Court Holds There Was No Duty to Meet and Confer Regarding City’s Anti-Racial Profiling Program Affecting Police Officers

California Supreme Court Decision in Claremont Police Officers Association v. City of Claremont (06 C.D.O.S. 7440, Slip op. Aug. 15, 2006). Earlier this week, the California Supreme Court filed its decision in the Claremont case, a case in which Meyers Nave filed an amicus curiae brief on behalf of the League of California Cities. The case concerned the scope of an agency’s meet and confer obligations under the MMBA.

The issue in Claremont concerned whether the city had an obligation to meet and confer regarding its decision to require its police officers to collect additional data regarding vehicle stops and detentions, including the person’s race. The program was aimed at determining if the officers were engaging in racial profiling.

The court of appeal previously held that the city violated its obligation to meet and confer. The Supreme Court reversed the court of appeal, holding that the city was not required to meet and confer with the police union before implementing the new requirements.

Basis for Holding

The Court held that implementing the program did not have a significant and adverse effect on the officers’ working conditions. Rather, the program required the officers only to provide “slightly more information” than what was otherwise required. Thus, the Court determined that this new program only had a “de minimis” impact, and there was no duty to meet and confer.

Test for Determining Meet and Confer Obligations

The Court summarized a “three-part inquiry” for gauging whether there is an obligation to meet and confer.

First, the question is whether the management action has a “significant and adverse effect on the wages, hours, or working conditions of the bargaining-unit employees.” If not, there is no duty to meet and confer.

Second, the question is whether the significant and adverse effect arises from the implementation of a fundamental management or policy decision. If not, then the meet and confer requirement applies. If so, then a third question is asked.

Third, if the answer to questions one and two are “yes,” then the question is whether the “employer’s need for unencumbered decisionmaking in managing its operations is out-weighed by the benefit to employer-employee relations of bargaining about the action in question.” In considering this question, one factor to consider is “whether the transactional cost of the bargaining process outweighs its value.”

The Court declined to issue a broader ruling that would have eliminated the duty to meet and confer altogether when agencies implement a fundamental management decision. Further, the Court emphasized the “narrowness” of its holding, insofar as the record did not show a significant impact, and the Court did not decide whether there would be a duty to bargain “should other issues regarding officer discipline, privacy rights, and other potential effects arise” after the program is implemented.

Supreme Court Confirms Doctrine of At-Will Employment

The California Supreme Court has been faced with numerous controversies regarding the nature of relationships between employers and their current or former employees. As early as 1889, the Supreme Court was presented with a question regarding the meaning of an employment relationship that was defined by an employer and employee as being “permanent.” Lord v. Goldberg, 81 Cal. 596 (1889). In response to that question, the court held that defining an employment relationship as permanent “was not intended to be for life, or for any fixed or certain period.”

Early court decisions in California regarding at-will employment relationships tended to favor an employer’s absolute right to discharge an employee. As the Supreme Court held in 1910, “it is the unquestioned right of the employee to leave the employment at his pleasure, and it is equally the right of the employer to discharge at his pleasure. Union Labor Hosp. Assoc. v. Vance Redwood Lumber Co., 158 Cal. 551 (1910).

Today, private-sector employment in California is generally presumed to be terminable at-will, meaning that the employment relationship can be terminated at any time by either the employer or employee with or without cause. This presumption was codified by the California Legislature in 1937: “An employment, having no specified term, may be terminated at the will of either party on notice to the other. Employment for a specified term means an employment for a period greater than one month.” California Labor Code Section 2922.

There are numerous exceptions to the general rule that private-sector employees in California may be terminated at the will of their employers. For example, the California Fair Employment and Housing Act forbids employers from terminating employees because of their race, national origin, sex, age, disability, marital status, sexual orientation, medical condition or religion. California Government Code Section 12900 et. seq. Moreover, an employee cannot be terminated in violation of a fundamental state or federal public policy.

Contractual agreements also can limit an employer’s ability to terminate an employee without good cause. An agreement to terminate an employee only for good cause does not have to be made in writing, and it can be established based on a oral assurance to an employee by the manager that he or she is entitled to continued employment. Such contracts are often referred to as implied-in-fact contracts. Because careless actions by employers can alter the at-will status of their employees, it is essential for employers to take steps to minimize the risk of unintended agreements to terminate employees only for good cause.

In 1988, the California Supreme Court delineated the factors that are used to determine whether an employer and employee have created an implied-in-fact contract: 1) the employer’s personnel polices and practices; 2) the employee’s length of service; 3) actions or communications by the employer reflecting assurances of continued employment, such as commendations, raises, bonuses, promotions and lack of criticism; and 4) the practices of the industry in which an employee is engaged. Foley v. Interactive Data Corp., 47 Cal.3d 654 (1988).

After determining the relevant factors to review, the Supreme Court held that a plaintiff stated a cause of action for breach of an implied-in-fact contract based on the following: The plaintiff worked for the employer for more than six years; the employer told the plaintiff that he had job security; the employer gave him consistent salary increases, promotions and bonuses; and the employer imposed limitations on its power to discharge an employee without cause in its written termination procedures.

In an effort to avoid creating such implied-in-fact agreements, employers often adopt policies and procedures that stress the at-will employment status of their employees. This includes defining the at-will employment relationship in job applications, offer letters, employment agreements and employee handbooks with the following or similar language: “Employment at-will” means that you are free to resign from your employment at any time, for any reason or no reason at all, with or without cause and with or without notice. Similarly, the employer may terminate your employment at any time for any legal reason, with or without cause and with or without notice.”

Questions about an employee’s at-will status have been the subject of significant litigation in California. Many of these lawsuits involve disputes over whether a purported at-will employment provision is ambiguous or creates some doubt as to the employment status of a particular employee. When such ambiguities exist, courts often have concluded that an employee is not at-will.

For example, in Saubert v. McKesson Corp., 223 Cal.App.3d 1514 (1990), a regional sales manager brought an action against his former employer alleging wrongful termination after he signed an employment application that stated “if hired, my employment is for no definite period and may, regardless of the date of payment of my wages and salary, be terminated at any time without any prior notice.” Despite the language in the employment application presumably defining the employment relationship as being at-will, the court nonetheless looked to extrinsic evidence and held that an implied-in-fact contract to terminate the regional sales manager only for cause existed.

The California Supreme Court recently was faced with a dispute regarding an alleged ambiguity in an at-will provision in a letter of employment. In Dore v. Arnold Worldwide Inc., 2006 DJDAR 10153, the Supreme Court concluded that an employee was at-will despite the employer’s failure specifically to define at-will employment to include the ability to terminate the employment relationship “without cause.” This case likely will be viewed as a victory for employers in their quest to avoid erroneously providing a seemingly at-will employee with for-cause termination rights. Moreover, the holding in this case signifies the Supreme Court’s re-affirmation of the doctrine of at-will employment.

The facts of the Dore case are as follows: Brook Dore was employed with an advertising agency in Colorado as a regional account director during the 1990s. In late 1998, Dore applied for a promotion to a management position in the agency’s Los Angeles office. Dore interviewed with various agency officers and ultimately was promoted to the management position in spring of 1999.

During his interviews for the promotion, Dore was never told the position was at-will. Furthermore, Dore alleges he found out that the two previous individuals who held his position were terminated by the agency for cause.

A senior vice president for the agency sent Dore a letter confirming the terms of his promotion in April 1999. This letter indicated that his employment was at-will and that the agency has “the right to terminate your employment at any time, just as you have the right to terminate your employment with the [agency] at any time.” The letter did not state that Dore could be terminated without cause.

Dore was terminated from his employment without cause in August 2001. He subsequently filed a lawsuit against the agency alleging 1) breach of contract, 2) breach of the implied covenant of good faith and fair dealing, 3) intentional infliction of emotional distress, 4) fraud and 5) negligent misrepresentation. The primary basis for Dore’s lawsuit was that the agency’s failure to communicate to him that he could be terminated without cause led him to believe that he would not be discharged from his employment except for cause.

Dore argued that the definition of the phrase at-will in the offer letter was ambiguous. According to the court, an ambiguity in contract language arises when language is “reasonably susceptible of more than one application to material facts.” The Supreme Court disagreed with Dore and held that the phrase at-will entails the notion of termination “with or without cause” as a matter of simple logic. Consequently, the Supreme Court ruled that the at-will language in Dore’s employment letter was not reasonably susceptible to an interpretation that the agency needed cause to terminate Dore.

The Supreme Court was compelled by the trial court’s observation that Dore “read, signed, understood and did not disagree with the terms of the letter.” In addition, because the letter used language similar to the at-will employment language in Labor Code Section 2922, the Supreme Court ruled that the letter did not contain any patent or latent ambiguities.

This case undoubtedly will have a favorable impact on employers in their quest to avoid altering the at-will status of their employees. Nonetheless, employers inadvertently still can provide seemingly at-will employees with for-cause termination rights. In Dore, had the employer made affirmative statements that Dore could be terminated only for cause or that he should not worry about being let go like the past two managers because he was doing such a good job, it is reasonably possible that the Supreme Court could have reached a different conclusion regarding Dore’s employment status.

While the holding in Dore could be argued to provide employers more flexibility in defining employment relationships, careful employers still define the at-will status of their employees adequately and thoroughly. This can be accomplished by having employees sign off on a comprehensive at-will acknowledgement, which affirmatively states that “the at-will employment relationship can only be altered by a written agreement signed by both the employee and the president of the company.”

Meyers Nave Attorneys Win Appeal for City of Dinuba

Meyers Nave is pleased to announce a substantial victory in a case that affects all public entities that receive property tax revenues, particularly redevelopment agencies that depend on property tax increment revenue to fund their operations.

In City of Dinuba, et al. v. County of Tulare, et al., Case No. S143326, the Court of Appeal for the Fifth District considered the ability of the City of Dinuba and its redevelopment agency to recover tax revenues improperly calculated and withheld by Tulare County. Due to the County’s incorrect assignment of tax rate codes to parcels within the City’s redevelopment project, the City did not receive the full tax revenue to which it was entitled over a five year period. When the City, after an independent audit, notified the County of the error, the County agreed to correct the assessment roll prospectively, but refused to make the correction retroactive and remit the misallocated tax monies.

U.S. Supreme Court Holds Retaliation Claim Can be Supported by Any Action that Would Dissuade a Reasonable Employee from Filing a Discrimination Complaint

BurlingtonNorthern Santa Fe Railway v. White (June 22, 2006). This case provides insight into the types of “actions” which support a retaliation claim under Title VII of the Federal Civil Rights Act.

Sheila White (“White”) was the only woman working at the Maintenance of Way Yard in Tennessee for the Burlington Northern & Santa Fe Railway Company (“Burlington”). White was hired as a track laborer, a job that involves removing and replacing track components, transporting track materials, and clearing litter and brush from the right of way. During the early stages of her job, White was assigned to operate a forklift, which was generally considered to be a more desirable aspect of the track laborer position.

A few months after starting her position with Burlington, White made an internal complaint about one of her supervisors repeatedly telling her that women should not be working in the Maintenance of Way Department. The offending supervisor was given a 10-day suspension.

After discipline was imposed against the supervisor, White was reassigned from forklift duties to perform standard track laborer tasks. This was because Burlington thought “a more senior man” should have the “less arduous and cleaner job” of forklift operator. In addition, White was placed on a 37 day unpaid suspension for an unrelated dispute she had with her supervisor over work issues. After an investigation of that dispute, White was reinstated to her position and awarded back pay.

After exhausting her administrative remedies, White filed a lawsuit against Burlington which alleged, among other things, retaliation in violation of Title VII of the Civil Rights Act of 1964. The two retaliatory acts that White used as a basis for her complaint were (1) the reassignment of her forklift duties; and (2) her 37 day suspension.

The Supreme Court granted review of this case to resolve a disagreement between the circuits regarding the types of actions which support a retaliation claim. Prior to this decision, several circuits applied the standard of a “materially adverse change in terms and conditions of employment” in order to establish retaliation. Other circuits used a less burdensome standard, holding that a plaintiff must show that the “employer’s challenged action would have been material to a reasonable employee.” The standard in the Ninth Circuit for establishing a retaliation claim was “adverse treatment that is based on retaliatory motive and is reasonably likely to deter the charging party or others from engaging in protected activity.”

Burlington argued that a reassignment of duties within the same job description can not support a retaliation claim because it does not materially affect the “terms and conditions” of employment. In addition, Burlington argued that because White was given backpay and reinstated, her 37 day suspension did not materially affect the terms and conditions of her employment. By making this argument, Burlington argued for application of the least onerous standard for retaliation claims. The Supreme Court disagreed, holding that these actions could support a retaliation claim because they could have “dissuaded a reasonable worker from making or supporting a charge of discrimination.” In reaching this conclusion, the Court held that the standard for a retaliation claim is that a plaintiff must show that the “employer’s challenged action would have been material to a reasonable employee.”

LEG Practice Advisor: This case arguably expands the types of conduct that could form the basis for a retaliation claim. Any conduct that would dissuade a reasonable worker from making a discrimination charge will support a retaliation claim.

For more information, please feel free to call or email any member of our Labor and Employment group.

California Supreme Court Holds Public Records Act Does Not Require Public Agencies to Disclose Competitive Proposals During the Negotiation Process

In Michaelis, Montanari & Johnson v. Superior Court (June 22, 2006) Supreme Court No. S133464, the California Supreme Court considered when competitive proposals submitted to a public agency in response to a Request for Proposals (“RFP”) for a public contract or lease must be disclosed under the Public Records Act, Government Code section 6250 et seq. (the “Act”).

At issue were responses submitted to an RFP for a lease of airport property at the Van Nuys Airport, part of Real Party in Interest Los Angeles World Airports (“LAWA”). LAWA’s position was that it would keep the proposals confidential while it negotiated a proposed lease, and make the proposals available for public review at the time the contract was submitted to the awarding authority, but before final award of the contract. LAWA’s reasoning was that this timing allowed the public agency, on behalf of its residents and taxpayers, to complete the negotiations without the proposer being aware of the competing bids, and still allow the public to obtain the information prior to the awarding authority’s consideration and award of the contract.

The trial court agreed with LAWA’s position, finding that, under the “catch all” exemption in Government Code section 6255, the public interest in nondisclosure clearly outweighs the public interest in disclosure. By a 2-1 vote, the Court of Appeal disagreed. The majority found that LAWA’s reasons for nondisclosure were vague and speculative, and that the public had a significant interest in knowing, prior to the completion of the negotiating process, whether LAWA acted properly and in accordance with its own guidelines. Justice Mosk dissented, arguing that substantial evidence supported the trial court’s findings that little if any public benefit would derive from premature disclosure of the competing proposals, and that such disclosure could impair LAWA’s negotiating process.

In a 7-0 decision, the Supreme Court reversed the Court of Appeal decision. In balancing the public interest in disclosure versus the public interest in nondisclosure under section 6255, the Court agreed that there was a “legitimate and substantial” public interest in reviewing the agency’s selection of a winning proposal. However, the Court found, there was no compelling reason why public scrutiny of this process could not as effectively take place after the negotiations were completed but before final approval of the lease. As to the public interest in nondisclosure, the Court upheld the trial court’s conclusion that there were substantial public benefits from delaying disclosure of the proposals until LAWA had selected a proposal and completed its negotiations. Specifically, “premature disclosure would reveal specific, confidential details of the competing proposals to the other proposers, thereby potentially impairing the city’s negotiation and selection process.”

Accordingly, the Supreme Court held that “public disclosure of such proposals properly may await conclusion of the agency’s negotiation process, occurring before the agency’s recommendation is finally approved by the awarding authority.” The Court also held that the agency’s failure to comply with the Act’s timing requirements did not warrant the “unduly harsh” penalty of “requiring disclosure of otherwise exempt records.”

Meyers Nave is special counsel to Los Angeles World Airport (LAWA). Joe Quinn and Julia Bond worked with in-house counsel to seek rehearing in the Court of Appeal, petition the California Supreme Court for review, and brief the merits and argue the case to the state high court.

U.S. Supreme Court Muddies Waters on Wetland Jurisdiction Standards

In Rapanos v. United States, and its companion case, Carabell v. United States Army Corps of Engineers, consolidated at 547 U.S. (2006), the Supreme Court once again examined the reach of the Army Corps of Engineer’s jurisdiction under the Clean Water Act to regulate “waters of the United States.”

At issue was the Army Corps’ interpretation of waters of the United States to include not only traditional “navigable-in-fact” waters, but also tributaries of such waters as well as wetlands adjacent to such waters and tributaries, even where such wetlands were separated from navigable-in-fact waters or their tributaries by “man made dikes… and the like.” (33 C.F.R. SS 328.3(c).) In both of the underlying cases, property owners sought to fill wetlands on their property in order to prepare for development. In Rapanos , the wetlands at issue have a direct surface-water connection to an intermittent waterway which emptied into a navigable river. Rapanos filled these wetlands on his land without a permit and was facing a civil suit by the Corps over his actions. Carabell, on the other hand, sought, and was denied, a permit to fill wetlands on his land. The Carabell wetlands are separated from a ditch by a berm that ordinarily blocks surface-water flow to the ditch, but 10-year storm conditions or greater can create a surface water flow. The ditch, in turn, is hydrologically linked to a navigable in fact water. The Sixth Circuit upheld the Army Corps assertion of jurisdiction over both of these wetlands.

A divided Court overturned the Sixth Circuit in both cases. Though no opinion gathered a majority, a plurality of Chief Justice Roberts, Justice Scalia, Justice Thomas, and Justice Alito, joined by Justice Kennedy, concurring in the judgment, agreed to remand the cases to the Sixth Circuit for further consideration of the jurisdictional issue. Unfortunately, since no one opinion was able to gather a majority, the exact test for determining the issue of jurisdiction remains unclear. The plurality opinion, penned by Justice Scalia established a two-part test for determining when a wetland would be covered by Federal jurisdiction: first, the agency must determine whether the “body of water” to which a wetland is connected is a “relatively permanent” body of water connected to traditional interstate navigable waters; and second, the agency must determine whether the wetland has a continuous surface connection with that water body, “making it difficult to determine where the “water” ends and the “wetland” begins. The definition of what, exactly, constitutes a “relatively permanent” body of water in the minds of the plurality, however, was left undefined. The plurality opined, for an example that a “seasonal river” which flowed for much of the year, but than ran dry for part of the year would be “relatively permanent,” but that a “wash” or “intermittent” or “ephemeral” streams would not.

Justice Kennedy’s concurring opinion rejects the plurality’s requirement that wetlands have a surface-water connection, instead offering that for an area to fall under Federal jurisdiction “the water or wetland must possess a ‘significant nexus’ to waters that are or were navigable in fact or that could reasonably be so made.” In order to meet this “significant nexus test” Justice Kennedy would have the Corps establish, on a case-by-case basis that wetlands adjacent to non-navigable tributaries “either alone, or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as ‘navigable.’” Like the plurality’s test, however, the details of Justice Kennedy’s test are somewhat vague. For example, Justice Kennedy does not provide much guidance concerning what is required for an action to “significantly affect” navigable waters.

As Chief Justice Roberts points out in his concurring opinion, “It is unfortunate that no opinion commands a majority of the Court on precisely how to read Congress’ limits on the reach of the Clean Water Act. Lower courts and regulated entities will now have to feel their way on a case-by-case basis.” The most reasonable approach appears to be to use both the plurality’s two-part test and Justice Kennedy’s “substantial nexus” test. Any wetlands that meet the more strict requirements of the plurality’s test would also likely meet the requirements of Justice Kennedy’s test, thus the plurality’s test can be used as a primary threshold test. If a wetland does not meet the plurality’s test, it appears that federal jurisdiction may still be established through the “significant nexus” test. The exact details of the factual requirements to meet either of these tests will need further definition by the courts on a case-by-case basis. One thing is clear – the precise reach of federal jurisdiction over wetlands under the Clean Water Act remains unresolved.

Meyers Nave is recognized for its work with all types of public agencies in California and provides the full scope of legal services to cities, counties, redevelopment agencies and special districts statewide.

Meyers Nave Announces Three New Principals

Oakland, CA – Meyers Nave, a leading California public law firm, is pleased to announce three new principals: John Bakker, Eric Danly and Amrit Kulkarni.

John Bakker focuses his practice on public law, and he has experience with the full range of public law issues. He serves as the City Attorney of Greenfield, the General Counsel of the Bayshore Sanitary District, and Assistant City Attorney of the cities of Dublin and Union City, and the Town of Los Altos Hills. His areas of expertise focus on government finance, Political Reform Act compliance, elections, and the Cortese-Knox-Hertzberg Local Government Reorganization Act. John is a member of the firm’s public law practice group and serves as the Co-chair of the firm’s Energy and Telecomm Practice Group.

Eric Danly provides advice on the full range of legal issues encountered by public agencies, especially cities and special districts. He was recently selected as attorney for the City of Petaluma and also serves as attorney for the cities of Clearlake and Cloverdale. As a member of the firm’s Public Law and Public Contracting Practice Groups, Eric specializes in public contract law and the Public Records Act. He has previously served on the League of California Cities Municipal Law Handbook Update Committee and the League’s Legal Advocacy Committee.

Amrit Kulkarni specializes in all aspects of land use and environmental law. He has litigated numerous land use cases at the trial and appellate level involving the National Environmental Policy Act, the California Environmental Quality Act, the Clean water Act, the Coastal Act, the Subdivision Map Act and the State Planning and Zoning Law. In addition, Amrit has significant expertise regarding land use issues pertaining to airports and has provided advice regarding major airport expansions in California, including Los Angeles International Airport.

Commenting on the announcement, Managing Principal Jayne Williams said, “We are proud of their extensive achievements and look forward to them further strengthening our practice groups. Known for their expertise in public law and their roles as business partners to our clients, we are pleased to make this announcement.”

About Meyers Nave

Founded in 1986, Meyers Nave is recognized for its work with all types of public entities in California and provides the full scope of legal services to cities, counties, redevelopment agencies and special districts statewide.

Meyers Nave’s areas of practice include labor/employment; torts; redevelopment; city attorney/general counsel representations; eminent domain; litigation; writs and appeals; public contracts and land use; and environmental law.