Tag: 2024 News

NuSil Technologies manufactures silicone and resins. NuSil utilized hazardous chemicals in the production and manufacture of products at its facility in Bakersfield, California. NuSil posted material safety data sheets with information about dangerous chemicals used at the facility.

Kevin O’Bryan worked for NuSil from 2006 to May 2016 at its facility in Bakersfield. O’Bryan’s work duties necessitated exposure to hazardous chemicals. NuSil provided training to O’Bryan about the chemicals he worked with and the use of personal protective equipment. Those trainings did not address formaldehyde. None of the material safety data sheets provided by NuSil mentioned formaldehyde.

In 2009, O’Bryan expressed concern to his supervisor about being exposed to chemicals. Around 2011 or 2012, O’Bryan again expressed concern about exposure to chemicals and was issued a full-face respirator. In 2013, O’Bryan’s doctor diagnosed him with “problems” that caused O’Bryan to be concerned about his workplace exposure. Around 2013, O’Bryan complained to the manufacturing supervisor about swelling and numbness in his hands, as well as extreme fatigue.

At some time between 2013 and May 11, 2016, O’Bryan complained to the site manager, that he believed formaldehyde was being generated by the distillation column on process at the facility. O’Bryan assumed there was formaldehyde because the smell was like “at the mortuary.

On May 11, 2016, O’Bryan took a disability leave of absence from work due to health symptoms he attributed to chemical exposure in the workplace at NuSil.O’Bryan filed a workers’ compensation claim against NuSil on June 27, 2016, alleging a cumulative trauma injury through May 10, 2016, to his hands, head, joints, respiratory system, central nervous system, and circulatory system from “exposure to toxic chemicals.”

At some point, O’Bryan filed a complaint about NuSil to California’s Division of Occupational Safety and Health. In its report, OSHA cited NuSil based on its finding that employees worked with formaldehyde in manufacturing rooms at the facility. O’Bryan was unaware of the presence of formaldehyde at the facility prior to OSHA’s report and learned of the presence of formaldehyde in approximately “May[ or] June” of 2017.

On September 18, 2018, O’Bryan settled his workers’ compensation claim for $235,000 by compromise and release which “does not resolve (or affect) any civil action (or right) applicant (may bring forth against NuSil) regarding this claim.”

On January 17, 2019, the O’Bryans filed a complaint against NuSil alleging two causes of action: fraudulent concealment on behalf of O’Bryan and loss of consortium on behalf of Tiffany O’Bryan. NuSil raised several affirmative defenses in its answer including that the claims were barred by the statute of limitations.

The parties stipulated and the trial court agreed to bifurcate the issues and try NuSil’s statute of limitations defense in a bench trial before trying the remaining issues. On July 1, 2022, “[p]hase 1” of the bench trial was conducted on the sole issue of the statute of limitations.The O’Bryans’ counsel conceded during closing argument that the applicable statute of limitations for the fraudulent concealment claim is two years.

On July 27, 2022, the trial court entered judgment for NuSil against the O’Bryans on “all claims in Plaintiffs’ Complaint in its entirety.” The Court of Appeal affirmed the trial court in the unpublished case of O’Bryan v. NuSil Technology -F084899 (April 2024).

An employee injured during the course of employment is generally limited to remedies available under the Workers’ Compensation Act. Certain types of injurious employer conduct bring the employee outside the compensation bargain. One exception to the exclusive remedy rule was identified by our Supreme Court in Johns-Manville Products Corp. v. Superior Court (1980) 27 Cal.3d 465.

The fraudulent concealment exception outlined in Johns-Manville was codified in 1982 as Labor Code section 3602, subdivision (b)(2). This statutory subdivision allows a civil suit “[w]here the employee’s injury is aggravated by the employer’s fraudulent concealment of the existence of the injury and its connection with the employment, in which case the employer’s liability shall be limited to those damages proximately caused by the aggravation.” (Lab. Code, § 3602, subd. (b)(2).).

A fraudulent concealment claim under Labor Code section 3602, subdivision (b)(2) requires the employee show three conditions: “(1) the employer must have concealed ‘the existence of the injury’; (2) the employer must have concealed the connection between the injury and the employment; and (3) the injury must have been aggravated following the concealment.” (Jensen v. Amgen Inc. (2003) 105 Cal.App.4th 1322.)

The parties agree the statute of limitations for the O’Bryans’ fraudulent concealment claim is two years pursuant to Code of Civil Procedure section 335.1. The question of when a “cause of action accrued is a mixed question of law and fact.” The O’Bryans filed their initial complaint on January 17, 2019. Thus, the O’Bryans’ cause of action was time-barred if all the elements of their fraudulent concealment claim accrued prior to January 17, 2017, absent an applicable exception to the general rule of accrual.

Here, O’Bryan suspected NuSil’s alleged wrongful conduct had injured him well before filing his civil complaint. By at least May 11, 2016, O’Bryan knew his health had been damaged by toxic chemical exposure at NuSil and suspected this exposure included formaldehyde, a chemical that was purportedly not being produced at the facility. At multiple times before May 11, 2016, O’Bryan expressed concern that his health was at risk from chemical exposure during his employment at NuSil.

The Court of Appeal rejected the O’Bryans’ contentions they could not assert their cause of action until the May 30, 2017 OSHA report confirmed the presence of formaldehyde at NuSil’s facility. This argument misapprehends the necessary facts to assert a cause of action. “A plaintiff need not be aware of the specific ‘facts’ necessary to establish the claim; that is a process contemplated by pretrial discovery.”

The WCAB just published en banc orders that involve a course of conduct that appears to have occurred across eight (8) cases, involving attorney Susan Garrett and hearing representative Lance Garrett’s representation of seven applicants and one lien claimant.

“It appears that in each of these cases Garrett Law Group through Susan Garrett or its hearing representative Lance Garrett, while supervised by attorney Susan Garrett, requested a series of continuances of multiple trial dates. However, the requests for continuance due to calendar conflict were not filed when the notice of hearing was issued. Instead, they waited until days before trial to request a continuance.”

“When the WCJ denied the request for continuance, they waited until the day of trial to file petitions for reconsideration in lieu of appearing for trial and to prevent the matters from proceeding, even though they were given notice by the Appeals Board in a prior decision that reconsideration is not proper from an order setting the matter for trial.”

“That is, based upon the timing of their filings, it appears that they filed the petitions for reconsideration solely to delay the trial proceedings in each case, as evidenced by their action of not appearing at trial in each case and not ensuring that their client appeared.”

“We emphasize that filing a petition for reconsideration does not by itself excuse any party from appearing at a properly noticed hearing because only the Workers’ Compensation Appeals Board can excuse an appearance. Moreover, their delay in seeking a continuance and filing for removal on or near the day of trial would not have provided sufficient time for the Appeals Board to act.”

Consequently, on April 10, 2024, the Appeals Board issued an en banc order consolidating eight cases and issued a notice of intention to impose costs and sanctions collectively up to $20,000.00 against attorney Susan Garrett (CA BAR #195580) in eight (8) instances where it appeared that she filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared that such actions were indisputably without merit.

The Appeals Board issued a second notice of intention to impose costs and sanctions collectively up to $20,000.00 against hearing representative Lance Garrett in eight (8) instances where it appeared that he filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared that such actions were indisputably without merit.

In the en banc notice of intent, the Appeals Board makes clear that a request for a continuance is not a final order as it does not resolve any threshold issue. Where a party files a petition for reconsideration without good cause, a notice of intent to impose sanctions may issue.

“In each of these cases, eight (8) instances total, attorney Susan Garrett and hearing representative Lance Garrett each appear to have engaged in the similar tactic of requesting trial continuances, then filing a petition for reconsideration of the order denying the trial continuance on or near the day of trial and then failing to appear at trial”.

Filing petitions for reconsideration designed to delay a trial can be described as frivolous and/or bad-faith conduct, which is sanctionable. (See United States Fire Ins. Co. v. Workers’ Comp. Appeals Bd. (Palafox) (2013), 78 Cal.Comp.Cases 1021 [2013 Cal. Wrk. Comp. LEXIS 137].) “Based upon our review of the record, it appears that the following same or similar sanctionable conduct has occurred in each of these cases.”

Both Susan and Lance Garrett have 20 plus 5 days to file a response to the notice.

En banc decisions of the Appeals Board are binding precedent on all Appeals Board panels and workers’ compensation administrative law judges. (Cal. Code Regs., tit. 8, § 10325; City of Long Beach v. Workers’ Comp. Appeals Bd. (Garcia) (2005) 126 Cal.App.4th 298, 316, fn. 5 [70 Cal.Comp.Cases 109]; Gee v. Workers’ Comp. Appeals Bd. (2002) 96 Cal.App.4th 1418, 1424, fn. 6 [67 Cal.Comp.Cases 236].) This en banc decision is also adopted as a precedent decision pursuant to Government Code section 11425.60(b).

It is interesting that the WCAB has elevated these cases to an en banc effort. One possible reason is that the WCAB intends to deal with frivilous petitions for reconsideration/removal more aggressively.

In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Justice Department in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.

The Justice Department’s COVID-19 Fraud Enforcement Task Force (CFETF) just released its 2024 report detailing the efforts of the task force and its member agencies in response to widespread fraud involving many COVID-19 relief programs targeted by fraudsters and other criminals who sought to exploit the government’s relief efforts for their personal gain.

To date, the efforts of the task force’s member agencies has led to criminal charges against more than 3,500 defendants for losses of over $2 billion, civil enforcement actions resulting in more than 400 civil settlements and judgments of over $100 million, and over $1.4 billion seized or forfeited.

In addition to the efforts noted above, the CFETF has established five strike forces to focus on the most complex and harmful pandemic fraud – often committed by overseas, organized, or violent actors. Those strike forces, located in the U.S. Attorneys’ Offices across the country including the Districts of Maryland, New Jersey, Colorado, the Southern District of Florida, and a joint task force co-located in the Eastern and Central Districts of California, are responsible for indicting 250 defendants to date, including gang members, inveterate fraudsters, and overseas rings committing a myriad of cyber-enabled fraud against our citizens and government programs.

The Eastern and Central Districts of California joint COVID Fraud Strike Force was formed in August 2022. As strike force district, the Eastern and Central Districts of California oversee agents, analysts, and AUSAs to bring the most impactful criminal pandemic fraud cases, often involving multiple CARES Act programs, foreign actors, violent perpetrators, or large loss amounts.

Since the inception of the Strike Force, the Eastern District of California has criminally charged 17 cases with associated actual losses of over $20 million.

The Central District of California has joined with FBI, IRS CI, SBA-OIG, HHSOIG, DOL-OIG, TIGTA, USSS, and several local law enforcement agencies to initiate 37 criminal cases involving 72 individuals suspected of committing PPP, EIDL, UI, and ERC fraud, with losses identified of more than approximately $126 million. Approximately 15 of the 35 cases involve fraudulent UI claims with collective losses of more than $53 million. CDCA’s cases have covered a broad spectrum of criminal activity in its diverse population with a view

CFETF members also established the National Unemployment Insurance Fraud Task Force, a first-of-its-kind task force that developed a data sharing and lead development process within OCDETF’s International Organized Crime Intelligence Operation Center (IOC-2), using data from pandemic relief programs. The NUIFTF has used that process to disseminate over 100 leads and intelligence associated with over $3 billion in suspected pandemic fraud.

While this report highlights these accomplishments, much work remains in the fight against COVID-19 fraud. CFETF members have seen their budgets cut, straining resources to develop investigations and prosecute offenders. The first years of the pandemic fraud response were dedicated to coordination, data collection, and the establishment of interagency data sharing to generate actionable leads.

Skillz Inc., is a mobile gaming company founded in 2012 by Andrew Paradise and Casey Chafkin. The company provides an online platform where users can play video games and compete with others on their mobile devices. Paradise is Skillz’s Chief Executive Officer and Chafkin is its Chief Revenue Officer. The company is headquartered in Las Vegas and has offices in San Mateo, Seattle, Vancouver and Los Angeles.

Gautam Shah joined Skillz as an employee in 2015 as Director of Skillz Live, a new program Skillz was launching at the time. Shah’s title later changed to Director of Finance and Strategy in mid-2017. Like many people in Silicon Valley who join startups, Shah accepted less cash compensation in exchange for options to buy Skillz stock at a predetermined exercise price.

For startup employees like Shah, the hope is that the company will undergo an initial public offering (IPO) – which would allow those employees to sell their stock on the open market at a significant profit. Indeed, the primary value of stock options like the ones granted to Shah lies with the ability to cash out those options if the company is successful and goes public.

On January 18, 2018 Shah met with Chafkin and told him he wanted a promotion and more compensation. Chafkin responded that a promotion was not appropriate given Shah’s current performance. Shah commented that it did not make sense for him to remain at the company if Skillz did not plan to promote him or increase his compensation.

On January 22, 2018, Shah forwarded an email from his work account to his personal email account. That email contained a confidential business report prepared by Mike Termezy. Termezy was a consultant hired by Skillz to analyze its “most confidential business data to determine where [it] had opportunities to grow [its] business in . . . a very competitive market space.” After a forensic investigation confirmed that he had taken a personal copy of this report he was terminated for cause.

Skillz had an IPO in December 2020. But Shah was not able to realize the Silicon Valley dream because he lost all of his stock options when Skillz terminated him for cause in 2018. As a result, Shah could not exercise his options and sell the Skillz stock he would have acquired upon doing so at a huge profit after the IPO like other former and current Skillz employees.

Shah sued Skillz for breach of contract, alleging that Skillz did not have cause to terminate him and wrongfully prevented him from exercising the stock options he had earned as a Skillz employee. A jury found that Skillz breached its contracts with Shah and awarded Shah over $11.5 million in damages for the lost options. The trial court, however, conditioned the denial of Skillz’s new trial motion on Shah’s acceptance of a remittitur in the amount of $4,358,358. After Shah accepted the remittitur, the court entered judgment for Shah in that amount.

Both parties appealed. Skillz contends that the judgment must be reversed due to defects in the jury instructions and special verdict forms. Skillz further contends that the damages awarded to Shah are “contrary to law” because they were not measured as of the date of breach, requiring either a far lower award or a new trial on damages. Meanwhile, Shah contends that the jury verdict in excess of $11.5 million should be reinstated because of errors in the trial court’s new trial orders and remittitur. Shah also contends that the court erred in dismissing his tort claims before trial because his stock options are “wages” under the Labor Code.

The Court of Appeal affirmed in part, and reversed in part in the partially published case of Sah v Skillz Inc., -A165372 (April 2024). In the published component of the decision, it was concluded that “stock options are not wages under the Labor Code.” The reasoning of this conclusion is very relevant to the employment law community.

“In the last argument of his cross-appeal, Shah contends we should reverse the trial court’s directed verdict dismissing his tort claims for retaliation and wrongful termination. According to Shah, the court erred when it concluded that stock options are not “wages” under the Labor Code. Shah therefore requests that we remand these claims for a new trial so he may pursue “tort damages, including punitive damages and attorneys’ fees.’ We review de novo a directed verdict and find no error here.”

The Court of Appeal agreed with Skillz that stock options are not wages because they “are not ‘amounts.’ They are not money at all. They are contractual rights to buy shares of stock.” (International Business Machines Corp. v. Bajorek (9th Cir. 1999) 191 F.3d 1033, 1039 (IBM); see Falkowki v. Imation Corp. (9th Cir. 2002) 309 F.3d 1123 [stock ” ‘options are not “wages” ‘under [the Labor Code’s] definition of the term ‘wages’ “].) This conclusion comports with the purpose behind Labor Code section 221. As the Ninth Circuit explained in IBM, “[t]he amount of money for which the shares can be sold on the market varies unpredictably from time to time, so it is not ‘fixed or ascertainable’ by any method of calculation when the agreements are made or exercised.” (Ibid.) Thus, the purposes behind Labor Code section 221 of “avoiding secret kickbacks enabling an employer to avoid minimum wage laws” and “protecting employees’ reliance interests in their expected wages, do not apply to stock options.” (IBM, at p. 1039.)”

The case of Thomas Perez was initially set for a priority conference on June 7, 2022. At that time, the case was set for trial commencing on November 15, 2022, on the issue of employment  On June 24, 2022, defendant SCIF filed a Petition to permit remote witness trial testimony of defense witnesses Jeff Hinkley and John Eastman.

On June 29, 2022, the WCJ issued an Order denying defendant’s petition on the basis that no good cause had been shown for allowance of such remote testimony. No evidence was identified, nor was any record made or testimony taken prior to denial by the WCJ of the Petition.

Then, on July 7, 2022, defendant filed a Petition for Removal of the June 29, 2022 Order. On November 30, 2022, the WCAB issued an “Opinion and Order Granting Petition for Removal and Decision After Removal,” remanding the matter back to the trial judge to make a record, in order to enable us to understand the basis for the WCJ’s decision per Hamilton v. Lockheed Corporation (2001) 66 Cal.Comp.Cases 473 (Appeals Board en banc).

A trial hearing took place on April 25, 2023, at which time the sole issue to be decided was whether Mr. Hinkley should be granted a remote appearance for purposes of testimony in any future trial related to the case. The stipulations of the parties included the statement that there were no objections to the remote testimony of Mr. Hinkley.

On June 12, 2023, the WCJ issued the F&O denying SCIF’s petition on the basis that defendant failed to demonstrate good cause. So, once again filed a Petition for Removal, which was granted, and the WCJ’s decision was rescinded in the panel decision of Perez v Cleanco Construction et.al, -ADJ2030301 (April 2024).

Any decision of the WCJ granting or denying a petition to allow an electronic appearance or electronic testimony must be reduced to writing and be based upon an adequate record, after providing the parties an opportunity to be heard, in the same manner as any other order touching on the parties’ due process rights. (Lab. Code § 5313; Cal. Code Regs., tit. 8, § 10833; Hamilton v. Lockheed Corporation (Hamilton) (2001) 66 Cal.Comp.Cases 473, citing Evans v. Workmen’s Comp. Appeals Bd. (1968) 68 Cal.2d 753, 755 [33 Cal.Comp.Cases 350, 351].)

A party intending to appear electronically may seek permission to appear electronically at a hearing pursuant to WCAB Rule 10816, by filing a petition pursuant to WCAB Rule 10510. A witness seeking permission to testify electronically may likewise file a petition pursuant to WCAB Rule 10817. The person seeking to appear electronically or testify electronically must demonstrate good cause.

A stipulation between the parties constitutes such good cause, and obviates the need to provide an opportunity to be heard or to create a record. (Cal. Code Regs., tit. 8, § 10835.) Here, the parties stipulated that Mr. Hinckley could testify electronically. By doing so, the parties demonstrated good cause. Thus, as explained below, in order to disregard the stipulation, the WCJ was required to demonstrate good cause to set it aside.

Stipulations are binding on the parties unless, on a showing of good cause, the parties are given permission to withdraw from their agreements. (County of Sacramento v. Workers’ Comp. Appeals Bd. (Weatherall) (2000) 77 Cal.App.4th 1114, 1121 [65 Cal.Comp.Cases 1] (Weatherall).) As defined in Weatherall, “A stipulation is ‘An agreement between opposing counsel . . . ordinarily entered into for the purpose of avoiding delay, trouble, or expense in the conduct of the action,”(Ballentine, Law Dict. (1930) p. 1235, col. 2) and serves ‘to obviate need for proof or to narrow range of litigable issues (Black’s Law Dict. (6th ed. 1990) p. 1415, col. 1) in a legal proceeding. – (Weatherall, supra, at p. 1119.).

It is true the Appeals Board has the discretion under section 5702 to reject factual stipulations. (See Frankfort General Ins. Co. v. Pillsbury (1916) 173 Cal. 56, 58-59 [159 P. 150]. However, the Appeals Board should not reject a stipulation clarifying the issues in controversy absent good cause. (See Robinson v. Workers’ Comp. Appeals Bd. (1987) 194 Cal.App.3d 784, 790-791 [52 Cal.Comp.Cases 419]; Weatherall, supra, p. 1119; See Bailey v. Taaffe (1866) 29 Cal. 422, 424 [exercise of discretion should not be capricious].)

“We see no basis on the existing record for the WCJ to have rejected the stipulation. The WCJ’s rejection of the agreement at trial to allow the witness’ remote testimony was stated as ‘[i]n order to properly assess the credibility of a witness, a trier of fact (as well as the other parties in a case) is best served by being able to observe the witness in ‘real life’ rather through a monitor or on a phone.’ (Report, p. 7.) Based on our review, we do not believe that this is a sufficient reason to reject the stipulation.”

Thus, the Order denying defendant’s petition to permit remote testimony of Jeff Hinkley in light of the stipulation of the parties at trial resulted in substantial prejudice and irreparable harm to defendant, as well as unnecessary delay.