LABOR CODE 2699

My obligation is to do the right thing. The rest is in God's hands.

      — Martin Luther King, Jr.



Tuesday, March 17, 2009

Benitez v. Wilbur, 2008 U.S. Dist. LEXIS 15018

Plaintiff’s tenth cause of action was brought under the PAGA for alleged Labor Code Violations.  Defendants argued that the Plaintiff’s failed to properly plead this cause of action because case law requires the claim to be plead as a class action, with all the protections afforded to the class certification process. Defendant’s cited Arias v. Superior Court, 153 Cal. App. 4th 777, review granted (Oct. 10, 2007), for the proposition that the California Supreme court granted review on the issue of whether PAGA actions must be brought as a representative action or as a class action.  Because Arias is not citable, the District Court used its best judgment to predict how the Court would decide the issue. (See, General Motors Corp. v. Doupnik, 1 F.3d 862 865 (9th Cir. 1993.)

The District Court pointed out that the PAGA does not contain any statutory language which requires the “representative action” to be brought as a class action.  The Court then distinguished a “representative” action from a “class action,” noting, “while every class action is a representative action, the converse is not the case.” (Salton City ect. Owner Assn. v. M. Penn Philips Co. 75 Cal. App. 3d 184, 191 (1977.) “In either instance, however, justification for the procedural devie whereby one may sue for the benefit of many rests on considerations of necessity, convenience, and justice.” (Id. at 191).  The Court also noted that, from the Court’s research, the cases imply that the class action is the norm as, “all PAGA cases have been brought as class actions, and not as individual claims.”

The Court also discusses how Defendants argument regarding issues of Due Process has merit if a class action is not required under the PAGA.  The Court acknowledged that “absent a class action mechanism under PAGA, a defendant could win against a named plaintiff and then face additional suits by other employees similarly situated.” The Court further declared that, “A class action lawsuit pursuant to the PAGA would guard against such potential violations of due process...would bind all potential class members to the adjudication of the civil penalties.” The Court further stated that requiring class action lawsuits under the PAGA would benefit the judicial system, “by eliminating repetitious litigation and providing a method of method of obtaining redress for claims too small to warrant litigation on their own.” Finally, the Court held that it was of their opinion that the California Supreme Court will interpret PAGA as requiring a class action. 


Tuesday, March 17, 2009

Sullivan v. Kelly Servs., Inc., 2008 U.S. Dist. LEXIS 91608 (N.D. Cal. Nov. 12, 2008)

Plaintiff was an employee for Defendant, a temporary agency and was placed on a six month assignment with MHN.  Plaintiff claimed that when her temporary assignment ended on August 11, she was “discharged” within the meaning of Labor Code section 201, which triggered Defendant’s obligation “immediately” to pay her unpaid wages.  Instead of paying Plaintiff’s wages immediately, Defendant paid her wages in accord with its routine schedule, issuing paychecks the Friday following the week worked.  Plaintiff filed a class action complaint alleging violations of Cal. Lab. Code section 201 and 202, which provide that an employer must, in most cases, pay its employee’s earned and unpaid wages immediately upon discharge, layoff or resignation.  Plaintiff also alleged a claim for unfair business practices pursuant to Cal. Bus. And Prof. Code section 17200 and amended her complaint to add a claim pursuant to the PAGA. The issue in this case was whether the end of a temporary assignment for an employee of a temporary staffing agency renders the employee discharged within the meaning of Labor Code section 201.

The District Court determined that the Plaintiff’s employment relationship with the Defendant did not end when her appointment with the MHN ended.  Nor did Defendant “release” Plaintiff after she completed working at MHN.  In fact, after Plaintiff’s last day at work with MHN, Plaintiff remained an active employee of Defendant by going on multiple job interviews for other temporary assignments.  Therefore, although Plaintiff completed her temporary job assignment with MHN, she did not complete her “job assignment” or time duration for which she was “hired” by Defendant.  Thus, Plaintiff was not “dismissed” from Defendant’s employment when she finished working for MHN.

Thus, Plaintiff’s cause of action under Labor Code section 2699 failed because it is solely based on the alleged violations of Labor Code sections 201, 202 and 203. Since Defendant did not violate any section of the code, Plaintiff was not an “aggrieved employee” under the PAGA. 


Tuesday, March 17, 2009

Im v. Jin Constr., 2004 U.S. Dist. LEXIS 20377

This case raised the issue of whether a Plaintiff could bring an action against Defendants pursuant to the PAGA.  Defendant’s were Prime Contract Defendants.  The District Court acknowledged that the PAGA provides an action against “any” alleged violator of the Labor Code. However, the Court refrained from ruling on the issue of whether Plaintiff’s could bring an action against these Defendants as, this situation raised a complex question of law best decided in the State court. 


Tuesday, March 17, 2009

Fleming v. Dollar Tree Stores, Inc., 2006 U.S. Dist. LEXIS 67749 (N.D. Cal. Sept. 15, 2006)

Plaintiff brought an action under California Labor Code section 212.  Defendant argued that the applicable limitations period for a violation of California Labor Code section 212 is one year, thereby precluding recovery for any earlier wrongful conduct. Plaintiff maintains that the references are proper because the California Business and Professions Code section 17200 is subject to a four year limitations period under section 17208.

The District Court addressed the issue of whether an action time barred under the Labor Code, can it still be pursued as an action seeking restitution under 17200 as an unfair business practice.  The court determined that the four year limitations period controls, without exception, even if the actual statute being sued upon provides a shorter limitations period. (Cortez v. Purolator Air Filtration
Products Co., 23 Cal. 4th 163, 178 79, 96 Cal. Rptr. 2d 518, 999 P.2d 706 (2000).)

The Court also determined that Labor Code section 225.5 does not preclude Plaintiff from seeking damages under section 2699(f). Section 2699(f)’s penalty provision applies only to those provisions that do not specifically provide a penalty, and section 225.5 does provide a penalty.  However, section 225.5 specifically states, “in addition to, and entirely independent and apart from,” any other civil penalty provision.  Thus, a private party may seek damages under section 225.5 as long as the party has complied with the administrative prerequisites set forth in section 2699.3. Section 2699(f) is an “other civil penalty provision,” thus, section 225.5 does not intend to foreclose a plaintiff’s use of section 2699(f) in seeking damages. 


Tuesday, March 17, 2009

Swanson v. USProtect Corp., 2007 U.S. Dist. LEXIS 37658 (N.D. Cal. May 10, 2007)

Plaintiff’s claim under PAGA sought penalties for violations occurring prior to January 1, 2004, when PAGA became effective. The original Plaintiffs in this action sent the requisite written notice in a letter dated October 28, 2004 identifying the alleged Labor Code violations. However, several of Plaintiff’s claims which could have been the basis for Plaintiff’s PAGA claims were not identified in this letter. The District Court discussed whether the the application of the PAGA is retroactive and determined that the PAGA claim is retroactive.  However, the Plaintiff was required to follow the notice requirements set forth in 2699.3 prior to bringing a 2699 claim. The Court determined that Plaintiff’s PAGA claim was barred to the extent that Plaintiff sought payment of penalties for any Labor Code violations not expressly identified in the notice that the original Plaintiffs in this action sent to the LWDA.


Tuesday, March 17, 2009

Moreno v. Autozone, Inc., 2007 U.S. Dist. LEXIS 43873 (N.D. Cal. June 5, 2007)

In April of 2005, Plaintiffs ceased working for Defendants.  In December of 2006, Plaintiffs notified LWDA of Labor Code violation claims.  In January of 2007, Plaintiffs obtained a right to sue letter from LWDA.  In February of 2007, Plaintiffs filed an amended complaint alleging claims for civil penalties pursuant to the PAGA. The District Court held that Plaintiffs’ PAGA claims were an enforcement action and were thus barred by the one year Statute of Limitations. 

The Court’s reasoning distinguished the situation in this case to a prior California Supreme Court’s determination, “In Myers, the California Supreme Court determined that an enforcement action brought by the state did not accrue until a licensee notified the state it intended to contest the citation or penalty. Myers explained that this result was dictated by the fact that ‘the action here is an enforcement action which may not be maintained until there is something requiring enforcement.’” (See, Meyers, 31 Cal.3d 628, 183 Cal. Rptr. 386, 645 P.2d 1218 (1982).) Myers further explained that “the enforcement action is brought not upon the original violation, but to effectuate the administrative decision once the licensee has informed the director of its intent to contest the decision.” Id. at 635. In contrast, Plaintiffs PAGA claim is not an enforcement action and accrues, per the general rule, when the wrongful act was committed. (See Id. at 634.)


Tuesday, March 17, 2009

Solis v. Regis Corp., 2006 U.S. Dist. LEXIS 77327 (N.D. Cal. Oct. 12, 2006)

Plaintiff experienced difficulties cashing paychecks earned while working for Defendants.  Plaintiff alleged that on several occasions she had to pay a $5 or $6 fee for cashing her check and that a hold had been placed on her checks. Several of Plaintiff alleged Defendant’s violated Labor Code section 212 by “unlawfully withholding wages due.” Plaintiff’s sought penalties under Labor Code section 225.5, which provides a penalty for violations of Labor Code Section 212.  Plaintiff argued in the alternative that even if penalties are not available under section 225.5 with respect to employees who did not pay check fees or have a hold put on their check, that penalties were available under pursuant to the PAGA. The District Court agreed, stating, “Section 225.5, however, provides a specific penalty for only those violations which involve the withholding of wages due any employee...it does not provide a specific penalty for violations of section 212 that do not involve the withholding of wages.  Thus, section 2699 (f) applies.”


Tuesday, March 17, 2009

Clark v. Chase Home Fin., LLC, 2008 U.S. Dist. LEXIS 47295

In this case, the District Court discussed whether Plaintiff’s claims under PAGA are viable against a corporate manager.  The Court concluded that this remains an open question. In Jones v. Gregory, 137 Cal.App.4th 798, 40 Cal. Rptr. 3d 581 (2006) the California Court of Appeals noted that PAGA may, in time, “provide workers with a mechanism for recovering unpaid overtime wages through private enforcement of section 558 . . . that include unpaid wages from ‘any employer or other person acting on behalf of an employer,’ a phrase conceivably broad enough to include corporate officers and agents in some cases.” Id. at 590. 


Tuesday, March 17, 2009

Beebe v. Mobility, Inc., 2008 U.S. Dist. LEXIS 12400 (S.D. Cal. Feb. 20, 2008)

Plaintiff filed a complaint seeking civil penalties pursuant to the PAGA based on allegations that Defendant paid it’s employees once per month in violation of Labor Code section 204 and for which civil penalties are available pursuant to Labor Code section 210 and the PAGA.  Defendant began to pay it’s employees on a bi-monthly basis before Plaintiff filed her complaint with LWDA.  Defendant argued that Plaintiff when filed her complaint with the LWDA, the one year statute of limitations had expired. The District Court agreed that the Statute of Limitations had expired and granted Defendant’s motion for to strike the Plaintiff’s PAGA claims and ultimately granted Defendant’s motion for Summary Judgment.

The main legal issue with respect to the PAGA claims was determining when the one year Statute of Limitations begins to run.  The District Court determined that the statute of limitations does not start running when a wrong is remedied. Rather, the statute of limitations starts running when a cause of action accrues i.e. when a plaintiff has the right to sue on a cause of action. Hogar Dulce Hogar v. Community Development Com’n of City of Escondido, 110 Cal. App. 4th 1288, 1295, 2 Cal. Rptr. 3d 497 (2003). “When an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new limitations period.”


Tuesday, March 17, 2009

Lopez v. Lassen Dairy, Inc., 2008 U.S. Dist. LEXIS 89491 (E.D. Cal. Oct. 20, 2008)

Plaintiffs filed an initial complaint asserting a PAGA claim, naming Lassen Dairy as the sole Defendant.  Plaintiffs sought to amend complaint add additional Defendants.  There was a dispute as to when Plaintiff sent notice to LWDA. The Plaintiff’s produced documentation establishing that Plaintiffs had sent timely notice to the LWDA adding a PAGA claim against Defendant Lassen Dairy and that a response was received from the LWDA indicating that the agency would not be pursuing an investigation prior to Plaintiffs’ filing the First Amended Complaint. The Plaintiff’s did not list a co-Defendant in the initial letter.  However, Plaintiff’s did send an amended letter to LWDA after filing the motion.  LWDA again responded that it would not be investigating the alleged labor code violations. 

The District Court held that Defendants argument that Plaintiffs failed to exhaust administrative remedies was moot and refused to grant Defendants motion on this basis. The Court also held that Defendants may file a motion to dismiss for failure to exhaust administrative remedies if it is determined that this issue is still a viable defense after being served with the Plaintiff’s Second Amended Complaint.


Tuesday, March 17, 2009

Singer v. Becton, Dickinson & Co., Med Safe Sys., 2008 U.S. Dist. LEXIS 56326 (S.D. Cal. July 23, 2008)

Plaintiff sued under the PAGA based on violations of Labor Code Sections 226.3 and 558.  Plaintiff’s followed the administrative procedures set forth under section 2699.3(a).  The District Court rejected Defendants argument that the one year Statute of Limitations had run.  The Court acknowledged the language set forth in Labor Code section 2699.3(d) which states, “the periods specified in this section are not counted as part of the time limited for the commencement of the civil action to recover penalties under this part.” The Court explained that this in general, this provision provides a mechanism to temporarily toll the one year statute of limitations. 

However, Plaintiff’s claims for violations of Labor Code Sections 226.3 and 558 were subject to the notice and cure provisions set forth in Labor Code section 2699.3(c) which does not require a return notice from the LWDA, but does require an employee to wait 33 days to allow the employer to cure the alleged violation before an employee can commence a civil suit.  Thus, the Court granted Defendants’ motion to strike the Plaintiff’s PAGA allegations for civil penalties, but left Plaintiff leave to amend his complaint to allege the allegation that Plaintiff waited 33 days to allow the employer to cure the alleged violation.


Tuesday, March 17, 2009

Kamar v. Radioshack Corp., 2008 U.S. Dist. LEXIS 40581 (May 15, 2008)

Plaintiffs, former employees of Radio Shack, filed a putative class action seeking monetary and injunctive relief for alleged wage and hour violations. Defendants sought a dismissal of Plaintiffs claim for unpaid split shift premiums and reporting time pay under California wage and hour regulations and for Plaintiffs claims under California Labor Code sections 204 and 210 and their claim for civil penalties under California Labor Code section 558.

The District Court denied Defendants motion to dismiss for Plaintiffs claim for split shift premiums and reporting time pay, and granted Defendants motion as to civil penalties under Labor Code section 558.

The District Court reasoned that Labor Code section 2699(a) of the Private Attorney’s General Act (PAGA) allows Plaintiffs to sue for section 558 civil penalties.  However, Plaintiffs followed the administrative procedures outlined in 2699.3(a).  The administrative procedures outlined in 2699.3 are applicable to Labor Code sections listed in 2699.5 and require written notice to the LWDA and a response before Plaintiffs may bring an action for civil penalties.  The Plaintiff’s claim for civil penalties pursuant to section 558 did not fall under section 2699.5.  Instead, the violations Plaintiffs claimed were subject to notice and cure provisions outlined in Labor Code Section 2699.3(c). 


Sunday, March 15, 2009

Waisbein v. UBS Fin. Servs., 2007 U.S. Dist. LEXIS 62723 (N.D. Cal. Aug. 15, 2007)

Plaintiff was a former UBS employee who opted out of a previously settled class action (The Bowman class action.) Plaintiff filed an action against UBS on his own behalf alleging violation of the Fair Labor Standards Act as well as State labor code violations alleged under the PAGA and under the California Business and Professions Code. Plaintiff sought to bring the state claims on behalf himself and of “other aggrieved employees.” The issue with respect to the PAGA was whether the Plaintiff was barred by res judicata from bringing claims under the PAGA to the extent he sought penalties to be awarded to the state.  The District Court held that Plaintiff could represent the state of California and other injured parties in a PAGA action.  However, Plaintiff could not assert the claim of injured parties who had settled in the Bowman class action, because those PAGA claims were barred by res judicata. 


Sunday, March 15, 2009

Waisbein v. UBS Fin. Servs., 2007 U.S. Dist. LEXIS 92051 (N.D. Cal. Dec. 5, 2007)

Plaintiff was a former UBS employee who opted out of a previously settled class action (The Bowman class action.) Plaintiff filed an action against UBS on his own behalf alleging violation of the Fair Labor Standards Act as well as State labor code violations alleged under PAGA and under the California Business and Professions Code. Plaintiff sought to bring the state claims on behalf himself and of “other aggrieved employees.” The issue with respect to the Plaintiff’s PAGA claim was whether Plaintiff was barred from bringing PAGA claims on behalf of the employee class members who had settled in the class action suit.

The District Court held that Plaintiff’s claim is limited to bringing suit on behalf of those who had opted out of the class.  The court reasoned that the state law claims were subject to dismissal because Plaintiff seeks relief on behalf of the Bowman class members, who had previously settled. The Court rejected Plaintiff’s argument that barring the claims would bar the State’s rights to impose penalties under other Labor Code Sections, stating, “that a claim brought under PAGA by an aggrieved employee is not only a claim brought on behalf of the employee, but also a claim brought on behalf of the State.” The court reiterated the California Court of Appeal’s statement that the PAGA “empowers or deputizes an aggrieved employee to sue for civil penalties ‘on behalf of himself or herself and other current former employees’ as an alternative to enforcement by the [State].” (See, Dunlap v. Superior Court, 142 Cal. App. 4h 330, 337.) Thus, the court held that the Bowman class members “voluntarily entered into an agreement in which they accepted a monetary benefit from UBS in exchange for not pursuing their claims under PAGA.”


Sunday, March 15, 2009

De Simas v. Big Lots Stores, Inc., 2007 U.S. Dist. LEXIS 19257 (N.D. Cal. Mar. 2, 2007)

Plaintiffs sought to add a claim under PAGA. The District Court held that Plaintiffs action was barred by the one year Statute of Limitations set forth in California Code of Civil Procedure Section 340.  CCP section 340 states, “ the limitations period shall be one year for “[a]n action upon a statute for a penalty or forfeiture, if the action is given to an individual, or to an individual and the state, except if the statute imposing it prescribes a different limitation.” (See also, Moore v. Genesco, Inc.,2006 U.S. Dist. LEXIS 71115 at 7 (N.D. Cal. Sept. 20, 2006)("the statute of limitations for statutory civil penalties under PAGA is one year,” citing Cal. Code. Civ. P. Section 340(a).) Specifically, the Court held that the Plaintiffs’ claims began to accrue at the time the Defendant’s allegedly committed the Labor Code violations.  The Court rejected Plaintiff’s argument that their PAGA claims did not accrue until they received notice form the LWDA that LWDA did not intend to pursue Plaintiffs grievances. 

The District Court also rejected Plaintiffs argument that Labor Code section 2699.3(a)(2)(c) gave Plaintiffs a right to amend their complaint as a matter of right within 60 days in Federal Court, holding that this provision directly conflicts with the Federal Rules of Civil Procedure governing amendment. Moreover, the court stated that Labor Code section 2699.3(a)(2)(c) only grants the right to amend without leave, it does not establish whether a particular amendment will survive. 

Finally, the District Court rejected Plaintiffs argument that they could maintain a PAGA as “aggrieved employees” because the three year statute of limitations for violations of Labor Code section 1194 (overtime wage claims) has not run. The Court agreed that an “aggrieved employee” bringing a PAGA claim does not need to have a valid claim for all of the violations brought under the claim.  However, Plaintiffs’ claim is brought under California Labor Code Sections 1194, which allows an employee to bring a civil action. Because Labor Code section 1194 does not give the LWDA authority to bring suit, Plaintiffs are not “aggrieved employees” for purposes of Lab. Code Section 2699, and are therefore not authorized to bring a PAGA action. 


Sunday, March 15, 2009

Thomas v.. Home Depot USA, Inc. 2007 US Dist LEXIS 75489

Plaintiff filed a class action alleging wage and hour violations.  After receiving notice from LWDA allowing him to pursue civil penalties, the Plaintiff amended his complaint to request relief pursuant to PAGA. The Plaintiff’s claim included dozens of Labor Code sections listed in Lab. Code Section 2699.5 are provisions with both three year and one year statutes of limitations. (See, Lab. Code 2699.5.) Plaintiff argued that a PAGA representative action on behalf of the State of California and other injured employees could still be maintained even though Plaintiff’s individual claim was barred by the one year Statute of Limitations set forth in California Code of Civil Procedure section 340. The District Court rejected Plaintiff’s argument stating that, regardless of the three year statute of limitations that applies to some to the Labor Code violations listed in Lab. Code section 2699.5, “a PAGA claim is, by definition, a claim for civil penalties.” Thus, the one year Statute of Limitations provided in California Code of Civil Procedure Section 340 applies to this action.  (See also, Big Lots, 2007 U.S. Dist. LEXIS 19257).


Sunday, March 15, 2009

Pulera v. F&B, Inc., 2008 U.S. Dist. LEXIS 72659 (E.D. Cal. Aug. 18, 2008)

Plaintiff’s alleged Defendants violated various California Labor Code violations, including the Labor Code’s Private Attorneys General Act (the PAGA).  Defendants filed a motion to dismiss for lack of subject matter jurisdiction on the grounds that under the PAGA, 75 percent of the Plaintiff’s recovery was required to go to the LWDA, and that Plaintiff’s claim thus failed to exceed the $75,000.00 amount in controversy requirement. Plaintiff’s asserted several theories on how their claims met the jurisdictional amount in controversy requirement.

The first issue with respect the PAGA claims was whether claims for penalties under the PAGA can be aggregated among an individual plaintiff and the Labor Workforce Development (LWDA) in order to meet the jurisdictional amount in controversy requirement.  The second issue was whether Plaintiff’s inclusion of prospective attorney’s fees was proper for establishing the requisite jurisdictional amount in controversy.

The District Court rejected the argument that Plaintiff’s individual claims should be aggregated with those recoverable by LWDA.  The Court distinguished the cases cited by the Plaintiff in support of their position as involving injunctive relief.  Here, the amount of damages sought by the Plaintiff were readily calculable for jurisdictional purposes. The Court held that since the LWDA can choose to enforce claims itself, regardless of the employee’s involvement, “the amounts recoverable by the Plaintiff based on his PAGA claims are separate and distinct from the amounts recoverable by the LWDA, and therefore these amounts may not be aggregated.” With respect to the Plaintiff’s claim that anticipated attorneys fees, the court held that the Plaintiff’s provided no basis for their calculation that attorneys fees would exceed $50,000.00.


Sunday, March 15, 2009

Sinolinding v. United Staffing Solutions, 2008 Cal. App. Unpub. LEXIS 305 (Cal. App. 2d Dist. 2008)

NOT CITABLE, UNPUBLISHED

Appellants were foreign nurses who brought their claims against cross defendant and respondent United Staffing Solutions, Inc. (USSI), alleging that USSI required them to enter into employment agreements that provided for wages below the prevailing wage for nurses set by the U.S. Department of Labor.  The main legal issues with respect to Labor Code section 2699 included whether Defendant’s conduct was a violation of Labor Code section 432.5 and thus, forms a basis of action under 2699 and whether Appellants’ failure to comply with requirements of CCP 382 (class action requirements) precluded appellants from pursuing matters in a representative capacity under 2699.

The Court of Appeals held that Appellants had stated claims under Labor Code section 2699, “Section 2699(f) expressly specifies a civil penalty for statutes that do not otherwise provide by one, such as Section 432.5 is among the statutes enumerated in section 2699.5 that gives rise to a civil action under section 2699.” Defendant’s conduct was a violation of Labor Code Section 432.5 and that a violation of 432.5 does form a basis of action under section 2699.  The Court further held that, nothing in section 2699 or its related provisions establishes that compliance with the class action procedures outlined in Code of Civil Procedure section 382 is a prerequisite to bringing an action under that provision.


Sunday, March 15, 2009

Amalgamated Transit Union, Local 1756, AFL CIO v. Superior Court, 148 Cal. App. 4th 39 (Cal. App. 2d Dist. 2007)

NOT CITABLE SUPERCEDED BY GRANT OF REVIEW

Plaintiffs included two labor unions and 17 members or former members of the unions.  Plaintiff’s filed suit against several transit company employers alleging violations of the labor code, and sought recovery that included an award of civil penalties estimated at over $2.6 million.  In a second cause of action, plaintiffs asserted the employers’ failure to provide the legally required meal and rest periods violated the unfair competition law (UCL), and sought injunctive relief and restitution of unpaid wages. (Bus. & Prof. Code, ‘ 17200 et seq.) The fourth amended complaint alleged the Unions were suing in their representative capacity on behalf of members who are or were employed by the defendant employers. In addition, the Unions brought the action as assignees of rights transferred to the Unions by over 150 employees and former employees of the defendant employers, “including the right to sue in a representative capacity on behalf of all other current and former aggrieved employees of Defendants...”

With respect to the PAGA claims, the Court held that “the Unions have standing as assignees to assert the claims of union members who have assigned to the Unions their rights to recover wages owing to them.  The Unions may not, however, assert claims on behalf of members who have not assigned their claims to the Unions.  An assignment purporting to transfer an individual’s right to sue in a representative capacity is ‘not a transfer by the owner’ of a ‘right’ to recover money or other personal property...Nor is such an assignment the transfer of an ‘injury in fact’ from assignor to assignee that confers standing on the assignee...consequently, the Unions do not have standing under PAGA or the UCL to assert the rights of members who have not assigned their recovery rights to the Unions.”

Issues up for review at the Supreme Court include whether a worker’s assignment to their Union of a cause of action for meal and rest period violations carries with it the worker’s right to sue in a representative capacity under PAGA or the Unfair Competition law (Bus. & Prof. Code Section 17200 et seq.)


Sunday, March 15, 2009

Arias v. Superior Court, 153 Cal. App. 4th 777 (Cal. App. 3d Dist. 2007)

NOT CITABLE SUPERCEDED BY GRANT OF REVIEW

The Petitioner brought this action against his former employer, Angelo Dairy.  The Petitioner alleged that he was not compensated for overtime wages and that he received no meal periods of rest breaks during his shifts, numerous other labor law violations, and sought damages and injunctive relief in his representative capacity for the interest of other current and former employees. The Petitioner brought his representative claims pursuant to the UCL and the PAGA. The Respondent moved to strike the causes of action that asserted representative claims on the ground that the employee did not comply with the requirements for pleading a class action.

The Court of Appeals held that, “the PAGA does not require that an action brought by an aggrieved employee comply with section 382 of the Code of Civil Procedure.  The Legislature has made clear that an action under the PAGA is in the nature of an enforcement action, with the aggrieved employee acting as a private attorney general to collect penalties from employers who violate labor laws. Such an action is fundamentally a law enforcement action designed to protect the public and penalize the defendant for past illegal conduct. Restitution is not the primary object of a PAGA action, as it is in most class actions. (People v. Pacific Land Research Co. (1977) 20 Cal.3d 10, 17; Corbett v. Superior Court, supra, 101 Cal.App.4th at p. 683.) Thus, both the purpose and the language of PAGA indicate an enforcement action on behalf of others need not be brought as a class action.”

The issues up for review at the Supreme Court are, whether an employee who is suing an employer for labor law violations on behalf of himself and others under the Unfair Competition Law (Bus. & Prof. Code, Section 17203) and the Labor Code Private Attorneys General Act (PAGA) must bring his representative claims as a class action.


Sunday, March 15, 2009

Deleon v. Verizon Wireless, 2008 Cal. App. LEXIS 2530

Petitioner Deleon opted out of a class action settlement and then brought an action under PAGA against Verizon various Labor Code violations on behalf of himself and other employees. The trial court ruled that Deleon’s lawsuit was barred by the doctrine of res judicata to the extent Deleon seeks relief on behalf of class members who settled a prior class action against Verizon Wireless because it adjudicated the same claims.  Deleon claimed that the action was not barred by res judicata because the element of privity was not met. Deleon argued that, as the real party in interest, the State, not the aggrieved Evenson employees, is the plaintiff and the State is not in privity with the Evenson employees.  The main issue with regard to Labor Code section 2699 was whether privity existed among the members of prior settled class action, and thus invoked the doctrine of res judicata to bar their claims in the current action.  The Court of Appeals held that privity exists among PAGA suits brought by aggrieved employees pursuant to 2699(a), but privity would not exist among aggrieved employees in PAGA suits brought by the State. Court allowed Deleon to amend his complaint to bring a lawsuit on behalf of himself and others who had opted out of the settlement.

The Court of Appeals discussed its decision in Dunlap v. Superior Court (2006) 142 Cal.App.4th 330 where the Court stated that PAGA “is intended to augment the enforcement abilities of the Labor Commissioner by creating an alternative private attorney general system for labor law enforcement.” (Id. at p. 337, italics added, quoting from Sen. Rules Com., Off. of Sen. Floor Analyses, analysis of Sen. Bill No. 796 (2003-2004 Reg. Sess.) as amended Sept. 2, 2003, p. 2, italics added.) Hence, PAGA “empowers or deputizes an aggrieved employee to sue for civil penalties ‘on behalf of himself or herself and other current or former employees’(Lab. Code Section2699 (a)), as an alternative to [Agency] enforcement . . . .” (Dunlap v. Superior Court, supra, at p. 337.)

The Court also discussed the statutory scheme of PAGA, stating, “Section 2699, subdivisions (g)(1) and (h) are further evidence that the ‘aggrieved employee,’ not the State, is the plaintiff in a PAGA civil action.  Section 2699, subdivision (g)(1) allows the PAGA employee to pursue other remedies concurrently with a PAGA action and recover attorney’s fees.  Such a provision would not be necessary if the real party in interest in a PAGA action were the State.  Section 2699, subdivision (h), PAGA precludes employees from bringing PAGA claims for violations for which the Agency has already issued a citation. Such provisions clearly distinguish between the PAGA plaintiff and the Agency or State.”

The Court stated that, “Based on PAGA’s statutory scheme, its stated goals, and Dunlap, it is clear that the plaintiffs here were the ‘aggrieved employees.’ Nothing in the statute empowers the employee to bring an action on behalf of the State.  Thus, the settling plaintiffs in Evenson are the very same people as the plaintiffs in Deleon’s PAGA action.” The Court rejected Deleon’s contention that the distribution of PAGA penalties (three quarters of PAGA penalties are paid to the State and one quarter are paid to the aggrieved employees) serves as evidence that a PAGA action brought on behalf of the State. The Court pointed out that, “in an analogous area of the UCL, courts have held that ‘the filing of a [representative, i.e., class] action by a private plaintiff does not confer on that plaintiff the stature of a prosecuting officer, and the fact that the plaintiff may be acting as a so-called private attorney general is irrelevant . . . .’(Hood v. Santa Barbara Bank & Trust (2006) 143 Cal.App.4th 526, 542, quoting from People v. Pacific Land Research Co. (1977) 20 Cal.3d 10, 17-19; see also Payne v. National Collection Systems, Inc. (2001) 91 Cal.App.4th 1037, 1045 [distinguishing actions brought by prosecutors and representative actions brought privately].) Indeed, Deleon could only bring his PAGA-based claims because the State or Agency specifically declined to pursue it.”

The Court also rejected Deleon’s argument that “the State could not be in privity with the Evenson plaintiffs because Evenson made no attempt to demonstrate compliance with PAGA’s prerequisites.” The Court stated that, “this same contention was rejected by the Federal District Court in Waisbein v. UBS Financial Services, Inc. (N.D.Cal. Dec. 5, 2007, No. C-07-2328) 2007 WL 4287334.  There, the plaintiffs filed a prior class action against UBS for violations of various Labor Code provisions and pursuant to PAGA.  In the ensuing settlement, the class released UBS for the state law claims.  (Id. at p. 1.) As did Deleon here, Waisbein where Plaintiff opted out of the class and filed his action against UBS on behalf of himself and ‘other aggrieved employees’ bringing, among other things, PAGA claims for many similar Labor Code violations.  (Ibid.)”

Finally, the Court rejected Deleon’s argument that his PAGA lawsuit was analogous to a qui tam action and reiterated, that, “section 2699, subdivision (a) establishes that the PAGA plaintiffs bring their action ‘on behalf of himself or herself and other current or former employees,’ not on behalf of the government.”


Sunday, March 15, 2009

Dunlap v. Superior Court, 142 Cal. App. 4th 330 (Cal. App. 2d Dist. 2006)

This case provides a thorough analysis of the legislative intent behind the Private Attorneys General Act (the PAGA) and the 2004 amendment to the PAGA. The Court of Appeals interpreted the Courts decision in Caliber Bodyworks, Inc. v. Superior Court, 134 Cal. App. 4th 365. Here, Plaintiff’s second through fifth causes of action did not seek civil penalties, which prior to enactment of the PAGA, were recoverable only by the Labor and Workforce Development Agency (LWDA). The only penalties being sought therein were various statutory penalties, which penalties already were recoverable by employees under the Labor Code prior to the adoption of the PAGA.  The issue was whether the Plaintiff was required to comply with the PAGA’s administrative prerequisites to filing suit before pursuing statutory penalties.  The Court of Appeals held that because the statutory penalties pled in Dunlap’s complaint were recoverable by an employee prior to the adoption of the PAGA, they were not subject to the administrative requirements listed in Labor Code section 2699.3.

The Court of Appeals explained that to be subject to the PAGA’s administrative requirements set forth in section 2699.3, the employee’s cause of action must allege a violation of one of the provisions listed in section 2699.5, and seek recovery of a civil penalty assessable by the [LWDA] (See, Labor Code Section 2699, subds. (a) & (f); Caliber, supra, 134 Cal.App.4th at p. 378.) Not all statutory penalties are ‘civil penalties’ subject to the PAGA. The Court explained that one must “distinguish between a request for statutory penalties provided by the Labor Code for employer wage and hour violations, which were recoverable directly by employees well before the [PAG] Act became part of the Labor Code, and a demand for ‘civil penalties,’ previously enforceable only by the State’s labor law enforcement agencies.”


Sunday, March 15, 2009

Caliber Bodyworks, Inc. v. Superior Court, 134 Cal. App. 4th 365 (Cal. App. 2d Dist. 2005)

Plaintiff’s were former employees of Defendant, Caliber Bodyworks, Inc., dba Caliber Collision Centers.  Plaintiff’s filed a complaint for wage-and-hour violations against Defendants on behalf of themselves individually and as putative class representatives, alleging Defendant’s failure to properly compensate its employees in violation of numerous Labor code provisions and for committing unfair business practices under Business and Professions code section 17200. Among other remedies, Plaintiff’s sought civil penalties for violations of several of the provisions specified in Labor Code Section 2699.5. Plaintiff’s did not allege that they satisfied the pre-filing notice and exhaustion requirements of Labor Code Section 2699.3. Caliber demurred to the complaint on the ground the trial court lacked subject matter jurisdiction over the matter because plaintiffs had failed to plead compliance with the administrative prerequisites to filing suit contained in section 2699.3 (a). According to Caliber, plaintiffs had an obligation to provide notice to the LWDA and Caliber and wait the prescribed time period for a response before filing suit because the first 12 causes of action in the first amended complaint seek penalties for alleged violations of Labor Code provisions in section 2699.5 and the thirteenth cause of action under section 17200 is expressly premised on some of the same violations.  The trial court overruled the demurrer, finding that “the Act expressly preserves an employee’s right to pursue claims under existing state and federal law, either separately or concurrently with a suit under the Act, and neither the language of section 2699.3, nor its legislative history, clearly required notice to the LWDA for claims based on statutes enumerated in section 2699.5 that had authorized a private cause of action prior to the effective date of the Act.”

The Court of Appeals held that Plaintiff’s could not maintain a private right of action under 2699, to the extent that they sought civil penalties because they did not satisfy Labor Code section 2699.3’s administrative requirements. However, Plaintiff’s could maintain causes of action for unpaid wages, statutory penalties, and unfair and unlawful business practices which were not subject to the notice and exhaustion requirements.

To be subject to the PAGA, the employee’s cause of action must allege a violation of one of the provisions listed in section 2699.5 and seek recovery of a “civil penalty” assessable by the LWDA. The Act’s requirements, including its administrative prerequisites to filing suit in section 2699.3(a), therefore, are triggered when an aggrieved employee seeks civil penalties for violation of a Labor Code provision that previously provided for recovery of a civil penalty by the Labor Commissioner, including those that existed for years prior to the Act’s effective date. Accordingly, notwithstanding plaintiffs’ observation that “wage and hour disputes (and others in the same general class) routinely proceed as class actions” (Prince v. CLS Transportation, Inc. (2004) 118 Cal.App.4th 1320, 1328), plaintiffs seeking civil penalties recoverable by the State in such suits for violations of any Labor Code provision specified in [134 Cal.App.4th 383] section 2699.5 must now plead compliance with 2699.3 (a)’s administrative procedures. An employer is potentially liable for unpaid wages and interest, statutory penalties and civil penalties for many violations of Labor Code wage and hour provisions. For example, an employee not fully paid upon discharge or layoff as required by section 201 (one of the Labor Code provisions identified in section 2699.5) may be entitled to recover not only his or her unpaid wages but also the statutory penalty provided by section 203 (another provision listed in section 2699.5) and the civil penalty provided by section 256. An action seeking the first two categories of damages, although requesting statutory penalties, is not subject to the Act’s prefiling notice and exhaustion requirements; an action seeking the third category of recoverable damages, whether alone or in combination with a prayer for other remedies, is.


Sunday, March 15, 2009

Amaral v. Cintas Corp. No. 2, 163 Cal. App. 4th 1157 (Cal. App. 1st Dist. 2008)

In this case, the Court of Appeals discussed three issues involving California Labor Code section 2699 (the PAGA).  The first was whether the PAGA applied retroactively to this case.  The second was whether the Plainiff’s PAGA claims related back to their original complaint.  The third was whether the trial court abused its discretion in awarding full penalties under PAGA because it failed to follow the guidelines of the Department of Labor Standards and Enforcement (DLSE) and set the penalties in an unjust, arbitrary and oppressive amount.

During the period from July 1999 through the end of June 2003, the City of Hayward contracted with Cintas for certain uniform and linen services.  In April 1999, the City adopted the Hayward Living Wage Ordinance (LWO).  Representatives of Cintas repeatedly certified that they would comply with the LWO. However, in May 2003, it was discovered that Cintas never complied with the LWO throughout the period from 1999 to 2003.  Plaintiff’s filed a class action lawsuit against Cintas based on the company=s failure to compensate employees at hourly rates required by the LWO and for violations of various Labor Code violations.  In 2004, after the Legislature enacted the PAGA, the plaintiff’s amended their complaint to seek additional penalties. The trial court certified a class consisting of all production and stockroom workers employed by Cintas at its Union City and San Leandro facilities between July 1, 1999 and June 20, 2003.  The court also permitted the City of Hayward to intervene as a plaintiff. Judgement was entered.  The court interpreted the LWO as applying to all hours worked by class members during the contract period and therefore concluded Cintas violated the LWO and Business and Professions Code section 17200 and breached its contract with the City. On these claims, the court awarded plaintiffs $790,489 in unpaid hourly wages and $14,254 in unpaid vacation benefits. The court also rejected Cintas’s retroactivity arguments and concluded plaintiffs could rely on the Private Attorneys General Act to obtain Labor Code penalties applicable to conduct that occurred before its enactment. However, because the court determined Cintas’s violation of the LWO was not willful, it declined to impose the higher penalty rates plaintiffs sought. The court ordered Cintas to pay a total of $258,900 in penalties for violations of Labor Code sections 210, 225.5 and 227.3. Plaintiffs moved to recover their costs and attorneys fees, based on Code of Civil Procedure section 1021.5 and fee-shifting provisions of the LWO and Labor Code. This motion was granted in part and denied in part. The trial court awarded fees of $1,199,550, calculated using a lodestar amount of $727,000 and a multiplier of 1.65, plus fees of $60,611 for work on the fee motion itself. The court also awarded $498 in non-statutory costs but denied plaintiffs’ attempt to recover additional litigation expenses. As before, Cintas filed a notice of appeal from the order granting attorney’s fees, and plaintiffs cross-appealed.

The Court of Appeals held that the PAGA claims did not apply retroactively in this case because PAGA did not increase Cintas ‘s liability for Labor Code penalties. The enactment of PAGA expanded the universe of parties who can collect penalties from employers for Labor Code violations. In this case, the only effect of the new statute was to allow private parties--class members who are present or former employees of Cintas--to recover penalties that previously could have been recovered only by the state Labor Commissioner. This change did not increase Cintas’s liability in any way, because the Labor Commissioner could have recovered the same penalties for Cintas’s violations before the passage of PAGA.

The Court of Appeals upheld the trial courts determination that Plaintiff’s PAGA claims related back to the original complaint. This conclusion was important for the calculation of penalties, since the trial court determined that PAGA penalties are subject to a one-year statute of limitations. (Code Civ. Proc., Section340.) An amendment seeking new damages relates back to the original complaint if these damages resulted from the same operative facts, i.e., the same misconduct and the same injury previously complained of. (Walton v. Guinn (1986) 187 Cal.App.3d 1354, 1362 [amendment adding new allegation of special damages related back because these damages resulted from the same injury and same accident alleged in original complaint].) Plaintiffs’ request for PAGA penalties in the second amended complaint was based on the exact same facts alleged in their original complaint regarding Cintas ‘s failure to comply with the LWO. The factual basis of Cintas ‘s liability is the same, and the resulting injury plaintiffs allege is the same.

Finally, the Court of Appeals held that the trial court did not abuse its discretion in declining to reduce the penalty award pursuant to the PAGA. The Court of Appeals explained that the Supreme Court holding that DLSE internal policies interpreting statutes are not entitled to judicial deference because they were not promulgated in accordance with the Administrative Procedures Act (APA). Given this Supreme Court authority, which was settled by the time PAGA was enacted, the Court of Appeals concluded that the Legislature intended trial courts to be constrained to follow DLSE enforcement policies the high court had declared void.  Labor Code section 2699 (e)(2) provides that in an action by an aggrieved employee to recover PAGA penalties, the court “may award a lesser amount than the maximum civil penalty amount specified by this part if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory.” Thus, PAGA penalties are mandatory, not discretionary. Labor Code section 2699 (e)(2) describes the conditions under which a trial court may exercise its discretion to reduce penalties. It does not specify guidelines for exercising discretion in general with regard to the amount of penalties, because the amount is fixed by statute. The text of section 2699 and the legislative history of PAGA indicate the purpose of the act was to encourage broad collection of civil penalties to deter Labor Code violations. (See, Caliber Bodyworks, Inc. v. Superior Court, supra, 134 Cal.App.4th at pp. 370, 374.) The trial court was not required to ignore the remedial purpose of the law when it declined to reduce the penalties to be imposed on Cintas. 


Sunday, March 15, 2009

Harrington v. Payroll Entertainment Services, Inc., 160 Cal. App. 4th 589

This case involved a dispute for about $44.63 in unpaid overtime.  For one 14 hour day, the Plaintiff, an off-duty police officer, provided traffic and crowd control services for a movie.  The movie’s payroll service provider relied on a formula provided by the Los Angeles Police Protective League, and underpaid Plaintiff by $44.63.  The Plaintiff filed a formulaic motion for class certification to include 16 other police officer.  The trial court denied the motion for class certification. Shortly before trial, the case settled for $10,500.00.  Plaintiff asked the trial court for about $46,000.00 in attorney’s fees.  The trial court denied the motion completely. The trial court concluded that, while Plaintiff and his attorneys had hopes of turning the case into a major class action, that did not occur because neither the facts nor the law supported such a result.  The real dispute turned out to be between a payroll company and a one day employee of a movie production company who was not paid $44.00 in overtime and whose paystub was technically deficient.  Plaintiff was paid a windfall of $10,500.00, and to award an additional amount would be confiscatory and unfair.  Plaintiff appealed on the ground that he has a statutory right to recover reasonable fees. 

The Court of Appeals agreed that under Labor Code sections 1194, 226, and 2699 that Plaintiff was entitled to an award of attorneys fees as a matter of right. The language of Cal. Lab. Code section 2699 (g) provides that an employee whose actions result in the payment of civil penalties “shall be entitled to an award of reasonable attorney’s fees and costs.” However, the most that Plaintiff was entitled to is his reasonable fee.  The Court of Appeals acknowledged the trial court’s determination that this dispute about $44.63, was not a viable class action, that Plaintiff was underpaid as a result of an honest mistake made in reliance on a formula provided by the Plaintiff’s union and was not based on any willful or knowingly wrongful conduct by PESI. The Court of Appeals concluded that given the nature of the dispute, the amount of the settlement, and the record of appeal, the trial court could not reasonably award an amount in excess of $500.00. 


Sunday, March 15, 2009

Reynolds v. Bement, 36 Cal. 4th 1075, 1084 1085 (Cal. 2005)

This case involved an action for recovery of unpaid overtime compensation. The question presented was whether Plaintiff stated a cause of action against any of eight individuals who were officers or directors and shareholders of the Delaware corporation, or its California subsidiary, that owned the automobile painting business for which he formerly worked. The individual Defendant’s demurred.  The trial court sustained the demurrer with leave to amend for some causes of action and without leave to amend as to others. The Court of Appeal upheld the trial court’s sustaining of a demurrer. The California Supreme Court affirmed the judgment of the Court of Appeal. This case gave an overview for State Remedies for Unpaid Overtime. The Supreme Court recognized that PAGA actions may be brought under California Labor Code section 2699 to collect civil penalties for violations of the Labor Code.  The court did not address whether a Plaintiff can bring an action under Cal. Lab. Code section 2699 against directors and shareholders.


Thursday, August 02, 2007

Arias v. Superior Court (Angelo Dairy)

The Court of Appeal issued an alternative writ after the trial court struck the plaintiff’s claims in part.  In overruling the trial court’s action, the court of appeal ruled that Section 17200 of the Business and Professions code requires that a representative claim be brought as a class action because the UCL requires compliance with the class action provisions of Code of Civil Procedure section 382.1 (Bus. & Prof. Code, section 17203.) But, section 2699 of the Labor Code, otherwise known as PAGA, expressly allows a person to prosecute a representative claim without requiring that it be brought as a class action. 

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