Tag: 2023 News

Rigoberto Gonzalez claimed injury to his heart, upper extremities, spine, and lower extremities while employed by Team Infinity as a service technician/mechanic during the period from August 28, 2001, through March 25, 2010.

The parties agreed to use Steven Nagelberg, M.D., an orthopedist and Edward J. O’Neill, M.D., and internist as AMEs in their respective fields, and Gonzalez was additionally evaluated by a rheumatology qualified medical examiner (QME) Seymour Levine, M.D.

As to the issue of apportionment, Dr. Nagelberg stated that 100% of the cervical and lumbar spine impairment was caused by the cumulative work injury, that 50% of the right wrist and bi-lateral knee impairment was due to the cumulative work injury, and 50% of the right wrist and bi-lateral knee impairment was due to a pre-existing non-industrial arthritic condition.

Dr. O’Neill stated that the hypertension caused 49% WPI, the coronary artery disease caused 20% WPI, the upper GI/GERD caused 7% WPI, and that applicant had 7% WPI as a result of his obstructive sleep apnea. He later said he would apportion the hypertension in the same fashion as the arthritic condition; namely, 75% non-occupational and 25% occupationally related. Regarding the coronary artery disease and the obstructive sleep apnea is that neither of those conditions are occupationally related and any impairment or disability is non-occupationally related with no apportionment to occupational factors.

Gonzalez had a “Facetime meeting” with Vocational Rehabilitation Counselor Paul Broadus. Mr. Broadus concluded that applicant was “not amenable to rehabilitation, solely due to his industrial impairments” and that he no longer had “the ability to return to work in the open labor market.”

After commenting on the apportionment given by the medical evaluators, he concluded that “Mr. Gonzalez is in a rather unusual situation in that none of his impairments by themselves preclude him from working in the open labor market. However, he has so many separate issues that when combined, the industrial portions alone make him not amenable to rehabilitation.  Conversely, if he only had the non-industrial impairments, these would be labor-disabling and preclude him from working by themselves.

At the October 13, 2021 trial the parties stipulated that applicant sustained injury AOE/COE to his heart, upper extremits, spine, and lower extremities; that “Applicant asserts he is 100 percent permanently totally disabled” and “Defendant asserts that, Applicant’s permanent disability is 86%;”

The WCJ found that the injuries caused 100% permanent disability. The employer’s Petition of Reconsideration was granted, and the award was rescinded in the panel decision of Gonzalez v Team Infinity -ADJ7263865 (July 2023).

The issue on Reconsideration was apportionment of permanent disability. On this issue the WCAB panel noted that pursuant to Labor Code 4663 “The Appeals Board must rely on expert medical opinion in determining apportionment; apportionment is a medical determination, and a non-medical opinion is not substantial evidence.”

The WCAB panel then noted its recent en banc decision on this issue stating “Accordingly, ‘vocational apportionment’ offered by a non-physician is not a statutorily authorized form of apportionment. In addition, apportionment determinations that deviate from the mandatory standards described in section 4663(c) are not a valid basis upon which to determine permanent disability. (Grace Nunes v. State of California, Dept. of Motor Vehicles (2023) Cal.Comp.Cases … [2023 Cal.Wrk.Comp. LEXIS … [ADJ8210063; ADJ8621818] (Appeals Board en banc)”

Also, Dr. Nagelberg and Dr. O’Neill did not review the VR reports in this case.

“It appears that notwithstanding the apportionment described by Drs. Nagelberg and O’Neill, it is Mr. Broadus’ opinion that applicant is 100% disabled as a result of his industrial cumulative injury. Clearly, his opinion is not consistent with the statutory and case law discussed above.”

Aetna Health of California Inc. provides health insurance. For its preferred provider plans, Aetna contracts with a network of physicians and other medical providers who offer care to insured individuals at an agreed rate. Member patients can also see providers outside the network on referral from in-network physicians, but may bear a greater share of the cost.

Effective in 2009, Aetna adopted a “Network Intervention Policy” designed, according to its terms, to “reduce the number of non par [i.e., nonparticipating, or out-of-network] referrals by par providers and if necessary take further action against participating providers who refuse, after warning and education to comply with the terms of their contract.”

The California Medical Association (CMA) is a nonprofit professional organization, founded in 1856, that advocates on behalf of California physicians. By CMA’s count, it has more than 37,000 physician members.

In 2010, at least two years before it filed suit, CMA learned of Aetna’s Network Intervention Policy from its members and became concerned that in threatening termination or actually terminating participating physicians for their referrals to out-of-network providers, the policy’s implementation interfered with physicians’ exercise of their sound medical judgment.

CMA diverted 200-250 hours of staff time to respond to the policy. That time was spent on activities including: (i) investigation for the purpose of “advis[ing] physicians and the public regarding how to address Aetna’s . . . interference with the physician patient relationship in an effort to avoid litigation over this issue”; (ii) “prepar[ing] a 3-page document entitled the ‘Aetna Termination Resource Guide,’ which [CMA] publicized, advising . . . members about Aetna’s new policy . . . , including ways to proactively address and counteract Aetna’s policies”; (iii) engaging with physicians affected by Aetna’s policy and interacting with Aetna on physicians’ behalf; and (iv) “prepar[ing] a letter to California’s Department of Insurance and California’s Department of Managed Health Care requesting that they take action to address” Aetna’s change in policy.

In July 2012, CMA sued Aetna, alleging Aetna’s implementation of the Network Intervention Policy violated the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.) both because it was unfairly oppressive and injurious and because it violated specified sections of the Insurance Code, Business and Professions Code, and Health and Safety Code. CMA sought to enjoin Aetna from enforcing the policy.

The UCL confers standing on a private plaintiff to seek relief under the statute only if that plaintiff has “suffered injury in fact” and “lost money or property as a result of the unfair competition” at issue.

Aetna moved for summary judgment. It argued that CMA lacked UCL standing because CMA had not lost money or property as a result of the policy. Aetna emphasized that the policy applied to individual physicians – not to CMA. CMA countered that it had diverted resources in response to the policy. The trial court granted Aetna’s motion for summary judgment on standing grounds. The Court of Appeal affirmed. (California Medical Assn. v. Aetna Health of California Inc. I (2021) 63 Cal.App.5th 660).

The California Supreme Court agreed to hear the case, and reversed the dismissal in the case of California Medical Assn. v. Aetna Health of California Inc. II – S269212 (July 2023)

The issue between the parties is whether resources that an organization has spent to counter an unfair or unlawful practice constitute “money or property” that has been “lost . . . as a result of the unfair competition.” (§ 17204.)

The California Supreme Court held that the UCL’s standing requirements are satisfied when an organization, in furtherance of a bona fide, preexisting mission, incurs costs to respond to perceived unfair competition that threatens that mission, so long as those expenditures are independent of costs incurred in UCL litigation or preparations for such litigation.

When an organization has incurred such expenditures, it has “suffered injury in fact” and “lost money or property as a result of the unfair competition.” (§ 17204.)

In this case the record discloses a triable issue of fact as to whether the plaintiff association expended resources in response to the perceived threat the health insurer’s allegedly unlawful practices posed to plaintiff’s mission of supporting its member physicians and advancing public health.

The evidence was also sufficient to create a triable issue of fact as to whether those expenses were incurred independent of this litigation. For these reasons, the trial court erred in granting summary judgment for the defense. It therefore reversed the judgment of the Court of Appeal, which affirmed the grant of summary judgment.

Erik Adolph, was a driver for UberEATS, a meal delivery service. The company through which drivers are connected with those in need of UberEATS’ services is owned by Uber Technologies Inc.

Before he began making deliveries for UberEATS in March 2019, Adolph created an account to use the UberEATS app. In creating his account, Adolph accepted an arbitration agreement, which “is governed by the Federal Arbitration Act.”

In October 2019, Adolph filed a putative class action complaint against Uber, claiming that Uber had misclassified employees as independent contractors, and had therefore failed to reimburse the class members for necessary work expenses. The complaint was amended to include only a California Private Attorney General Act (PAGA) cause of action. Uber filed a petition to compel arbitration of Adolph’s individual claims, strike the class action allegations, and stay all court proceedings.

But the trial court denied Uber’s petition to compel arbitration citing California Supreme Court’s 2014 decision in Iskanian v. CLS Transportation Los Angeles, LLC 59 Cal.4th 348, 384 and the cases following it, In Iskanian the California Supreme Court held “that an employee’s right to bring a PAGA action is unwaivable,” and that “here . . . an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law.”

Uber appealed the ruling of the trial court. On April 11, 2022 the Court of Appeal affirmed the trial court in the case of Adolph v Uber Technologies Inc. -G059860 (consol. w/ G060198). The case was unremarkable at the time, hence it was “unpublished.”

About two months later, The Supreme Court of the United States published its decision in Viking River Cruises, Inc. v. Angie Moriana, on June 15, 2022, agreeing with the employer who had appealed nearly the same issue as in Adolph v Uber. SCOTUS thus limited the application of Iskanian in California. It said “When an employee’s own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit.” As a result, Moriana would lack statutory standing to maintain her non-individual claims in court, and the correct course was to dismiss her remaining claims.

The U.S. Supreme Court decision in Viking had – at least temporarily – disrupted the PAGA process against employer’s who have arbitration agreements in California. Hence, on July 22, 2022 the California Supreme Court granted Uber’s Petition for Review in the Adolph case. The Uber case which was unremarkable and unpublished, is now remarkable, since the timing make it the case chosen to decide how Viking will work in California.

The California Supreme Court agreed to hear Adolph v Uber Technologies Inc in order to consider whether an aggrieved employee who has been compelled to arbitrate individual claims “premised on Labor Code violations actually sustained by” the plaintiff (Viking River, supra, 596 U.S. at p. __ [142 S.Ct. at p. 1916]; see Lab. Code, § 2699, subd. (a)) maintains statutory standing to pursue non-individual “PAGA claims arising out of events involving other employees” (Viking River, at p. __ [142 S.Ct. at p. 1916]) in court.

In deciding Viking River the U.S. Supreme Court concluded that a PAGA plaintiff loses standing in this situation: “[A]s we see it, PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding. Under PAGA’s standing requirement, a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action.”

And SCOTUS reasoned that “When an employee’s own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit.”

Nonetheless, the California Supreme Court in it’s Adolph v Uber Technologies -S274671 (July 2023) decision published today, disagreed with the Viking River interpretation of PAGA, a state law, because “[t]he highest court of each State . . . remains ‘the final arbiter of what is state law’ ” (Montana v. Wyoming (2011) 563 U.S. 368, 378, fn. 5), “we are not bound by the high court’s interpretation of California law.”

The centerpiece of PAGA’s enforcement scheme is the ability of a plaintiff employee to prosecute numerous Labor Code violations committed by an employer and to seek civil penalties corresponding to those violations.

“Uber makes several arguments in urging that a PAGA plaintiff loses standing to litigate non-individual claims in court when the plaintiff’s individual claims are subject to arbitration. None is persuasive.”

In sum, where a plaintiff has filed a PAGA action comprised of individual and non-individual claims, an order compelling arbitration of individual claims does not strip the plaintiff of standing to litigate non-individual claims in court. This “is the interpretation of PAGA that best effectuates the statute’s purpose, which is ‘to ensure effective code enforcement.’ ”  

“We reverse the judgment of the Court of Appeal and remand the case for further proceedings consistent with this opinion. We limited our review to the question of PAGA standing and express no view on the parties’ arguments regarding the proper interpretation of the arbitration agreement.”

In 1996 and 1997, the Anaheim Public Financing Authority, the City of Anaheim, Walt Disney related entities, and a bond trustee signed several contracts. Under the Finance Agreement, Disney, the City, and the Authority agreed “to combine resources on the terms and conditions hereof to bring about a revitalization of the entire Anaheim Resort and to finance the public improvements needed for the Anaheim Resort, the expansion of the Convention Center, and the Disneyland Resort Project.”

The Anaheim Resort spans about 1046 acres. The Disneyland Resort is located within the Anaheim Resort and includes all the theme parks, hotel rooms, retail establishments, and other facilities located on Disney property. In the Finance Agreement, Disney agreed to build a new theme park (California Adventure), a pedestrian bridge, additional hotel rooms, as well as new retail, dining, and entertainment facilities (Downtown Disney). The Authority agreed to issue municipal bonds to raise money to help pay for the project.

In 2018, Anaheim voters approved Measure L, a Living Wage Ordinance (LWO). (Anaheim Mun. Code, § 6.99 et seq.) The LWO applies to hospitality employers in the Anaheim or Disneyland Resort areas that benefit from a “City Subsidy.” Affected employers were required to pay their employees a minimum of $15 per hour under the LWO starting in 2019, with annual increases of $1 an hour. In 2023, the wage would then be tied to the consumer price index.

In 2019, Kathleen Grace and other employee plaintiffs filed a class action complaint against the Walt Disney Company, Walt Disney Parks and Resorts, U.S., Inc. and Sodexo, Inc., and Sodexomagic, LLC alleging a violation of the LWO. Sodexo operates restaurants in Disney’s theme parks. The Employees alleged they were employed by either Disney or Sodexo, and they were not paid a living wage, beginning on January 1, 2019.

It was undisputed the Employees were not being paid the required minimum hourly wage under the LWO. However, Disney argued it was not covered under the LWO as a matter of law because it is not benefiting from a “City Subsidy.”

Disney and Sodexo filed a motion for summary judgment. The Employees argued the City issued municipal bonds in 1997, which gave “Disney over $200 million dollars to help finance the construction of California Adventure and a parking garage to serve the new park.” The bonds issued under the Finance Agreement will not be paid off until 2036.

The trial court granted the motion for summary judgment.  It concluded that “A ‘rebate . . . of taxes,’ as that phrase is used in the [LWO], refers not only to a refund of taxes already paid, but also to an abatement of taxes yet to be paid, an exemption from taxes, etc.” Nonetheless, the court concluded “there is no evidence that the Finance Agreement somehow lessens [Disney’s] tax obligation. Therefore, the public benefit conferred . . . by the Finance Agreement does not create a City Subsidy.”

The employees appealed, and the Court of Appeal reversed in the published case of Grace v. The Walt Disney Company – G061004 (July 2023).

Pursuant to Anaheim Mun. Code § 6.99.110 “A ‘City Subsidy’ is any agreement with the city pursuant to which a person other than the city has a right to receive a rebate of transient occupancy tax, sales tax, entertainment tax, property tax or other taxes, presently or in the future, matured or unmatured.”

The word “rebate” is not defined within the LWO. Generally, a “rebate” means “a return of a part of a payment.” (Webster’s 11th New Collegiate Dict. (2003) p. 1037.) This definition is consistent with California statutes, in which a “rebate” ordinarily means any kind of “retroactive abatement, credit, discount, or refund.”

Here, under the Finance Agreement, the City agreed to issue municipal bonds through the Authority. The bondholders were to be repaid based on the incremental increases in the City’s transient occupancy tax (paid by hotel guests on Disney property and other properties in Anaheim), sales tax (paid by consumers in businesses located within Disney owned property), and property tax (paid directly by Disney).

Under the Enhancement Agreement, Disney agreed if there was any year in which the City’s tax revenues in the debt service fund failed to meet its bond obligations to the bond trustee, Disney would then make up the shortfall. And under the Reimbursement Agreement, the parties agreed Disney would then be reimbursed by the City for any of its shortfall payments in those years when the City’s incremental tax revenues rebounded and were sufficient to meet its bond obligations

“We find that under these three agreements, particularly the Reimbursement Agreement, Disney has the right to receive a rebate – a return – of a portion of the incremental transient occupancy tax (paid by hotel guests), the local sales tax (paid by consumers), and the local property tax (paid by Disney) in those “rebound” years when the City’s incremental tax revenues exceed its bond obligations.”

“In short, we hold Disney receives a “City Subsidy” within the meaning of the LWO and is therefore required to pay its employees a living wage. Thus, we reverse the trial court’s order granting the defendants’ motion for summary judgment.”

The Industrial Welfare Commission (IWC) was established in California in 1913 to regulate the wages, hours, and working conditions of women and children employed in the state.

The IWC’s first order, issued in 1916, established a minimum wage for women and children in the garment industry. The order also set limits on the number of hours that women and children could work per day and per week. In the years that followed, the IWC issued a series of orders covering other industries, including manufacturing, retail, and agriculture.

In 1972, the California Legislature amended the Labor Code to authorize the IWC to establish minimum wages, maximum hours, and standard conditions of employment for men as well as women. The IWC promulgated a series of wage orders in 1976 and 1980. These orders were challenged in court, but ultimately upheld.

In 1988, appointees of Governor Pete Wilson on the IWC repealed the “daily overtime” provisions in many of the wage orders. This change was controversial, and it was eventually reversed in 1999.

The IWC is currently not in operation. The Division of Labor Standards Enforcement (DLSE) continues to enforce the provisions of the wage orders.

However, the IWC has just been revived as a result of the new budget just signed into law. On July 10, Governor Gavin Newsom signed A.B. 102, the final step in moving the State Budget Act of 2023 into law. It takes effect immediately upon signing. The 2023-24 state budget includes total spending of approximately $310.8 billion, of which $225.9 billion is from the General Fund.

The new budget allocates $78,650,000 “for support of Department of Industrial Relations.” and Schedule (5) of that allocation provides the sum of $3,000,000 for the now dormant Industrial Welfare Commission. The allocation provisions contained the following earmark.

“Of the amount appropriated in Schedule (5), $3,000,000 shall be available for the Industrial Welfare Commission to convene industry-specific wage boards and adopt orders specific to wages, hours, and working conditions in such industries, provided that any such orders shall not include any standards that are less protective than existing state law. The commission shall prioritize for consideration industries in which more than 10 percent of workers are at or below the federal poverty level. The Industrial Welfare Commission shall convene by January 1, 2024, with any final recommendations for wages, hours, and working conditions in new wage orders adopted by October 31, 2024.”

California Labor Code section 1178 permits the Industrial Welfare commission to convene these Wage Boards. Ultimately there is a great probability that higher minimum wages, especially in targeted industries, will be arriving by the end of next year.

The back story to the resurrection of the IWC may have been minimally successful efforts to increase wages in various industries in California in previous years, such as the Fast Food Accountability and Standards Recovery Act (AB 257 – FAST Recovery Act) aimed at fast-food workers. It became law in 2022.

This law was to have established the Fast Food Council within the Department of Industrial Relations until January 1, 2029, and was to be composed of 10 members to be appointed by the Governor, the Speaker of the Assembly, and the Senate Rules Committee, and would prescribe its powers.

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 was co-chaired jointly by the National Restaurant Association, the U.S. Chamber of Commerce and the International Franchise Association.

On December 5, the 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. However, Katrina S. Hagen Director, California Department of Industrial Relations, sent the coalition a letter on December 27, 2022 stating that it intends to implement AB 257 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.

The judge issued a temporary restraining order blocking the state from implementing the law while a lawsuit challenging its constitutionality is pending.

However, the resurrection of the Industrial Welfare Commission by provisions of the newly approved budget may have opened a new front in this political battle. The Governor will now have to evaluate candidates and make appointments to members of the IWC. All five will be the subject of confirmation hearings in the California Senate. And staff members will be recruited and hired under the Civil Service Ace.

The resurrection process will therefore take substantial time to fully make the IWC operational. Nonetheless, employers should expect efforts to increase wages statewide in the coming years from various legal and political fronts.