California Case Law Update

Author: Kelly Denham


Mendiola v. CPS Security Solutions, Inc. (2015) 60 Cal.4th 833

CPS Security Solutions, Inc. (“CPS”) employed on-call guards to provide security at construction worksites. The guards’ obligations differed depending on the day of the week. On weekdays, each guard was on patrol for eight hours, on call for eight hours, and off duty for eight hours. On weekends, each guard was on patrol for 16 hours and on call for eight hours.

An on-call guard was required to reside in a trailer provided by CPS. The on-call guard had to notify a dispatcher when leaving the worksite. If another employee was available for relief, the guard had to wait onsite until the reliever arrived. If a reliever was not available, the guard had to remain onsite, even if there was a personal emergency.

CPS paid the guards hourly wages for time spent patrolling the worksite. Guards did not receive compensation for on-call time unless (1) an alarm or other circumstances required they conduct an investigation or (2) they waited for, or were denied, a reliever. CPS paid the guards for the actual time they spent investigating disturbances. The guard was paid for the full eight hours if three or more hours of investigation were required during on-call time.

CPS guards filed two class action lawsuits in 2008. The complaints alleged CPS’s on-call compensation policy violated minimum wage and overtime obligations imposed by the Industrial Welfare Commission (“IWC”) wage order and Labor Code statutes. The trial court granted plaintiffs’ motion, concluding CPS’s compensation policy violated Wage Order 4. Wage Order 4 requires employers pay each employee not less than the applicable minimum wage for all hours worked in the payroll period. It also requires employees be paid one and one-half times their regular rate of pay for all hours worked over 40 hours in the work week and for all hours worked in excess of eight hours in any workday.

The court concluded on-call hours constituted compensable “hours worked” within the meaning of Wage Order 4. The Court of Appeal affirmed in part and reversed in part. Both parties petitioned to the Supreme Court for review.

The Supreme Court held the plaintiffs’ on-call hours constituted compensable hours worked. It further held CPS could not exclude “sleep time” from plaintiffs’ 24-hour shifts.

California courts considering whether on-call time constitutes hours worked have focused on the extent of the employer’s control. Courts look at various factors, including the following: (1) whether there was an on-premises living requirement; (2) whether there were excessive geographical restrictions on employee’s movements; (3) whether the frequency of calls was unduly restrictive; (4) whether a fixed time lime for response was unduly restrictive; (5) whether the on-call employee could easily trade on-call responsibilities; and (6) whether the employee had actually engaged in personal activities during on-call time. Courts also take into account whether the on-call waiting time is spent primarily for the benefit of the employer.

Here, the Court correctly determined the guards’ on-call hours represented hours worked under the above requirements. Further, the Court found the guards’ on-call time was spent primarily for CPS’s benefit.

Satyadi v. West Contra Costa Healthcare District (2014) 232 Cal.App.4th 1022

Carolyn Satyadi interviewed and accepted the position of Clinical Laboratory Director at Doctor’s Medical Center (“DMC”) in November 2010. Beginning in December 2010 through March 2012, Satyadi informed DMC and its executive staff about numerous operational practices she believed were violations of state and federal laws relating to the laboratory’s operations. Satyadi refused to engage in these activities she believed violated the law.

In January 2012, during union negotiations, a DMC executive made derogatory comments about Satyadi in the presence of her subordinates. Satyadi complained in writing about this harassment and was assured the matter would be reviewed by DMC’s interim chief executive officer. Satyadi was never contacted about her complaint. In March 2012, Satyadi was placed on administrative leave pending an investigation into allegations against her by other DMC employees. Satyadi was terminated by letter in June 2012.

Satyadi filed her complaint against DMC, West Contra Costa Healthcare District (owner of DMC) and various DMC officials. Satyadi claimed she was fired in retaliation for reporting and refusing to participate in DMC’s allegedly illegal activities. Her complaint alleged causes of action under certain provisions of the Labor Code.

The defendants filed a demurrer, arguing Satyadi had not filed a complaint with the Labor Commissioner under section 98.7 before bringing her action, thus her suit was barred by her failure to exhaust administrative remedies. The trial court agreed, holding Satyadi first needed to seek relief from the Labor Commissioner before filing suit in court.

The Court of Appeal reversed the trial court’s decision. While Satyadi’s appeal was pending, the Legislature enacted two amendments to the Labor Code, 244(a) and 98.7(g), which specified that employees like Satyadi did not need to exhaust administrative remedies prior to filing suit for violations of the Labor Code, unless the provision under which suit is brought expressly requires exhaustion. The Court found the amended Labor Code sections applied to this case. The amendments clarified existing law, thus they may be applied to this case without transgressing the general rule against retroactive application of statutes. Therefore, Satyadi was not required to exhaust her remedy before the Labor Commissioner prior to filing suit.


Gonsalves v. Li (2015) 232 Cal.App.4th 1406

Defendant Ran Li crashed a BMW during a test drive. Kenneth Gonsalves, a salesperson for the BMW dealership, was a passenger in the vehicle. Gonsalves alleges he suffered significant back injuries as a result of the crash. He filed suit, and the jury found Li was negligent and awarded Gonsalves over $1.2 million in damages. Li argued the court erred in permitting plaintiff’s counsel to examine Li about his negative responses to Gonsalves’s requests for admission (“RFA’s”) and admitting those responses in evidence.

The Court concluded Li’s denials to Gonsalves’s RFA’s were inadmissible, holding that denials of RFA’s are not admissible evidence at trial. The Court observed that discovery statutes expressly allow any part of a deposition or interrogatory to be introduced at trial. However, there is no provision for RFA’s. The statutes provide only that admissions in response to RFA’s are binding on the party at trial. It does not expressly permit a denial, objection, or failure to respond to RFA’s to be used against the party at trial.


Stofer v. Shapell Industries, Inc. (2015) 233 Cal.App.4th 176

Plaintiff Stofer (“Plaintiff”) purchased a home from Dr. Laux. Almost two years later, plaintiff sued the homebuilder, Shapell Industries, Inc. (“Shapell”) for strict liability, negligence and fraudulent concealment. Plaintiff claimed Shapell built the home on unstable and uncompacted “fill” soil and with an inadequate foundation.

Shapell moved for summary judgment, contending it did not conceal any material information. Further, Shapell contended Plaintiff did not have standing to sue because her claims accrued while Dr. Laux owned the home. The trial court granted the motion as to Plaintiff’s fraudulent concealment claim. It denied the motion as to Plaintiff’s other claims, concluding there were triable issues of material fact.

Plaintiff appealed, contending the order granting summary adjudication on her fraudulent concealment claim must be reversed.

The Court of Appeal agreed with Plaintiff, concluding there was a triable issue of material fact regarding whether Shapell fraudulently concealed information about the property soil’s condition.

The Court reasoned it is required to review the evidence and reasonable inferences in the light most favorable to Plaintiff. The Court determined Stofer’s evidence showed Shapell may have concealed information about the property’s soil condition from Karen Serke, who was Shapell’s structural engineer, and from Timothy Wright, who was the Shapell officer for whom Shapell built the home in 2002.

In addition, the Court agreed with Stofer that a jury had to find the disputed facts as to when and to whom Stofer’s claims accrued. It has been held that where the material facts as to accrual turn on disputed facts or require credibility determinations, the jury must make those factual findings before the trial court decides whether the facts determined by the jury establish legal ownership of the claims.

ABOUT THE AUTHOR: Kelly Denham graduated from Loyola Law School in 2012. Ms. Denham’s primary focus at Tyson & Mendes is construction defect litigation. Contact Kelly at 858.263.4117 or

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