NOTICE AND AGENDA FOR
AZELA Membership/CLE MEETING
Friday, April 21, 2017, 12 Noon to 1:30pm
Location: Jaburg & Wilk, P.C. Conference Room
20th Floor, at 3200 North Central Avenue in Phoenix. Free (validated) parking is available in the parking structure west of the office building. (Kraig Marton, Jeff Silence, and David Farren are our hosts.) There is no cost to attend.
Feel free to bring your lunch and beverage.
1.5 hour CLE certificates will be given to all in attendance
in person or telephonically (see pages 10-11 infra)
This Notice and Agenda prepared and written by Roger A. McKee firstname.lastname@example.org
Chair, AZELA CLE/Membership Meetings
To Attend Telephonically: Members who attend telephonically will be sent CLE certificates upon request to Roger McKee, email@example.com. To attend by phone, all you have to do is pick up your phone and follow these simple instructions.
- Dial (712) 432-1212
- Enter the meeting ID number: 574-193-032 (followed by the # key)
- Put your phones on mute unless you are speaking.
If you run into any problems, dial the Jaburg & Wilk office number (602) 248-1000 and ask for Jeff Silence or Ash (the Jaburg & Wilk I.T. person).
Recent significant cases
Plaintiffs employment lawyers should be familiar with the relatively new federal whistleblower protection statute, the Sarbanes-Oxley Act (as modified by the Dodd-Frank Act), codified at 18 USC 1514A, which provides remedies for employees of publicly-traded corporations who whistleblow on matters which may affect stock values. Here are two recent 9th Circuit cases:
Rocheleau v. Microsemi Corporation, Inc., 2017 WL 677563 (2-21-17): Sets forth the elements and burdens of proof for a claim under Sarbanes-Oxley and Dodd-Frank Acts; and Somers v. Digital Realty Trust Inc., 850 F. 3d 1045 (3-8-17): Protected whistleblowing may be either to SEC or internally within the corporation. (both reviewed by Natalie Virden)
Brandon v. Maricopa County, 2017 WL 710474 (2-23-17) (Larry J. Cohen for Plaintiff, Kimberly Demarchi and Michele Iafrate for Defendants): Maria Brandon was a Deputy County Attorney assigned to defend the county in civil cases. She had been assigned to defend the MCSO on some jail brutality cases which had resulted in some high-profile large settlements. She was contacted by an Arizona Republic reporter who had heard that she had written a confidential memo that had been leaked in which she said the County was making large payouts so that certain County employees could avoid being deposed. When called by the reporter she refused to comment on her memo, but said when asked why the County was making the settlement payouts she said: “I don’t know why they did what they did, and I’m sure they had their reasons.” County officials saw the newspaper article and asked the County Attorney to remove her from defending the County in civil cases, and the County Attorney then fired her. She filed (inter alia) claims for 42 USC 1983 (retaliation for exercise of free speech) and intentional interference with contractual relations against individual defendants, and won a jury verdict for $1 on her first claim and $638,147.94 on her second (tort) claim, plus attorneys’ fees of $302,175.28 for her 1983 claim. On appeal, the Ninth Circuit reversed and remanded for entry of judgment for the Defendants because (1) on her 1983 claim, she was speaking in her official capacity (not as a private citizen as required by Garcetti v. Ceballos), and (2) the interference by the individual defendants was not “improper”. (reviewed by Emily Tournabene)
Mayes v. WinCo Holdings, Inc., 846 F. 3d 1274 (2-3-17):
Facts: Plaintiff Katie Mayes worked at WinCo, an Idaho Falls grocery store, for twelve years. During her final years at WinCo, Mayes supervised employees on the night-shift freight crew. On July 8, 2011, Mayes was fired for taking a stale cake from the store bakery to the break room to share with fellow employees and telling a loss prevention investigator that management had given her permission to do so. WinCo deemed these actions theft and dishonesty. It also determined that Mayes’s behavior rose to the level of gross misconduct under the store’s personnel policies. WinCo denied Mayes and her minor children benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). WinCo also denied Mayes credit for accrued vacation days. Mayes argued that WinCo fired her not for theft and dishonesty but instead to put a man in charge of the freight crew. She filed three claims against WinCo: (1) sex discrimination claims under Title VII; (2) a claim under COBRA; and (3) a wage claims under the Fair Labor Standards Act. The district court granted summary judgment to WinCo on all claims, but the 9th Circuit reversed and remanded on all.
(1) Cat’s paw: Genuine issue of material fact existed as to whether female general manager of grocery store, who allegedly made remarks indicating discriminatory animus towards female manager based on her sex, participated in decision to terminate manager or in decision to hire male replacement, precluding summary judgment The animus of a supervisor can affect an employment decision if the supervisor influenced or participated in the decision-making process; even if the supervisor does not participate in the ultimate termination decision, a supervisor’s biased report may remain a causal factor if the independent investigation takes it into account without determining that the adverse action was, apart from the supervisor’s recommendation, entirely justified.
(2) The fact that the supervisor with a discriminatory motive is in the same protected class as the plaintiff (Mayes’ supervisor was female) is no defense in a discrimination claim. (reviewed by Erin Hertzog-Spriggel)
RAMc French history comments: (1) These facts remind me of the famous quote from Marie Antoinette about the rebellious peasants just before she was beheaded in the French Revolution “Let them eat (stale) cake”. (2) The facts of this case are a classic case of the punishment not fitting the crime, kinda’ like what got Jean Valjean thrown in the bastille in “Les Miserables”.
U.S. District Court for Arizona
Zaki v. Banner Pediatric Specialists, L.L.C., 2017 WL 105991, case # 2:16 CV 1920 PHX DLR (1-10-17) (Richard K. Walker for Plaintiff, Lindsay Jo Fiore for Defendant): Bad Lawyering case. Plaintiff Emad Zaki is a physician specializing in pediatric nephrology. In 2010, Banner hired Zaki to provide pediatric nephrology care and on-call coverage pursuant to a Physician Employment Agreement (PEA). On June 3, 2014, Zaki took leave from Banner to care for his father in Egypt. While there, Zaki suffered a serious brain injury in a car accident. Due to his injury, Zaki was unable to obtain medical clearance to resume work at Banner. On December 29, 2014, Banner sent Zaki an email informing him that he would be terminated without cause, effective March 29, 2015. Zaki filed claims in the Maricopa County Superior Court but then voluntarily dismissed them prior to resolution, and filed a new action in the USDC, setting forth multiple claims of breach of employment contract, FMLA violation, and ADA violation. Almost all claims were dismissed because of applicable statutes of limitations. (1) Plaintiff argued incorrectly that state law tolling statute, ARS 12-504 applied but he had never sought leave to re-file after voluntary dismissal in the MCSC. (2) Plaintiff argued incorrectly that there had been a tolling agreement with opposing counsel, but the express terms of the agreement were inapplicable to the statutes of limitations applicable to his various claims. (3) Biggest mistake is that Plaintiff (with serious brain injury) failed to argue the AZ tolling statute [ARS 12-502 for plaintiffs who are incapacitated (‘unsound mind”)] which could have tolled all applicable statutes of limitations
Vasquez v. Smith’s Food & Drug Centers, Inc., 2017 WL 1233840, case #4:14 CV 2339 TUC DCB (4-4-17) (Jerry S. Smith for Plaintiff, Texas counsel for Defendant): Vasquez was employed by Fry’s for many years. She has fibromyalgia, and had been given accommodations and FMLA leave until she transferred to a different store because the new manager at that store did not want to accommodate her disability as the previous ne had done. Shortly after her transfer to the new store, she was suspended for three days for allegedly violating one work rule, then shortly thereafter, she was fired for allegedly violating another rule. She filed claims of disability discrimination and retaliation under both the ADA and the Rehab Act, alleging that the Fry’s work rules she was alleged to have violated did not exist. At her ADES Appeal Tribunal hearing on her application for unemployment benefits, the employer’s sole witness, the Asst. Store Manager, testified that he was unaware of the existence of the rule that she had allegedly violated which caused her termination, and ADES ruled in her favor. The District Court denied Fry’s motion for summary judgment on the ADA claims, finding both direct and indirect evidence, and that the employer’s given reasons for its termination were supported by evidence. Vasquez’s parallel Rehab Act claims were based upon the fact that Fry’s accepts USDA food stamps from its customers and gets reimbursed for them, and it accepts Medicare Part D payments for prescriptions sold to customers with such coverage. The Court granted summary judgment for Fry’s on these claims, finding that Fry’s did not meet the definition of a “recipient of federal financial assistance” for coverage under the Rehab Act.
Valenzuela v. Bill Alexander Ford Lincoln Mercury Incorporated, 2017 WL 1326130, case #2:15 665 PHX DLR (4-11-17) (Isaac Hernandez for Plaintiff, Lindsay Schafer or Defendants): Auto dealership terminated sales rep, allegedly for poor sales performance. Previously, he has suffered a serious eye disorder which required corrective surgery which was successful. He was off for approximately three weeks on FMLA leave to recuperate, and then he returned with no restrictions. About six weeks after he returned, he was fired, allegedly for poor sales volume during the past quarter which included the three weeks he was on FMLA leave. He asked the employer to factor in his leave in determining whether his sales for the period were deficient as an accommodation for his disability (eye disorder which lasted approximately three weeks). The employer refused, and there was evidence that another sales rep with a similar low sales volume was not terminated. The Court denied the employer’s motion for summary judgment, holding (1) a temporary disability is a disability under the ADA, and (2): “Defendants terminated Plaintiff two months after learning about his alleged disability, five weeks after he returned from leave, and the same day as the release of a quarterly sales report that did not adjust performance expectations to account for his leave. Given this timeline, and for purposes of Plaintiff’s prima facie case, a jury reasonably could infer that Defendant terminated Plaintiff because of his condition, his request for and decision to take leave, and/or his request that the quarterly sales report be adjusted to account for his leave.”
Hernandez v. Gemini Hospice LLC, 2017 WL 1318036, case # 2:16 CV 1486 PHC GMS (4-10-17) (Ty Frankel for Plaintiff, Joseph Velez for Defendant); Plaintiff employee was a certified nursing assistant who made house calls for her employer. She filed a claim for overtime under the FLSA, and the employer counterclaimed for fraud, alleging that she had billed the employer for time and mileage that was not compensable under their employment agreement. The employer’s counterclaim alleged that she was to be paid for time and mileage between her house calls, but not for time and mileage spent travelling to her first stop in the work day or to go home after her last work stop of the day, and that she had billed for and been paid for such before and after work hours and mileage, and had also padded her billings for time and mileage between her house calls. Plaintiff filed a motion to dismiss the counterclaim based upon, inter alia, claim or issue preclusion.
The Plaintiff had filed a wage claim with the ICA pursuant to ARS 23-356 et seq. in which one of the contested issues was whether the parties’ employment agreement provided for payment of time and mileage incurred when the Plaintiff traveled either to work or her first house call at the beginning of each work day. After an informal contested evidentiary hearing, the ICA determined, inter alia, that she was entitled to reimbursement for this first tri each work day. That administrative agency determination was not appealed and thus became final. The District Court provided a good discussion of when a final government agency decision becomes final and may be given preclusive effect in subsequent litigation, and held that the ICA decision was preclusive as to the employer’s counterclaim with respect to the travel at the beginning of each work day, and partially dismissed the counterclaim as to such damages, but permitted the counterclaim to proceed as to the other travel reimbursement sought by the Plaintiff.
Bach v. Bouie, 2017 WL 1354937, case # 2:16 CV 2226 PHX GMS (4-13-17) (Brad and Tod Schleier for Plaintiffs, Barry Uhrman and Greg Coulter for Defendant): Two female employees of the Arizona State Lottery were fired by Lottery Executive Director, Tony Bouie (who was later himself fired by the Governor). Both alleged sex discrimination by Bouie led to their terminations but rather than pursue Title VII relief against the State, they filed an action against Bouie under 42 USC 1983 alleging that their federal constitutional right to equal protection had been violated because their terminations were motivated by their gender. Bouie filed a motion for judgment on the pleadings, arguing that their exclusive remedy for sex discrimination was under Title VII, and that there was no relief available under 1983 for a claim of sex discrimination in employment. Citing three 9th Circuit precedents, the District Court denied the motion to dismiss the 1983 claims alleging violation of the right to equal protection (by sex discrimination). RAMc Note: Because the state is not a “person” in the context of a 1983 claim, it cannot be sued for 1983 relief, but a state actor may be sued for prospective injunctive relief and attorneys’ fees, which are the only relief available in this case for these claims. See e.g., Arizona Students Association v. Arizona Board of Regents, 824 F. 3d 858 (9th Cir., 2016).
O’Neal v. America’s Best Tire LLC, 2017 WL 1311670, case # 2:16 CV 56 PHC DGC (4-5-07) (Michael Zoldan and Clifford Bendau for Plaintiffs, Karen Karr and Brad Denton for Defendants): Two original and twelve opt-in Plaintiffs filed this lawsuit FLSA overtime lawsuit against their employers, tires stores with common ownership. They settled all fourteen claims for a total of $30,000, and agreed to have the court determine attorneys’ fees and costs. The Plaintiffs sought $141,000 in attorneys’ fees and $6,064 in costs. After considering the requests and objections and arguments and LRCIv 54.2, Judge Campbell awarded attorneys’ fees of $60,000 and taxable costs of $3,361, because, inter alia:
(1) The number of hours was excessive for many tasks. The Court, sua sponte, examined the PACER case dockets and found a large volume of almost identical pleadings filed by both counsel in other FLSA cases, indicating that many of the tasks were using templates or boilerplates for which excessive hours were claimed.
(2) Block billing was used, making it impossible for the Court or opposing counsel to determine the reasonableness of the time claimed for a particular task.
(3) All tasks were billed at a minimum of .2 hour even if the task would have taken only a minute or so.
(4) A Ninth Circuit case was quoted, and Judge Campbell concluded:
“The Court concludes that awarding more than $110,000 in attorneys’ fees for the work done in this case, given the familiarity of Plaintiffs’ counsel with the issues litigated and the extent of success, would be unreasonable. In fact, in language relevant to this case, the Ninth Circuit noted that “no reasonable person would pay lawyers $148,000 to win $34,000.” McGinnis, 51 F.3d at 810. The Court concludes that a fee award of $60,000 represents the reasonable value of the work performed by Plaintiffs’ counsel.”
Costs recoverable under the FLSA:
(5) “Under the Fair Labor Standards Act, costs [‘of the action’] include reasonable out-of-pocket expenses.” Van Dyke v. BTS Container Serv., Inc., No. 08-cv-561-KI, 2009 WL 2997105, at *2 (D. Or. Sept. 15, 2009) (citing Smith v. Diffee Ford–Lincoln–Mercury, Inc., 298 F.3d 955, 969 (10th Cir. 2002)). “Costs of the action “can include costs beyond those normally allowed under Fed. R. Civ. P. 54(d) and 28 U.S.C. § 1920.” Id. (citing Herold v. Hajoca Corp., 864 F.2d 317, 323 (4th Cir. 1988)) (FLSA’s costs provision authorizes an award of costs as part of a “reasonable attorney’s fee,” which would not be authorized under Rule 54 or 28 U.S.C. § 1920).”
(6) The employers objected to the following costs: (1) $203.70 for obtaining a transcript of the scheduling conference; (2) $2,762.50 in sums paid to Optime Administration, a firm retained to administer the opt-in portion of the case; (3) $170 paid to attempt service on “Max Jones”; and (4) $2,500 in “overhead,” a total that is not itemized or explained. Judge Campbell denied #1 as unnecessary, and #3 as non-compensable normal law office operating expenses.
Everts v. Sushi Brokers LLC, 2017 WL 1133017, case # 2:15 CV 2066 PHX JJT (3-27-17) (Michael Poulton and Nisha Noroian for Plaintiff, Brian Hembd and John Wilenchik for Defendant): Restaurant food server became pregnant, and when employer became aware of pregnancy, it transferred her to a less lucrative position as a hostess. When Everts refused the transfer, she was fired. She filed claims for Title VII pregnancy discrimination and ACRA sex discrimination. She produced direct evidence (a voicemail from the owner) that she would have to be removed as a food server because of her pregnancy. The employer made some weak arguments that the transfer was necessary because not being pregnant was a “bonafide occupational qualification” for a food server, which the Court rejected, citing, inter alia, the SCOTUS decision in Johnson Controls. The Court granted the Plaintiff’s motion for partial summary judgment on liability on both claims.
Arizona Appellate Courts
Lipsky v. Safety National Casualty Corporation, 2017 WL 443525, Ct. Apps. Div. One case # 1 CA-CV 15-37 (2-2-17) (Michael Doyle and Erin Faulhaber for Plaintiff, Melanie Pate for Defendant): Plaintiff filed, inter alia, claim for wrongful termination for having filed a workers compensation claim, ARS 23-1501(A)(3)(c)(iii). Superior Court (Judge Starr) granted summary judgment for employer, but Court of Appeals reversed and remanded, holding, inter alia:
(1) “To prevail on a wrongful termination (EPA) claim, Lipsky must show that his filing a workers’ compensation claim was a substantial factor in the decision to terminate his employment. See Thompson v. Better–Bilt Aluminum Prods. Co., 187 Ariz. 121, 127, 927 P.2d 781, 787 (App. 1996).”
(2) The merits of the wrongful termination claim did not depend upon the merits of the underlying workers comp claim.
Wade v. Arizona State Retirement System, 241 Ariz. 559, 390 P. 3d 799 (2017) (Dan Bonnett for Plaintiff, AAG Paula Bickett for State): The public employer’s contributions into the ASRS for benefit of a city employee formed part of her salary, and thus, was “compensation” as defined in statute governing ASRS and used to calculate employer contributions to ASRS. The Supreme Court applied rules of statutory construction, and did not give deference to the ASRS interpretation of the state. (reviewed by Dan Bonnett)
Gullett on behalf of Estate of Gullett v. Kindred Nursing Centers West, L.L.C., 241 Ariz. 352, 390 P. 3d 378 (App., 2017): (Scott Boehm for Plaintiff, Anthony Fernandez for Defendant): Jeffrey Gullett appealed the Superior Court judgment compelling arbitration of his statutory claim for abuse and neglect of his late father Winford Gullett pursuant to Arizona’s Adult Protective Services Act (APSA), A.R.S. §§ 46–451 to 46–459. He argued that the mandatory arbitration agreement that his ill father signed when he was admitted into the Defendant’s nursing home was both substantively and procedurally unconscionable and therefore unenforceable. (Note: Under AZ law, an arb agreement may be unenforceable based upon either procedural and/or substantive unconscionability.) Gullett first argued that the arb argreement was substantively unconscionable because of (1) limitations on discovery, (2) failure to assure a neutral arbitrator by referencing an arb service designated by the Defendant, and (3) lack of mutuality of obligation to arbitrate claims. The Court of Appeals recognized these three grounds for substantive unconscionability and examined the record and determined that the facts did not support these three arguments. Next, regarding procedural unconscionability, the Court reversed because the Superior Court denied Gullett the opportunity to do discovery to support this defense to compelling arbitration:
“ . . .when determining “whether an arbitration agreement is procedurally *388 unconscionable, [a] court must examine each transaction on its own facts.” Dueñas, 236 Ariz. 130, ¶ 9, 336 P.3d at 768; see also Broemmer v. Abortion Servs. of Phx., Ltd., 173 Ariz. 148, 153, 840 P.2d 1013, 1018 (1992) (examining specific facts of case to find arbitration agreement unenforceable). Only Gullett’s father and Kindred’s representative were present when Kindred entered into the Agreement with Gullett’s father, a man requiring in-patient care because of serious health problems, and who died approximately one month later. Gullett therefore cannot oppose arbitration on the basis of procedural unconscionability without being permitted limited discovery on that issue. The ability to mount a procedural unconscionability defense to arbitration should not depend on something as fortuitous as whether the individual who signed the agreement remains able to testify.
22¶ 33 Limited discovery on the issue of procedural unconscionability is consistent with Arizona public policy favoring arbitration. “The whole object of discovery is that mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation.” Simpson v. Heiderich, 4 Ariz.App. 232, 236, 419 P.2d 362, 366 (1966). Discovery would also prevent dispositions on the issue of procedural unconscionability “from becoming a guessing game.” U–Totem Store, 142 Ariz. at 552, 691 P.2d at 318. And, because arbitration agreements are subject to the same enforceability defenses as any other contract, Dueñas, 236 Ariz. 130, ¶ 6, 336 P.3d at 768, it is the prerogative and obligation of courts to determine the validity of an arbitration agreement prior to enforcement, see Guidotti, 716 F.3d at 773, which cannot be done properly without an adequate vetting of the issue.”
Useful cases from other jurisdictions
Crabtree v. Angie’s List, Inc., 2017 WL 413242 (S.D. Ind., 1-31-17): Plaintiffs filed FLSA OT claims against their employer, alleging that they were only paid for 40 hours per week, but had in fact worked far more hours, often off-premises, using their personal cell phones and personal computers. In order to mount a defense to the overtime claims, the company sought information and data that would pinpoint the plaintiffs’ whereabouts at all times and potentially show that they were not working when they said they were. The discovery requests included a demand for the plaintiffs’ GPS and location services data from their personal cellphones, email messages, social media posts, work schedules, journals, diaries, calendars, text messages, blog or website posts, Twitter messages or other social media posts. The company also sought to forensically examine all computers, cellular telephones, smartphones, tablets, and other communication devices used by the plaintiffs during work time throughout their employment with the defendant. The plaintiffs argued that since they were permitted, and in fact expected, to work outside the office to accommodate clients in different time zones, the fact that their phones had left the Angie’s List building would have no meaningful impact on whether the employees were performing work at that time. The plaintiffs had already provided the defendant with cellphone records that would allow the company to identify business-related calls. Moreover, the court wrote, the company also had access to data from SalesForce that shows when the employees were logged into the software as well as data showing when they were present at Angie’s List’s offices such as badge swipe data and login data from their work computers. In addressing all of the employer’s discovery requests, the court cited the recent amendment to Federal Rule 26(b)(1) on proportionality, noting that discovery must be “proportional to the needs of the case.” Because this an FLSA OT action, the court declared that when the plaintiffs were in fact working was relevant. But the court found that the defendant failed to demonstrate that the GPS/location services data from plaintiffs’ electronic devices would be more probative than any of the other data already in the company’s possession. Consequently, forensic examination of the electronic devices was not proportional to the needs of the case because the significant privacy and confidentiality interests of the employees outweighed any benefit the data might provide. Angie’s List similarly failed to show how the employees’ emails, text messages or social media posts from this one year period may be more probative as to these issues than other less intrusive data already within its control, such as the SalesForce data, computer logins, or badge swipe data. The employer’s discovery requests were denied.
Diamond v. Hospice of Florida Keys, Inc., 2017 WL 382310 (11th Cir., 1-27-17): Hospice social worker was terminated after taking FMLA leave and filed claims for FMLA interference and FMLA retaliation. District Court granted employer’s motion for summary judgment, but 11th Circuit reversed and remanded: (1) Genuine issue of material fact existed as to whether employer interfered with social worker’s FMLA rights by discouraging her from taking FMLA leave in order to care for her seriously ill parents when the hospice told the social worker in an e-mail that her continued time away from workplace compromised the quality of care the hospice was able to provide as an organization, and by requesting “proof of need” in form of gas and travel receipts, precluding summary judgment on social worker’s FMLA interference claim; (2) A genuine issue of material fact existed as to whether she was prejudiced when she refrained from taking additional (FMLA leave due to discouragement by her employer precluded summary judgment on her FMLA interference claim; and (3) Close temporal proximity between the social worker’s intermittent FMLA leave totaling approximately 13 days over a one month period and her termination from work at the hospice two weeks later established a prima facie case of FMLA retaliation citing 29 C.F.R. § 825.220(c). (reviewed by Denise Blommel)
Conclusion of Membership Meeting
(Pick up your CLE certificate or send e-mail to
firstname.lastname@example.org to request it.)
2017 AZELA Calendar
All AZELA meetings and events listed are on Fridays. Jaburg & Wilk has generously let us use their conference room again in 2017 for our Membership/CLE meetings on the dates listed below:
June 14-16: State Bar Convention (La Paloma, Tucson)
June 21-14 NELA Convention (San Antonio)
(No meeting in July)
Time & Place of Monthly CLE Meetings: All meetings (except for the Annual Convention) start at 12 noon, at the Jaburg & Wilk conf. room.
CLE Credit Provided: All members in attendance will receive a CLE certificate for 1.5 hours of MCLE credit. If ethics subjects are covered, that time will be indicated on the CLE certificate.