Category: Daily News

Last July, according to a report by HealthAffairs.org. the Chair of the House Energy and Commerce Committee, Cathy McMorris Rodgers (R-WA) and two colleagues on the Health and Oversight Subcommittee sent a forceful letter to Food and Drug Administration (FDA) Commissioner Robert Califf regarding FDA’s inadequate inspections of drug manufacturing plants in India and China: “The FDA’s recent decision to address shortages of critical drugs by allowing the temporary import of otherwise unapproved drugs from India and China makes having effective foreign inspection programs in those countries critical … we are worried that the United States is overly reliant on sourcing from foreign manufacturers with a demonstrated pattern of repeatedly violating FDA safety regulations.”

Bloomberg News reports that the Department of Defense recently announced that it will begin independently testing the quality and safety of imported generic drugs. Defense officials are in talks with Valisure, an independent lab, to test the quality and safety of generic drugs it purchases for millions of military members and their families, according to several people familiar with the matter who asked not to be named as the details aren’t public..

Generic drugs account for 90 percent of prescriptions dispensed in the United States. They also represent a sizeable share of the drugs used by hospitals to treat patients in ICUs, oncology units, transplant centers and emergency departments.

Because generic drugs sold in the U.S. must be FDA-approved, health care providers and patients assume that they are safe and effective. There is growing evidence that this confidence may be misplaced. In fact, quality issues are the precipitating factor in more than 60 percent of generic drug shortages.

The Hatch-Waxman Act of 1984 created a streamlined pathway for generic drugs. All a manufacturer must do is demonstrate that the generic version it proposes to sell is “bioequivalent” – meaning it delivers roughly the same amount of active pharmaceutical ingredient (API) into a person’s bloodstream, at roughly the same rate and duration, as the brand-name drug on which it is based. To demonstrate bioequivalence, a manufacturer typically hires a contract research organization (CRO) to perform the necessary testing with 24 to 36 healthy volunteers.

Once a drug is approved for sale in the U.S., FDA relies on periodic inspections of pharmaceutical plants and record reviews to ensure that a company complies with “Good Manufacturing Practices,” (GMP). FDA does not routinely test the medicines themselves. Instead, it asserts that manufacturers are responsible for the quality and safety of their products. In the early years of Hatch-Waxman, this honor system worked reasonably well. It does not today. Recent FDA actions and published research indicate that generic medicines are not always bioequivalent or safe. For example:

– – In 2009, researchers published a study in Neurology titled “The risks and costs of multiple-generic substitution of topiramate,” a drug that treats epilepsy. They found that switching generics was associated with significantly higher rates of hospitalizations, head injury or fracture and longer hospital stays.
– – In 2012, an FDA-sponsored a study of Budeprion XL, an extended-release antidepressant, revealed that a manufacturer’s generic did not perform as well as the brand-name drug. Years after hundreds of consumers first raised concerns, the product was withdrawn from the market.
– – Although generic manufacturers may contain different “inactive” ingredients, such as fillers and binders, than the brand-name drug, few of these ingredients have been tested to determine if they can affect bioequivalence. In 2015, FDA reported that in some instances, they do.
– – In 2017, Circulation published a study titled “Impact of the Commercialization of Three Generic Angiotensin II Receptor Blockers on Adverse Events in Quebec, Canada.” The researchers found that shortly after the generic versions came on the market, reports of adverse events significantly increased.
– – In 2018, after being alerted by independent industry testing, FDA determined that some generic ARB medicines, including versions of valsartan, losartan, and irbesartan, contained nitrosamines – a probable carcinogen.
– – In 2020, an independent laboratory found “unacceptable levels” of NDMA, a known carcinogen, in samples of metformin, a diabetes medication taken by 20 million The finding was reported to FDA and led to broad recalls.
– – In 2021, a study of generic versions of tacrolimus, an immunosuppressant, found that some dissolve too rapidly. This might affect therapeutic duration and increase the risk of organ rejection.
– – Also in 2021, FDA raised integrity concerns with the bioequivalence studies of approximately 100 drugs conducted by two Indian CROs. The agency rejected the studies and required manufacturers to repeat them. Unlike its European counterpart, which suspended marketing of the products, the FDA allowed the drugs to continue to be sold with a special code to alert pharmacists that they should not be considered “automatically substitutable” for their brand-name counterparts.

Because FDA approval is considered the benchmark for drug quality, the US companies that supply most generic drugs to America’s pharmacies, clinics, and hospitals search the globe for the least expensive generic versions of brand-name drugs. The “race to the bottom” this engendered drove most generic drug production offshore. As a result, America is highly reliant on other countries for its generic drugs and the ingredients and raw materials required to make them.

Roosevelt Luckett worked for a McDonald’s restaurant located on Venice Boulevard in Los Angeles.From time to time, Luckett worked in the drive-thru cash booth. Luckett asked whether he could use a seat in the drive-thru cash booth, and McDonald’s denied his request. His employer operated approximately 78 corporate McDonald’s restaurants in California with drive-thru cash booths.

Luckett sued his former employer, McDonald’s Restaurants of California, Inc. under the Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.). Luckett alleged McDonald’s violated Industrial Welfare Commission Wage Order No. 5-2001, section 14(A), which requires employers to provide suitable seats to their employees “when the nature of the work reasonably permits the use of seats,” and section 14(B), which requires an employer to provide suitable seats in reasonable proximity of the work area for employees to use during lulls in operation. (Cal. Code Regs., tit. 8, § 11050, subd. 14(A) &(B) [Wage Order No. 5-2001];

McDonald’s moved for summary judgment. McDonald’s argued (among other issues) that there was no factual dispute that the nature of the work did not reasonably permit the use of a seat at its drive-thru cash booths. It argued the booths were a tight workspace, designed for standing, and the fluidity of movement required to service customers (including frequent foot movements, reaching, bending, shifting, and twisting) could not be reasonably performed from a seated position. Additionally, placing a seat in the booth would create a tripping hazard. McDonald’s also argued that Luckett failed to exhaust administrative remedies as required under PAGA with respect to his section 14(B) claim and thus, the claim was procedurally barred.

Defendant’s evidentiary submission in support of its motion included among other things the declaration of its operations manager in California since January 2013, Saad Sabbagh, the declaration of McDonald’s then-director of customer experience, Michael Cramer, and the report of a retained ergonomics expert, Jeffrey Fernandez, PhD.

The trial court granted the motion, finding there was no factual dispute that the nature of the work did not reasonably permit use of a seat in McDonald’s California drive-thru booths. The Court of Appeal affirmed the summary judgment In the unpublished case of Luckett v. McDonald’s Restaurants of California -B317481 (November 2023).

In Kilby v. CVS Pharmacy, Inc. (2016) 63 Cal.4th 1,the California Supreme Court explained, “Whether an employee is entitled to a seat under section 14(A) depends on the totality of the circumstances. Analysis begins with an examination of the relevant tasks, grouped by location, and whether the tasks can be performed while seated or require standing. This task-based assessment is also balanced against considerations of feasibility. Feasibility may include, for example, an assessment of whether providing a seat would unduly interfere with other standing tasks, whether the frequency of transition from sitting to standing may interfere with the work, or whether seated work would impact the quality and effectiveness of overall job performance. This inquiry is not a rigid quantitative analysis based merely upon the counting of tasks or amount of time spent performing them. Instead, it involves a qualitative assessment of all relevant factors.” (Id. at pp. 19-20.).)

Drive-thru cash booth employees have primary and secondary duties. Their primary duties include taking orders and completing payment transactions for drive-thru customers, and providing “excellent customer service” while doing so. For example, Sabbagh observed, “It is McDonald’s expectation that employees in the cash booth reach out to customers who are sitting in their vehicles, rather than make our guests take off their seat belts, stretch, or open their vehicle doors to reach in toward the employee during a payment transaction.” Sabbagh also declared that McDonald’s places great emphasis on the guest experience and speed of service. Therefore, McDonald’s tracks the speed of service for each restaurant and provides training regarding how to diagnose and fix slowdowns.”

“There is seating in the crew break room to ensure that employees are able to sit and rest during their formal breaks. However, generally speaking, outside of these breaks, it is not acceptable to McDonald’s for an employee to be sitting down and doing nothing while on duty – except, perhaps, as an accommodation for a medical issue.” Thus, to provide the requisite level of service, McDonald’s expects its employees to remain busy between customer transactions by performing secondary duties.

Because the work in the cash booth is most appropriately done from a standing position, McDonald’s generally only allows employees to sit as an accommodation for medical reasons.

In assessing feasibility, the employer’s business judgment and the physical layout of the workspace may be relevant considerations. (Kilby, supra, 63 Cal.4th at pp. 21-22.) However, physical differences among employees are not relevant to the section 14(A) inquiry. “That provision requires a seat when the nature of the work reasonably permits it, not when the nature of the worker does.” (Kilby, supra, at p. 23.)

The Court of Appeal Concluded by noting “Luckett has not demonstrated a genuine issue of material fact as to whether it is feasible to place a seat in the drive-thru cash booths.”

In this case, plaintiffs are Ventura County, California firefighters and law enforcement officers who (except for one plaintiff) are members of two unions, the Ventura County Professional Firefighters’ Association (PFA) and the Ventura County Deputy Sheriffs’ Association (DSA). The County sponsors various health insurance plans for its eligible employees and their dependents. Under agreements between the unions and the County, plaintiffs were eligible to enroll in union-sponsored health insurance plans instead of the County’s plans.

The County manages health benefits for union and non-union employees alike through its Flexible Benefits Program. As part of this “cafeteria plan,” the County provides its employees every pay period with a Flexible Benefit Allowance, also known as the “Flex Credit,” which employees may use to purchase health benefits on a pre-tax basis.

The amount of the Flex Credit for union members is set through negotiation between the County and the unions. If the premium for an employee’s chosen health insurance is more than the Flex Credit, the balance of the premium owed is deducted from the employee’s pre-tax earnings. If the premium is less than the Flex Credit, the remainder is paid to the employee in cash as taxable earnings.

Employees can also waive participation in the Flexible Benefits Program altogether, in which case they do not receive the Flex Credit.

In the early 1990s, the County, in consultation with union representatives, developed another option for employees who did not wish to purchase a sponsored benefits plan yet wanted to retain their Flex Credit. Specifically, an employee who already has medical insurance from another source, such as a spouse’s plan, may choose to “opt out” of the Flexible Benefits Program. Employees who opt out are allotted the same Flex Credit but must pay an opt-out fee.

Both the Flex Credit and opt-out fee appear on employees’ paystubs: the Flex Credit is listed under “Earnings” and the “opt-out fee” appears as a “before tax deduction.” The County subtracts the opt-out fee from the Flex Credit and then pays the balance to the employee in cash. Union members pay the same opt-out fee as all other County employees who opt out of the Flexible Benefits Program. The amount of the opt-out fee varies from year to year, but it generally comprises most of the Flex Credit.

Plaintiffs opted out of the Flexible Benefits Program and were paid in cash the balance of the Flex Credit less the opt-out fee. The County treated this residual cash payment as part of plaintiffs’ regular rate of pay when calculating their overtime compensation. But the County did not include in that calculation the value of the opt-out fee.

Plaintiffs filed this putative class action under the FLSA challenging that determination. See 29 U.S.C. § 216(b). They argued that the exclusion of the opt-out fee from their “regular rate” of pay resulted in the County underpaying plaintiffs for overtime work, in violation of the FLSA.

The district court granted summary judgment to the County, concluding that the opt-out fee was properly excluded from plaintiffs’ regular rate of pay under a statutory exception for health plan contributions. The 9th Circuit Court of Appeals affirmed in the published case of Anthony Sanders et. al. v The County of Ventura 22-55663 (November 2023).

Plaintiffs maintain that the FLSA requires the whole Flex Credit, including the opt-out fee, to be included in their regular rate of pay citing Flores v. City of San Gabriel, 824 F.3d 890 (9th Cir. 2016).

However in Flores, the City of San Gabriel provided its employees with a designated sum that they could use to purchase medical benefits, but any employee who supplied proof of alternate coverage could forgo the benefits and instead directly receive that sum in cash. The 9th Circuit cconcluded that these “cash-in-lieu of benefits payments” were not excluded under § 207(e)(4) because they were not paid “to a trustee or third person,” as that statutory exception requires.

The County here complied with this aspect of Flores: it treated the cash it paid to plaintiffs – the difference between the Flex Credit and the opt-out fee – as part of plaintiffs’ regular rate of pay when calculating overtime compensation.

But Flores did not consider opt-out fees like the ones at issue here, and nothing in Flores supports plaintiffs’ theory that the opt-out fee is itself part of plaintiffs’ regular rate of pay. In this case, the opt-out fee does not function like the cash payment in Flores. Indeed, the opt-out fee is not provided to the plaintiffs in cash at all, and employees have no right under the program to access that amount as cash-in-lieu.

For various reasons pointed out in the opinion, the 9th Circuit held that the County properly excluded the Flex Credit opt-out fee from plaintiffs’ regular rate of pay under 29 U.S.C. § 207(e)(4).

Deniece Abraham worked for Wells Fargo at its business support call center in Sacramento. She was part of a team of traveling bankers that went to Virginia to train new call center employees who had been hired to staff a business support call center in that state.

As part of the traveling banker training, Wells Fargo promoted the traveling banker position as an opportunity to network with colleagues from other branches and pursue leadership roles. A trip to Virginia was scheduled to occur between November 24, 2019, and November 27, 2019, with each day’s training sessions lasting from 7:00 a.m. until 3:00 p.m. After 3:00 p.m., the traveling bankers were considered to be on their own time and free to do whatever they wanted.

The trip was organized by a manager with Wells Fargo who arranged air travel, lodging, and rental car reservations. All of the traveling bankers from Sacramento were permitted to drive the rental cars reserved for the trip. Further, all the traveling bankers from Sacramento were included in a group text messaging conversation to communicate about the shared use of the rental cars so that everyone could efficiently travel to the training sessions, obtain dinner, or run errands. For the trip, Wells Fargo issued each traveling banker a “purchasing card” to pay for travel expenses and meals. The traveling bankers were prohibited from using the purchasing card to buy alcohol.

On the third day of the trip, November 26, 2019, the traveling bankers discussed plans for dinner that evening, including meeting with trainees and a supervisor from the Virginia office. After training ended for the day, the traveling bankers drank alcohol in the lobby of their hotel. Deniece Abraham and two of her colleagues went to dinner at a karaoke bar using one of the rental cars provided by Wells Fargo. They arrived at the karaoke bar around 8:00 p.m. There, they danced, drank alcohol, and ate chicken wings. Employees from the Virginia Wells Fargo branch arrived at the karaoke bar at approximately 10:00 p.m. and the group continued to dance, drink alcohol, and eat chicken wings.

Shortly after 1:30 a.m., Abraham and her two colleagues left the karaoke bar and used the rental car provided by Wells Fargo to drive back to their hotel room. Abraham was a passenger in the car. At approximately 2:00 a.m., the driver of the rental car crashed into a tree while exiting the freeway. Abraham died from her injuries.

Plaintiffs Diane and John Abraham sued Wells Fargo Bank, N.A. and Sheonta Malbrough for the wrongful death of their daughter Deniece Abraham. Wells Fargo moved for summary judgment, asserting plaintiff’s suit was barred by the exclusive remedy provisions of the Workers’ Compensation Act. Specifically, Wells Fargo argued that, because Abraham was considered a commercial traveler at the time of her deat,her death was caused by a workplace injury that was exclusively compensable with workers’ compensation benefits.

The trial court agreed with Wells Fargo and granted the motion for summary judgment, ultimately leading to dismissal of the case. The Court of Appeal affirmed the dismissal in the unpublished case of Abraham v. Wells Fargo Bank -C098233 (November 2023).

Under the “commercial traveler” rule, an employee traveling on the employer’s business is regarded as acting within the course of employment during the entire period of his, her, or their travel. (Wiseman v. Industrial Acc. Com. (1956) 46 Cal.2d 570, 572.) His or her acts in traveling, procuring food and shelter are all incidents of the employment, and where injuries are sustained during the course of such activities, the Workers’ Compensation Act applies.

The Court of Appeal concluded that “Here, Abraham was an employee of Wells Fargo traveling for the purpose of Wells Fargo’s business. During the business trip, Abraham went out for dinner and drinks with colleagues and then died on the way back to the hotel. These undisputed facts establish that Abraham was a commercial traveler at the time of her death, and thus her conduct of traveling and procuring food fell within the conditions of her employment.”

On November 18, 2021, two inspectors from the Division of Occupational Safety and Health were denied consent to inspect the premises of Calvary Chapel of San Jose (Employer), a private school located on church grounds.

On November 29, 2021, the Division sought an “inspection warrant” from the Santa Clara County Superior Court. The Division supported their request for a warrant with two declarations: one from Richard Haskell (Haskell), Associate Safety Engineer, and another from Lisa Brokaw (Brokaw), Staff Attorney. Haskell’s declaration stated, “We were directed to open this inspection in response to a complaint made to the Division’s Fremont District Office on November 16, 2021 that Calvary Christian Academy was not complying with Title 8, section 3205, COVID-19 Prevention, face covering and outbreak reporting requirements.”

On November 29, 2021, a Judge of the Santa Clara County Superior Court granted the Division’s request for an inspection warrant. The Division subsequently conducted a site inspection, commencing on November 30, 2021.

On March 10, 2022, the Division issued five citations to Employer, alleging twelve violations of safety orders contained in title 8 of the California Code of Regulations,1 and totaling $67,330 dollars in penalties. Employer filed timely appeals of all the citations on March 21, 2022.

On July 18, 2022, the Employer filed a motion to suppress evidence, arguing all evidence from the inspection should be suppressed because the warrant had been issued without probable cause. The Division filed an opposition on July 28, 2022. Employer filed a reply on August 16, 2022.

On September 1, 2022, Administrative Law Judge (ALJ) Kerry Lewis issued an Order on Motion to Suppress Evidence, which granted Employer’s motion. The ALJ, relying on the Board’s prior jurisprudence, concluded she had jurisdiction to rule on the motion to suppress evidence, and granted the motion after determining the warrant had been issued without probable cause. The ALJ’s Order also excluded any evidence arising from the Division’s inspection of the site.

The Division filed a Petition for Reconsideration with the Occupational Safety and Health Appeals Board (OSHAB) in the case of In Re Calvary Chapel San Jose -1564732 (November 2023). In this case OSHAB affirmed the ALJ’s ruling that Cal/OSHA’s warrant application lacked the requisite probable cause. However the case was remanded for a ruling, on the application of the good faith exception to suppression of the evidence.

Labor Code section 6314, subdivision (b), states that if permission to investigate a place of employment is refused, the Division may seek an inspection warrant pursuant to Code of Civil Procedure section 1822.50 et seq. “An inspection warrant is an order . . . signed by a judge of a court of record, directed to a state or local official, commanding him to conduct any inspection required or authorized by state or local law or regulation relating to building, fire, safety, plumbing, electrical, health, labor, or zoning.”

The Division’s petition for reconsideration argues, at length, that the Board and its ALJ lack authority to evaluate the validity of the inspection warrant issued by the Santa Clara County Superior Court, and lack authority to grant Employer’s motion to suppress evidence. The Division argues that the California Constitution solely vests courts with original jurisdiction to review such warrants for errors. The Division contends the Legislature can only divest the courts of such jurisdiction if they enact a law pursuant to express or implied constitutional authority, which the Division argues did not happen here.

Additionally, although the Division recognizes that the Board has previously found it had authority to review an inspection warrant based on the California Supreme Court’s decision in Goldin v. Public Utilities Commission (1979) 23 Cal.3d 638 (Goldin), the Division argues that the Goldin decision is inapposite, as it concerns the Public Utilities Commission (PUC) a much different agency with different constitutional authority.

Additionally, although the Division recognizes that the Board has previously found it had authority to review an inspection warrant based on the California Supreme Court’s decision in Goldin v. Public Utilities Commission (1979) 23 Cal.3d 638 (Goldin), the Division argues that the Goldin decision is inapposite, as it concerns the Public Utilities Commission (PUC) a much different agency with different constitutional authority.

Once an appeal has been initiated before the Board, the Board’s operative statutes require parties to contest the citations, and all related issues, to a final decision before the Board prior to seeking judicial review. (Lab. Code, § 6600-6633.) The statutes permit a party aggrieved by a final order or decision of a hearing officer to file a petition for reconsideration before the Board. (Lab. Code, § 6614.) The filing of such a petition for reconsideration is a prerequisite to judicial review, and all issues not in that petition are waived. (Lab. Code, §§ 6615, 6618.) Labor Code section 6615 states,

OSHAB then noted “Taken together, Labor Code sections 6615 and 6618 set forth an exhaustion requirement, providing that all objections, irregularities, and illegalities arising from a final order or decision are waived, and not subject to court review, unless first presented to the Board via a petition for reconsideration. As relevant here, these statutes demonstrate that the adequacy of the warrant must first be presented to the Board, and such remedies exhausted, to prevent waiver.” Thus the Board ruled that it had jurisdiction to entertain a motion to suppress.

Cases discussing the constitutionality of inspection warrants in Cal/OSHA proceedings have stated that the search and seizure requirements of the Fourth Amendment and Article I, section 13, of the California Constitution mandate a probable cause requirement for Cal/OSHA inspection warrants. (Salwasser Mfg. Co. v. Mun. Court (1979) 94 Cal.App.3d 223, 231-232 (Salwasser I).)

The standard of probable cause, i.e., the level of scrutiny required for a Cal/OSHA inspection warrant, is detailed in Salwasser Mfg. Co. v. Occupational Safety & Health Appeals Bd. (1989) 214 Cal.App.3d 625 (Salwasser II). Salwasser II found that the criminal probable cause standard is not applicable when the warrant application is based on employee complaints, and instead called for a “lesser standard of administrative probable cause.” (Salwasser II, supra, 214 Cal.App.3d at 630.) Salwasser II relied on federal circuit court decisions when discussing and defining this lesser standard of administrative probable cause.

“The Board follows the good faith exception to the exclusionary rule. (Southwest Marine, Inc., supra, Cal/OSHA App. 96-1902.) The Board has previously noted that it will only exclude evidence pursuant to the exclusionary rule when it can be established that the warrant was not obtained in good faith.

The Occupational Safety and Health Appeals Board concluded that the “ALJ has not yet ruled on application of the good faith exception in this particular case. Therefore, it remanded this matter back to hearing operations for consideration, and a ruling, on the application of the good faith exception in this case.