January Court Report: This Major California Decision is Another Win for Labor Rights

State high courts issue thousands of opinions each year, and these court decisions have just as much of an impact on public policy as the legislative process. To help you keep track of consequential judicial decisions and their impact on state policy, MultiState publishes the Monthly Court Report, which offers a monthly recap of notable state high court decisions to provide a more dynamic picture of public policy trends.

January Court Report: California Decision Protects Employees’ Ability to Enforce Labor Rights

This month, several of the nation’s high courts found themselves breaking with legal precedent and defining new limits to previously settled law. In Maine, certain barriers to foreclosure actions were eliminated and Oregon opened the door to common law negligence claims against insurers. California’s Supreme Court, however, made a particularly impactful decision that imposes new limitations on an employer’s options when defending against Private Attorneys General Act (PAGA) claims. 

In Estrada v. Royalty Carpet Mills, a complaint was filed against an employer on behalf of a group of similarly situated employees under the Private Attorneys General Act (PAGA). PAGA gives employees the right to file claims against employers for labor code violations without having to go through labor enforcement agencies; agencies that have been unable to keep up with the needs of a quickly growing workforce. Estrada’s complaint asserted that the employer failed to provide meal periods and sought to have the claims of all of the aggrieved employees resolved in a single class proceeding. While PAGA permits employees to file claims to recover civil penalties on behalf of a class of individuals, such claims must be adequately similar to be certified as a class. The trial court found that the meal period claims “presented too many individualized issues to be resolved in a class proceeding” and dismissed the case. It did so by relying upon a prior Court of Appeals ruling affirming the authority of the trial court to make such a determination. The Court of Appeals in Estrada, however, rejected this precedent and ruled in favor of the Plaintiffs. The California Supreme Court solidified this reversal of position in its ruling, finding that the trial court did not possess the inherent authority to dismiss the case. In fact, the Court rejected the requirement of manageability in PAGA claims outright, asserting that PAGA claims are not subject to the same restrictions as class action claims. The Court emphasized that trial courts have a variety of tools at their disposal to manage complex PAGA claims without dismissing them and dismissing claims with prejudice is a course of action reserved only for very narrow circumstances not met by this case. 

California is well-known for its favorable laws on worker’s rights, and the state supreme court’s decision in Estrada does nothing to dispel this reputation. Employers in the state hoping to easily dispense with broad PAGA claims are going to have to explore other avenues of defense. PAGA, as it was intended, continues to offer employees a formidable tool to enforce their rights.   

Other Key January Decisions 

Alabama

Alabama’s Supreme Court determined that the state’s statute granting immunity to health care providers for injuries sustained while being treated for COVID-19 extends beyond those claims directly related to medical treatments. In this case, the hospital was found to be immune from liability for a COVID-19 patient’s slip and fall injury that occurred while leaving the facility. Read more.

Colorado

The Colorado Supreme Court concluded that the State Property Tax Administrator’s methodology for calculating tax increment financing did not violate Colorado’s Urban Renewal law. The court found that the plain language of the law granted the Administrator broad authority, and the Administrator did not surpass this authority when he differentiated between direct and indirect benefits when calculating the values of property in a renewal area. Read more.

Delaware

Delaware’s Supreme Court found that the fundamental right to contract permits the enforceability of “forfeiture-for-competition” provisions within limited partnership agreements. Such provisions permit the withholding of business disbursements if a partner who leaves the partnership engages in competition. Read more.

Illinois

The Illinois Supreme Court ruled that three temporary staffing agencies that agreed to fix wages below market rate and not to hire each other’s employees were not immune to the restrictions of the Illinois Antitrust Act. The court found that despite language within the Act that “appears to exempt…all agreements concerning wages and conditions of employment, regardless of their anticompetitive effects,” such a reading would be antithetical to the act’s intent. Read more.

Kentucky

Kentucky’s Supreme Court found that the complexity of a negligence claim may make testimony from an expert witness necessary. In this case, the plaintiff was being taken for x-rays of his surgically repaired ankle when his foot was bumped and injured. The Court stated that the plaintiff’s complicated medical history, including a problematic surgery, made expert testimony essential to prove causation. Read more.

Maine

In a split decision, Maine’s Supreme Court closed a foreclosure loophole making it more difficult for homeowners to protect themselves against creditor action. The court overturned precedent and found that a lender’s failure to provide proper default notice before initiating a foreclosure action does forfeit their right to any future attempt to enforce the mortgage. Read more.

Massachusetts

The Massachusetts Supreme Judicial Court ruled that sentencing individuals between the ages of 18 and 20 to life without the possibility of parole violates the constitutional protection against cruel and unusual punishment. The Court wrote that since “the brains of emerging adults are not fully developed and are more similar to those of juveniles than older adults” decency requires that such a punishment not be available for this age group. Read more.

Montana

The Montana Supreme Court denied the state’s petition to pause enforcement of the ruling in Held v. Montana while the case is still pending appeal. In Held, the court ruled in favor of 16 youth plaintiffs who asserted that the state was violating their constitutional right to a clean and healthful environment. As a result of the state supreme court’s denial, Montana will need to immediately begin implementing methods for greenhouse gas and climate impacts analysis when granting permits under the Montana Environmental Policy Act. Read more.

New Hampshire

New Hampshire’s Supreme Court determined that a woman was guilty of trespass when she attended a school board meeting without a mask in violation of a mask mandate. Despite the woman’s argument that failure to wear a mask was not a crime, the court ruled that the school board had a right to condition the privilege of entry upon the wearing of a mask, and the woman, therefore, did not have permission to be present. Read more.

New Jersey

The New Jersey Supreme Court ruled against Ocean Casino in its case seeking insurance benefits for business interruption due to COVID-19. The court found that the casino failed to provide proof of the “direct physical loss or damage” covered by its insurance policies since no part of the property was “destroyed or altered in a manner that rendered it uninhabitable.” Read more.

New Mexico

New Mexico’s Supreme Court vacated a lower court’s conviction of a defendant for aggravated battery, declaring that the conviction violated the defendant’s constitutional protection against double jeopardy. The court declared that the same evidence of the use of force could not be used to prove both aggravated battery and the defendant’s remaining conviction for armed robbery. Read more.

Nevada

Nevada’s Supreme Court sided with conservationists when it found that the state engineer acted within his authority to make water decisions, stopping the development of a large planned community. Water basins were found to be inadequate to support both the development and the surrounding environment. Case law dictated that private water rights could not supersede long-standing vested rights. Read more.

Oregon

The Oregon Supreme Court reversed judicial precedent when it ruled that insurers are subject to common-law negligence claims for emotional distress damages. Prior rulings asserted that such a claim was only possible if an insurance policy was subject to a standard of care independent of the insurance policy. This reopens the door to bad-faith claims under the Unfair Claims Settlement Practices Act. Read more. 

Pennsylvania

Pennsylvania’s Supreme Court ruled that a 1982 law barring Medicaid reimbursement for abortions in all cases except for rape or incest was “presumptively unconstitutional.” In its majority opinion, the court took a bold step and asserted that reproductive autonomy was a fundamental right, and Medicaid could not constitutionally single out abortion from other reproductive care. This is the first time that the Pennsylvania Supreme Court has addressed such a right since the overturning of Roe v. Wade. Read more.

Texas

The Texas Supreme Court found in favor of a doctor in a malpractice case, determining that the standard of proof for emergency medical malpractice of “willful and wanton negligence” is at least that of gross negligence. The Court did not find it necessary to define “willful and wanton negligence” since evidence in the case did not even support gross negligence. Read more. 

In a second case, Texas’s Supreme Court ruled that a property owner has no duty to protect an individual from a danger on an adjacent property if the property owner has no control over the conditions of that property. In this case, a hospital was deemed not to have a duty to protect an employee from an accident that occurred on a bordering road. Read more.

Washington

Washington’s Supreme Court ruled that Washington University had no duty to protect a student from an attack, despite the attacker already being under investigation by the university for prior sexual assaults. Unlike the initial assaults, the attack in question occurred off-campus. The court found that a strict premises liability approach should be applied and that the university was therefore not at fault. Read more.