Tag: 2024 News

Sunshine Behavioral Health, LLC employed Britnee Campbell as an hourly, nonexempt worker from approximately October 2018 to March 2019. Sunshine contends that when Campbell began her employment, she signed an arbitration agreement that included a class action waiver.

On May 23, 2022, Campbell, as the lead plaintiff in a putative class action, filed the instant complaint. The complaint alleged a single cause of action for violations of Business and Professions Code section 17200, et seq., based on violations of employment law. Among other things, the complaint alleged employees had not been paid proper overtime compensation, had been required to work through meal and rest breaks without compensation, had not been paid minimum wage, and had not been paid in a timely manner.

Sunshine filed an answer on August 3, 2022. The answer included an affirmative defense that “one or more of the putative class members” signed an arbitration agreement that precluded them from participation.

According to Campbell’s counsel, prior to the initial status conference, which was set for September 15, 2022, defense counsel proposed the idea of early mediation to explore settling the case. Campbell’s counsel represents that in the joint status conference statement, Sunshine represented to the court that “formal discovery is premature at this time, as Defendant believes that the parties would benefit from early informal settlement discussions, including attending private mediation”  Sunshine also stated: “Defendant is amenable to private mediation and a stay of the case pending the completion of mediation. Participation in private mediation would include an informal exchange of data and information sufficient to prepare for settlement negotiations.” The status conference was continued to December 14.

The parties agreed to mediate the case. On October 27, 2022, they entered into a detailed agreement entitled “Joint Stipulation Regarding Discovery and Mediation” (the joint stipulation). The joint stipulation stated, among other things, that the parties agreed to participate in private mediation on April 18, 2023, and to stay discovery. Sunshine agreed to produce documents and data prior to the mediation and to refrain from certain conduct with regard to potential class members. The parties also agreed that if mediation was unsuccessful, the parties had met and conferred on an appropriate notice to the class pursuant to Belaire-West Landscaping, Inc. v. Superior Court (2007) 149 Cal.App.4th 554 (a Belaire-West notice), which would be mailed out by an agreed-upon company seven days after the failed mediation. According to Campbell’s attorney, reaching the joint stipulation required “substantial negotiations,” including “weeks” spent on the Belaire-West notice.

On November 22, 2022, Sunshine asserted it located, for the first time, an arbitration agreement in Campbell’s personnel file. No explanation was offered as to why this document was not or could not have been located earlier. Sunshine did not inform Campbell of this discovery until December 7, 2022, when preparing the status conference report for the court.

Months later, on May 3, 2023, Sunshine filed its motion to compel arbitration. The motion was not particularly complex or voluminous.

At the May 10 status conference, the court noted the failure to participate in mediation was “a violation by defendant of the Court’s stipulation and order which was filed on [March 24, 2023].”

The court held a hearing on the motion to compel arbitration on July 14, 2023. The court, after discussion, found that Sunshine, “under an analysis of the St. Agnes factors, . . . waived its right to compel Plaintiff’s claims to arbitration. Sunshine appealed.

The court of appeal affirmed in the published case of Campbell v. Sunshine Behavioral Health -G062886 (September 2024).

“Like the trial court, we do not unquestioningly accept Sunshine’s representation that it discovered the arbitration agreement for the first time on November 22, 2022. The trial court was highly skeptical, using quotations around the word “discovered” at several points in the minute order denying the motion to compel.”

As in Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, the defense raised by Campbell was waiver. “The waiver inquiry is exclusively focused on the waiving party’s words or conduct; neither the effect of that conduct on the party seeking to avoid enforcement of the contractual right nor that party’s subjective evaluation of the waiving party’s intent is relevant. [Citations.] This distinguishes waiver from the related defense of estoppel, ‘which generally requires a showing that a party’s words or acts have induced detrimental reliance by the opposing party.’ [Citations.] To establish waiver, there is no requirement that the party opposing enforcement of the contractual right demonstrate prejudice or otherwise show harm resulting from the waiving party’s conduct.”

On March 22, 2018 Andrew Nguyen filed a civil action in Los Angeles County Superior Court, captioned State of California, ex rel. Andrew Nguyen v. US. Healthworks, Inc., Case No. BC 698811, that alleged that US. Healthworks (USHW), a nationwide chain of occupational and urgent care clinics, failed to comply with its obligations under the Unclaimed Property Law (UPL), by holding unclaimed property USHW was required to report and remit to the State of California, and that USHW’ s failures to do so constitute violations of the California False Claims Act (“CFCA”) and, therefore, USHW is alleged to be liable for treble damages, penalties, expenses, costs and attorneys’ fees.

In March 2022 the California Attorney General filed a Complaint in Intervention in the Andrew Nguyen action. The AG alleged that “USHW accrued tens of millions of dollars in overpayments, millions of dollars’ worth of which USHW let sit on its books for years, sometimes more than a decade, without issuing a refund. Of the overpayments for which USHW did issue a refund check, millions of dollars’ worth of such checks were never successfully cashed and USHW also held those balances on its books indefinitely.”

This month the California Attorney General announced a settlement with U.S. Healthworks. The $7.7 million settlement resolves allegations that USHW knowingly kept millions of dollars from the State of California in unclaimed property, in violation of the Unclaimed Property Law (UPL) and the California False Claims Act (CFCA). The unclaimed property in question included patient balances due to overpayment. As part of the settlement, USHW must hand over unclaimed property totaling $1.5 million to the State Controller’s Office.

In addition USHW agreed to pay the Office of the Attorney General, via wire transfer, the sum of five million two hundred twenty-one thousand thirty-eight dollars and seventy-four cents ($5,221,038.74) pursuant to Government Code section 12652, subdivision (g). It also agreed to pay the sum of one million thirty-one thousand seven hundred two dollars and twenty-seven cents ($1,031,702.27) to Andrew Nguyen, as his qui tam share as the whistleblower in this case.

At times, urgent care centers carry patient balances due to overpayment. This happens when an insurance payment is more than was anticipated after patients pay out-of-pocket costs. While the urgent care should issue a refund in these situations, sometimes refund checks mailed to patients are returned or are never cashed.

Under the UPL, all intangible property that remains unclaimed by the true owner for more than three years after it became payable or distributable must be reported and then remitted to the state. The UPL also mandates 12% interest per year on property that should have been reported or remitted to the state. The CFCA permits the Attorney General to bring a civil law enforcement action to recover treble damages and civil penalties against any person who knowingly makes or uses a false statement or document to either obtain money or property from the State or avoid paying or transmitting money or property to the State.

Even when USHW filed reports with California, the company underreported the unclaimed property it held in 2018, 2019, 2020, and 2021. USHW violated the CFCA when it chose not to report its unclaimed property holdings, thereby knowingly concealing millions of dollars due to the State of California. Although USHW’s unreported property claims were repeatedly brought to management’s attention, management declined to comply and report the property to avoid an audit by state authorities.

The settlement also contains the provision “USHW does not admit to any violations of law and does not admit any wrongdoing that was or could have been alleged by Plaintiff, the Controller or Mr. Nguyen before the date of the Judgment under any law. No part of this Judgment, including its statements and commitments, shall constitute evidence of any liability, fault, or wrongdoing by USHW.

Governor Newsom just signed Assembly Bill No. 2337 which authorizes the use of electronic signatures in proceedings before the Workers’ Compensation Appeals Board.

On March 18, 2020, shortly after Governor Newsom declared a state of emergency in response to the spread of COVID-19, WCAB issued an en banc decision, Case No. MISC. NO. 260, with several orders, including authorization to use electronic signatures on compromise and release agreements. When the state of emergency was terminated by the Governor on February 28, 2023, WCAB issued another en banc decision, Case No. MISC. NO. 268, rescinding provisions of en banc orders made during the state of emergency, including those relating to the authorized use of electronic signatures, as contained in Case No. MISC. NO. 260.

With the rescission of that order, electronic signatures are no longer being allowed in workers’ compensation proceedings as they are not explicitly authorized under the Labor Code. This new law codifies the authorized use of electronic signatures on documents filed in proceedings before the WCAB.

The California Lawyers Association, Workers’ Compensation Section, the sponsor of this law, writes in support noting: “Electronic signatures were used effectively in workers’ compensation proceedings for three years during the state of emergency. California explicitly authorizes electronic signatures in civil proceedings, where they are widely and effectively used. AB 2337 follows a long line of legislation in California permitting electronic signatures in various areas. There were no arguments in opposition.

The following two sections were added to the Labor Code.

110.5. For the purpose of this chapter and subject to restrictions or requirements that may be adopted by the administrative director or the Workers’ Compensation Appeals Board, documents that require a signature, including the signature of a notary on an acknowledgment, may be filed with an “electronic signature,” defined as an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record, where the electronic signature is attributable to a person per the requirements of Title 2.5 (commencing with Section 1633.1) of Part 2 of Division 3 of the Civil Code or Section 16.5 of the Government Code.

3206.5. For the purpose of this division and subject to restrictions or requirements that may be adopted by the administrative director or the Workers’ Compensation Appeals Board, documents that require a signature, including the signature of a notary on an acknowledgment, may be filed with an “electronic signature,” defined as an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record, where the electronic signature is attributable to a person per the requirements of Title 2.5 (commencing with Section 1633.1) of Part 2 of Division 3 of the Civil Code or Section 16.5 of the Government Code.

The California Labor Commissioners’ Office announced a settlement in the amount of $1.7 million in a wage theft case that impacts over 550 Wingstop employees in Kern County. This announcement follows a state investigation that uncovered a scheme in which a franchisee disguised the ownership of five Wingstop locations to deprive employees of wages, overtime, and meal breaks.

The LCO began its investigation in November 2020 after receiving a Report of Labor Law Violation for one of the locations.

The investigation revealed that, between 2019 and 2022, five Wingstop businesses were each operating as separate corporate entities, although one owner, Clinton Lewis, operated each site and shared employees between the multiple locations.

By treating each location as a separate employer, Lewis was able to pay workers the lower minimum wage rate designated for smaller employers with 25 or fewer employees.

Employees scheduled to work at more than one Wingstop in one day were denied overtime pay when they worked more than eight hours in a workday or 40 hours in a workweek. Lewis avoided paying missed meal break premiums to staff when scheduling them at more than one location. Additionally, employees were not compensated for off-the-clock work during their time traveling from one location to another.  

This settlement resolves the citations that covered minimum wage violations, contract wage violations, meal period premiums, liquidated damages, and waiting time penalties. Today’s settlement is an update from an earlier announcement.  

Employees who worked at the following Wingstop restaurant locations from June 9, 2019, and April 30, 2022, should contact LCO at (661) 587-3070 as they may be entitled to owed wages and damages under the settlement agreement:

– – 5628 Stockdale HWY, Bakersfield, CA 93309
– – 4580 Coffee Rd B, Bakersfield, CA 93308
– – 2600 Oswell St E, Bakersfield, CA 93306
– – 1523 Panama Ln, Bakersfield, CA 93307  
– – 3800 Gosford 100, Bakersfield, CA 93309  

The Labor Commissioner’s Office in 2020 launched an interdisciplinary outreach campaign, “Reaching Every Californian.” The campaign amplifies basic protections and builds pathways to vulnerable populations, providing critical information to workers and employers on legal protections and obligations, as well as the Labor Commissioner’s enforcement procedures. Californians can follow the Labor Commissioner on Facebook and Twitter.

Appellants Sarah Anoke and other current or former employees initiated arbitration proceedings with Judicial Arbitration and Mediation Services to resolve employment-related disputes with X. Anoke’s employment contract with X provides for arbitration of such disputes.

On March 7, 2023, the arbitrator emailed an invoice for $27,200, X’s share of the initial fees for the 15 individual arbitrations here, to all counsel. The invoice stated that “[p]ayment is due upon receipt.” Anoke’s counsel mistakenly paid the invoice the same day. As a result, when X’s counsel accessed the arbitrator’s online portal on March 8, the system listed the status of the invoice as “[c]losed” and indicated that $27,200 had been “[p]aid” on the invoice.

Anoke’s counsel notified the arbitrator of the error on March 8, and the arbitrator issued a refund check on March 21. Anoke’s counsel apparently did not notify X that it had paid the fees or requested a refund. Notwithstanding the refund, when the arbitrator emailed counsel for both parties near the end of March to schedule an initial administrative call, the arbitrator represented that – ‘[t]he initial filing fees . . . have now been paid.”

On April 11, the arbitrator emailed counsel for both parties, stating that “[i]t appears [the] billing department may have nulled the original invoice” for the case-opening fees. The email included, as an attachment, a second invoice for X’s share of the case initiation fees, $27,200. The new invoice, dated April 7, indicated that “[p]ayment is due upon receipt.” The arbitrator’s online portal continued to list the earlier invoice as “[c]losed” and “[p]aid.”

On May 5, X remitted payment on the April 7 invoice.

In the superior court, Anoke filed a motion to compel an arbitration in which X is liable for her reasonable attorney fees and costs, a remedy for untimely payment under CCP section 1281.97, subdivision (b)(2).

After a hearing, the court denied relief. The court reasoned that, because the arbitrator nullified the first invoice after Anoke’s attorney mistakenly paid it, and X timely paid the second invoice, X met the statutory deadline. The plaintiffs appealed the denial.

The court of appeal affirmed in the published case of Anoke v. Twitter -A168675 (September 2024).

The purpose of section 1281.97 is “[t]o avoid delay” from nonpayment of the fees needed at the outset of an arbitration, encouraging efficient and prompt resolution of disputes subject to arbitration.

Our Legislature recognized that “[a] company’s strategic non-payment of [arbitration] fees and costs severely prejudices the ability of employees or consumers to vindicate their rights,” particularly when the company refusing to pay the fees is the party who insisted on arbitration in the first place.

By “provid[ing] employees and consumers remedies if a drafting party refuses to pay,” the statute seeks “[t]o ensure that a drafting party cannot unilaterally prevent a party from adjudicating their claims” in arbitration.

Accordingly, section 1281.97 establishes a 30-day time frame for payment of the fees required to initiate an employment or consumer arbitration. As the party that imposed the arbitration clause, the statute refers to X as the “drafting party.” (§§ 1280, subd. (e), 1281.97, subd. (a)(1).) If the fees “are not paid within 30 days after the due date the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration[.]” (§ 1281.97, subd. (a)(1).) When the drafting party is in default, the employee or consumer may (as applicable here) compel an arbitration in which the drafting party is liable for reasonable attorney fees and costs. (§ 1281.97, subd. (b)(2).)

Importantly, the “due date” that triggers the 30-day grace period is set by an invoice from the arbitration provider. Once an employee or consumer initiates an arbitration, the arbitration provider must “immediately provide an invoice for any fees and costs required before the arbitration can proceed to all of the parties to the arbitration.” (§ 1281.97, subd. (a)(2).) “To avoid delay” the arbitration provider must issue the invoices “to the parties as due upon receipt,” unless the agreement states otherwise. (Ibid.) In sum, a default occurs when the arbitration fees go unpaid for 31 days after “the due date” (§ 1281.97, subd. (a)(1)) set by an arbitration provider’s “invoice.” (§ 1281.97, subd. (a)(2).)

“That never happened here. After the arbitrator issued the first invoice, properly marked due upon receipt, Anoke’s counsel immediately paid the invoice in full. When the arbitrator issued a new invoice, also marked due upon receipt, X paid the fees within 30 days. Neither invoice was ever past due for 31 days, as the statute requires for a default.”

“Anoke makes several arguments. None has merit.”

“In these unique circumstances, we conclude that Anoke’s counsel “paid” the first invoice. As Anoke acknowledges, the reasons for a late payment are irrelevant.“