STIPULATION FOR ENTRY OF CONSENT DECREE AND REQUEST FOR PUBLICATION IN THE FEDERAL SUPPLEMENT
Plaintiff Karen Livadas and Defendant Victoria Bradshaw, Labor Commissioner for the State of California, hereby stipulate and agree that the Court may enter the supplementary remedial order filed herewith in this action. The parties respectfully request that this order be published in the Federal Supplement to facilitate public understanding of the disposition of this case.
IT IS SO STIPULATED. Dated: September 19, 1994 DAVIS, COWELL & BOWE
By Michael Anderson
Richard G. McCracken
Michael T. Anderson
Attorneys for Plaintiff-Appellee
Dated: September 20, 1994
By H. Thomas Cadell, Jr. Chief Counsel
Division of Labor Standards
Department of Industrial Relations
State of California
Attorneys for Defendant-Appellant
[PROPOSED] SUPPLEMENTARY REMEDIAL ORDER
After careful consideration of motions, legal memoranda, exhibits and arguments of the parties, and consistent with the opinion of the United States Supreme Court issued June 13, 1994, in this matter, IT IS HEREBY ORDERED THAT:
1. The Court's order in this action dated October 12, 1990, remains in effect.
2. The Defendant Victoria Bradshaw and her successors as Labor Commissioner for the State of California shall promulgate the Interpretive Bulletin 94-4 (attached hereto as Exhibit A) as a remedial measure to bring the enforcement policy of the Division of Labor Standards Enforcement into compliance with federal law.
IT IS SO ORDERED.
THELTON E. HENDERSON
United States District Court
Department of Industrial Relations
DIVISION OF LABOR STANDARDS ENFORCEMENT
DATE: August 5, 1994
TO: All Professional Staff Statewide
FROM: Victoria L. Bradshaw
State Labor Commissioner
San Francisco HQ
SUBJECT: Livadas v. Bradshaw
On June 13, 1994, the United States Supreme Court delivered its opinion in the case of Livadas v. Bradshaw.1 The Supreme Court reversed the ruling of the Ninth Circuit Court of Appeals and held that the policy of the Labor Commissioner, which led to the rejection of the claim for waiting time penalties filed by Karen Livadas, was inconsistent with the National Labor Relations Act.
The Division's policy had relied on an understanding of the state courts' interpretation of the term "application;" an understanding which the U.S. Supreme Court held was misdirected. The policy adopted by the Labor Commissioner (and the California courts) was based upon the premise that the parties to a collective bargaining agreement (CBA) should have as much freedom as possible to interpret the terms of their agreement and that interference by a state agency was inappropriate. The Division's position was based on a 1975 interpretation of Labor Code § 229 by the California Court of Appeal in the case of Plumbing, Heating and Piping Employers Council v. Howard,2 53 Cal. App. 3d 828, 126 Cal. Rptr. 406, which, quoting from the California Supreme Court's decision in Posner v. Grunwald-Marx (1961) 56 Cal. 2d 169, 14 Cal. Rptr. 297, 363 P.2d 313, defined the word "application." Based on that decision, the Labor Commissioner's policy rejected claims where any term contained in the CBA had to be "applied" to the state law claim in order to effect a resolution. Since the penalty to be applied in a § 203 claim would obviously require the application of the wage rate contained in the CBA, the claim could not be processed.
The policy adopted by the Labor Commissioner in 1976 (See Policy/Procedural Memo 76-6) did not anticipate the more recent revelations by the Supreme Court regarding the arbitration of claims under collective bargaining agreements. Since the Division's policy was based on what it perceived to be state law, the Division had no reason to change its position, even in light of the language contained in footnote 12 of the U.S. Supreme Court's decision in Lingle v. Norge Division of Magic Chef Inc. 486 U.S. 399, 100 L. Ed. 2d 410, 108 S. Ct. 1877 (1988), which dealt with "looking to" the pay rate contained in the CBA to determine damages.
According to the Livadas court, this concept of "looking to" the collective bargaining agreement to determine "damage computation," requires state courts (or agencies such as DLSE) to "consult" the collective bargaining agreement in the course of the litigation of the state claim. Thus, the Court holds that the state's concepts of arbitrability must be co-extensive with § 301 preemption principles. The issue of whether the state courts have interpreted the term "application" to mean something other than the meaning given that term in federal law, is irrelevant. It is the "legal character" of the claim which is dispositive and not whether a grievance arising from precisely the same set of facts could be pursued through the arbitration procedure.
The Livadas court does not, however, open the door to unlimited adjudication of claims filed by employees whose terms and conditions of employment are covered by collective bargaining agreements containing arbitration clauses. Justice Souter noted in the opinion that the Court was not holding "that a § 203 penalty claim could never be pre-empted..." Also, in discussing the Plumbing, Heating and Piping Employers Council v. Howard decision, the Livadas Court noted that in that case:
"an employee sought to have an 'unpaid wage' claim do the office of a claim that a collective-bargaining agreement entitled him to a higher wage; that son of claim, however, derives from the collective-bargaining agreement and, accordingly, falls within any customary understanding of arbitral jurisdiction." Livadas v. Bradshaw, 865 F. Supp. 642, Slip Opinion p. 18, fn. 20.
Unfortunately, except for that statement, there is little else in the Livadas decision to guide the Division in determining where the bright line between preemption and non-preemption might lie.
However, on June 20, 1994, the Supreme Court issued another decision dealing with similar issues. Justice Blackmun wrote for a unanimous court in the case of Hawaiian Airlines, Inc. v. Norris, U.S. ; 114 S. Ct. 2239 (1994) (92-2058). This decision sheds more light on the concepts touched upon in the Livadas case and allows the development of a new Division policy, which will meet the concerns expressed by the Livadas Court.
The Hawaiian Airlines case involved the issue of whether an airline employee, who refused to certify the safety of an airliner that he considered unsafe and for reporting his concerns to the FAA, may pursue available state law remedies for wrongful discharge. In Hawaiian Airlines, Justice Blackmun places great reliance on whether the claim asserted by the employee is "independent" of the CBA and tests the concept of independence on whether the CBA is the only source of the right asserted by the employee.
The Hawaiian Airlines case holds that "wholly apart from any provision of the CBA, petitioners [Hawaiian Airlines] had a state-law obligation not to fire respondent in violation of public policy or in retaliation for whistleblowing. The parties' obligation under the RLA to arbitrate disputes arising out of the application or interpretation of the CBA did not relieve petitioners of this duty."
Justice Blackmun also contrasted the facts in the Hawaiian Airlines case with those found in the earlier case of Allis-Chalmers v. Lueck 471 U.S. 202, 85 L. Ed. 2d 206, 105 S. Ct. 1904. In the Allis-Chalmers case, the Court applied § 301 preemption to a state-law claim for bad-faith handling of an insurance claim. This was done because the employer's obligation to provide the insurance to employees was rooted firmly in the collective bargaining agreement and was not based on state law.
It appears that the Court is saying that if the state law right is completely stated in the statute and there is no need to interpret the CBA to resolve or enforce that right, there is no reason for preemption principles to apply. Justice Blackmun, in the Hawaiian case, cites the language of Lingle to explain this concept:
"In other words, even if dispute resolution pursuant to a collective-bargaining agreement, on the one hand, and state law, on the other, would require addressing precisely the same set of facts, as long as the state-law claim can be resolved without interpreting the agreement itself, the claim is 'independent' of the agreement for § 301 purposes." Lingle, supra, at 408-409.
Coupling this concept with the language used in the Livadas decision, one can only conclude the provisions of Labor Code § 201, which require that an employer pay the employee for all wages due at time of discharge, creates a state-law right which is "independent" of the CBA. Since the Livadas Court says that "when liability is governed by independent state law, the mere need to 'look to' the collective-bargaining agreement for damage computation is no reason to hold the state law claim defeated by § 301," it must follow that DLSE should be able to accept and adjudicate claims for unpaid wages due at time of termination, as long as the meaning of contract terms is not the subject of dispute.
For example, if there is only one rate of pay under the CBA (or there exists no argument by the parties regarding the rate of pay due the employee), there would appear to be no impediment to adjudicating a claim to determine unpaid wages at the time of termination.
Of course, this conclusion would allow DLSE to enforce § 203 claims as well. However, if, as in Livadas, there were a number of wage rates provided under the CBA and, unlike Livadas, there was a bona fide dispute as to the hourly rate of pay the employee was owed, or if the amount of wages due required an interpretation of a particular provision in a CBA (vacation pay, holiday pay, etc.), the Division would hold the case in abeyance pending resolution of the matter or the issue involving contract interpretation under the grievance procedure provided in the CBA.
Undoubtedly, many cases will arise which will involve the questions of whether or not the Division has jurisdiction. As a result, each situation will be addressed on a case-by-case basis. While the Division has attempted to anticipate as many situations as it can, there will arise unexpected fact situations, which were not considered or novel legal theories which must be analyzed. Inasmuch as the question of jurisdiction in this area is based on rather esoteric legal principles, the Division Legal Section must be consulted in each case before any decision on jurisdiction is made.
The following interim procedures are to be implemented immediately by all DLSE personnel and are to be followed until new, written directives are issued:
A. No claim will be rejected solely because the employment was covered by the terms of a collective bargaining agreement.
B. Until further notice, every case involving employment covered by a CBA is to be referred to the assigned attorney no matter how routine the assigned Deputy or Hearing Officer feels the case may be. No final action is to be taken on such claim, unless the matter has been reviewed by the assigned attorney. This policy may be reviewed in the future depending on the experience the Division has with these types of cases.