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California Case Law Update

Employment Law

Peabody v. Time Warner Cable, Inc. (2014) 59 Cal.4th 662

Susan Peabody (“Peabody”) worked for Time Warner Cable, Inc. (“Time Warner”), as a commissioned salesperson.  Peabody received biweekly paychecks, which included hourly wages in every pay period and commission wages about every other pay period. 

Peabody stopped working for Time Warner and brought a class action suit, alleging the following:  (1) she regularly worked 45 or more hours per week, but was never paid overtime wages; (2) she occasionally worked more than 48 hours per week, earning less than the minimum wage in those weeks when she was paid only hourly wages; and (3) due to Time Warner’s implementation of a new compensation plan in March 2009, she was not paid all of the commission wages owed on January and February 2009 sales. 

Time Warner removed the matter to Federal Court and successfully moved for summary judgment.  In granting summary judgment, the District Court determined that the January and February 2009 commissions were neither earned nor owed until additional conditions were satisfied, which did not occur until after the adoption of the March 2009 compensation plan.  The District Court also concluded that Time Warner could attribute commission wages paid in one biweekly pay period to other pay periods for the purpose of satisfying California’s compensation requirements.

Plaintiff appealed.  The Ninth Circuit affirmed as to the commission wages claim; however, it determined that underlying the remaining issues was the question of whether Peabody’s commissions could be allocated over the course of a month, or whether the commissions could only be counted toward the pay period in which the commissions were paid.   At the request of the Ninth Circuit, the California Supreme Court considered whether an employer may attribute commission wages paid in one pay period to other pay periods in order to satisfy California’s compensation requirements.

Time Warner argued Peabody fell within California’s “commissioned employee” exemption and thus was not entitled to overtime compensation.  The exemption requires, among other things, than an employee’s “earnings exceed one and one-half times (1 ½) the minimum wages.”  (Cal. Code Regs., tit. 8, § 11040, subd. 3(D).)  Time Warner acknowledged that most of Peabody’s paychecks included only hourly wages and were for less than that amount.  It argued, however, that commissions should be reassigned from the biweekly pay periods in which they were paid to earlier pay periods.  Attributing the commission wages in this manner would satisfy the exemption’s minimum earnings prong and would necessarily mean Peabody’s compensation was, at all times, higher than the applicable minimum wage.

The Supreme Court held than an employer may not attribute commission wages paid in one pay period to other pay periods in order to satisfy California’s compensation requirements.  The Court reasoned that such a conclusion furthers public policy in that it protects employees.

Premises Liability

Heskel v. City of San Diego (2014) 227 Cal.App.4th 313

Menahem Heskel (“Heskel”) sued the City of San Diego (“the City”), claiming he suffered personal injury from a dangerous condition on public property, when he tripped over a protruding base of a hollow metal post cemented into a city sidewalk (“the condition”).  (Gov. Code, § 835.)  The City filed a motion for summary judgment, alleging it lacked the requisite actual or constructive notice to be liable. 

In support of its motion for summary judgment, the City produced several declarations from City employees, which tended to demonstrate that, although City workers had been in the area where Heskel fell a few times over the year before the accident, the did not notice the condition.  Further, neither City workers nor citizens had notified the City about the condition before Heskel’s fall.

Heskel produced three declarations in opposition to the City’s motion for summary judgment.  A declaration of Heskel’s acquaintance, Nathan Dobrovsky (“Dobrovsky”), explained that Debrovsky was familiar with the condition; that Dobrovsky himself had tripped over it over a year prior to Heske’s incident; and that in the few months after Heskel’s fall, a “No Parking” sign was inserted into the base that made up the condition.  A declaration of Heskel’s son, Danny, explained that he witnessed Heskel trip over the condition and fall on his arm; that Danny observed the area around the condition had been painted a few months after the incident; and that Danny had observed that a “No Parking” sign was later inserted into the base.  A declaration from Heraclio Serrano explained that he had regularly worked in the area near the condition and that it had been present for approximately two years before the sign was inserted into it; and that Serrano had driven his truck onto the sidewalk once and the condition punctured a tire.

Heskel also produced photographs of the condition which were attached to Danny’s declaration.  The photographs were very poor in quality and did not precisely indicate the condition’s size or shape.  However, it was apparent from the photographs that the condition was at most a few inches in height. 

The trial court granted the City’s motion of summary judgment, finding as a matter of law that the City lacked constructive notice of an obvious dangerous condition.  Heskel appealed, contending the trial court erred because triable issues of fact remained as to whether the City had constructive notice of the condition.

Under California Government Code section 835.2, subdivision (b), “constructive notice” requires a plaintiff to establish that the dangerous condition existed for such a period of time and was of such an obvious nature that the public entity, in the exercise of due care, should have discovered the condition and its dangerous character.  Heskel argued that the trial court erred because a reasonable jury could have found the City had constructive notice of the condition, because it was present in its dangerous state for more than one year.  However, the Court of Appeal found that the City’s several declarations were substantial evidence that the condition was not obvious and the City was therefore entitled to summary judgment.   The Court of Appeal also found that Heskel failed to present any evidence that the condition was obvious such that the City, in the exercise of due care, should have become aware of it.  (Gov. Code, § 835.2, subd. (b).)  As such, the Court of Appeal affirmed the summary judgment granted by the trial court.

Expert Witness Testimony in Federal Court

City of Pomona vs. SQM North America Corporation, (Ninth Cir.; May 2, 2014) 750 F.3d 1036

After excessive levels of the chemical perchlorate were found in the water system in Pomona, California, the city of Pomona undertook to investigate the source of that contamination and remedy the problem.  Using a methodology known as “stable isotope analysis,” a scientist hired by the city determined that the most likely dominant source of the perchlorate found in the city’s groundwater was sodium nitrate that had been used as fertilizer.  The city sued SQM North America Corporation, the company that imported the sodium nitrate into the United States.  Before trial, the district court held an evidentiary hearing and excluded the city’s expert witness.  The city appealed this ruling.

Dr. Neil Sturchio was Pomona’s expert witness on causation. Dr. Sturchio is the director of the Environmental Isotope Geochemistry Laboratory at the University of Illinois at Chicago. He began working on Pomona’s perchlorate case in April 2011.  SQMNA moved to exclude Dr. Sturchio’s opinions, arguing that “stable isotope analysis” was insufficiently reliable to be received in evidence under Rule 702 of the Federal Rules of Evidence.  After an evidentiary hearing, the district court granted SQMNA’s motion in limine to exclude Dr. Sturchio’s testimony.The district court excluded Dr. Sturchio’s opinions as unreliable on the grounds that: (1) the opinions were subject to future methodological revisions and not yet certified; (2) the procedures he used had not yet been tested and were not subject to retesting; and (3) the reference database used by Dr. Sturchio was too small.

The Appellate Court found the district court had abused its discretion by not allowing a jury to resolve contested (but otherwise admissible) expert testimony.  The Court reversed the district court’s order of exclusion.

In its reasoning, the Court discussed Rule 702 of the Federal Rules of Evidence, which provides that expert opinion evidence is admissible if: (1) the witness is sufficiently qualified as an expert by knowledge, skill, experience, training, or education; (2) the scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (3) the testimony is based on sufficient facts or data; (4) the testimony is the product of reliable principles and methods; and (5) the expert has reliably applied the relevant principles and methods to the facts of the case.  (Fed. R. Evid. 702).  The Court explained that, in evaluating proffered expert testimony, the trial court is supposed to act as “a gatekeeper, not a fact finder.”  (Primiano v. Cook, 598 F.3d 558, 565 (9th Cir. 2010)).

The Court reasoned that the record shows that Dr. Sturchio’s methodology and report are based on the scientific method, practiced by recognized scientists in the field, and have a basis in the knowledge and experience of the relevant discipline, thereby rendering the report reliable.  The Court found that it is a question for the jury, not the court, to determine what weight to afford Dr. Sturchio’s testimony.  Therefore, the Court held that the district court’s conclusion was an abuse of discretion.

Privacy Violations and the Internet

In re Zynga Privacy Litigation, (Ninth Cir.; May 8, 2014) 750 F.3d 1098

The Ninth Circuit panel affirmed the district court’s dismissal of claims for violations of the Wiretap Act and the Stored Communications Act, two chapters within the Electronic Communications Privacy Act (ECPA), when Facebook and Zynga Game Network, Inc., a social gaming company, allegedly disclosed confidential user information to third parties.  The panel held that the plaintiffs failed to state a claim because they did not allege that either Facebook or Zynga disclosed the “contents” of a communication, a necessary element of their ECPA claims.  The Court therefore affirmed the district court’s dismissal of the complaint with prejudice.

The Court provided some background information when it explained that in addition to its social networking and advertising services, Facebook offers a platform service that allows developers to design applications that run on the Facebook webpage. Zynga is one such developer. It offers free social gaming applications through Facebook’s platform that are used by millions of Facebook users.  According to the plaintiff’s complaint, Zynga programmed its gaming applications to collect certain information and then transmit this information to advertisers and other third parties. As a result, both Facebook and Zynga allegedly disclosed information to third parties such as the user’s Facebook IDs and the address of the Facebook webpage the user was viewing when the user clicked the link.

The Court found the Stored Communications Act generally precludes a covered entity from disclosing the contents of a communication, but permits disclosure of record information like the name, address, or client ID number of the entity’s customers in certain circumstances.  The question for the Court to decide, therefore, was whether the plaintiffs plausibly alleged that the information at issue here constituted the “contents of any communication,” 18 U.S.C. §§ 2511(3)(a), 2702(a), that is, “any information concerning the substance, purport, or meaning of a communication.”

In its analysis, the Court concluded the information that Facebook and Zynga transmitted to third parties included the user’s Facebook ID and the address of the webpage from which the user’s HTTP request to view another webpage was sent, and that this information does not meet the definition of “contents,” because these pieces of information are not the “substance, purport, or meaning” of a communication.

ABOUT THE AUTHORS: Morgan Van Buren is an associate at Tyson & Mendes LLP.  He specializes in personal injury and high net worth insurance issues.  Contact Morgan at 858.263.4107 or mvanburen@tysonmendes.com.

 Nicole Hermanson is a graduate of Pepperdine University School of Law. She focuses on products liability and business litigation. Contact her at nhermanson@tysonmendes.com.

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