California Court Orders Dismissal of Class Action Based on Convictions Inquiry on Job Application

Plaintiffs representing a putative class of 135,000 job applicants could not recover $26 million in damages for an allegedly “illegal” question on the employer’s employment application which sought information about prior criminal convictions, a California Court of Appeal has ruled. Starbucks Corp. v. Superior Court, No. G039700 (Cal. Ct. App. Dec. 10, 2008). The plaintiffs objected to the inquiry because it appeared to seek information about marijuana-related convictions that were more than two years old; such inquiries are unlawful under the California Labor Code. The court held that the plaintiffs were not part of the group intended to be covered by the law and, thus, could not recover damages. The court ordered the trial court to enter summary judgment in favor of the employer.

The employer used a two-page application for all store-level employees throughout the United States. The application’s first page included the following question: “Have you been convicted of a crime in the last seven (7) years?” On the back of the application, the employer included various disclaimers in bold-face type, including a specific disclaimer for California applicants which provided:

CALIFORNIA APPLICANTS ONLY: Applicant may omit any convictions for the possession of marijuana (except for convictions for the possessions of marijuana on school grounds or possession of concentrated cannabis) that are more than two (2) years old, and any information concerning a referral to, and participation in, any pretrial or post trial diversion program.

The three named plaintiffs, Eric Lords, Hon Yeung, and Donald Brown, each applied for a job with the employer and completed a job application. None had a marijuana arrest or conviction. None was hired. Mr. Lords understood the application and the California disclaimer to mean that he did not need to report a marijuana conviction more than two years old. He truthfully answered “No” to the convictions question, and he did not believe that the employer failed to hire him due to his response to the convictions question. Mr. Yeung also understood the application and disclaimer to mean that he was not required to disclose any information regarding marijuana convictions more than two years old. Nevertheless, Mr. Yeung refused to answer the convictions inquiry. Mr. Brown also refused to answer the inquiry.

In 2005, the plaintiffs filed a class action lawsuit on behalf of an estimated 135,000 job applicants, alleging that the convictions question was illegal under the Labor Code and that the disclaimer was inadequate. The trial court certified a plaintiff class, and the employer moved for summary judgment. The court denied the motion, holding that the convictions inquiry violated the Labor Code and questioned whether the average applicant would see and understand the disclaimer due to its location on the back of the application and its font size. The trial court concluded that the plaintiffs were entitled to recovery of $200 in damages per applicant.

The employer appealed the order and requested that it be vacated. The employer argued that its employment application complied with California law because it instructed applicants not to disclose marijuana-related convictions in the disclaimer. The appellate court disagreed, not because of the disclaimer’s language, but because of “its placement.” The court stated that, if the employer had included the disclaimer immediately following the convictions question, it would have been entitled to summary judgment on the reasonableness of the employment application. However, the disclaimer’s placement on the back of the application surrounded by a “sea of boldface type” rendered it ambiguous. The court stated, “[T]he unintended consequence of [the employer’s] one-size-fits-all style for its employment applications is a lack of clarity for which California law strives.”

Notwithstanding the application’s potential ambiguity, the court held that the plaintiffs were not entitled to any recovery under the Labor Code for themselves or the putative class for two reasons. First, with respect to Mr. Lords and Mr. Yeung, the application was not ambiguous. They both read the disclaimer and understood that they did not need to disclose marijuana convictions more than two years old. Accordingly, they suffered no harm.

Second, none of the plaintiffs had any marijuana convictions; thus, they were not part of the group that the statute was meant to protect. The purpose of the statute was to “minimize or eliminate the lingering social stigma flowing from what is now perceived to be a relatively minor form of criminal activity,” not to “protect the privacy interests of job applicants who had no marijuana convictions in their background.” Rejecting the plaintiffs’ claim, the court expressed its disapproval of using litigation to “precipitate payoffs by private businesses for alleged violations of law having no real relationship to a true public interest.” The court further noted that the plaintiffs’ “strained efforts to use the marijuana reform legislation to recover millions of dollars from [the employer gave] a bizarre new dimension to the everyday expressions ‘coffee joint’ and ‘coffee pot.’” Accordingly, the court ordered the trial court to enter summary judgment in favor of the employer.

This case reminds employers to review their employment applications to ensure that they comply with California law (or the laws of other states, where applicable) and do not create ambiguity inadvertently. This case also may signal a growing judicial impatience with excessive bounty-hunter litigation and assists employers defending against such litigation.

Jackson Lewis attorneys are available to assist employers in reviewing employment applications for compliance with applicable law and in defending against employment-related claims.