Recent months have shown a dramatic increase in suits against retailers by cashiers seeking seats at work. The influx results from two California Court of Appeal decisions in late 2010 that permitted the plaintiff cashiers to pursue suits against their employers for not providing seating. Several suits filed since then come from cashiers seeking to require employers to provide them with seats at work. But a lawsuit filed in Los Angeles last Thursday shows that the issue does not just concern cashiers.

That suit, filed against Banana Republic and Gap, alleges that the clothing manufacturers should have provided employees in their retail stores with adequate seating accommodations. Like the cashier lawsuits, the complaint cites on California Labor Code section 1198 and Industrial Wage Commission ("IWC") Wage Order 7-2001. Labor Code section 1198 prohibits employers from violating IWC wage orders. Wage Order 7-2001 requires employers within the "mercantile" industry to provide employees with suitable seats if the nature of their work allows. Specifically, Section 14 of the Wage Order requires employers to provide suitable seats to all employees "when the nature of the work reasonably permits the use of seats" and, when the nature of the work requires standing, provide seats close to the work area for employees to use "when it does not interfere with the performance of their duties."

Wage Order 7-2001 broadly defines the mercantile industry to include "any industry, business, or establishment operated for the purpose of purchasing, selling, or distributing goods or commodities at wholesale or retail; or for the purpose of renting goods or commodities."

The cashier cases all contend that cashier work reasonably permits the use of seats. The Banana Republic and Gap case does the same, but also expands beyond cashiers to include other employees who may wish to sit down when not engaged in active duties. So the net effect is that plaintiffs are now pursuing seating violations as they apply to every employee, not just those at the cash register. And they are seeking civil penalties under the Private Attorney General Act of 2004 that potentially number in the millions.

So what can employers do? First, employers can assess the nature of employees’ work duties and make determinations about whether the nature of the respective jobs reasonably permits the use of seats, and whether there is some reason that seating cannot reasonably be provided to employees awaiting active engagement. Where employers deem standing to be essential for a job, they can make sure that the job description accurately reflects that determination. These decisions and the basis for them should be documented. Second, employers may consider making seats available upon request, on a case-by-case basis; this could bolster the argument,should litigation later arise, that the case should not proceed as a class action. Third, employers can make seats available near the employee work area, such as in a break room, and allow employees to use these seats when doing so does not interfere with the performance of their duties.

Content for this post was provided by the following labor and employment attorneys in Crowell & Moring’s Orange County office: partner Mark A. Romeo, counsel Wendy A. Sugg, and associate Samuel P. Nielson.

Chipotle Mexican Grill coined the phrase the “Chipotle Experience” to describe customers’ participation in the preparation of their meal. In July 2010, the Ninth Circuit ruled in Antoninetti v. Chipotle Mexican Grill, Inc., that the Chipotle Experience violated the ADA because there was no “equivalent facilitation” for customers in wheelchairs, who could not see over a wall separating the food from the customers. The court awarded injunctive relief, damages, and attorney’s fees. Like Chipotle, other restaurants and retailers are at risk for failing to offer the same customer experience to all their patrons, particularly if they advertise the experience to the public.

Continue Reading Ninth Circuit Holds that Under the ADA, Chipotle Mexican Grill Must Offer Patrons Equivalent Customer Experiences

Despite strong opposition expressed by the National Retail Federation, the Retail Industry Leaders Association, the National Grocers Association, and the National Association of Manufacturers, President Obama has filled two of the three vacancies at the National Labor Relations Board with recess appointments. Joining union-side labor lawyer Mark Pearce is Craig Becker. Becker is a long-time senior lawyer for the Service Employees International Union and has been a staff attorney with the AFL-CIO since 2004. Becker’s appointment has generated enormous controversy. Senate Republicans unanimously joined business groups in opposing the nomination, citing concern that Becker’s views on labor law are outside the historical mainstream. Sen. John McCain (R-Az.) described Becker’s appointment as “clear payback by the Administration to organized labor.”

Continue Reading Pro-Union Presidential Appointees Likely to Change the Labor Law Landscape

Case: Kullar v. Foot Locker Retail Inc., Case No. A119697 (Cal. Ct. App. 11/7/08)

The One Sentence Summary: Approval of a $2 million settlement in a wage-and-hour class action against a retailer was vacated because the trial court failed to independently analyze the evidence and circumstances surrounding the settlement.


What They Were Fighting About: Defendant Foot Locker agreed to settle this class action, which alleged various failures to properly compensate employees for their labor and expenses, for a total of $2 million. A member of the class filed a written objection to the settlement and requested discovery, arguing that the settlement was not fair and class counsel had not completed sufficient discovery to determine the extent of the class loss. At the hearing for final approval, the settling parties argued that information supporting the settlement had been exchanged at the mediation that resulted in the settlement, but that none of the information could be provided to the trial court due to the privilege accorded mediation discussions. The trial court concluded that it could not compel the parties to turn over documents exchanged at the mediation, and approved the settlement on the basis that “circumstantial evidence” indicated it was fair.

Upon the objector’s appeal, the appellate court vacated and remanded for further proceedings. The court held the trial court was required to independently analyze the evidence and circumstances to determine whether the settlement was in the best interests of the class. Although the trial court was not required to attempt to decide the merits of the case, it must at least satisfy itself that the class settlement is within “the ‘ballpark’ of reasonableness.” Accordingly, the trial court was required to examine the relevant data. If certain data were privileged, the parties could be required to provide the trial court with other data that would enable the court to make an independent assessment of the adequacy of the settlement terms. The appellate court further held that the objector should be permitted to renew its discovery requests, within limits.

Employment contracts with non-competition clauses are common outside of California, but a California statute, section 16600 of the California Business and Professions Code, prohibits non-compete contracts outside of a few statutory exceptions. In a decision issued on August 7, 2008, Edwards v. Arthur Anderson, No. S147190, the California Supreme Court held that section 16600 prohibits non-competition contracts even if the non-compete clause is reasonable or imposes only a “narrow restraint.” The Court further held that the employer had engaged in a wrongful act by requiring the employee to sign a release of claims under the non-competition contract.

Background:

Section 16600 provides that

“Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

Statutory exceptions to section 16600 allow non-compete contracts in certain circumstances, including in connection with the sale of goodwill of a business (§ 16601) and the dissolution of a partnership (§ 16602) or limited liability corporation (§ 16602.5).

In Edwards, the plaintiff Edwards had signed a non-competition agreement as an employee of Arthur Anderson. The agreement barred Edwards from serving within 18 months any Anderson clients with whom Edwards had worked, and barred solicitation of clients of Anderson’s Los Angeles office. After Anderson became embroiled in the Enron scandal, HSBC sought to hire a group of employees including Edwards. HSBC and Anderson required the moving employees to sign a “Termination of Non-Compete Agreement” which released “any and all” claims against Anderson. Edwards refused to sign the termination agreement because he did not want to release indemnity claims against Anderson, and was therefore not hired by HSBC. Edwards then sued Anderson and HSBC for claims including interference with prospective economic advantage. Edwards lost in the trial court against Anderson but won at the California Court of Appeal (click here for a discussion of the lower court decision). The California Supreme Court then took the case.

California Supreme Court Holdings:

  • The first question before the California Supreme Court was whether Anderson’s enforcement of the non-competition agreement (by forcing Edwards to sign an agreement terminating it) was a wrongful act. The Court held that enforcing the non-competition agreement was illegal under section 16600 and enforcing it was a wrongful act that could lead to liability for interference with prospective economic advantage. The Court noted that

    section 16600 reflects “a settled legislative policy in favor of open competition and employee mobility, . . . [it] ensures that every citizen shall retain the right to pursue any lawful employment and enterprise of their choice [and it] protects the important legal right of persons to engage in businesses and occupations of their choosing.”

  • In light of the broad statutory language of section 16600 and the limited statutory exceptions, the Court rejected decisions of federal courts which had ruled that section 16600 allowed “reasonable” non-compete contracts that imposed only a “narrow restraint” on competition. The Court stated “Section 16600 is unambiguous, and if the Legislature intended the statute to apply only to restraints that were unreasonable or overbroad, it could have included language to that effect.”
  • In a second part of the decision unrelated to the non-competition agreement issue, the Court also held that the release sought by Anderson as the employer for “any and all” claims was not unlawful because it could not be interpreted to release non-waivable employee indemnity rights under California Labor Code section 2802(a).

Case: Costco Wholesale Corporation v. Superior Court (Cal. Ct. App. 3/27/08)

The One Sentence Summary: Where a redacted version of a letter prepared by Costco’s outside counsel detailing a comprehensive factual investigation and legal analysis of the classification of managers within Costco warehouses disclosed only job descriptions of certain managers readily available from other sources, Costco was unable to establish that irreparable harm would result from disclosure of the redacted letter and therefore was not entitled to writ relief from the trial court’s order requiring production of the redacted letter.

What They Were Fighting About: In 2000, Costco engaged outside counsel to conduct a comprehensive factual investigation and legal analysis of the classification of managers within Costco warehouses. Outside counsel interviewed two warehouse managers and relied on other information provided to her by Costco, her legal research and experience in preparing a 22 page letter addressing the exempt status of certain Costco warehouse managers in California. In 2001, Costco decided to reclassify ancillary managers (i.e., managers of departments within each warehouse, such as meat, bakery, pharmacy, etc.) from exempt employees not entitled to overtime payments to salaried, non-exempt employees who were entitled to overtime. Plaintiffs then filed a class action against Costco in 2003 alleging it had misclassified ancillary managers as exempt employees and thus unlawfully failed to pay overtime. Plaintiffs sought production of the outside counsel’s letter, and Costco objected on attorney-client privilege and work product grounds. The trial court ordered that a referee inspect the letter in camera to determine whether and what information in the document constituted privileged legal advice. The referee issued a recommendation upholding Costco’s privileges as to parts of the letter, which he redacted, but found that other factual information about various employees’ job responsibilities was not protected and should be produced. The referee found that the factual information was obtained in outside counsel’s role as fact-finder rather than attorney and should be disclosed because it amounted to recorded statements of prospective witnesses and/or reflections on a non-legal matter. The trial court adopted the referee’s recommendation and ordered the redacted form of the letter produced. Costco filed a petition for writ of mandate, which the appellate court denied, and then filed a petition for review in the California Supreme Court. The Supreme Court granted the petition and transferred the case back to the appellate court. The appellate court requested supplemental briefs, specifically on the issue of whether irreparable harm would result from release of the redacted letter, thus justifying extraordinary relief by writ of mandate. Following a hearing, the court again denied the petition for writ of mandate, thereby upholding the trial court’s order requiring production of the redacted letter.

Court Holdings:

  • The court’s opinion focused primarily on whether disclosure would result in irreparable harm to Costco. Upon examining the redacted letter, the court held that Costco could not establish irreparable harm because the only parts of the letter that were unredacted were “inconsequential and [did] not infringe on the attorney-client relationship.” The factual statements describing certain employees’ job descriptions did not communicate any legal opinion, analysis or strategy, but merely provided information readily available from other sources that could easily be obtained through interviews, depositions or a document production request.
  • Although the general rule in Evidence Code section 915(a) is that a trial court may not require even in camera disclosure of a communication in order to determine whether the communication is privileged, the rule is not absolute and in camera hearings may be held under certain circumstances. For example, in camera review is allowed to evaluate whether waiver exists and when application of a privilege depends on the communication’s content (e.g., common interest privilege); or when there is a claim that the attorney was acting in some capacity other than as legal counsel and the dominant purpose of the communication and the attorney’s work were not in furtherance of an attorney-client relationship (e.g., communications by insurance company’s in-house claims adjuster who was also an attorney). Without in camera hearings, control over the determination of whether a privilege exists would be based solely on the representations of the party asserting the privilege.
  • The court upheld the referee’s conclusion that the unredacted portions of the letter, which contained factual information about various employees’ job descriptions based on non-privileged documents and interviews with two managers, were not privileged. While recognizing that the attorney-client and work product privileges apply to corporations, the court cited the “landmark” California case on corporate attorney-client privilege, D.I. Chadbourne, Inc. v. Superior Court, 60 Cal.2d 723 (1964) for the proposition that not all statements furnished to corporate attorneys are privileged. The court noted that the referee applied the principles set forth by the Supreme Court in Chadbourne in analyzing which portions of the letter were privileged.
The San Francisco Health Care Security Ordinance (HCSO) became effective on January 9, 2008. The HCSO requires most San Francisco employers to make minimum health care expenditures for their employees, to track such expenditures, and to confirm compliance. Folger Levin & Kahn LLP has prepared a summary of the HCSO intended to be a step-by-step guide to help businesses understand the basic requirements of the ordinance. If you have any questions about the application of the HCSO to your business, please contact any of us in the Labor and Employment Practice Group.
This posting provides a summary of many new developments in California Employment Law for 2008, including summaries of new statutes, case law, and regulations that will impact California employers. If you have any questions about the application of any of these laws to any particular situation effecting your company, please contact one of us in the Labor and Employment Practice Group.

Case: National Federation of the Blind v. Target Corporation: Implications Beyond “Brick-and-Click” Retailers

Summary: Are websites required to be accessible to the blind? A case before the United States District Court for the Northern District of California directly addresses that question, and thus far, the answer seems to be “yes” if you are a business that uses your website to offer goods and services that are available in your “brick-and-mortar” store. The answer may also be “yes” if you are an operator of a website that may be deemed a “business establishment” or a “public place” in California.


Full Posting:

While the concept of providing a website that is accessible to blind persons may sound like an anomaly to some, assistive technology makes it possible for blind and visually impaired persons to surf the Internet. For example, screen reader software can convert text into speech, so long as that the website is designed to allow the use of screen reader software.

In 2006, National Federation of the Blind (“NFB”) filed a lawsuit against Target Corporation (“Target”) (the “NFB v. Target litigation”), alleging that Target’s website, www.target.com, violated the Americans with Disabilities Act (“ADA”), 42 U.S.C. §§ 12101, et seq., and related California statutes, The Unruh Civil Rights Act (the “Unruh Act”), Cal. Civ. Code § 51, and The California Disabled Persons Act (the “Disabled Persons Act”), Cal. Civ. Code § 54.

From the outset, NFB’s ADA claim against Target was limited by the statutory language. Title III of the ADA provides:

“No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.”

42 U.S.C. § 12182(a) (emphasis added).

In an earlier lawsuit filed by Access Now, Inc., another nonprofit disabled advocacy group, against Southwest Airlines challenging the inaccessibility of the southwest.com website, the court dismissed Access Now’s ADA claim because the claim was premised on the theory that the inaccessibility of southwest.com prevented access to Southwest’s “virtual” ticket counters, which are not actual, physical places of public accommodation. Access Now, Inc. v. Southwest Airlines Co., 227 F. Supp. 2d 1312, 1319-21 (S.D. Fla. 2002).

THE REQUISITE NEXUS BETWEEN target.com AND TARGET STORES

Learning from the Access Now case, the plaintiffs in the Target litigation allege that as a result of Target’s refusal to remove barriers to target.com, blind individuals are being denied full and equal enjoyment of the goods and services offered at Target’s brick-and-mortar stores. In other words, the theory of the case against Target is that the plaintiffs were denied access to the goods and services at Target stores as a result of their inability to access target.com. National Federation of the Blind v. Target Corporation, 452 F. Supp. 2d 946, 952 (N.D. Cal. 2006).

As set forth in the Second Amended Complaint, the features of target.com include:

  • a store locator that allows shoppers to find the location and hours of a nearby Target store;
  • an online pharmacy, through which customers can place prescription refills for pick-up at a Target store;
  • an online photo shop, through which customers can order prints for pick-up at a Target store;
  • coupons that may be redeemed at a Target store, and;
  • online wedding and baby registries.

In support of their motion for class certification, the proposed plaintiffs’ class members submitted declarations alleging (1) that they were deterred from going to the Target stores because they were unable to find products or product descriptions on target.com, and (2) that their shopping trips to the Target stores took longer as a result of the inaccessibility of target.com, either because they were unable to “pre-shop” or because they had to resort to in-store help. See National Federation of the Blind v. Target Corporation, 2007 U.S. Dist. LEXIS 73547, *19-23 (N.D. Cal., October 2, 2007). For purposes of class certification, the court found these declarants to be sufficient, and certified a nationwide class consisting of:

“all legally blind individuals in the United States who have attempted to access Target.com and as a result have been denied access to the enjoyment of goods and services offered in Target stores.”

Id., *66.

INTEGRATION BETWEEN target.com AND TARGET STORES

While limiting the ADA claim, for the time being, to those plaintiffs who were denied access to the enjoyment of goods and services in Target stores as a result of their attempt to access target.com, the court did leave open the door for expanding the scope of the claim if the evidence showed an “integrated merchandising” between target.com and the physical Target stores.

This aspect of the court’s ruling can be found in its original decision denying Target’s motion to dismiss, where the court observed in a footnote that there were questions as to whether “Target treats Target.com as an extension of its stores, as part of its overall integrated merchandising efforts.” 452 F. Supp. 2d at 956, fn. 4. “A broader application of the ADA to the website may be appropriate if upon further discovery it is disclosed that the store and website are part of an integrated effort. Parties may file briefing on this issue later if the court deems it appropriate.” Id.

REASONABLENESS OF ACCOMMODATIONS OFFERED BY TARGET

In certifying the class and in denying Target’s earlier motion to dismiss, the court specifically reserved for another day the question of whether in-store assistance and 1-800 customer service numbers offered by Target may constitute sufficient “reasonable accommodation” under the ADA. Id., *24; see also 452 F. Supp. 2d at 956. In addressing whether Target’s accommodations are reasonable, the court will no doubt take into consideration the nature of burden or hardship – i.e., the relative cost – to be undertaken in making the target.com website more accessible to blind users.

NO NEXUS BETWEEN “BRICK-AND-CLICK” REQUIRED FOR STATE LAW CLAIMS

The potential reach of the NFB v. Target litigation, however, is greater under applicable California laws.

Under both the Unruh Act and the Disabled Persons Act, a violation of the ADA is a per se violation of those acts. A “brick-and click” retailer like Target (i.e., a retailer with both a brick-and-mortar presence and an online presence) faces potential liability under the ADA and the two California statutes if it is found to be denying blind or visually impaired consumers equal access to the website, and thus to goods or services of a place of public accommodation.

The court in NFB v. Target, however, has ruled that neither the Unruh Act nor the Disabled Persons Act requires a nexus between the individual’s online experience and his or her experience at the physical stores. 2007 U.S. Dist. LEXIS, *28. The logical extension of such a rule is that any business doing business in California with a website is potentially subject to liability under these laws for failing to make its website accessible to visually impaired persons.

The NFB v. Target court’s decision was based on its reading of the statutory language. The Unruh Act provides that all persons are “entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.” Cal. Civ. Code § 51(b). The Disabled Persons Act guarantees that individuals with disabilities “shall be entitled to full and equal access” to medical facilities, common carriers, telephone facilities, adoption agencies, private schools, hotels, places of public accommodation, and “other places to which the general public is invited.” Cal. Civ. Code § 54.1(a)(1). Based on its finding that the language of the two California statutes is broader than the ADA, the NFB v. Target court defined the California subclass to include “all legally blind individuals in California who have attempted to access Target.com,” regardless of whether those persons attempted to access the physical Target stores. 2007 U.S. Dist. LEXIS, *28-35, *66.

If other courts agree with the NFB v. Target court regarding the breadth of the California laws, then any business that directs itself to California residents, regardless of whether it is a retailer or it has a physical presence in California, faces possible exposure in the event its website is found to be inaccessible.

CONCLUSION

The NFB v. Target litigation is far from over. As of this writing, Target had petitioned the Ninth Circuit Court of Appeals to review the district court’s class certification decision. Target is also challenging the plaintiffs’ Second Amended Complaint. Other issues – such as whether Target has provided reasonable accommodation, and whether the application of the Unruh and Disabled Persons Acts to regulate websites like target.com violates the dormant commerce clause – will no doubt be subjects of heavily contested litigation and appeals.

Additional test cases will follow, as well as potential legislative intervention. Neither the ADA nor advances in assistive technology, however, will fade away. All businesses would be well advised to evaluate their websites in the context of evolving laws and technology to ensure that if it becomes a target of the next lawsuit, it can put its best foot forward to demonstrate the reasonableness of its conduct.

Case: Doran v. 7-Eleven, Inc., No. 05-56439 (9th Cir. Nov. 9, 2007)

The One Sentence Summary: If an ADA plaintiff has encountered or has personal knowledge of at least one barrier affecting his or her disability and thereby has been deterred from attempting to gain access to a place of public accommodation, the plaintiff has standing to challenge all accessibility barriers in that public accommodation that are related to his or her disability.


What They Were Fighting About: Plaintiff Jerry Doran sued for ADA violations at a 7-Eleven store located in Anaheim, 550 miles from his home. Doran is a paraplegic and uses a wheelchair for mobility. His complaint identified nine alleged barriers at the 7-Eleven store including that the store aisles were too narrow and that disabled patrons were denied access to the employees-only restroom. During discovery, Doran’s expert conducted a site visit and identified three additional barriers that would potentially impact mobility-impaired persons. The trial court granted summary judgment to 7-Eleven on all of Doran’s ADA claims, holding that Doran did not have standing to challenge barriers first identified in the expert report because he did not personally encounter or have personal knowledge of those barriers. The trial court also found that Doran failed to provide any evidence that the nine barriers identified in the complaint had not been removed or violated the ADA. Doran appealed.

Court Holdings:

  • The fact that Doran lived 550 miles away from the 7-Eleven store did not preclude him from establishing Article III standing. He personally visited the store on 10 to 20 prior occasions, is currently deterred from visiting the store due to its accessibility barriers, and planned to visit Anaheim at least once a year on annual trips to Disneyland.
  • Trial court erred in precluding Doran from suing as to those accessibility barriers related to his disability as a wheelchair user that he did not personally encounter. If an ADA plaintiff knows about at least one violation that deters him or her from attempting to enter the public accommodation again and conduct further investigation of its accessibility, the plaintiff has Article III standing to sue. Discovery may then be conducted as to any other barriers related to his or her disability and those may be included in the claim.
  • A rule limiting an ADA plaintiff to challenging only those violations affecting his or her disability that he or she personally encountered or knew about at the time of filing suit would burden businesses with more ADA litigation, encourage piecemeal compliance with the ADA, and interfere with the goal of eliminating disability discrimination in places of public accommodation.
  • The dissenting judge expressed serious concern that the majority were improperly expanding Article III standing to plaintiffs who had not suffered an injury. The dissenting opinion presented a hypothetical of a mobility-impaired customer who sued after being unable to find a disabled parking space in a shopping center, and then sought discovery as to ADA violations by all the tenants of the center whose stores he or she never visited after being unable to find parking. The majority distinguished this scenario as involving establishments within the shopping center that were not responsible for the injury to the customer caused by the lack of disabled parking access.
  • The Ninth Circuit affirmed the dismissal of alleged ADA violations that Doran failed to prove with any evidence. As to the allegedly narrow aisles in the 7-Eleven store, plaintiff did not present any measurements to show that the aisles did not comply with the 36-inch clearance required by the ADA Accessibility Guidelines. Regarding the lack of access to the employees-only restroom, that is not a place of public accommodation under the ADA because it is not open to the public. Therefore, no violation of the ADA occurred.