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9th Circuit Rejects Fire Chief’s Discrimination Case Against City of Stockton

Ronald Hittle was an at-will employee of the City of Stockton and served as the City’s Fire Chief from 2005 through 2011.

In May 2010, the City received an anonymous letter purporting to be from an employee of the Stockton Fire Department. The letter described Hittle as a “corrupt, racist, lying, religious fanatic who should not be allowed to continue as the Fire Chief of Stockton.” The source of this information was not an anonymous individual, but later established as a high-ranking Fire Department manager.

The City hired an outside independent investigator, Trudy Largent, to investigate various allegations of misconduct. In a 250-page report referencing over 50 exhibits, Largent sustained almost all of the allegations of misconduct against Hittle. This investigation ultimately led to his termination by the City.

Largent’s Report specifically concluded that Hittle: (1) lacked effectiveness and judgment in his ongoing leadership of the Fire Department; (2) used City time and a City vehicle to attend a religious event, and approved on-duty attendance of other Fire Department managers to do the same; (3) failed to properly report his time off; (4) engaged in potential favoritism of certain Fire Department employees based on a financial conflict of interest not disclosed to the City; (5) endorsed a private consultant’s business in violation of City policy; and (6) had potentially conflicting loyalties in his management role and responsibilities, including Hittle’s relationship with the head of the local firefighters’ union.

Hittle sued the City, former City Manager Robert Deis, and former Deputy City Manager Laurie Montes claiming that his termination was in fact the result of unlawful employment discrimination in violation of Title VII of the Civil Rights Act of 1964 and California’s Fair Employment and Housing Act. Hittle alleged that Deis and Montes terminated his employment as Fire Chief “based upon his religion.”

Defendants moved for summary judgment seeking dismissal of all of Hittle’s claims. Hittle subsequently cross-moved for partial summary judgment as to his federal and state religious discrimination claims on April 1, 2021. On March 1, 2022, the district court denied Hittle’s motion and granted Defendants’ motion as to all of Hittle’s claims. The 9th Circuit Court of Appeals affirmed in the published case of Hittle v City of Stockton -22-15485 (August 2023).

The panel held that, in analyzing employment discrimination claims under Title VII and the California FEHA, the court may use the McDonnell Douglas Corp. v. Green burden-shifting framework – 411 U.S. 792 (1973) – under which the plaintiff must establish a prima facie case of discrimination.

The burden then shifts to the defendant to articulate a legitimate, nondiscriminatory reason for the challenged actions.

Finally, the burden returns to the plaintiff to show that the proffered nondiscriminatory reason is pretextual. Alternatively, the plaintiff may prevail on summary judgment by showing direct or circumstantial evidence of discrimination.

Hittle was required to show that his religion was “a motivating factor” in defendants’ decision to fire him with respect to his federal claims, and that his religion was “a substantial motivating factor” with respect to his FEHA claims.

The panel concluded that Hittle failed to present sufficient direct evidence of discriminatory animus in defendants’ statements and the City’s notice of intent to remove him from City service. And Hittle also failed to present sufficient specific and substantial circumstantial evidence of religious animus by defendants. On summary judgment, circumstantial evidence of discrimination “must be ‘specific’ and ‘substantial'”

“The district court’s grant of summary judgment in defendants’ favor was appropriate where defendants’ legitimate, non-discriminatory reasons for firing Hittle were sufficient to rebut his evidence of discrimination, and he failed to persuasively argue that these non-discriminatory reasons were pretextual.”

Contractor Sentenced for $140K Premium Fraud and $1M Wage Theft

The San Jose owner of a flooring company was sentenced to county jail last week to county jail and ordered to pay over $580,000 in restitution for fraud, after being caught under reporting his payroll to avoid paying thousands of dollars in insurance premiums.

An investigation showed Martin Helda had under reported his All Bay Floor payroll avoiding $140,000 in insurance premiums and did not pay his employees about a $1 million in owed overtime.

Helda, 35, pleaded guilty to three fraud counts, including Workers Compensation Premium Fraud, Employment Development Department fraud, and wage theft. In addition to paying restitution to victims, he was sentenced to four months in county jail and 200 hours of community service.

The investigation began after an insurance audit revealed that Helda’s payroll did not match the number of people he had working for him. This case was investigated in conjunction with the newly formed Workers’ Exploitation Task Force (WE TF). DA Investigators utilized partnerships with the Department of Industrial Relations and the State Labor Commission to find justice for victims of wage theft.

A DA investigation uncovered that Helda withheld time and a half overtime wages to at least 18 employees, including one employee who was owed approximately $60,000. However, there could be as much as $1.7 million owed to all employees including those not known to the DA’s Office.

According to his biography posted on IdeaMensch.com Martin Helda “took the California State Contractors License Exam and was one of the youngest people ever in the state to pass the exam, and from there he launched All Bay Area Floors, a commercial flooring company.”

“He grew the business over the next 12 years to be one of the largest flooring companies in the Bay Area, with over 60 employees. Recently, Martin has launched his 2nd business, Bay Area Concrete Polishing, which he plans to be as successful has his first.”

However, at the time of his arrest in April 2021, media sources said he claimed he only had one employee.

Victims who have yet to be identified in this matter may file a wage claim on the Labor Commissioner’s Office website or at any of their office locations.

District Attorney Jeff Rosen said: “Whatever you think you might be saving in the short term will cost you a lot more than money in the long term. Fraud doesn’t pay.”

Cal/OSHA Asks Employers to Take the Pledge for Safe + Sound Week

Cal/OSHA and the Department of Industrial Relations (DIR) encourage California’s employers and workers to commit to workplace safety and health during Safe + Sound Week from August 7-13.

Register your commitment to safety with Cal/OSHA for Safe + Sound Week. Those who register will join the thousands of businesses around the country showing their commitment to workplace safety and will have their workplace listed as a participant. This year’s program will provide resources for businesses on mental health and well-being.

The benefits of participating in Safe + Sound Week include enhanced safety and health at work sites with effective safety programs to identify and address potential hazards before an injury or illness occurs; improved employee well-being and morale that increases business productivity; cost savings that proactive safety measures provide to reduce medical costs, workers’ compensation claims and potential losses associated with downtime and productivity disruptions; and increased awareness on best safety practices to help prevent work-related accidents, injuries and illnesses.

Show that you and your group lead on safety as a core value by supporting Safe + Sound Week through the communication channels or social media platforms you use with the hashtag #SafeandSoundWeek. Cal/OSHA and DIR are participating in a West Coast Challenge again this year with Oregon and Washington. The three state leaders have posted a video issuing a challenge to each other in a friendly competition to see which of the three states has the highest ratio of businesses registered.

Cal/OSHA helps protect workers in California from health and safety hazards on the job. Cal/OSHA’s jurisdiction to conduct workplace safety and health inspections extends to almost every workplace in California, with few exceptions for workplaces covered by federal agencies. Employers who have questions or need assistance with workplace health and safety programs can call Cal/OSHA’s Consultation Services Branch at 800-963-9424.

Workers in California are protected regardless of immigration status. Workers who have questions about safety and health in the workplace can call 833-579-0927 to speak with a live bilingual Cal/OSHA representative between the hours of 9:00 a.m. and 7:00 p.m. Monday through Friday. Complaints about workplace safety and health hazards can be filed confidentially with Cal/OSHA district offices.

Prosecutors Must Use Specific, Not General Statutes In Comp Fraud Cases

On August 17, 2015, Evelyn Rivera went to see a doctor at Kaiser Permanente Hospital becaus.e she had injured her left shoulder. She told the doctor her shoulder had begun hurting after stretching it four or five days earlier. In February 2016, she had surgery on her shoulder to repair a torn rotator cuff.

About a year after the initial appointment, Rivera submitted a workers’ compensation claim for an injury to the same shoulder. One doctor examined her on October 19, 2016, and another examined her in August .cling bin. The second doctor reviewed Rivera’s prior medical records and concluded he did not believe her injury was work related. Her workers’ compensation claim was later rejected, but the County of Riverside was billed for her visits to the two doctors.

In July 2018, the Riverside County District Attorney’s Office filed a complaint charging Rivera with two felony counts of insurance fraud under Insurance Code section 1871.4, subdivision (a)(1) (count 1) and Penal Code section 550, subdivision (a)(1) (count 2). Rivera was arraigned in Riverside County Superior Court on September 21, 2018, pled not guilty,

On March 15, 2019, at the Riverside County Superior Court preliminary hearing. Kurtis Lackman, a workers’ compensation investigator, testified about his investigation into Rivera’s case.

Lackman said he began his investigation after the district attorney’s office received a referral from the county, which had already undertaken an investigation. He interviewed the doctors who examined Rivera after she made her workers’ compensation claim. He also interviewed Rivera. His testimony supported the facts set out above. After his testimony, the judge determined “it does appear that the offenses that are currently charged in Counts 1 and 2 have been committed. There’s sufficient cause to believe the defendant guilty of those particular offenses, so I will order that she be held to answer to same.”

The preliminary hearing resulted in a finding of probable cause, thus the People filed an information with the same charges now in Riverside County Superior Court., and Rivera pled not guilty at her arraignment.

A settlement conference was held in October 2021, two and a half years later. Rivera asked the judge to reduce the charges to misdemeanors under section 17(b) and grant her misdemeanor diversion under Penal Code section 1001.95 (section 1001.95), avoiding the need for a trial.

Later Rivera filed a formal motion to reduce the charges to misdemeanors and grant diversion, provided Rivera first paid restitution of approximately $20,000. The prosecutor objected, arguing the court did not have authority under section 17(b) to reduce the charges to misdemeanors until Rivera had pled guilty or been convicted.

The judge agreed with the defense that under the “Williamson Rule” the prosecution could not charge Rivera under sectioAn 550(a)(1) because the more specific section 550(a)(6) governs. The court granted the motion and set aside count 2.

On December 15, 2022, Rivera paid $20,000 in restitution and Riverside County Superior Court Judge Taylor reduced count 1 to a misdemeanor under section 17(b) and granted diversion under section 1001.95, with conditions that she perform 20 hours of community service and attend a life skills class.

The People filed a petition for a writ of mandate seeking to vacate the order setting aside the section 550(a)(1) count and the order reducing the Insurance Code count to a misdemeanor.overturn the order reducing count 1 to a misdemeanor and the order setting aside count 2.

The Court of Appeal agreed with Rivera and the trial court that the People were required to prosecute this workers’ compensation fraud case under the more specific section 550(a)(6). It therefore denied the People’s petition for a writ of mandate as to that order in the unpublished case of People v Superior Court (Rivera) -E080532 (August 2023)

The People charged Rivera under section 550(a)(1), which states it is unlawful to “[k]nowingly present or cause to be presented any false or fraudulent claim for the payment of a loss or injury, including payment of a loss  or injury under a contract of insurance.” (Italics added.) The gravamen of the complaint and information was that Rivera knowingly presented a false claim for the payment of benefits available under the workers’ compensation law.

Rivera argues, and the Court of Appeal agreed, that the allegation against her also falls under section 550(a)(6), which makes it unlawful to “[k]nowingly make or cause to be made any false or fraudulent claim for payment of a health care benefit.” (Italics added.) Workers’ compensation benefits like funds paid to cover medical expenses are “health care benefits,” which means section 550(a)(6) applies specifically to her case.

The only differences between the two statutory provisions is that 550(a)(1) applies to payments for any losses or injuries and section 550(a)(6) applies to payments for health care benefits, a subset of the general category.

Rivera argued that the well established 1954 California “Williamson Rule” (In re Williamson, 43 Cal. 2d 651, 276 P.2d 593) justified the ruling of the trial court. The Williamson Rule is a legal doctrine in California criminal law that states that if a general statute includes the same conduct as a special statute, and thus conflicts with it, the special act will be considered as an exception to the general statute whether it was passed before or after such general enactment.

The Court of Appeal concluded that “It follows that the Williamson rule applies, and we should infer the Legislature intended that conduct like Rivera’s be prosecuted exclusively under section 550(a)(6).” … “The trial judge was correct to set aside the section 550(a)(1) count, and we will therefore deny the People’s petition for a writ of mandate as to that order.”

CEO of Whittier Clinic Pleads Guilty to $5M Health Care Fraud

The former president and CEO of a Whittier medical clinic pleaded guilty to submitting fraudulent billings to a Medi-Cal health care program that provides family planning services to low-income Californians without health insurance.

Vincenzo Rubino, 58, of Valencia, pleaded guilty to nine counts of health care fraud and two counts of aggravated identity theft in the middle of his federal criminal trial, in which the prosecution had nearly concluded its case.

According to evidence presented at trial, Rubino founded, owned and operated Santa Maria’s Children and Family Center, a Whittier-based medical clinic registered as a non-profit public benefit corporation and enrolled as a Family Planning, Access, Care and Treatment (Family PACT) provider run through Medi-Cal.

From November 2014 to August 2017, Santa Maria’s submitted fraudulent claims totaling nearly $5 million to the Family PACT program for family planning services that were never provided, often using the information of patients who were recruited at off-site locations with offers of free diabetes testing, but who in fact never received the examinations and other services.

To submit many of these claims, Rubino used the names of two medical providers whom the patients did not see and who did not even work for Santa Maria’s at the time — a physician’s assistant and an elderly doctor who was himself a patient in a skilled nursing facility during much of the scheme.

The Medi-Cal program paid more than $2.3 million dollars on the fraudulent claims, as well as an additional approximately $1.5 million to a pharmacy and laboratory stemming from referrals based on the same services that were never delivered.

United States District Judge Otis D. Wright II scheduled a sentencing hearing for January 22, 2024, at which time Rubino will face up to 10 years in federal prison for each health care fraud count, and a mandatory sentence of two years in federal prison consecutive to the other sentences for each aggravated identity theft count.

The United States Department of Health and Human Services Office of Inspector General and the California Department of Justice investigated this matter.

July 24, 2023 – News Podcast


Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Supreme Court Says CMA May Proceed Against Aetna for Unfair Competition. Arbitration of Individual Claims Does Not Preclude Concurrent PAGA Litigation. $6M Punitive Damages Justified by Employer’s “Despicable” Conduct. WCAB Rejects Vocational Apportionment Noting Recent En Banc Decision. Allianz Unit Fined $5 Billion for Multibillion-Dollar Fraud Scheme. Applicant Attorney Robert Slater’s Conviction Affirmed. San Jose Roofing Contractor Faces $460K Premium Fraud Case. CHSWC Reporting Delays Cause Another Extension of Debit Card Sunset. 64% of 2000 Hospitals Non-Compliant with 2021 Price Transparency Law.

Jury Awards UCSD Physician $39.5 million in UC Whistleblower Case

After a two-month trial, this week a jury awarded former UC San Diego oncologist Dr. Kevin Murphy more than $39 million in his whistleblower claim against the University of San Diego.

According to the report by the San Diego Union-Tribune, the dispute between Murphy and UCSD began in the fall of 2015, when philanthropist Charles Kreutzkamp died of cancer and left $10 million to the university “for cancer research.” The university planned to use it as a general gift for its Moores Cancer Center. Murphy said the donor had intended to fund Murphy’s experimental brain stimulation treatment, known as PrTMS. He complained the school was attempting to divert the funds.

Eventually, the school steered the money to Murphy’s research. But he said school officials thwarted his attempts to set up clinical trials and ignored his official complaints about it. The school said Murphy violated policies, wrongly used donated funds to set up a research clinic off campus and enriched himself and his companies.

According to investigative reporting by non-profit Inewsource.com, the UC system launched the litigation battle in 2020 when it sued Murphy, alleging he committed fraud and enriched himself using the $10 million donation to the university meant for research. It claimed at least $6.9 million of that donation was gone but no research was ever performed.

Murphy countersued, claiming UCSD led a campaign against him when he spoke up about the university funds being directed away from their intended purpose.

Those two lawsuits were combined into a massive trial that ended this week with a $39 million verdict in favor of Dr. Murphy. The jury deliberated for fewer than eight hours before returning a verdict Wednesday afternoon.

In addition to ruling in favor of Murphy, the jury also found that the doctor had breached his duty of loyalty to UCSD and acted against its interests. The jury awarded about $67,000 in favor of the UC system, which covered money Murphy had earned outside the university that he had failed to turn over as required.

The UC system asked for more than $8 million in damages, including civil penalties for violations of the False Claims Act and years of Murphy’s salary paid to him while he was disloyal to the public institution. UCSD had also sued for damages against Murphy’s private medical clinic and medical software company, but the jury found that the companies did not owe any damages.

Murphy said he would use the funds to run the trials he had always intended to conduct using the $10 million donation to UCSD.

The ruling is the latest of several whistleblower cases his laywer, Mark T. Quigley at Greene Broillet & Wheeler, has won against the University of California. According to the firms website, .

In another high-profile whistleblower retaliation trial, Mr. Quigley says that he attained a $2 million verdict against the UC Regents and the former Dean of the UC Irvine School of Medicine. The plaintiff in that case, Mark Linskey, M.D., is a tenured full professor at the UC Irvine School of Medicine and the former Chair of the Department of Neurological Surgery. Mr. Quigley said he resolved the case for a total of $3 million in damages and also obtained a Court Order reinstating Dr. Linskey to the Department of Neurological Surgery and residency program.

In another case, Scheer vs UC Regents, (2022) 76 Cal App. 5th 904, a California State Appeals Court recently reinstated one of Mr. Quigley’s whistleblower retaliation cases which involves a top UCLA pathology doctor’s claims that he was fired in retaliation after raising concerns about workplace mismanagement. The plaintiff, Dr. Arnold Scheer, alleged in his 2017 lawsuit that the University of California Regents and two former supervisors fired him after he identified numerous issues and violations concerning patient safety, mismanagement, fraudulent conduct, sub-standard facility conditions, lost specimen samples, and more.

A Los Angeles County Superior Court judge dismissed all of Dr. Scheer’s claims at the summary judgment stage, but the three-judge panel unanimously revived the case that asserts three causes of action: violations of a state whistleblower protection law, Labor Code section 1102.5, a whistleblower law specifically protecting University of California employees, Government Code section 8547.10; and a health care worker whistleblower protection law, Health, and Safety Code section 1278.5.

An in another case, attorney Quigley achieved a $10 million settlement in Pedowitz v. UC Regents, a whistleblower-retaliation case. The Los Angeles Times reports that Robert Pedowitz, originally recruited to UCLA in 2009 to run the orthopedic surgery department, sued UCLA, the UC Regents, fellow surgeons, and senior university officials because they failed to act on his complaints about conflicts of interest. Pedowitz alleged that they later retaliated against him for speaking out.

According to the LA Times story, Pedowitz stated he became “concerned about colleagues who had financial ties to medical-device makers or other companies that could unduly influence their care of patients or taint important medical research.” Pedowitz raised concerns about the financial dealings of several doctors, including an orthopedic surgeon that testified at trial about receiving $250,000 in consulting fees in 2008 from device maker Medtronic. Pedowitz also took issue with physicians who included UCLA logos on personal websites without getting official permission.

After raising his concerns, however, Pedowitz said he was pressured to step down as department chairman in 2010. He accused the university of retaliation, stating he was denied patient referrals and prevented from participating in grants and other activities, LA Times reports

July 2023 Hospital Analysis Shows Continuing Tight Financial Margins

The economic outlook for hospitals remains bleak, according to the July 2023 data on hospital financial performance from Kaufman Hall.

Kaufman Hall’s newest Physician Flash Report, with data through the second quarter of 2023, found that provider productivity for medical groups continues to increase, with net patient revenue per provider FTE up 10% from a year ago.

However, this productivity was not enough to offset rising expenses as the median investment/subsidy per provider still rose 5% year-over-year to $224,243. The total direct expense per provider full-time equivalent (FTE) reached $611,519, a 4% increase compared to Q2 2022.

They report that most hospitals underperformed in June as high expenses and economic pressures persist. As margins continue to stabilize on the surface, the gap between high-performing hospitals and those struggling in this new “new normal” is widening.

Key takaways from the July 2023 National Hospital Flash Report are:

– – Hospital margins underperformed in June, compared to the previous month. Despite an overall trend of continued improvement, most hospitals underperformed slightly compared to May. Fiscal year-end accounting adjustments may have also contributed to the performance bump in June.
– – Average lengths of stay continue to decrease, and emergency department visits are down. Patient volumes continue to stabilize, and increases in outpatient revenue indicate people are continuing to shift away from inpatient settings.
– – Bad debt and charity care are increasing. Hospitals are being affected as states step up efforts to redetermine Medicaid eligibility and more people are disenrolled.
– – Inflation continues to challenge hospitals’ performance. Supplies and purchased service expenses remain high. Decreases in labor expenses may indicate higher staff turnover and even reductions in workforce.

This ‘new normal’ is an incredibly challenging environment for hospitals,” Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall, said in a statement. “It’s time for hospital and health system leaders to begin developing and implementing a strategy for long-term sustainability, including expanding their outpatient footprint and re-evaluating where finite resources are being utilized.”

“As labor continues to be the largest share of expenses, health systems need to think strategically about provider employment models,” said Matthew Bates, managing director and Physician Enterprise service line lead with Kaufman Hall. “Organizations that want to see performance improvement must figure out how best to effectively integrate advanced practice providers into the care team model.”

WCAB Ordered to End It’s Longstanding Illegal Reconsideration Procedure

Michele Earley, Ashraf Gorgi, Hyun Sook Lee, Roman Hernandez Aguilar, and Jose Flores Campos were each applicants in a workers’ compensation proceeding. In each case one of the parties had filed a Petition for Reconsideration of a ruling issued in their case.

By statute, the WCAB must act upon such petitions within 60 days. To satisfy this requirement, the Board often grants petitions for purposes of further study without first deciding whether reconsideration is actually warranted. Later – sometimes many months after the petition for reconsideration was filed – the Board issues a decision on the merits affirming, reversing, or modifying the ruling at issue.

In each of these five cases, the Board issued a grant-for-study order. The Petitioners’ grant-for-study orders arose in different situations with different timelines. The cases are different but the Board’s orders were exactly the same. The uniform language of these orders reveals a standard form and not particularized analyses.

The Board explained its grant-for-study procedure. It generally tries to identify significant cases or those requiring en banc review, and cases involving complicated or novel issues. It was able to trace the history of this practice to the 1950’s; an earlier origin existed but is lost in time. The Board surmised the grant-for-study procedure “evolved naturally” from 1913 statutes that allowed the Industrial Accident Commission (a precursor to the Board) either to grant or to deny rehearing and thereafter to issue a decision after rehearing.

According to the results of a public records request that Petitioners served on the Board, as of November 2, 2021, there were 543 workers’ compensation cases awaiting a final decision in which the Board had issued a grant-for-study order between October 1, 2018 and October 1, 2021. The time between the filing of the grant-for-study orders and the Board’s final decisions ranged from five to 21 months.

The Court of Appeal issue a writ of mandate requiring the Board to cease its grant-for-study procedure and to comply with the statute when granting reconsideration in the published case of Earley v. Workers’ Comp. Appeals Bd. B318842 (August 2023).

Labor Code section 5908.5 requires the Board to explain its reasons for granting reconsideration and to identify the evidence supporting its decision. The Court simply said that the “statute is clear. The Board must obey it.”

At oral argument, the Board assured the Court of Appeal that it carefully reviews the cases in which it decides to issue a grant-for-study order. A careful review is not enough. Section 5908.5 requires the Board to go a step further and to explain in its order granting reconsideration why it made the decision to grant reconsideration based upon the evidence in the particular case.

However the Court of Appeal noted that “The Board’s grant-for-study orders in these cases fell short. These orders gave no reason for granting reconsideration other than a boilerplate statement that further study is necessary ‘based upon our initial review of the record.’ A rubber stamp could have authored these statements.

“The Board does not claim that its standard grant-for-study order complies with section 5908.5. Rather, its defense of the grant-for-study procedure focuses on the long tenure of the procedure and the claimed impossibility of issuing a reasoned order in all cases. But a long-standing and incorrect procedure remains incorrect.”

The Board must comply with section 5908.5 when it orders reconsideration. That is, the Board must state in detail the reasons for its decision and the evidence supporting it. Those reasons must be based on the grounds identified in section 5903. The Board need not, however, issue a final order within 60 days. The review necessary to support a decision to grant a petition for reconsideration within 60 days does not involve the same burden as the preparation of a final ruling. The Board must engage in the analysis necessary to permit a reasoned decision as to whether reconsideration is warranted based upon the factors identified in section 5903 and the evidence in the particular case. The Board then can decide whether to affirm, to modify, or to vacate the order at issue after further consideration and a more thorough review of the record.”

Petitioners met the statutory requirements for an award of attorney fees under Code of Civil Procedure section 1021.5. However the Court of Appeal reduced the requested $221,554.50 in fees by one half because Petitioners’ success was only partial.

“Petitioners successfully challenged the lawfulness of the Board’s current grant-for-study practice, resulting in an order that will require the Board to comply with section 5908.5 when it grants reconsideration. They did not achieve their aim of requiring the Board to issue final rulings on petitions for reconsideration within 60 days.” The Court of Appeal also awarded Petitioners their out-of-pocket appellate costs, which they identify as $7,891.63.

After SCOTUS Remand, 9th Circuit Reaffirms its Denial of Employer’s Arbitration

Domino’s sells ingredients used to make pizzas to its franchisees. As relevant to this case, Domino’s buys those ingredients from suppliers outside of California, and they are then delivered to Domino’s Southern California Supply Chain Center. At the Supply Center, Domino’s employees reapportion, weigh, and package the relevant ingredients for delivery to local franchisees but do not otherwise alter them.

The plaintiff drivers (“D&S drivers”), employees of Domino’s, then deliver the ingredients in response to orders from Domino’s California franchisees.

Edmond Carmona and two other “D&S drivers filed a putative class action against their employer, Domino’s Pizza in 2020, alleging various violations of California labor law. Each plaintiff’s agreement with Domino’s requires arbitration of “any claim, dispute, and/or controversy” between them.

But the federal district court denied Domino’s motion to compel arbitration. The 9th Circuit Court of Appeals previously affirmed the district court’s denial of Domino’s motion to compel arbitration, holding that because the drivers were a “class of workers engaged in foreign or interstate commerce,” their claims were exempt from the Federal Arbitration Act by 9 U.S.C. § 1.

But the U.S. Supreme Court granted Domino’s Petition for Certiorari, vacated the 9th Circuit decision, and remanded the case for reconsideration in light of Southwest Airlines Co. v. Saxon, 142 S. Ct. 1783 (2022).

After remand from the Supreme Court, the 9th Circuit Court of Appeals again reaffirmed the trial court’s denial of Domino’s arbitration petition, and distinguished the application of the Southwest decision from the Domino case in its published decision of Carmona v Domino’s Pizza – 21-55009 (July 2023).

In Saxon the Supreme Court used a fact-specific test to determine if a worker is exempt from the FAA under 9 U.S.C. § 1. This test should be focused on “the actual work that the members of the class . . . typically carry out” in that business rather than simply the employer’s business.

In Saxon the Supreme Court held that an employee who “frequently loads and unloads cargo on and off airplanes that travel in interstate commerce” was engaged in interstate commerce. Id. at 1793. The critical question is whether the workers are actively “engaged in transportation” of goods in interstate commerce and play a “direct and necessary role in the free flow of goods across borders.”

In finding that the cargo workers met this description, the Court specifically rejected Southwest’s argument that the cargo workers must themselves cross state lines to be engaged in interstate commerce.

However the 9th Circuit pointed out that the Saxon decision did not address the question in the Domino’s case. Rather, the Saxon Court expressly pretermitted whether “last leg” drivers like the D&S drivers in this case qualified for the exemption.

The decision after remand in the Domino’s case squarely rested upon the 9th Circuit reading of Rittmann v. Amazon.com, Inc., 971 F.3d 904 (9th Cir. 2020), “a case whose continued validity Saxon expressly declined to address.”

Rittmann confronted whether delivery drivers who transported goods from Amazon warehouses to in-state consumers were exempt from the FAA under § 1, and concluded that, because the Amazon goods shipped in interstate commerce were not transformed or altered at the warehouses, the entire journey represented one continuous stream of commerce.

Here in the Domino’s case the issue is whether the D&S drivers operate in a single, unbroken stream of interstate commerce that renders interstate commerce a central part of their job description. The pause in the journey of the goods at the warehouse alone does not remove them from the stream of interstate commerce.

Because the goods in this case were inevitably destined from the outset of the interstate journey for Domino’s franchisees, it matters not that they briefly paused that journey at the Supply Center.”