abetting claims are based upon allegations that each agency assisted each employer in carrying out a systemic policy of age discrimination in hiring against older writers as a class. The writers are not required to plead how each agency assisted or encouraged particular discriminatory acts against him or her individually in order to bring a classwide claim for aiding and abetting. Rather, the Court concluded that a talent agency would be liable for aiding and abetting an employer's violation of FEHA if the agency knew the employer's conduct violated FEHA and gave "substantial assistance or encouragement to the [employer] to so act." Id. at 11559-11560.

The writers have alleged that the agencies knew the employers were engaged in systemic discrimination on the basis of age and gave substantial assistance or encouragement to the employers by virtue of their own referral practices, screening out older writers in favor of younger ones. Therefore, the Court explained that if the writers are able to prove these allegations, they will have established an agency's liability for aiding and abetting the employers. Nothing more is needed.

The FEHA Amendments Adding Age to the Bases of Discrimination Constituting Unlawful Employment Practices by Employment Agencies Do Not Apply Retroactively

The trial court concluded that the writers could not sue the talent agencies for direct violation of FEHA because FEHA did not create direct liability for age discrimination by employment agencies until the passage of amendments effective January 1, 2003. This Court agreed, and concluded that the amendments, as they apply to employment agencies in section 12940(d), do not apply retroactively.

The Court reached this conclusion by reasoning that "since there is no clear legislative intent to impose retroactive liability on employment agencies, we apply the general presumption that statutes operate prospectively, and conclude that talent agencies have no direct liability under FEHA for conduct pre-dating January 1, 2003." Id. at 11564.

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1. Opinion by P.J Huffman; J. Nares and J. Irion concurring.

2. The Court also noted that Sysco did not waive its right to seek to compel arbitration merely because it opposed Ruiz's motion to remand.

3. Opinion by Justice Paul Boland; P.J. Cooper and J. Flier concurring.