Application of California Law in Non-Compete Litigation?

In a recent East Coast/West Coast conflict, courts in Massachusetts consider the application of California Law in a non-compete litigation. Massachusetts courts are not the only courts to come up against this particular issue either. Other courts around the country have also been asked to study the application of California law in litigation based on non-competition agreements. Generally speaking, non-competition agreements are not enforceable in California. So, employees who have worked in another state or in situations where the agreement contains a forum selection clause outside of the state of California are rushing to file in California court or present other state courts with the argument that California state law should be applicable. Either action would offer them the hope of avoiding mobility restrictions.

The Business Litigation Session of the Suffolk Superior Court in Massachusetts recently found themselves asking the question, “Should California law regarding non-compete agreements be applied to cases and agreements outside of the state?”

The issue was considered in connection with the case FTI, LLC, et al. v. Duffy, et al. in which three of the plaintiffs’ former employees resigned. Shortly after resigning they filed suit in California seeking a ruling that the non-compete agreements were unenforceable. Five months later, the plaintiffs filed suit in Massachusetts alleging a breach of the non-compete agreements, as well as other violations (i.e. trade secret misappropriation, breach of fiduciary duty, unfair competition, etc.) The defendants moved to stay the case pending resolution of the California suit. One former employee also moved to dismiss the claims citing a lack of personal jurisdiction. 

The Massachusetts court did not stay the case. In situations when duplicative lawsuits are filed in multiple jurisdictions, the later-filed action is typically stayed, but courts have discretion and can give preference to the later-filed action when doing so best serves the interests involved in the case. In this case, the court held that the two seemingly duplicative lawsuits actually had minimal overlap. The California case sought to void the non-compete agreement. The Massachusetts case focused on other claims. Additionally, the agreement was governed by Maryland law and a court in California would have no greater expertise or ability to apply Maryland law than a Massachusetts court. The court held that Massachusetts had an equally strong interest in the case due to the fact that the plaintiffs alleged defendants committed a number of business torts during the time of employment cited by court documents.

The Massachusetts court also denied the employee’s argument that the case lacked personal jurisdiction. The court found that the employee had sufficient minimal contacts through his supervision of six employees in the state, regular travel to the state of Massachusetts in order to fulfill supervisory duties, and that he billed more than 130 hours to the company while working in Boston in the year 2014 alone. The court also found that since the employee filed a suit in California (revealing that he was willing to travel across the nation to litigate a case) he would not be unfairly burdened by the need to defend himself in a Massachusetts court simply because he resided in New York.

If you have questions about California state law and how it applies to your non-compete agreement, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Wrongful Termination Alleged by LA UPS Worker in California Lawsuit

A former Los Angeles United Parcel Service (UPS) center manager, Mason McConn, claims his employment was terminated in order to appease Hispanic employees after he was falsely accused of racism in the workplace. McConn is suing UPS alleging that as a white worker for the company he was wrongfully terminated in 2017 describing himself as a “sacrificial victim” so the company could appease a Latino employee who made unfounded claims and filed discrimination complaints against the massive package delivery service.

The suit was brought in Los Angeles Superior Court alleging wrongful termination, racial discrimination, retaliation, defamation, and false light invasion of privacy. There are three defendants listed in the suit, UPS, the previously mentioned Latino employee of UPS, Pedro Flores, and one of the company’s human resources employees, Gerald Yee. McConn filed the wrongful termination lawsuit seeking unspecified damages and an injunction ordering UPS not to discriminate or retaliate against their employees.

According to court documents, McConn was employed by UPS for 12 years. His job duties included supervising drivers who distributed freight throughout the Los Angeles County. McConn had two decades of experience in the industry, was well-liked by drivers and UPS management, and was regularly commended for his work at the company.

Due to a shortage of drivers, it became necessary for McConn to assign additional work to drivers in the UPS work force. This action angered Flores. When McConn assigned Flores the additional workload, Flores reacted in an insubordinate manner. McConn claims that at times Flores refused to perform his job duties outright. McConn claims that Flores then called McConn a racist out of spite and alleged the McConn was discriminating against Flores because he was Latino. Flores then violated McConn’s seniority and physically assaulted him. After the incident, Flores reported the claims that McConn alleges were false and malicious to UPS human resources as well as the company’s upper management.

According to McConn, UPS knew Flores was lying, but because they did not want to agitate Flores further for fear of escalating claims of discrimination, retaliation, etc. and due to his history of filing grievances against the company, they responded by acting against McConn.

Allegedly, the company’s fear of being sued by Flores resulted in the firing of McConn even though they were well aware that Flores’ accusations were unfounded. McConn was fired in May 2017. The company claimed the firing was based on McConn’s use of a “swear” word on the premises, but this was a regular occurrence in the organization and no one had ever been reprimanded for swearing before – let alone fired. By firing McConn in this situation, the company held McConn to different standards of accountability than non-white employees and sacrificed his position at the company simply to avoid escalating racial tension that was incited by Flores’ false accusations.

If you fear you have been wrongfully terminated or if you are experiencing workplace retaliation, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Southern California Car Wash Company Allegedly Cheated 800 Workers Out of Overtime Pa

A southern California car wash mogul, Vahid David Delrahim, will pay back $4.2 million in back wages and penalties after allegedly cheating 800 workers out of overtime pay and destroying evidence. The decision followed a two-year court battle with federal authorities.

The Los Angeles native failed to provide workers at a dozen different California locations with minimum wage or overtime payment. The car washes were located in Orange, Los Angeles, San Bernardino, and Ventura counties. The consent decree was approved by the U.S. District Court Judge Fernando Olguin ordering Delrahim to pay:

·      $1.9 million in back wages

·      $1.9 million in damages to workers

·      $400,000 in civil penalties

The case is being called a landmark case as it sends a powerful message to employers that the Department of Labor will use powerful law enforcement and litigation tools to protect employees and level the playing field for law-abiding employers. According to the judgment, Delrahim ordered his employees (many of whom are Spanish speakers unfamiliar with U.S. and/or California labor law) to work off the clock at the start of each shift. He also ordered them to clock out when business was slow but remain at the car wash for when business picked back up. This resulted in many hours on site without payment.

The back wages ordered by the court cover a period from 2013 to the present. It’s possible that more workers will be added to the case resulting in more money as the identity of all workers at all 12 car washes is not currently known. Delrahim was told to provide more names, addresses and workplace records within 30 days. The info was originally requested by the prosecutors in the case in 2016. The judgment will result in the employees receiving over $10,000 in back wages.

If you have questions about off the clock work or overtime payment, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Coding School Agrees to $1M Settlement After Alleged Labor Law Violations

A coding school, General Assembly Space, Inc., recently agreed to pay over a thousand of their current and past instructors $1 million in order to settle allegations that the school misclassified them as independent contractors rather than employees. As a result of the misclassification, the instructors were not paid minimum wage and overtime wages according to their complaint filed in California federal court.

The motion for preliminary settlement approval the plaintiffs’ counsel stated that they planned to request 1/3 of the settlement amount – approximately $333,333 for attorneys’ fees and another $15,000 for expenses in addition to regular fees. Plaintiffs’ counsel felt this amount was fair as it would allow each class member to receive around $28.35 for every qualifying week they completed on the job.

If the settlement deal is approved it would provide resolution for the 10-count complaint that was filed by John Marin, lead plaintiff in the case. The suit was filed in July 2017 against General Assembly Space, Inc., a New York based online school.

The lead plaintiff in the case, Marin, began working for the school as a lead instructor, full-time in June 2016. He taught three consecutive 3-month immersive data science courses in Lost Angeles, California.

According to Marin, he consistently worked 70-80 hour work weeks and was not given the meal and rest breaks required by law. He also claims he was not paid overtime for his hours over the standard 40 hour work week or given accurate/itemized wage statements. After he completed the instruction of the third consecutive course, he was terminated abruptly. The company then replaced Marin with an employee who was classified as exempt from overtime. Marin was denied unemployment benefits by the company, but California’s Employment Development Department later reversed this denial.

The original complaint asserted claims under the FLSA (Fair Labor Standards Act) in addition to claims under California state labor law and the state’s Unfair Competition Law. He also made claims under the Private Attorneys General Act (allowing workers to sue in order to recover civil penalties on their own behalf and on behalf of other employees in their situation), and the state of California for labor code violations.

Marin later amended his complaint to add another former instructor, Keyan Bagheri, as a lead plaintiff. The district court cut the claims brought under FLSA and soon after, the two parties entered mediation. The parties notified the court that they had reached a settlement agreement in May.

If you have questions about overtime pay or if you are not receiving your meal or rest breaks in accordance with California state labor law and/or the Fair Labor Standards Act, please get in touch with the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.