April 2018 employment law decisions

Damages required for federal court jurisdiction is based on the amount claimed at the time the case is removed from state to federal court.

April 20, 2018, Ninth Circuit Court of Appeals, Else Chavez v. JPMorgan Chase & Co: Ms. Chavez sued her employer in California state court. JPMorgan removed the case to federal court and that court dismissed the case (summary judgment). On appeal, Ms. Chavez contended that removal was improper on grounds the federal court lacked (diversity) jurisdiction because the amount in controversy did not exceed $75,000. The Ninth Circuit reviewed the diversity jurisdiction rule, which requires the parties to be residents of different states and the amount in controversy to be more than $75,000. The amount may include damages as well as attorney’s fees awarded under fee shifting laws. The appellate court concluded that Ms. Chavez’s agreement to removal was strong evidence that the amount exceeded $75,000. Alternatively, there was evidence that Ms. Chavez’s yearly salary was more than $39,000 and she intended to work for another nine years. As a result, a jury could have awarded her over $350,000 in lost wages. The Ninth Circuit rejected Ms. Chavez’s assertion that the amount was limited to the time period between her termination and the removal of the case (a little over one year). Instead, the amount is based on the damages that are claimed at the time the case is removed.

Plaintiff may dismiss his case after trial commences but before the case is submitted.

April 17, 2018, Second District Court of Appeal, Achikam Shapira v. Lifetech Resources: Mr. Shapira file a breach of employment contract claim against Lifetech. The case went to a court (bench) trial. Mr. Shapira requested that the court dismiss his case before the trial concluded. The trial court denied the request, entered a judgment in Lifetech’s favor, and awarded Lifetech $137,000 in attorney’s fees as the prevailing party. On appeal, Mr. Shapira contended that the court should have dismissed his case, and, therefore, the attorney’s fees award was erroneous. The appellate court reviewed the law (Code of Civil Procedure section 581) under which Mr. Shapira sought dismissal: a court must dismiss a case after the trial commences if the plaintiff requests it. The Second District assumed, consistent with both parties’ arguments, that the latest the request can be made is before the case is submitted. The appeals court concluded that Mr. Shapira’s case had not been submitted before he requested dismissal because the court had not ordered the matter submitted, closing arguments were not complete, and the date to file the final paper (closing argument briefs) had not passed.

Pay differential between men and women cannot be justified by an employee’s prior salary.

April 9, 2018, Ninth Circuit Court of Appeals, Aileen Rizo v. Jim Yovino: Ms. Rizo was paid by Fresno County Office of Education less than comparable male employees for the same work. The County justified the wage differential on grounds Ms. Rizo’s prior salary—which was the basis for her starting salary—constitutes a “factor other than sex,” which is a legal defense to a claim of pay discrimination. The question before the appeals court was whether this justification is valid under the federal Equal Pay Act. The Ninth Circuit acknowledged the importance of the issue: “Although the Act has prohibited sex-based wage discrimination for more than fifty years, the financial exploitation of working women embodied by the gender pay gap continues to be an embarrassing reality of our economy.” The appellate court concluded (“unhesitatingly”) that the “factor other than sex” defense is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance. The Ninth Circuit determined that given the Equal Pay Act’s primary purpose is to eliminate long-existing endemic sex-based wage disparities it is inconceivable that Congress would create an exception for basing new hires’ salaries based on those very disparities. The appeals court found support for this determination in the language, legislative history, and purpose of the Act. The Ninth Circuit decided that prior salary, whether considered alone or with other factors, is not job related and does not fall within an exception to the Act that allows employers to pay disparate wages. It overruled its prior decision (Kouba v. Allstate Insurance Co. (9th Cir. 1982) 691 F.2d 873) that the Act does not impose a strict prohibition against the use of prior salary.

Posted by deanroyerlaw