Page 1

CMCP Diversity Matters Fall 2015 Newsletter

MINORITY

Fall 2015 1


CMCP Diversity Matters 2015 eNewsletter Committee Members

1

Tambry L. Bradford (Co-Chair) Special Counsel Pepper Hamilton LLP

Cassandra Mougin (Co-Chair) Shareholder Pettit Kohn Ingrassia & Lutz, PC

Michael Chung Of Counsel Willenken Wilson Loh & Delgado LLP

Karen A. Henry Counsel Davis Wright Tremaine LLP

Noah Perez-Silverman Associate Caldwell Leslie & Proctor, PC

Kelly Perigoe Associate Caldwell Leslie & Proctor, PC

David Shimkin Member Cozen O’Connor

Jonathan Turner Partner Mitchell Silberberg & Knupp LLP


Fall 2015 Newsletter

Table of Contents

page 3

Attorney Spotlight Series: CMCP Executive Director Emeritus – Marci Rubin

page 4

OMNICARE and its Implications

page 6

Meet Your New CMCP Board Members – Attorney Spotlight Series: Marissa M. Dennis

page 8

Legal Update: Written Objections to Summary Judgment Evidence are Preserved for Appeal

page 11

Business Development Series: Even E. M. Forster Believed in Face to Face Meetings and Trial Strategies”

page 13

Uber Drivers – Independent Contractors or Employees?

page 16

INside Diversity VIII CMCP, ACC-SoCal & DLA Piper bring you the eighth Annual INside Diversity Event

page 17

Diversity Calendar Mark Your Calendars for Upcoming Diversity Events

2


CMCP Diversity Matters

ATTORNEY SPOTLIGHT ON

CMCP Executive Director Emeritus – Marci Rubin By: Karen A. Henry, Counsel, Davis Wright Tremaine LLP

Director Emeritus Marci Rubin from the California Minority Counsel Program (CMCP) sits down with Davis Wright Tremaine lawyer Karen Henry to discuss Marci’s CMCP leadership, values and principles from her childhood, implicit bias, as well as professional opportunities and access for attorneys of color.

This video will open in a new webpage. Karen Henry is Counsel at Davis Wright Tremaine’s Los Angeles office. Litigating in state and federal court, Karen maintains a broad and diverse practice, focusing primarily on media, IP, and entertainment law. In her practice, she defends clients in a range of matters, including copyright, trademark, right-of-publicity, theft of ideas, defamation, and invasion of privacy litigation. For more info about Karen, click here.

3


Fall 2015 Newsletter

OMNICARE and its Implications By: Jeffrey M. Hammer, Attorney, Caldwell Leslie & Proctor, PC

I

n the spring of this year, the Supreme Court issued its long-awaited decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 135 S.Ct. 1318 (2015), resolving a circuit split regarding the scope of liability under Section 11 of the Securities Act of 1933 for false statements of opinion. The Omnicare decision enshrines the distinction between “opinions” and “facts,” but leaves some uncertainty regarding proving liability for omitting a fact from a statement of opinion. As a result, the decisions has important implications for how companies prepare registration statements and how Section 11 claims are litigated.

Background Omnicare—a provider of pharmacy services for nursing homes—filed a registration statement that stated Omnicare “believe[s]” that its “contractual arrangements” “are in compliance with applicable federal and state laws” and that its “contracts with

pharmaceutical manufacturers are legally and economically valid arrangements that bring value to the healthcare system and the patients that we serve.” Omnicare, 135 S.Ct. at 1323. Pension funds that purchased Omnicare stock filed suit under Section 11, which gives purchasers a cause of action against issuers for material misstatements or omissions in a registration statement. Id. at 1324. They claimed that Omnicare’s legal compliance opinions were material misrepresentations, based on later-filed lawsuits that alleged payments from drug manufacturers to Omnicare violated anti-kickback laws. Id. The plaintiffs also alleged that Omnicare omitted facts to make its opinion not misleading because it failed to disclose that none of Omnicare’s directors and officers “possessed reasonable grounds” for concluding the opinions were truthful and complete. Id. The district court dismissed the complaint because it failed to allege the defendants knew their opinion Continued on next page…

4


CMCP Diversity Matters was false. Id. The Sixth Circuit reversed, holding that a plaintiff need only allege that a statement of opinion is objectively false; a “defendant’s knowledge is not relevant” because Section 11 provides for strict liability with no scienter requirement. 719 F.3d 498, 503-05 (6th Cir. 2013). In reaching this conclusion, the Sixth Circuit parted ways with the Second and Ninth Circuits, which had held that a plaintiff must allege an opinion is both objectively and subjectively false to state a claim under Section 11. Fait v. Regions Fin. Corp., 655 F.3d 105, 110 (2d Cir. 2011); Rubke v. Capitol Bancorp Ltd., 551 F.3d 1156, 1162 (9th Cir. 2009).

The Omnicare Decision The Supreme Court reversed, holding that statements of opinion are not actionable under Section 11 unless the speaker subjectively believes the opinion is untrue, regardless of whether the opinion is objectively untrue. Omnicare, 135 S.Ct. at 1325-27. Section 11 “does not allow investors to second-guess inherently subjective and uncertain assessments.” Id. at 1327. As to omissions, the Court held it is actionable if “material facts about the issuer’s inquiry into or knowledge concerning a statement of opinion” are omitted and “those facts conflict with what a reasonable investor would take from the statement itself.” Omnicare, 135 S.Ct. at 1329. The Court explained that this standard should not be viewed as an invitation to allege omission claims based on conclusory assertions. The plaintiff “must identify particular (and material) facts going to the basis for the issuer’s opinion . . . whose omission makes the opinion statement at issue misleading to a reasonable person reading the statement fairly and in context.” Id. at 1332.

Key Takeaways The Omnicare decision has several implications for how registration statements are prepared and how securities lawsuits are litigated. First, the decision strengthened defendants’ ability to defend against opinion-based Section 11 claims. If the defendant did not know the opinion was untrue, there is no liability. Second, notwithstanding the Court’s admonition that omissions-based opinion claims may not be pled in conclusory terms, expect claims based on omissions to be a new avenue of Section 11 litigation. To reduce the risk of Section 11 liability, issuers should consider accompanying statements of opinion with the bases for the belief, as well as qualifications that make clear any uncertainties or limitations to the opinion. Third, although Omnicare dealt specifically with Section 11, expect plaintiffs to seek to extend its omissions holding to claims under other federal securities statutes. For example, district courts are already beginning to address arguments that Omnicare applies to claims under Sections 10(b) and 18 of the Securities Exchange Act. See In re Merck Litig., 2015 WL 2250472, at *23 (D.N.J. May 13, 2015); Special Situations Fund III QP v. Deloitte Touche Tohmatsu CPA, Ltd., 2015 WL 1474984, at *15 (S.D.N.Y. Mar. 31, 2015); Corban v. Sarepta Therapeutics, Inc., 2015 WL 1505693, at *6-7 (D. Mass. Mar. 31, 2015). Although issuers should be sure their process for drafting registration statements and related work accounts for the Omnicare decision, they should also monitor decisions by the lower courts as they apply Omnicare—and spell out its full implications—over the coming years.

Jeff Hammer is an attorney at Caldwell Leslie’s Los Angeles office. Jeff’s practice focuses on complex commercial litigation in state and federal court where he has represented clients as both plaintiffs and defendants in litigation involving business torts, trade secret claims, contract disputes, and state and federal securities claims. For more info about Jeff, click here.

5


Fall 2015 Newsletter

MEET YOUR NEW CMCP BOARD MEMBERS

ATTORNEY SPOTLIGHT ON

MARISSA M. DENNIS – Partner, Allen Matkins Leck Gamble Mallory & Natsis, LLP By: Noah Pérez-Silverman, Attorney, Caldwell Leslie & Proctor, PC

M

arissa Dennis’s decision to join the California Minority Counsel Program Board of Directors should come as no surprise to those who know her. In addition to being a skilled litigator with expertise handling complex matters for commercial real estate companies and financial institutions, she has also shown a demonstrated commitment to helping others and advancing diversity in the legal profession. And her firm, Allen Matkins Leck Gamble Mallory & Natsis, LLP, has a long, proud history with the organization, having included among its ranks CMCP founding member Guy Rounsaville, Jr. Joining the Board was a perfect way for Marissa both to continue giving back to the community and to extend her firm’s partnership with CMCP. Marissa’s interest in the law was sparked in an unusual way. As the child of immigrants from

Thailand who worked long hours, she spent many afternoons at home watching Divorce Court with her sister. But it was the workings of the legal system that fascinated Marissa, more so than the domestic dramas on display. The show piqued her interest in how our society resolves disputes, and it set her on a path that took her to UCLA, where she earned a Bachelor’s Degree in Political Science and a Master’s Degree in social welfare, and eventually to Loyola Law School. But Marissa’s path to becoming a lawyer was not direct. In addition to her interest in the law, she also had a strong desire to help the less fortunate. A trip to Mexico City during college opened her eyes to inequality and poverty in a way she had not fully appreciated before, and she became committed to helping those in need. After college, she worked as an employment counselor for People Assisting the Homeless

(PATH), providing guidance and support to homeless individuals in their attempts to find jobs and become self-sufficient. And after obtaining her Master’s, she became a social worker with the Department of Child and Family Services, helping abused and neglected children in the foster care system. Her years as a social Continued on next page…

6


CMCP Diversity Matters worker were fulfilling, but also at times frustrating, as she had to cope with the constant lack of resources and she struggled with her inability to effect broad, systematic change. Her desire to effect greater change is what led her back to her interest in the law. With this prologue, Marissa is the first to admit she did not see herself as a partner of a law firm when she started law school. After her summer associateship at Allen Matkins, she envisioned working at the firm a few years and then pursuing public interest law. But she was surprised to find that she truly enjoyed her corporate work, and she received tremendous support and guidance in her career from her firm. For example, when she was a second year associate, the partners at Allen Matkins allowed Marissa to argue a case before the California Court of Appeal (which she won); and the firm continued to look for opportunities to give her experiences that would develop her legal skills. In this environment, she thrived, setting herself apart as a go-to attorney for corporate real estate clients, with the ability to provide counsel on both litigation and transactional matters. Her practice also includes services to financial institutions, such as Wells Fargo, and technology companies, such as Uber. And Marissa, cognizant of the opportunities she received as a young lawyer, strives to pay the experience forward, always looking to give capable junior

7

attorneys experiences that will help them grow in their careers. She recognizes that allowing associates to play a large role in the most interesting parts of litigation makes them feel supported, trusted, and respected, and ultimately makes them want to remain at the firm. In addition to her corporate work, Marissa still finds time for pro bono, consistently providing help with adoption cases, which takes her back to the same children’s courthouse in Monterey Park where she would testify as a social worker. She also serves on her firm’s Diversity Subcommittee, and co-chairs the firm’s LA Office Community Outreach Committee. In that role, she coordinates her office’s efforts to give back to the community, with canned food drives, volunteer opportunities at the L.A. Regional Food Bank, coastal clean-ups, and an initiative Marissa started in conjunction with her former colleagues at PATH to collect professional attire for homeless people to wear to job interviews. Although Marissa relishes her primary job as a litigator and counselor, she welcomes these opportunities to broaden her interaction with the community. She feels that these opportunities (volunteering, recruiting, pro bono), as well as her non-legal interests (traveling through wine country with her husband, doting on her Labradoodle, Scarlet), make her life “multi-dimensional.” Her

involvement with CMCP is another dimension that Marissa is thrilled to add to the mix. With its focus on assisting minority attorneys in their careers, the organization’s mission strikes a chord with Marissa’s own interests in diversity issues and mentorship. She first became involved through CMCP founding member Guy Rounsaville, Jr., who encouraged her to attend a mixer in Los Angeles. After meeting people from CMCP at that first mixer, she was the natural choice to introduce the speakers at an event her firm hosted for CMCP at their office. And once she hit it off with Marci Rubin, CMCP’s indefatigable Executive Director Emeritus, Marissa’s role in the organization grew and grew. Marci encouraged Marissa to speak on multiple CMCP panels, Marissa helped plan the Annual Conference as part of the CMCP Conference Committee, and now she has made the final leap to the CMCP Board of Directors. Reflecting on the state of diversity in the legal profession, Marissa notes how far the profession has come in the past several decades, but also how far it has yet to go. She recalls a story told to her by a senior partner at Allen Matkins who, as an associate, had attended a client meeting at a private club that did not allow women to use the front door. Marissa’s colleague was allowed to dine with her client, but only if she entered the club through a side door. It is stories like these and similar stories relayed by panelists


Fall 2015 Newsletter

at last year’s Annual Conference that—much like her trip to Mexico City in her youth— that convince Marissa she needs to be part of the solution. She is excited to work with incoming Executive Director Robert White to help chart the next course for CMCP, and she would love to see the organization grow into areas of California where it does not have as large a presence, such as Fresno and Sacramento. Although that growth could prove challenging, Marissa knows there are many attorneys of color in these regions who could benefit from all that CMCP has to offer, and she is up to the challenge. Noah Pérez-Silverman is an attorney at Caldwell Leslie’s Los Angeles office. Noah has an impressive breadth of experience. He has handled complex privilege issues, supervised voluminous electronic discovery projects, and helped obtain terminating sanctions against an adversary for litigation misconduct. For more info about Noah, click here.

Legal Update:

Written Objections to Summary Judgment Evidence are Preserved for Appeal By: Cassandra E. Mougin, Shareholder, Pettit Kohn Ingrassia & Lutz, PC

On August 10, 2015, Governor Brown signed SB 470, codifying the holding in Reid v. Google, Inc. (2010) 50 Cal.4th 512, that evidentiary objections on motions for summary judgment are preserved on appeal whether or not the trial court rules on them. The bill adds the following language to California Code of Civil Procedure section 437c: (q) In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion. Objections to evidence that are not ruled on for purposes of the motion shall be preserved for appellate review. Before Reid and Section 437c(q), the California appellate courts had been split on the question of whether evidentiary objections that were not ruled on were waived on appeal. Some appellate courts held that filing written objections, alone, was sufficient to preserve evidentiary Continued on next page…

8


CMCP Diversity Matters

objections for appeal. Other courts of appeal held that parties that filed written objections, but failed to request a ruling at the hearing, had waived the objections. In Reid, the California Supreme Court settled the split, holding that if a party has filed written objections to evidence the court need not rule on each objection at the hearing, in order for the objections to be preserved on appeal. The other portion of the holding from the Reid case—that a court’s statement that it declines to render formal rulings is presumed to be an implied overruling of the objections—was not codified by SB 470. In Reid, the plaintiff filed an employment discrimination case against his previous employer, Google. Google moved for summary judgment. Google submitted 31 pages of objections, raising more than 175 separate objections to evidence. (Reid, 50 Cal.4th at p. 533). At least 50 of the objections were based simply on “relevance.” (Id.) At the hearing, Google incorporated its written objections, and focused on four items of evidence in particular. (Id.) In a written order, the trial court granted Google’s motion and stated: “The Court declines to render formal rulings on evidentiary objections. In ruling, the Court relied on competent and admissible evidence pursuant to Biljac Associates v. First Interstate Bank (1990) 218 Cal. App.3d 1410, 1419-1429.” (Id.) This type of ruling has been commonly referred to as a Biljac ruling. Plaintiff appealed and argued that, because the court did not rule on Google’s objections, those objections had been waived on appeal. Google argued that the Biljac ruling should be a presumption that the objections were sustained. Google also argued that if the Court of Appeal were to presume that the objections were overruled, the Court of Appeal would, in effect, be concluding that the objections were waived. The Court of Appeal refused to hold that the evidentiary objections were waived, but ruled that the trial court’s Biljac ruling is presumed to be an implied overruling of the evidentiary objections. (Id. at 533-534). The California Supreme Court granted Google’s petition for review to address the preservation of evidentiary objections on appeal. The California Supreme Court held that because Google submitted its evidentiary objections in proper form in writing and orally, all of its objections were preserved on appeal. It also agreed with the Court of Appeal that a Biljac ruling presumes the objections were overruled.

9


Fall 2015 Newsletter

In so holding, the California Supreme Court analyzed the history of the waiver language in CCP 437c. The Supreme Court noted that prior to a 1990 amendment, objections “not made either in writing or orally at the hearing” were deemed waived. (Reid, 50 Cal.4th at p. 529 (quoting Former §437c, subd. (b) as amended by Stats. 1984, ch. 171, §1, pp. 544, 545).) In 1990, the Legislature considered changing this language to “Evidentiary objections not made in writing at least two court days prior to the hearing shall be deemed waived.” (Reid, 50 Cal.4th at p. 529 (quoting Sen. Bill No. 2594 (1989-1990 Reg. Sess.) as introduced Mar. 1, 1990, p. 2.) Ultimately, in 1990, the Legislature changed the language to “Evidentiary objections not made at the hearing shall be deemed waived.” (Reid, 50 Cal.4th at p. 530 (quoting § 437c, subd. (b), as amended by Stats. 1990, Ch. 1561, §2, pp. 7330, 7331, enacting Sen. Bill No. 2594 (1989-1990 Reg. Sess.) as amended May 7, 1990.) The Court noted that one of the objectives of the 1990 amendment, was to ensure that all evidentiary objections be first made in the trial court and not made for the first time on appeal, and then inferred that when the Legislature deleted “either in writing or orally,” it did not intend to restrict the manner in which objections had to be presented, but simply required that the objections be presented to the trial court, rather than being made for the first time on appeal. (Id. at 530.) The Court reasoned that written objections made before the hearing, as well as oral objections made at the hearing, are deemed made “at the hearing” so that either method of objection avoids waiver. (Id. at 531-532). The Reid Court also included a practice note, characterizing “innumerable” or “blunderbuss” objections as a “disturbing trend” that could lead to a court reprimanding or even sanctioning counsel for abusive practices, and encouraging parties at the very least to “specify [at the hearing] the evidentiary objections they consider important, so that the court can focus its rulings on evidentiary matters that are critical in resolving the summary judgment motion.” (Id. at 532-533). Thus, even with the addition of Section 437c(q), practitioners should focus on the objections that really count, and raise key objections at the hearing.

Cassandra Mougin is a shareholder at Pettit Kohn’s San Diego office. Cassandra’s litigation practice focuses on premises liability, professional malpractice, real estate, and corporate litigation, as well as insurance law. For more info on Cassandra, click here.

10


CMCP Diversity Matters Business Development Series:

Even E. M. Forster Believed in Face to Face Meetings By: Martha Sullivan, Principal, Thornton Marketing

A

recent New Yorker article referred to a short story called “The Machine Stops.” It was written by E. M. Forster more than one hundred years ago, about people who lived underground and were entirely dependent on technology. Somehow, Forster imagined a world that sounds similar to the way we live today. There were “plate screens” that sound like today’s smart phones and laptops and there was a form of instant messaging. People lived in isolation and rarely had face to face contact. There is a wonderful quote from the book that seems relevant to our ongoing conversation about business development and how to develop and maintain relationships. A boy in the story who lives far away from his mother says to her, “The Machine is much, but it is not everything. I see something like you in this plate, but I do not see you. I hear something like you through this telephone, but I do not hear you. That is why I want you to come. Pay me a visit, so that we can meet face to face, and talk about the hopes that are in my mind.” A virtual form of communication, whether fictional or real, doesn’t have the same impact as a face to face meeting. We can have Skype or Facetime calls with people, but it is not the same as sitting in the same room with them. We can phone each other and have a conversation, but we might notice a degree of distraction, a feeling that the person we are talking to might be reviewing emails instead of truly listening. We all recognize how efficient texting can be. It’s so efficient that we don’t even have to include any unnecessary communication. We don’t have to ask anything personal or ease into a conversation. We appreciate the convenience of texting, but it may not be the best way to develop or maintain a relationship. You know that I believe relationships are essential to business development. When you commit to a face to face meeting, you demonstrate that you are more invested in the relationship. There is a much higher likelihood that you will truly see and hear another person and “talk about the hopes” that both of you share. An in-person conversation will have much more depth than any form of digital communication, and there will be less chance of misunderstanding the tone or meaning of your message. In that experience of sitting with another human being, you will both create neural pathways in your brains that will connect you, not just today, but in the future. These are the connections that help build relationships and trust.

11


Fall 2015 Newsletter

If you are ready to exchange emailing and texting for face to face meetings, you will have numerous opportunities to meet wonderful people at the CMCP Annual Business Conference on October 22 and 23. This is one of the best times of the entire year to have as many face to face meetings as you can in two days. If you have attended CMCP events, you know that the members are accessible and friendly. The conference is an ideal place to expand your network.

Maximize your attendance at the CMCP Annual Business Conference

In the weeks before the conference, reach out to CMCP members you have met in the past and make plans to see them in LA.

Make sure you have a large supply of business cards to exchange at the conference, even if you think other members already have your contact information.

Schedule time to send follow-up emails during the week of October 26.

Update your 2016 marketing plan and schedule other followup activities that will allow you to continue to develop your relationships.

In the months after the conference, read CMCP emails and newsletters regularly and plan to attend events throughout the year. The more events you attend, the more face to face meetings you will have.

Martha Sullivan is a business development coach for attorneys and other professional service providers. She is certified as a professional coach and has more than 25 years of experience in marketing and business development. For more info about Martha, click here.

12


CMCP Diversity Matters

Uber Drivers –

Independent Contractors or Employees? By: Jonathan M. Turner, Partner, Mitchell Silberberg & Knupp LLP

O

n June 3, 2015, the California Labor Commissioner’s Office, following an evidentiary hearing, issued a decision finding that under the state’s wage and hour laws, Uber was an “employer” of drivers using its online platform to respond to customer requests for driver services. The case, Berwick v. Uber Technologies, Inc., was appealed by Uber to the California Superior Court, which will conduct a de novo review as provided under the Labor Code.1 Whether the superior court reaches the same conclusion as the Labor Commissioner remains to be seen, but there is growing momentum in the judicial system to confront the issue of employment relationships in the “service on demand” businesses that are flourishing with advances in online technology. In confronting this issue, courts must face the challenging task of applying antiquated legal principles to the business realities associated with that technology, particularly as that technology redefines the ways in which people go to work. Uber, whose financial assets have grown exponentially over time,2 seems determined to defend its position that the drivers using its technology are independent contractors and not employees; hence, Uber may well be the flagship defendant in pending and future cases in which this issue is firmly decided one way or the other, even though other startup companies utilizing similar technology to provide consumers with “service on demand” are facing legal challenges from plaintiffs claiming they have been misclassified as independent contractors. By way of example, Homejoy, an

on-demand home cleaning service company, recently shut down citing lawsuits from cleaners who claimed they were misclassified as independent contractors as a factor in its decision to close its doors. Similarly, on-demand companies such as Lyft (on-demand ride service similar to Uber), Postmates (on-demand product delivery), and Caviar (on-demand food delivery), to name a few, have faced or are facing similar misclassification lawsuits. The Labor Commissioner’s Berwick decision has drawn the attention of employment law practitioners on both sides of this issue because it provides some insight into the legal principles that govern this issue, at least under California wage and hour laws. During the hearing before the Labor Commissioner, Uber’s product manager testified that Uber is a “technological platform, a smart phone application that private vehicle drivers (Transportation Providers) and passengers use to facilitate private transactions;” that Uber provides “administrative support” to the driver and the party requesting driver services; that the driver takes no instruction, supervision or direction from Uber, but merely uses Uber’s mobile application whenever the driver wishes to notify prospective customers that the driver is available to transport them; and that Uber neither exerts control over the hours drivers work, nor sets any minimum requirements regarding the number of customer pickups.

Cal. Lab. Code § 98.2. Henry Blodget, “I Just Heard Some Startling Things About Uber…,” at http://www.businessinsider.com/uber-revenue-2014-6. Mr. Blodget is CEO and Editor-in-Chief of Business Insider. 1. 2.

13


Fall 2015 Newsletter

From these facts, Uber argued that no employment relationship existed as between Uber and the driver; rather, Uber is a “neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation.”3 The Labor Commissioner was not persuaded. According to the Labor Commissioner, “the reality …is that [Uber] [is] involved in every aspect of the operation. [Uber] vet[s] prospective drivers, who must provide to [Uber] their personal banking and residence information, as well as their social security number. Drivers cannot use [Uber]’s application unless they pass [Uber]’s background and DMV checks.”4 Perhaps the most significant finding upon which the Labor Commissioner relied when determining that Uber is an employer is that the service provided by the driver is “integral” to the very business purpose for why Uber exists—to provide transportation services for customers who see this business model as an alternative to taxicab services. Quoting from the California Supreme Court’s decision in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, the Labor Commissioner stated: The modern tendency is to find employment when the work being done is an integral part of the regular business of the employer, and when the

worker, relative to the employer, does not furnish an independent business or professional service.” (Borello, supra, at p. 357.) Plaintiff’s work was integral to [Uber]’s business. [Uber] [is] in business to provide transportation services to passengers. Without drivers such as Plaintiff, [Uber]’s business would not exist. In one sense, the Labor Commissioner’s ruling in the Berwick case reflects a trend that has been prevalent in California over the two and a half decades since Borello was decided—for courts and other adjudicatory authorities to go beyond the common law test for determining when the relationship between parties to a service transaction is that of employment or independent contractor. At common law, this question was answered by examining who had the “right to control” the work being performed-if the hiring party retained control over only the results of the work, but not the manner and means by which that work was performed, then the relationship between the parties would be considered one of an independent contractor. On the other hand, if the hiring party also maintained day-to-day control over the manner and means by which the work was performed, which generally meant administering Continued on next page…

This was the Labor Commissioner’s characterization of the position Uber took in the case. The author has not reviewed the arguments made at the hearing, nor the post-hearing briefs, if any, submitted in the case. 4. See Labor Commissioner’s decision in Berwick v. Uber Technologies, Inc., at p.6. 3.

14


CMCP Diversity Matters day-to-day supervision, instruction and direction regarding performance of the work, an employment relationship existed. When deciding whether the plaintiffs in Borello were employees or independent contractors, the California Supreme Court broke new ground by applying the common law test of employment “in light of the remedial purposes of the workers compensation laws,” and concluded that the plaintiffs were “without doubt…a class of workers to whom the protection of the [workers compensation law] is intended to protect.” Borello, at p. 358. The wage and hour statutes, like the workers compensation statute, are, of course, “protective statutes.” Consistent with its ruling in Borello, the California Supreme Court more recently reaffirmed that the wage and hour laws are not to be confined by the common law test for employment but are to be “liberally construed with any eye to promoting such protection.” See Martinez v. Combs (2010) 49 Cal.4th 35, 61. It follows that when deciding Uber’s case on appeal in Berwick, the trial court and any reviewing court of appeals will have to take their cues from Borello and Martinez, and will not limit their analysis to whether the common law definition of employee has been satisfied but will examine the “remedial purposes” of the governing Labor Code sections. This approach may be well intended, and it undoubtedly will be seen by many as furthering legislative goals to prevent abuses in compensation practices as between hiring parties and those being hired. Even so, the compensation abuses that led to the passage of the wage and hour laws in the early part of the last century are not what are at issue in Berwick or, for that matter, in the several other driver cases that are pending against Uber. True enough, Uber’s business model carries some attributes of employment. It provides the means for which persons can earn money in return for their labor, and the type of labor involved; i.e., driving, goes to the very core of Uber’s operation and reason for existing. But there is a reason why the number of Uber drivers is growing and why Uber’s business model is succeeding. Uber’s business model affords complete flexibility to the driver, who decides what days to work, what hours 15

during the day to work, or whether to work at all. There is no field supervisor who monitors driver performance, nor an on-site manager to whom drivers must report their work activities. There is no passenger pick up quota. There is no disciplinary procedure established or administered by Uber for a driver’s failure to work, or for working poorly. All of these matters are left to the free and open market in that the driver’s compensation or lack thereof will depend on the driver’s availability to work, and the quality of the service provided by the driver, as perceived by the customer, not by Uber management. Redefining the relationship between Uber and the drivers as one of employment invites a host of practical problems for which “workarounds” could not be developed or applied without changing the very core of the business model adopted by Uber. Because driving is not considered an exempt task under the wage and hour laws, Uber, among other things, would have to monitor hours worked by the drivers; determine when the driver’s workday begins and ends; pay overtime premiums when drivers work beyond the number of straight time hours permitted; ensure that drivers are afforded meal breaks and rest periods; adopt a payroll system and pay cycle that complies with the Labor Code; and obtain workers compensation insurance. In today’s business environment, we are witnessing how innovative advances in online technology intersect with the desire of persons to maintain more flexibility over their work and control over their time. The wage and hour laws should be construed and applied in a manner that adapts to, and not hinders, this new environment.

Jonathan Turner is a partner in the Los Angeles office of Mitchell Silberberg & Knupp LLP. A significant portion of his practice is in the motion picture industry, where he has represented studios and other employers in labor arbitrations, administrative proceedings, court litigation, union avoidance issues, and collective bargaining negotiations. For more info about Jonathan, click here.


Fall 2015 Newsletter

16


CMCP Diversity Matters Diversity Calendar

October 8, 2015

October 8, 2015

October 8, 2015

Barristers Fall Social

41st Annual Dinner and Silent Auction

Annual Dinner

Los Angeles County Bar Association

California Women Lawyers

Scarpetta Los Angeles - Beverly Hills

Anaheim Marriott - Anaheim

Iranian American Bar Association NorCal Chapter

Read more

Read more

6:00pm - 9:00pm

5:30pm - 9:00pm

5:30pm - 8:30pm

Fairmont Hotel - San Francisco Read more

October 13, 2015

October 16, 2015

October 28, 2015

Perspectives from Women Lawyers on Achieving Work Life Balance

18th Annual Awards & Scholarship Dinner

Hastings Alumni and Alameda County Judges Social

Orange County Women Lawyers Association

Latina Lawyers Bar Association

Women Lawyers of Alameda County

Grand Catered Events - Orange

Millennium Biltmore Hotel - L.A.

Scott’s Seafood Restaurant - Oakland

Read more

Read more

October 29, 2015

October 29, 2015

November 4, 2015

Social Action Fundraiser

Judges’ Night & Awards Dinner

Annual Dia de los Muertos de Barranda

Bay Area Lawyers for Individual Freedom

Mexican American Bar Association

Orange County Hispanic Bar Association

The L.A. Hotel Downtown - LA

Luna Kutsi - Santa Ana

Lookout Bar - San Francisco

Read more

Read more

November 12, 2015

November 19, 2015

December 4, 2015

Fall Member Mixer

Joint Happy Hour

Orange County Bar Association

Asian American Bar Association & Iranian American Bar Association

Annual Gala, Dinner & Dance Sponsorship

11:45am - 1:30pm

5:30pm - 9:30pm

6:00pm - 9:00pm

Read more

6:00pm - 9:00pm

5:30pm - 8:30pm

5:30pm - 7:30pm

Read more

5:30pm - 7:30pm

6:00pm - 9:00pm

Morton’s The Steakhouse - Santa Ana Read more

Osha Lounge - SF Read more

Reception @ 6:00pm Dinner @ 7:00pm

Charles Houston Bar Association Double Tree Hotel Berkeley Marina Berkeley Read more

17


CMCP Diversity Matters

Fall 2015 Newsletter

Fall 2015 Newsletter

MINORITY

Fall 2015

Š Copyright 2015 California Minority Counsel Program 465 California Street, Suite 635 San Francisco, CA 94104 Tel: 415-782-8990 Email: newsletter@cmcp.org Web: http://www.cmcp.org 16

CMCP Diversity Matters - Fall 2015  

California Minority Counsel Program Diversity Matters eNewsletter Fall 2015 Issue

Read more
Read more
Similar to
Popular now
Just for you