Author: WorkCompAcademy

As a backstory to the new decision just published by the 9th Circuit Court of Appeals, a civil case, was filed April 11, 2022 in San Francisco Superior Court by the San Francisco and Los Angeles District Attorneys, alleging that the Potter Handy LLP San Francisco lawfirm and 15 of its lawyers — including name partners Mark Potter and Russell Handy — of violating California’s Unfair Competition Law by bringing fraudulent and deceitful litigation under the Americans with Disabilities Act against small businesses. The district attorneys asked the court to enjoin the law firm from further violations and make it repay thousands of small businesses that settled claims over the last four years.

In dismissing the district attorneys’ case in August 2022, San Francisco Superior Court Judge Curtis Karnow found that the conduct of Potter Handy attorneys was covered by California’s “litigation privilege” that attaches to court filings and communications related thereto. The judge found that the privilege applied “irrespective of the communication’s maliciousness or untruthfulness.”

On October 20,2022 the San Francisco District Attorney announced that they would appeal the dismissal of their case against Potter Handy LLP.  The outcome of that appeal is not yet known.

Meanwhile, on October 2, 2020, Orlando Garcia – who is currently represented in this case by Potter Handy LLP – filed a complaint in the California state court challenging Gateway Hotel’s “reservation policies and practices,” specifically “the lack of information provided on [Gateway’s] website that would permit [Garcia] to determine if there are rooms” that would accommodate his disability. Garcia contended that Gateway’s failure to provide this information violated the ADA and California law.

Gateway removed the case to federal court, and Garcia subsequently amended his complaint, dropping his claim based on California law. Gateway then moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), and the district court granted the motion after concluding that the information on Gateway’s website complied with the ADA’s requirements.

Gateway then sought an award of attorney’s fees, which the court denied because it could not “conclude on the record before it that [Garcia]’s case was frivolous or unreasonable” and because there was no “clear indication that [Garcia]’s lawsuit was vexatious.”

Gateway then filed an application for costs, which the court awarded. After filing two motions to retax costs that the court denied on procedural grounds, Garcia filed a third motion to retax costs, arguing that costs may be awarded to defendants under the ADA only if the action was frivolous, unreasonable, or without foundation. The court denied this motion after concluding that Brown v. Lucky Stores, Inc., 246 F.3d 1182 (9th Cir. 2001) – the legal authority cited in support of Garcia’s position – was irreconcilable with the Supreme Court’s intervening decision in Marx v. General Revenue Corp., 458 U.S. 371 (2013).

The district court followed “the Supreme Court’s intervening decision in Marx rather than the Ninth Circuit’s earlier precedent” in Brown, and determined that Rule 54(d)(1) governed the award of costs in ADA actions. And because Rule 54(d)(1) provides that costs may be awarded to a prevailing party at the district court’s discretion, the court concluded that Gateway properly received its costs in the action and denied Garcia’s motion to retax costs.

These orders were followed by a timely appeal. The 9th Circuit Court of Appeals reviewed the case, and affirmed the award of costs to the Hotel in the published case of Garcia v Gateway Hotel – 21-55926 (September 2023).

This case required the 9th Circuit Court of Appeals to clarify the circumstances under which a defendant may be awarded its costs in an action brought under the Americans with Disabilities Act of 1990 (“ADA”), 42 U.S.C. § 12101 et seq. Gateway contends that the standard for awarding costs to ADA defendants is governed by Federal Rule of Civil Procedure 54(d)(1), which allows courts the discretion to award costs to prevailing parties “[u]nless a federal statute . . . provides otherwise.”

Appellant Orlando Garcia contends that the ADA’s fee- and cost-shifting statute “provides otherwise” because it permits ADA defendants to receive their costs only where there is a showing that the action was frivolous, unreasonable, or groundless. He relied on Brown v. Lucky Stores, Inc., supra. Therefore, he contends that the district court should have granted his motion to retax costs, which would have, in effect, denied Gateway’s application for costs.

The majority opinion agreed with the district court and concluded that its decision in Brown cannot be reconciled with the Supreme Court’s decision in Marx, and therefore it has been effectively overruled. Accordingly, it held that Rule 54(d)(1) governs the award of costs to a prevailing ADA defendant, and such costs may be awarded in the district court’s discretion.

Circuit Judge Hurwitz wrote the dissenting opinion. He agreed with the majority that after Marx Rule 54(d)(1) controls the award of costs to a prevailing defendant in an ADA action. He also agreed with the majority that prior caselaw holding that the ADA “provides otherwise” than Rule 54(d)(1) cannot be reconciled with Marx. But, he parted company with his colleagues on whether our three-judge panel is free to reach these conclusions.

“The proper course – even when the eventual outcome is, as today, seemingly preordained – is to require an en banc court to inter our previous decisions unless an intervening Supreme Court abrogates them.”

Late Thursday night the California Legislature finished its 2023 session, but not before frantic lobbying by advocacy groups, some controversy and last-minute deal-making. The most tumultuous legislative deal made earlier this month is aimed at the fast food industry in California.

The backstory begins with the passage of the Fast Food Standards and Accountability Recovery Act in 2022 – Assembly Bill 257 – giving the state’s 550,000 fast food workers a seat at the table and bargaining power.

This 2022 law would have established the Fast Food Council within the Department of Industrial Relations until January 1, 2029. It would have been composed of 10 members who would to establish sectorwide minimum standards on wages, working hours, and other working conditions related to the health, safety, and welfare of, and supplying the necessary cost of proper living to, fast food restaurant workers.

The law was opposed by franchise owners, fast food companies and the California Restaurant Association. Joe Erlinger, the President of McDonald’s posted an open letter which opposed the law, and he claimed “Economists say it could drive up the cost of eating at a quick service restaurant in California by 20% at a time when Americans already face soaring costs in supermarkets and at gas pumps.”

In response to this Act, California small business owners, restaurateurs, franchisees, employees, consumers, and community-based organizations announced the formation of a coalition to refer the FAST Act back to voters and suspend its implementation until they have a say in November 2024. The coalition’s effort is co-chaired jointly by the National Restaurant Association, the U.S. Chamber of Commerce and the International Franchise Association.

On December 5, 2022, the Save Local Restaurants coalition announced it submitted to county elections officials over one million signatures from Californians in order to prevent AB 257 from taking effect until voters have their say on the November 2024 ballot.

Next, Katrina S. Hagen Director, California Department of Industrial Relations, sent the coalition a letter on December 27, 2022 stating that it intended to implement AB 257 – the FAST Act – on January 1, 2023.

The Local Restaurants coalition therefore filed a lawsuit on December 29, 2022, claiming that the state’s Constitution dictates that, as part of the referendum process, laws cannot go into effect until voters have an opportunity to exercise their voice and vote on the proposed legislation. A request for a preliminary injunction was granted in that case in January 2023 by Sacramento County Superior Court Judge Shelleyanne W.L. Chang. The Department of Industrial Relations was prohibited from implementing AB 257 until it was either disqualified from the Ballot by the Secretary of State, or the Voters had their say at the scheduled election.

Moving into 2023, the Secretary of State determined that the the referendum petition filed against AB 257 contains more than the minimum number of required signatures. In response to the referendum, the SEIU backed another bill, AB 1228 which was introduced on February 16, 2023. The bill would impose joint-employer liability on franchised businesses – including the very restaurant chains that loudly decried AB 257

AB 1228 bill would have required that a fast food restaurant franchisor share with its fast food restaurant franchisee all civil legal responsibility and civil liability for the franchisee’s violations of prescribed laws and orders or their implementing rules or regulations. The bill would authorize enforcement of those provisions against a franchisor, including administratively or by civil action, to the same extent that they may be enforced against the franchisee. The bill would provide that a waiver of the bill’s provisions, or any agreement by a franchisee to indemnify its franchisor for liability, is contrary to public policy and is void and unenforceable.

In September 2023, deal was made between fast food companies, unions and lawmakers, detailed in an amendment to AB 1228. The agreement would give a $20 minimum wage to fast food workers starting next April. And fast food companies would not face potential liability for labor violations at their franchises, if the ballot referendum to undo the controversial Fast Food Standards and Accountability Recovery Act is withdrawn, saving both sides the time and money on the campaign.

The amendment also prohibits any city, county, or city and county from enacting or enforcing any ordinance or regulation applicable to fast food restaurant employees that sets the amount of wages or salaries for fast food restaurant employees, .

According to a summary by CalMatters, lawmakers sent the following bills which are of interest to California employers and the insurance industry, to Governor Gavin Newsom for his signature, or possible veto.

– – Health care employees: An agreement to eventually raise the minimum wage to $25 an hour for tens of thousands of health care workers. In exchange, under SB 525, hospitals and other medical employers get a 10-year moratorium on local measures to increase compensation. Workers at larger hospitals and dialysis clinics would be the first to see the increase, starting in 2026, followed by community clinics and other health facilities. Employees at smaller and rural hospitals will have to wait until 2033 to see the $25 bump.

– – Striking workers: A bill that is one of the California Labor Federation’s top priorities, to allow striking workers to collect unemployment benefits after two weeks on the picket line, is especially notable this summer, when labor disputes involving California screenwriters, hotel workers, restaurant employees and others are leaving  many without pay as they strike for better working conditions. But business groups oppose Senate Bill 799, arguing that the state’s unemployment program is already over strained.

Not every bill made it, however. For instance, AB 518, by Assemblymember Buffy Wicks, would have extended who can take paid family leave to “chosen family” who don’t have a legal or biological relationship. The measure was held in the Senate.

Sutter Health is a not-for-profit integrated health delivery system headquartered in Sacramento, California. It operates 24 acute care hospitals and over 200 clinics in Northern California. Sutter Hospital Association was founded in 1921 as a response to the 1918 flu pandemic. Named for nearby Sutter’s Fort, its first hospital opened in 1923.

The a Report by Becker’s Hospital Review said that California State Board of Pharmacy documented “major deficiencies” related to staff training and knowledge in 2019 at Sutter Coast Hospital’s compounding pharmacy, which was recently placed on a three-year probation. Sutter Coast Hospital is a community-based, not-for-profit hospital serving residents of Del Norte County, California, and Curry County, Oregon.

According to an Accusation made on November 6, 2021 by the Board of Pharmacy, Department of Consumer Affairs,during a routine inspection in January 2019, an investigator noted “major deficiencies” related to compounding training among staff, according to documents on the probation agreement.

The pharmacist in charge and her staff “had not conducted most of the training required prior to commencing compounding,” the investigator found. When asked to demonstrate knowledge of “aseptic hand washing, garbing, cleaning of a controlled environment and the ability to accurately document each documented drug compound,” inspectors found “major deficiencies” in employees’ knowledge of these regulations.

The investigator also found the only sink available was in a restroom, despite pharmacy law requiring a sink with running water is within the “parenteral solution compounding area or adjacent to it.”

During the inspection, the Board investigator observed that compounding staff failed to wear appropriate clothing. Specifically, compounding staff: failed to wear non-shedding gowns, and wore isolation gowns instead; failed to don personal protective equipment immediately outside the segregated compounding area; did not dry hands with a low-lint towel prior to donning a non-shedding gown; and wore visible jewelry.

The facility documented sterile compounding with a system called EPIC and did not ensure the records kept included all the required elements. Specifically, records for completed compounded drug products for vancomycin, ketamine, and Remicade did not contain all ingredients used to compound the products, did not contain the beyond use date of the final compounded products, and did not contain final volumes.

During the inspection, the Board investigator observed unsanitary conditions, including that the Pharmacy did not clean the hoods, all surfaces and floors with a germicidal detergent and sterile water. Respondent Pharmacy’s policies and procedures stated that cleaning must be conducted with a detergent, but the pharmacy only used isopropyl alcohol and water for cleaning.

In May 2023, Sutter Coast Hospital Pharmacy entered into a Stipulated Settlement and admitted all of the accusations made against it. A probation began July 23 for the Crescent City, Calif.-based hospital’s compounding facility. During the probation, the hospital will be subjected to unannounced visits from the pharmacy board and will be required to provide quarterly updates to the state, provide five hours of compounding education for pharmacy technicians and pay an undisclosed fine.

The pharmacy has since worked with the state pharmacy board and violations have been corrected, a spokesperson for Sacramento-based Sutter Health previously told Becker’s.

“We have partnered with the California Board of Pharmacy and have made significant investments at Sutter Coast’s compounding facility,” a spokesperson said. “These recent upgrades exceed all sterile compounding standards for hazardous drugs, which provide protections for employees and patients. Sutter Health remains committed to providing our patients excellent and quality care and supporting overall community health.”

The U.S. Department of Labor has just proposed a new rule that would strengthen protections for farm workers in the H-2A program and help prevent abuses that undermine wages and standards for all agricultural workers.

The proposed rule would add new protections for worker self-advocacy, better protect workers against retaliation, make foreign labor recruitment more transparent and enhance the department’s enforcement. This proposal builds on a final rule the department published in October 2022 that modernized key aspects of the H-2A program.

“Farm workers are vital to our farmers, our food supply and our communities,” said Acting Secretary Julie Su. “This proposed rule would strengthen protections for H-2A farm workers who are particularly vulnerable to labor abuses, empower them to advocate for fair treatment and ensure that their employment does not depress labor standards and undercut domestic farm workers. The administration is committed to protecting all workers, and this proposal would significantly advance that effort.”

The proposed rule includes:

– – Adding new protections for worker self-advocacy. The proposed rule would improve workers’ ability to advocate for better working conditions by expanding and clarifying existing anti-retaliation protections. The proposed rule would also expand workers’ rights to invite and accept guests – including labor organizations – to employer-provided housing. Additionally, for workers not protected by the National Labor Relations Act, the proposed rule would require employers to provide a list of workers to a requesting labor organization, permit workers to designate a representative to attend any meeting between a worker and the employer where the worker reasonably believes that the meeting may lead to discipline, and prohibits employers from holding captive audience meetings unless the employer provides certain information to ensure that such meetings are not coercive. The proposal would also create greater transparency for workers about their prospective employers’ stance on their right to organize freely and without interference by requiring employers seeking to hire H-2A workers to provide a certification to the Department of Labor that the employer will bargain in good faith over the terms of a proposed labor neutrality agreement with a requesting labor organization or will explain why they will not do so.
– – Clarifying when a termination is “for cause.” The proposed rule would clarify that an employer only terminates a worker “for cause” when the worker either fails to meet pre-specified productivity standards or fails to comply with employer policies after the employer applies a system of progressive discipline. The proposal would establish six conditions to terminate a worker for cause, including that the employee has been informed of, or reasonably should have known, the employer’s policy, rule or productivity standards. Clarifying the meaning of the term “for cause” in existing regulations is important because termination “for cause” generally strips affected workers of their right to be offered work hours of at least three-quarters of the contract period and right to outbound transportation. For U.S. workers, termination “for cause” also strips them of their right to be contacted for employment in the subsequent year.
– – Making foreign labor recruitment more transparent. In line with concerns expressed by workers’ rights and anti-trafficking organizations, the Government Accountability Office and the department’s Office of Inspector General, the department has found that increased transparency is necessary to help protect agricultural workers from predatory practices during the recruitment process. The proposed rule would require employers to provide a copy of all agreements with any agent or recruiter the employer engages in recruiting prospective H-2A workers to the department, regardless of whether the agent is in the U.S. or abroad. The proposed rule would also require employers to identify and disclose the name and location of anyone soliciting H-2A workers on their behalf.
– – Making wages more predictable. The proposed rule would make wages more predictable in the H-2A program by making new wage rates applicable immediately upon their publication in the Federal Register rather than weeks later. This will ensure that agriculture workers are paid the most up-to-date wages as soon as possible. The rule would also require employers who fail to provide adequate notice to workers of a delay in their start date to pay workers the applicable rate for each day that work is delayed for up to 14 days. The proposal would further require enhanced transparency for employers to communicate minimum productivity standards, applicable wage rates, overtime opportunities and delayed start dates to workers.
– – Improving workers’ access to safe transportation, including seat belts. Workers in the H-2A program often travel long distances to and from the worksite in crowded vans and buses, sometimes driven by workers who worked all day, raising grave concerns about transportation safety. The proposed rule would add a seat belt requirement to reduce these hazards. For vehicles that are required by the Department of Transportation to be manufactured with seat belts, the proposed rule would prohibit the use of any employer-provided vehicle to transport H-2A workers unless each occupant is wearing a seat belt before the vehicle is operated, except in specific circumstances.
– – Enhancing enforcement to improve program integrity. The proposed rule would increase the speed with which the debarment of any business that violates H-2A program rules becomes effective by streamlining deadlines for Office of Foreign Labor Certification integrity and Wage and Hour Division enforcement actions. The proposed rule would also make it easier for the workforce system to discontinue necessary recruitment services for employers who have failed to meet program requirements. Finally, the proposed rule would prohibit employers from holding or confiscating a worker’s passport, visa, or other immigration or government identification documents.

Upon publication in the Federal Register, the notice of proposed rulemaking will be open for public comment for 60 days. The department has provided information on sending comments, and will consider all comments received before publishing a final rule.