| Welcome to the Autumn 2023 Newsletter, where we share what has been happening at the firm, and provide some timely viewpoints on recent cases, legislative matters or other issues of note for our clients and firm friends. |
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Welcome to the Salisian | Lee LLP Newsletter
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Welcome to the Autumn 2023 Newsletter, where we share what has been happening at the firm, and provide some timely viewpoints on recent cases, legislative matters or other issues of note for our clients and firm friends. We hope you enjoy and if you have any questions or concerns about anything we cover here, please do not hesitate to contact us at info@salisianlee.com.
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Firm News
- We have been adding talent over the past few months! We welcomed new Associates Jennifer Goldstein and Jared Densen, Paralegal Jessica Fox, Legal Secretary Taylor Thompson, and Receptionist Melanie Young. We have really enjoyed bringing them into the fold in what has been an extremely busy period for the firm.
- After a four-year hiatus during the pandemic, we held our 13th Anniversary Reception at the InterContinental Los Angeles Downtown hotel on May 17, 2023.
- We have continued our commitment to growing our firm culture with our ongoing social events, including, most recently: bowling, escape rooms, and celebrating birthdays and anniversaries.
- In October, our firm obtained a major victory in the California Court of Appeal, reversing a Motion for Summary Adjudication and subsequent Motion for Judgment on the Pleadings granted at the trial court level against our commercial tenant clients. Our clients had been denied rent abatement and were sued by the landlord, who demanded full rental payments during a several-month period in which the Premises were damaged and unusable, at no fault of our clients. At the trial court level, the landlord had prevailed on its argument that the defects of the Premises were the responsibilities of our clients under the language of the subject lease, and were accordingly responsible for full rental payments. Our firm was retained to challenge the matter on appeal, and we successfully convinced the Court of Appeal to reverse the trial court's judgment in full.
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Cases Making News
By Danya Elbendary, Associate
Below please find some new, notable and/or highly watchable recent cases.
Groff v. DeJoy, 143 S. Ct. 2279 (2023)
On June 29, 2023, the U.S. Supreme Court issued its opinion in Groff v. Dejoy, clarifying the relevant test for refusing religious accommodations under Title VII of Civil Rights Act of 1964.
As reported in our Spring 2023 Newsletter, the case explored whether a mere burden to coworkers is sufficient for an employer to be excused from providing accommodations under the "more than de minimis cost test" previously established by the Court in Trans World Airlines Inc. v. Hardison in 1977 and followed by lower courts since.
Groff was a postal worker at rural post-office who requested Sundays off as a religious accommodation. While Groff's request was initially granted, Groff was eventually fired, leading him to sue USPS alleging failure to reasonably accommodate his religious practices under Title VII.
During oral arguments before the Supreme Court, Groff argued that the de minimis test failed to adequately protect religious employees in the workplace and should therefore be rejected, while the government raised concerns that rejecting the de minimis test would upend the 40-year-old statutory precedent established by Hardison.
In its unanimous opinion authored by Justice Alito, the Court held that merely showing "more than a de minimis cost," as Hardison has been interpreted, does not suffice to establish an undue hardship under Title VII, reasoning that the Hardison opinion cannot be reduced to that single phrase considering its repeated reference to "substantial" burdens in describing an employer's "undue hardship" defense.
Thus, the Court ultimately held that to deny a religious accommodation, an employer must show that the burden of accommodation is "substantial in the overall context of an employer's business." The Court further elaborated that courts must apply the clarified test to "take into account all relevant factors in the case at hand, including the particular accommodations at issue and their practical impact in light of the nature, size, and operating costs of an employer."
The Court's ruling is a win for religious employees, as it establishes stronger protections in the workplace under Title VII. Concurrently, employers should anticipate heightened scrutiny regarding denial of religious accommodations and proceed in accordance with the standard as clarified in Groff.
Acheson Hotels v. Laufer, U.S. No. 22-429 (2023)
On October 4, 2023, the Supreme Court heard oral arguments in a case involving tester standing under the Americans with Disabilities Act ("ADA").
Specifically, the issue presented is whether a self-described "tester" of ADA compliance had standing under Article III of the Constitution to challenge the failure of a place of public accommodation to provide disability accessibility information on its website as required by the ADA, despite that individual having no intention of visiting that place of public accommodation.
Standing under Article III generally requires that a plaintiff have suffered an injury-in-fact that is concrete and particularized, actual or imminent, was caused by the defendant's conduct, and is redressable by the court. Alternatively, "tester standing" refers to the ability of a plaintiff with no intention of taking advantage of the services provided by a company to "test" its compliance, then allege injury and sue that company for noncompliance with required regulations. Historically, tester standing has been a mechanism for civil rights enforcement permitted by courts in previous cases.
The Petition for Certiorari in this case emphasized that the Circuits were divided on the issue of whether Article III grants standing to "testers" to enforce compliance at places they never intend to visit, with the Second, Fifth, and Tenth Circuits rejecting arguments for tester-standing, while the First and Eleventh Circuits have supported standing under the facts of the instant case, thus necessitating Supreme Court review. Notably, following grant of certiorari in this case, plaintiff Laufer voluntarily dismissed her complaint with prejudice, seemingly in avoidance of impending Supreme Court review. Accordingly, concerns of mootness were raised.
During oral arguments, Acheson Hotels argued that because Laufer did not intend to use Acheson's disability accommodations, her failure to receive information about those accommodations could not cause her a cognizable injury under Article III. In particular, it reasoned that because the ADA only provides injunctive relief, the applicable injury at issue here must be in the future to be redressable and warrant standing. Acheson further argued that despite Laufer's withdrawal of her lawsuit, the case was not moot, as another plaintiff could presumably come forward, and there is a circuit split on the standing issue that necessitates the high Court's clarification. Finally, Acheson admonished the Court not to "bless the strategy of filing a large number of lawsuits, settling most of them, and then abandoning the rare case that threatens to create adverse precedent," as the tactic raises institutional concerns.
Alternatively, the government raised the issue of mootness as an initial matter in amicus curiae briefing, arguing that there is no live controversy presented by this case, as required by Article III for judicial review, not only because Laufer had preemptively withdrawn her suit, but also because the hotel ownership had changed, and the website in question was no longer missing the information required by the ADA. The government reasoned that, given the complications presented in this case, the Court should preserve its ability to address this issue with a case that is less problematic. Finally, the government also argued that the circuit split was not as significant as it seemed when certiorari was initially granted, as the Eleventh Circuit's decision previously raised in the Petition for Certiorari had since been vacated, meaning only one circuit decision supported Acheson's position. Laufer raised similar arguments.
Justice Kagan appeared most strongly in agreement with the mootness arguments, remarking that as opposed to presenting a live controversy, as required, the case was "dead, dead, dead, in all the ways that something can be dead." Accordingly, Kagan reasoned that the Court's issuance of a decision here seemed imprudent. Justices Sotomayor and Alito seemed to parrot these concerns, with both asking questions about how issuing a decision here would differ from an advisory opinion.
While it is not clear whether the Court will ultimately decide this case given the mootness arguments, which several of the Justices appeared to recognize as a potential limitation, a substantive decision here could have potentially far-reaching implications on the issue of tester standing, making this an important case to watch.
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In Greater Depth
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Cannabis Use Outside of Work: Important Upcoming Changes for Employees and Employers
By Glenn Coffman, Associate
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On January 1, 2024, Assembly Bill 2188 will become operative, which will require and/or enable California employers and employees to fall in line with the state's progressing views on the recreational and medicinal use of cannabis. Specifically, AB 2188 will revise and update the California Fair Employment and Housing Act (FEHA) to make it unlawful for an employer to discriminate against a person in hiring, termination, or any term or condition of employment, or otherwise penalize a person, if the discrimination is based upon the person's use of cannabis off the job and away from the workplace.
AB 2188 will still allow preemployment drug screening or employer-required drug screening tests; however, an employer will be prevented from firing, terminating, disciplining, or not hiring any employee who is found to have "non-psychoactive" traces of marijuana or THC - the principal psychoactive component in cannabis - in their blood or urine system. Moreover, during employment, employers may still have drug testing if they feel that the employee is somehow impaired in performing their job because of marijuana or other drug use. But that employer will only be permitted to take action if the level of THC found in the employee's system is actually impairing that employee's ability to perform his or her work. Despite the loosening of these rules, employers will still have the option of preventing the possession of the cannabis or other drugs in the workplace.
AB 2188 will apply only to employers with five or more employees; it will not apply to employees in the building and construction trades, or in positions requiring a federal background investigation or clearance. AB 2188 will further not exempt any state or federal laws requiring applicants or employees to be tested for controlled substances as a condition of employment, receiving federal funding or federal licensing-related benefits, or entering into a federal contract.
Presently, California jurisprudence has generally declined to protect employees from employer actions based upon their cannabis use. A helpful illustration comes from the California Supreme Court decision in Ross v. RagingWire Telecommunications, Inc., 42 Cal. 4th 920 (2008).
In Ross, a terminated employee brought a disability-based discrimination action under the FEHA against his employer. The employee, whose physician had recommended he use marijuana to treat chronic pain, was fired when a preemployment drug test required for new employees revealed his marijuana use. The employee thereafter brought an action alleging that the company (1) violated the FEHA and (2) terminated his employment wrongfully, in violation of public policy. The trial court sustained the company's demurrer without leave to amend, ruling that the employee's claims were not legally viable causes of action, which was affirmed by the Court of Appeal.
The California Supreme Court granted the employee's petition for review, but ultimately affirmed the rulings of both the trial court and Court of Appeal, holding that the employee could not state a cause of action under the FEHA for the employer's refusal to accommodate his medicinal use of marijuana or for wrongful termination in violation of public policy.
As to the employee's FEHA violation claim, the Court reasoned that the 1996 Compassionate Use Act passed by California voters did not give marijuana the same status as any legal prescription drug, as no state law could legalize marijuana if the drug remained illegal under federal law. As such, the FEHA did not require employers to accommodate what was deemed use of illegal drugs. The Court additionally noted that employers were permitted to perform drug tests and could deny employment to persons who tested positive for such illegal drugs.
As to the employee's violation of public policy claim, the employee argued that while a party to a contract of employment without a specified term may terminate at will, this rule was subject to the exception that an employer may not discharge an employee for a reason that violates a fundamental public policy of the state. The Court rejected this argument, noting that the Compassionate Use Act does not speak to employment law, as there was simply no fundamental public policy requiring employers to accommodate marijuana or other drug use by its employees.
Interestingly, while the Court rejected the employee's arguments, a dissenting and concurring opinion may have foreshadowed and predicted AB 2188. The dissent noted that "[n]othing in the text of the FEHA or in California decisional law supports the proposition that a requested accommodation can never be deemed reasonable if it involves off-duty conduct by the employee away from the jobsite that is criminal under federal law, even though that same conduct is expressly protected from criminal sanction under state law." (emphasis added). The dissent's reasoning recognized that there was little evidence that the employee's marijuana use to treat chronic pain would interfere with the rights or interests of the other employees, in any way affect the employer's legitimate interests as an employer, or adversely impact its business operations. The dissent further noted the lack of meaningful difference between marijuana and numerous other prescription drugs affecting cognitive functions and with the potential for abuse.
Moving forward, situations like the one in Ross may become a thing of the past under AB 2188, as employers will no longer be able to penalize employees for marijuana use off-the-job and not affecting their work. It is of course important to remember that AB 2188 will not become effective until the new year and that cannabis users should still be careful, as any use of cannabis away from work may still impact their present or potential employment. However, once the page turns to 2024, employment laws surrounding recreational and medicinal cannabis use outside of work will loosen and be brought even closer to California's generally more progressive values.
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Looming Battles Between Facebook and Twitter
Could Clarify What the "Tort Law of the Marketplace" Is
By Marius Mateescu, Associate
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Facebook, Inc., now Meta Platforms, Inc., received a letter recently from Twitter, Inc., now X Corp., regarding Facebook's alleged unfair competition with Twitter. The letter was sent on the eve of Twitter rebranding to X Corp.
Twitter's letter contends that Facebook engaged in unfair competition by hiring employees to build "Threads," Facebook's competitor to Twitter's core service. Facebook has not similarly formally notified Twitter yet regarding its use of "X," which Facebook has registered for trademark/servicemark protection.
In California, Business and Professions Code section 16600 renders void "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind." The courts have broadly interpreted this statute to invalidate judicial action, as well as noncompete agreements and other provisions that have the effect of noncompete agreements, that results in restraining an individual from practicing a trade, profession, or calling. See e.g., Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937, 945-949 (2008); The Retirement Group v. Galante, 176 Cal. App. 4th 1226, 1238 (2009). Damages may be awarded for unfair competition, provided they do not work a "restraint" on trade, but the contours of what may constitute unfair competition in light of section 16600's expansion are unclear.
Generally, a plaintiff asserting unfair competition must show that the defendant misappropriated confidential information or trade secrets without consent. But Twitter's claims relate to Facebook hiring its employees to develop Threads. On its face, that is not unfair competition—although certain cases, which predate the expansion of section 16600, hold that "raiding" a competitor's personnel is unfair competition. However, the interplay between these cases and section 16600 has never been addressed by the California Supreme Court. Specifically, whether the traditional rules concerning the "tort law of the marketplace," which prohibit an employee from unfairly competing with an employer in certain ways, remain intact in light of section 16600, which apparently restricts judicial action preventing certain forms of what has been classified as unfair competition in violation of the tort law of the marketplace, has never been addressed. See generally, Loral Corp. v. Moyes, 174 Cal. App. 3d 268 (1985).
Under the current weight of California authority, the only way Twitter's raiding claims will succeed is if it can show that Facebook hired employees who stole confidential information belonging to Twitter - perhaps proprietary code - and ratified those employees' conduct by knowingly allowing them to implement the confidential information in Threads. But Twitter's raiding claims may also create new California law clarifying whether the "tort law of the marketplace" remains intact as to raiding claims, and more broadly how those laws interact with section 16600. And Twitter may be able to convince the California courts that section 16600 does not apply to "raiding" claims, and that imposing liability—both at law and in equity—on Facebook's ex-employees is not a "restraint" under section 16600.
The implications of this future legal dispute may be substantial. If Twitter can convince California courts that various forms of unfair competition survive section 16600, then California employers will have a stronger basis in the future to sue or prevent their employees from working for competitors. If they can show that the competitor targeted the employees and lured them away, then that may be a form of actionable unfair competition. Presently, such a claim may or may not be summarily dismissed under California law, and so would likely not be brought unless possibly as a counterclaim. Essentially, if Twitter is successful, it will provide California employers with leverage to control their competitors' hiring practices by allowing unfair competition claims to survive past the pleadings stage.
For now, it appears that Facebook and Twitter are both waiting for the opportune moment to bring their potential claims. Mr. Musk and Mr. Zuckerberg may first face off in their anticipated cage match - with the loser perhaps turning next to the legal fight.
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Legal Disclaimer: The information contained in this newsletter is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this newsletter, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the state of California.
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