Tag: 2024 News

Lizbeth Balderas was a Fresh Start Harvesting, Inc employee. In June 2022, she filed a complaint for civil penalties for violations of the California Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.) on behalf of herself and 500 other current and former employees of defendant Fresh Start Harvesting, Inc

In her lawsuit she alleged, “Ms. Balderas is not suing in her individual capacity; she is proceeding herein solely under the PAGA, on behalf of the State of California for all aggrieved employees, including herself and other aggrieved employees.”

Balderas claimed that Fresh Start did not provide employees with required meal break periods and rest periods, and that Fresh Start provided inaccurate wage statements, made untimely wage payments, and failed to pay wages at termination. Fresh Start filed a motion to compel arbitration.

Fresh Start filed a motion to compel arbitration.

On its own motion, the trial court gave notice of its intent to strike Balderas’s complaint. It said because she had not filed an individual action seeking PAGA relief for herself, she lacked standing to pursue a “non-individual” or representative PAGA action on behalf of other employees.

The trial court ruled Balderas lacked standing to bring a representative PAGA action on behalf of other employees because she did not allege “an individual claim” in the action. The Court of Appeal reversed in the published case of Balderas v. Fresh Start Harvesting, Inc. -B326759 (April 2024).

The Court of Appeal said that PAGA is a remedial statute intended to protect employees from employer misconduct. Remedial statutes must be broadly interpreted to achieve the legislative goals. (In re Delila D. (2023) 93 Cal.App.5th 953, 974.) PAGA provisions must be interpreted broadly to protect employees. (Adolph v. Uber Technologies, Inc., supra, 14 Cal.5th at p. 1122.)

Class or representative PAGA actions play an important function in enforcing [the Labor Code] by permitting employees . . . a relatively inexpensive way to resolve their disputes about unlawful employer conduct. (Piplack v. In-N-Out Burgers (2023) 88 Cal.App.5th 1281- 1286.)

The statutory goal is furthered by extending broad standing to aggrieved employees that does not depend on the viability or strength of a plaintiff’s individual PAGA claim. In fact, the inability for an employee to pursue an individual PAGA claim does not prevent that employee from filing a representative PAGA action. California courts have consistently held that ” ‘ [p]aring away the plaintiff’s individual claims’ ” for one reason or another, ” ‘does not deprive the plaintiff of standing to pursue representative claims under PAGA.’ ” (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104 – 1122.)

These broad-standing policies that allow employees the freedom to bring representative PAGA actions to challenge unfair employer policies had not been questioned until 2022 when the United State Supreme Court made some observations about PAGA standing that conflicted with what the California Legislature intended.

In Viking River Cruises v. Moriana (2022) _ U.S. _ [213 L.Ed.2d 179, 200-201] (Viking River), the United States Supreme Court wrote, “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.” (Italics added.) “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.” (Ibid., italics added.)

In reliance on this language, the trial court struck Balderas’s “non-individual” representative PAGA action. It noted that in her complaint Balderas alleged, “Ms. Balderas is not suing in her individual capacity; she is proceeding herein solely under the PAGA, on behalf of the State of California for all aggrieved employees, including herself and other aggrieved employees” of Fresh Start. Noting that she did not file her own individual PAGA claim, the court found under Viking River she could not bring this representative PAGA action for penalties.

In Adolph v. Uber Technologies, Inc., supra, 14 Cal.5th at page 1119, our Supreme Court held Viking River was incorrect on PAGA standing and its decision on that issue may not be followed by California courts. The court wrote, “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 [179 L.Ed.2d 799]), we are not bound by the high court’s interpretation of California law.”

The Adolph court concluded that the Viking River requirement of having to file an individual PAGA cause of action to have standing to file a representative PAGA suit was incorrect. There are only two requirements for PAGA standing. “The plaintiff must allege that he or she is (1) ‘someone “who was employed by the alleged violator” and (2) someone “against whom one or more of the alleged violations was committed.”   (Adolph v. Uber Technologies, Inc., supra, 14 Cal.5th at p. 1120.)

Balderas met the standing requirements.The order striking the pleading is reversed. Costs on appeal are awarded to appellant.

In May 2015, Arno Patrick Kuigoua started working for the California Department of Veterans Affairs as a registered nurse at the Knight Veterans Home in Lancaster, California. His employment with the Department ended in October 2018. The Department fired him after determining he sexually harassed women and delivered substandard care that injured patients.

Kuigoua appealed his termination to the State Personnel Board, which, after a six-day hearing, rejected his appeal. The administrative law judge ruled Kuigoua’s dismissal was just and proper. Unsuccessful in altering this ruling were Kuigoua’s petition for rehearing, his petition for writ of mandate, his appeal of the writ denial, and his 2022 petition for review by the California Supreme Court.

Just before his State Personnel Board hearing, on April 2, 2019, Kuigoua filed an administrative charge of employment discrimination. He filed this charge concurrently with the California Department of Fair Employment and Housing and the federal Equal Employment Opportunity Commission.

Kuigoua’s Commission Form reported that, during three and a half months in 2018, someone discriminated against him on the basis of Kuigoua’s male gender. Kuigoua also suffered retaliation, apparently for reporting this discrimination. The retaliation took the form of denying him the opportunity to earn overtime pay. The Department failed to ameliorate these problems and finally discharged him altogether. Kuigoua said his direct antagonist was Julian Manalo.

An equal opportunity officer named Robert Hennig investigated these charges. Hennig found no evidence that Kuigoua had suffered discrimination because of his male gender and he was given a right-to-sue notice.

On March 5, 2020, Kuigoua sued the Veterans Department in state court on state statutory claims. This complaint asserted four causes of action and the factual allegations in this complaint cover about eight pages.

Kuigoua’s judicial complaint stated nothing about gender discrimination against males at the West Los Angeles facility. Now the site of the oppression was 60 miles north, in Lancaster. Neither was there mention of antagonist Manalo. The retaliation now was for complaining to Ancheta about harassment from Smith and Quintua: three people Kuigoua omitted from his Commission Form. The time frame was different: over the three-year interval from 2015 to 2018, rather than the three and a half months in 2018.

Defendant Veterans Department responded to Kuigoua’s lawsuit. The Department noted the lawsuit was about alleged events different from those Kuigoua alleged in his Commission Form. The Department moved for summary judgment on the basis Kuigoua had not exhausted his administrative remedies.

The trial court granted the Department’s motion. The court’s single-spaced eight-page statement of decision carefully applied the law to the disparity between Kuigoua’s factual allegations in his administrative and judicial complaints. Kuigoua appealed.

The Court of Appeal of the 2nd Appellate District affirmed the trial court in the published case of Kuigoua v. Dept. of Veteran Affairs -B323735 (April 2024).

The Court of Appeal said “Kuigoua loses this appeal because he changed horses in the middle of the stream. His agency complaint was one animal. On the far bank, however, his lawsuit emerged from the stream a different creature. Changing the facts denied the agency the opportunity to investigate the supposed wrongs Kuigoua made the focus of his judicial suit. The court rightly ruled Kuigoua failed to exhaust his administrative remedies. “

Employees like Kuigoua who wish to sue under the Fair Employment and Housing Act must exhaust the administrative remedy that statute provides. They do so by filing a complaint with the Department of Fair Employment and Housing. Filing this administrative complaint is a mandatory prerequisite to suing in court. (Guzman v. NBA Automotive, Inc. (2021) 68 Cal.App.5th 1109 at p. 1117; see Clark, supra, 162 Cal.App.5th at p. 308, fn. 21.)

Once the agency receives this complaint, it investigates the alleged unlawful practice and decides whether it can resolve the matter by conference, conciliation, and persuasion. If these measures fail, the agency may issue an accusation. If the agency decides against issuing an accusation, it issues a right-to-sue letter to the aggrieved person. (Guzman, supra, 68 Cal.App.5th at p. 1117.)

“Summary judgment is now recognized as a particularly suitable means to test the sufficiency of the plaintiff’s or defendant’s case.”

Ferrellgas’s business is the transportation and installation of propane gas, a hazardous material regulated by the United States Department of Transportation (DOT).

Tom Faley was hired by Ferrellgas as a driver in 2016. On March 11, 2018, Faley was promoted to one of the district manager positions and in this role was directly supervised by Denise Whisman. Whisman was the general manager of Ferrellgas’s service center in San Diego (where Faley worked), and oversaw the center’s operations and employees. Two district managers reported to Whisman.

In June 2018, e-mails between Faley and Whisman document Faley’s deficiencies (primarily with customer and employee communication) and their back and forth to provide Faley with adequate training for his new role and to manage the work effectively. In August 2018, Faley underwent his first performance review as district manager with Whisman. Whisman reported that Faley was deficient in two areas, customer retention and business growth, and was meeting expectations in three others.

Performance problems continued and were well documented between Faley and Wishman for the next year. Ultimately in July 2029 . Whisman told Faley he was being terminated for performance reasons. Faley asked if he could stay on as a driver or technician, since the problems were related to his management. Whisman said no, and shortly after Faley was escorted from the premises.

Faley brought suit against Ferrellgas for retaliation under the Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq.), failure to prevent retaliation under FEHA, retaliation under Labor Code section 1102.5, wrongful termination against public policy, and intentional and negligent infliction of emotional distress.

After discovery, Ferrellgas brought a successful motion for summary judgment against Faley. The trial court found that Faley failed to show that Ferrellgas’s “legitimate, documented non-retaliatory reasons” for terminating his employment were mere pretext and that no triable issue of fact was raised as to Faley’s claims for retaliation.

The trial court also found Faley’s claims for intentional and negligent infliction of emotional distress were not actionable because nothing in the record gave “rise to the sort of ‘outrageous, or ‘despicable’ conduct” necessary to support those causes of action and that they were barred by the exclusivity provisions of the Workers’ Compensation Act.

The Court of Appeal affirmed the dismissal of his case in the unpublished case of Faley v. Ferrellgas -D081184 (April 2024).

On appeal, Faley asserts the court erred because triable issues of fact remain as to whether Ferrellgas had a retaliatory motive for his termination. He also contends the court used the wrong legal standard for his retaliation claim under Labor Code section 1102.5, requiring reinstatement of that cause of action. Finally, with respect to his emotional distress claims, Faley asserts they are not barred by workers’ compensation exclusivity, and that triable issues of fact remain with respect to the claims.

The Court of Appeal rejected each of Faley’s arguments and affirm the judgment in favor of Ferrellgas, as it discussed its reasoning for each of the issues raised.

A cause of action for intentional infliction of emotional distress exists when there is ‘(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.

A defendant’s conduct is “outrageous” when it is so extreme as to exceed all bounds of that usually tolerated in a civilized community. And the defendant’s conduct must be “intended to inflict injury or engaged in with the realization that injury will result.” (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050-1051.)

Further,an essential element of an Intentional Infliction of Emotional Distress claim is a pleading of outrageous conduct beyond the bounds of human decency.

Managing personnel is not outrageous conduct beyond the bounds of human decency, but rather conduct essential to the welfare and prosperity of society. A simple pleading of personnel management activity is insufficient to support a claim of intentional infliction of emotional distress, even if improper motivation is alleged. If personnel management decisions are improperly motivated, the remedy is a suit against the employer for discrimination. (Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 80)

Former chiropractor Peyman Heidary owned and oversaw a network of medical clinics to generate fraudulent billings to workers’ compensation and insurance carriers.

As a non-attorney, he also allegedly controlled the day-to-day operations of various law firms, including California Injury Lawyers.He allegedly controlled or directed hiring and firing, legal decision making, and income flow to and from the law firm. Codefendants Cary Abramowitz, a lawyer, and Ana Solis allegedly assisted Heidary in these operations.

Heidary also allegedly formed and controlled several health clinics in Southern California. Each was staffed by front and back room support staff for scheduling and basic medical services .

Included were chiropractors operating as primary treating physicians, allegedly providing blanket, cookie-cutter services to each patient at Heidary’s direction and making as many medical specialist referrals as possible. Despite their qualifications, they also wrote medical legal reports using Heidary’s templates, the most expensive report in workers’ compensation.

Medical doctors, or specialists, allegedly provided blanket treatment and medlegals on Heidary’s orders. Billings were made in each provider’s name, and payments were made to their accounts. However, Heidary required fee-splitting and he was the only one allowed to withdraw funds. Heidary also had the doctors sell their accounts-receivables (AR) to him, which he then sold to third parties.

Under the alleged fraud scheme, injured workers appeared at the law firm, which would fill out boilerplate paperwork and, on Heidary’s order, direct the workers to one of his clinics to begin treatment. At the clinic, the workers underwent treatments, regardless of need, such as massage, chiropractic, acupuncture, psychiatric and other services. After the maximum number of visits, they were discharged regardless of medical status.

A Riverside County grand jury returned an indictment against Heidary and his codefendants Cary Abramowitz, Ana Solis, and Gladys Ross. The criminal defendants filed a demurrer, and later a motion to dismiss this indictment, challenging in part whether they had received notice of the charges and whether the indictment improperly aggregated multiple acts into single counts. The trial court denied both requests. Heidary appealed.

The Court of Appeal summarily denied the petition on August 8, 2017. On October 11, 2017, the California Supreme Court intervened directing the Court of Appeal to address these issues. After this ordered review, the trial court ruling was affirmed by the Court of Appeal in the published case of Heidary v Superior Court.

Heidary, is described in court records as a chiropractor and suspected architect of a “massive, fully integrated criminal enterprise” designed to commit workers’ compensation insurance fraud. According to the indictment, Heidary went by the aliases Brian Heidary, Number One and The Godfather. Heidary owned or ran numerous businesses, including law firms and health clinics, and relied on other people to disguise his involvement and create a complex and illegal ownership structure, according to court records.

The criminal activity dates back to at least 2009, according to investigators. Heidary was originally charged in July 2014, but an indictment filed in Riverside County Superior Court expands the case and named new co-conspirators.

Heidary was convicted by a Riverside County jury in January 2024 of 68 counts of insurance fraud, conspiracy, money laundering, and various other charges.

Although originally charged with $98 million in fraud, evidence presented at trial, including Heidary’s testimony, revealed that the actual damage was about $150 million. During the sentencing hearing on April 12, 2024, Judge Charles Koosed noted that Heidary possessed deep knowledge of the workers’ compensation system, stating, “’[Heidary] took advantage of that knowledge based on greed.”

On April 12, 2024, Heidary was sentenced to 54 years, eight months in state prison and ordered to pay more than $23 million in fines for his role in orchestrating a massive workers’ compensation fraud scheme totaling $150 million.

“The California workers’ compensation system is designed to help injured workers get back on their feet without ruining them financially,” said Riverside County District Attorney Mike Hestrin. “Sophisticated criminals like Mr. Heidary don’t just steal money, they take advantage of innocent patients. The sentence handed down today sends a strong message that these types of offenses will not be tolerated in Riverside County.”

Heidary used the sham law firm to recruit thousands of legitimately injured patients, referring them to his network of clinics to create unnecessary billing. One of the injured workers, Denise Rivera, slipped and fell while working as a certified nurse assistant for special needs children. Ms. Rivera testified that she was recruited into Heidary’s scheme, but never received any effective treatment.

“[Heidary’s employees] released me,” Rivera told jurors. “They told me – basically I was okay. My knee was okay.” When asked during the trial if her knee actually was OK, she simply responded, “No.”

Kent Bo Fridolfsson, 67, of Benicia, pleaded guilty to six charges of insurance fraud and grand theft after a joint investigation with the California Department of Insurance, Solano County District Attorney’s Office and the Employment Development Department (EDD) revealed he underreported payroll by nearly $1 million to illegally save on workers’ compensation insurance and taxes.

Fridolfsson was placed on formal probation, ordered to pay over $725,000 in restitution, and ordered to surrender his contractor’s license.

The joint investigation began after one of Fridolfsson’s employees sustained a work-related injury and contacted State Compensation Insurance Fund (State Fund), who provided insurance coverage to Fridolfsson’s business. Fridolfsson was the former president and owner of the construction company Diversified Specialists and had been a licensed contractor in California since 1986.

Fridolfsson had insurance coverage with State Fund from 2010 to 2021 and was required to report payroll during each policy period. From 2010 to 2019 Fridolfsson reported zero payroll to State Fund; however, in January 2019 one of his employees contacted State Fund after sustaining a work-related injury. After being contacted by State Fund, the Contractors State License Board conducted a site inspection of Fridolfsson’s business and interviewed a number of his employees.

The joint investigation found that Fridolfsson underreported his payroll by $989,823. The failure to report employee payroll resulted in the illegal reduction of workers’ compensation insurance premiums, leading to approximately $382,104 in premium owed to State Fund.

The underreported payroll also resulted in an unpaid payroll tax to Employment Development Department of approximately $347,520.

Fridolfsson was convicted on April 5, 2024. This case was prosecuted by the Solano County District Attorney’s Office.