March 1998 Vol. 4 No. 3 ISSN 1087-6219
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In This Issue

• Legislature intended to apply ADA standards to FEHA's disability provisions
• California law limiting covenants not to compete may apply to contracts between out-of-state employer and its non-California employees
• Court of Appeal explains standards for recovery of emotional distress damages
• Ninth Circuit explores employees' privacy interest in connection with medical examinations
• Ninth Circuit loses patience with constant violations of Circuit Rules
• UPDATES

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Legislature intended to apply ADA standards to FEHA's disability provisions

The San Diego division of the Fourth District Court of Appeal has ruled that the mental disability discrimination provisions of the Fair Employment and Housing Act (FEHA) adopted the standards of the federal Americans with Disabilities Act (ADA). The court rejected the more liberal interpretation adopted by the Fifth District in Pensinger v. Bowsmith, Inc., 60 Cal. App. 4th 709 (1998), which was discussed in the February 1998 issue of Appellate Decisions Noted.

Anne Muller claimed that she was harassed by her supervisors at the Automobile Club on account of a psychological disability she suffered after being threatened by an insurance claimant. She commenced a federal court action and the present state court action. The federal court granted summary judgment on the ground that Muller's disorder was not a disability under the ADA because it did not “substantially limit” any of Muller's “major life activities.” See 42 U.S.C. § 12102(2).

FEHA defines a physical disability as a condition that “limits an individual's ability to participate in major life activities,” but omits the ADA's “substantially” wording. Cal. Gov't Code § 12926(k)(B). FEHA defines a mental disability as “any mental or psychological disorder,” but omits “substantially and “major life activities.” Cal Gov't Code § 12926(i). The Pensinger court ruled that the legislature meant what it said. Therefore, FEHA protects individuals with a mental disorder even absent any effect on a major life activity.

This court said that the legislative history of the amendment that added protection of mental disabilities to FEHA revealed an intent to adopt the ADA definitions. Further, another FEHA provision dealing with housing discrimination uses the ADA definition of mental disability. Cal Gov't Code § 12955.3(a).

The court also interpreted the FEHA provision banning discrimination based on “medical condition.” FEHA provides that the term “includes any health impairment related to or associated with a diagnosis of cancer, for which a person has been rehabilitated or cured, based on competent medical evidence. Cal. Gov't Code § 12926(h). The legislature used “includes” in this context as a word of limitation. Had it meant the term to be one of “enlargement,” it could have added the phrase “but is not limited to.”

Muller v. Automobile Club of Southern California, 1998 WL 62819 (Cal. Ct. App. Feb. 9, 1998).

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California law limiting covenants not to compete may apply to contracts between out-of-state employer and its non-California employees

The First District Court of Appeal in San Francisco has ruled that California's ban on covenants not to compete applies to employment agreements between non-California employers and their employees when a restriction is invoked against a California employer.

Hunter Group is a Maryland corporation with its headquarters in Maryland. It competes for consulting business with Application Group and other California-based companies. It has had very few employees in California. Its agreements with its non-California employees contain covenants not to compete, which prevent those employees from working for any of Hunter Group's competitors for up to a year, unless laid off for economic reasons. The agreements also provide that Maryland law governs.

Dianne Pike was a Maryland resident who worked for Hunter Group under an agreement that included a covenant not to compete. She never set foot in California until Application Group hired her away from Hunter Group to work in California. After Hunter Group invoked the covenant not to compete, Pike and Application Group sought a declaratory judgment that the covenant was not enforceable.

With limited exceptions, California Business and Professions Code section 16600 bars covenants prohibiting employees from working for a competitor after termination of their employment. (The exceptions are for persons connected with the sale of business assets or goodwill, and members of LLC's and partnerships.) Maryland law has no such prohibition.

California uses the governmental interest analysis to resolve choice of law issues. Where the parties have agreed to application of another state's law, California will respect their choice, unless (1) the other state has no substantial relationship to the parties or their transaction, or (2) application of the other state's law would violate a fundamental California policy. If the other state's law would violate a fundamental state policy, the court must decide whether California has a materially greater interest in determination of the particular issue.

In this case, the court discerned in section 16600 an interest in “protecting the freedom of movement of persons whom California-based employers (such as AGI) wish to employ to provide services in California.” Maryland's interest in enforcing the covenant was limited to (1) protecting employers from the hiring away of employees providing “unique” services, and (2) protecting against misuse of trade secrets. The present dispute did not implicate either interest.

The Court of Appeal also concluded that Application Group could seek relief against Hunter Group's violation of section 16600 as an unlawful business practice under California Business and Profession Code section 17200.

Application Group, Inc. v. Hunter Group, Inc., 1998 WL 76235 (Cal. Ct. App. Feb. 23, 1998).

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Court of Appeal explains standards for recovery of emotional distress damages

The Second District Court of Appeal in Los Angeles has ruled that a plaintiff may seek emotional distress damages when defendant's conduct puts her in fear of being severely injured or killed. The decision questions the two-prong test for determining such claims that was announced in Bro v. Glaser, 22 Cal. App. 4th 1398 (1994).

Maria Simmons alleged that she was standing in her front yard when George Henry Raveling's car collided with another car on the adjacent public street. Raveling's car was propelled into Simmons's yard, but did not strike her. Nonetheless, she feared that she would be severely injured or killed.

The Bro case had purported to lay down a black letter rule for all non-impact, non-injury, non-bystander negligent infliction of emotional distress cases. The rule required a plaintiff to prove both (1) a pre-existing relationship with the defendant, and (2) outrageous conduct.

The court in this case decided that there was no basis for such a rule. Negligent infliction of emotional distress is simply the tort of negligence. All the plaintiff needs to establish is the defendant's duty, a breach of that duty, and resulting damage (which may consist of emotional distress). The duty may derive from a pre-existing relationship. It may also be imposed by law, or assumed by the defendant.

In this case, Raveling had a duty to drive his car with due care. His breach of that duty caused a collision, which in turn put Simmons in fear for her life. She was entitled to seek recovery of her resulting emotional distress damages through a negligence cause of action.

Wooden v. Raveling, 1998 WL 80592 (Cal. Ct. App. Feb. 26, 1998).

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Ninth Circuit explores employees' privacy interest in connection with medical examinations

The Ninth Circuit has ruled that federal and state constitutional guarantees of privacy prohibit testing public employees for sensitive medical conditions without their knowledge.

Lawrence Berkeley Laboratory is a research institution jointly operated by state and federal agencies. For several years it tested blood samples from newly hired employees for syphilis, sickle cell trait and pregnancy as part of its mandatory employment entrance examination. Although the employees filled out questionnaires that sought similar information, Lawrence Berkeley did not tell them that it would test their blood for those conditions.

Several employees filed a class action alleging that the testing violated their privacy rights, Title VII and the Americans with Disabilities Act. The District Court granted summary judgment for Lawrence Berkeley, but the Ninth Circuit reversed.

The federal and state constitutions provide protection from “the non-consensual retrieval of previously unrevealed medical information.” Therefore, a court must weigh the individual's privacy interest in the information against the employer's justification for the testing.

Here, the testing sought personal information, in which the employees enjoyed “the highest expectations of privacy.” There was an issue of fact as to whether the testing was an appropriate part of an employment-related general physical examination. That precluded summary judgment.

Plaintiffs were also entitled to pursue their claims under Title VII. they alleged that Lawrence Berkeley singled African-American and women employees out for nonconsensual testing not administered to other employees. If proved, that would constitute discrimination in the terms and conditions of obtaining employment. Further, the mere obtaining of the information would constitute the “adverse effect” required to establish injury under Title VII.

There was no viable claim under the ADA. Lawrence Berkeley complied with the ADA requirement that it not administer a medical examination until after it extended a job offer. The ADA does not limit such testing to job-related areas. It just guarantees confidentiality, and restricts the use that the employer makes of the results. There was no claim that Lawrence Berkeley violated those provisions.

Norman-Bloodsaw v. Lawrence Berkeley Laboratory, 1998 WL 39209 (9th Cir. Feb. 3, 1998).

Ninth Circuit loses patience with constant violations of Circuit Rules

The Ninth Circuit has notified litigants that it will no longer tolerate failure to follow its Circuit Rules. While it declined to sanction the offending attorney in the case before it, the court announced that it was “reaching the end of our patience in these matters and therefore declare that this habit of noncompliance must end.”

In the present case, the problem was the excerpts of record. Circuit Rule 30-1 requires excerpts in lieu of the appendix described in Federal Rule of Appellate Procedure 30. The excerpts should be bound with a tan cover, consecutively paginated, and contain copies of documents in the record necessary to resolve any issues raised in the appeal.

Appellant had appealed from the grant of summary judgment, but did not include the operative complaint, or any of the evidence submitted to the District Court. “The excerpts of record filed by offending counsel in this case were, quite possibly, the most useless collection of papers that members of this panel have ever seen.”

Despite the egregious violations, the panel declined to impose sanctions. “It is difficult to justify singling out the particular offending attorney in this case for monetary punishment when we have allowed so many previous rules violations to slide by without comment.” The court will probably not be so lenient with future rule violations.

The court recommended that attorneys handling appeals in the Ninth Circuit consult Winning On Appeal, by Senior Judge Ruggero Aldisert, of the United States Court of Appeals for the Third Circuit. You may purchase a copy from the Appellate Counsellor Bookstore.

De La Rosa v. Scottsdale Memorial Health Sys., Inc., 1998 WL 65455 (9th Cir. Feb. 19, 1998).

UPDATES

Subsequent treatment of decisions reported on in earlier issues:

Astaire v. Best Film & Video Corp. (July 1997 issue), amended on rehearing, 1998 WL 67329 (Feb. 19, 1998).

Barris v. County of Los Angeles (January 1998 issue), modified on denial of rehearing (Jan. 14, 1998).

Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court (February 1998 issue), now reported at 17 Cal. 4th 119 (1998), modified (Feb. 25, 1998).

Cotran v. Rollins Hudig Hall Int'l (February 1998 issue), time for grant or denial of rehearing extended to April 5, 1998 (Jan. 23, 1998).

Fazio v. City and County of San Francisco (November 1997 issue), petition for certiorari filed (Feb. 17, 1998).

Pitts v. County of Kern (February 1998 issue), now reported at 17 Cal. 4th 340 (1998)

Quackenbush v. Superior Court (January 1998 issue), modified on denial of rehearing (Jan. 23, 1998), petition for review filed (Feb. 2, 1998).

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