Labor Code section 206.5 may be the focus of forthcoming opinion in Fourth Appellate District

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Greatsealcal100I’m told that the Fourth Appellate District, Division Three, has an interesting opinion on the way in the next couple of weeks. According to Wage Law via Twitter (@wagelaw), Chindarah et al. v. Pick Up Stix, Inc. et al. is going to have something interesting to say about Labor Code section 206.5. @wagelaw suggests that the decision is due this week, and the docket nominally supports that contention, noting that the decision is “due” on February 19, 2009. However, at least some of the Courts of Appeal around the state interpret the 90-day deadline on the issuance of opinions in submitted matters to mean that the case must be decided by the end of the month in which the decision is due (when the Court reports on whether it has resolved all pending matters under penalty of nonpayment of Justices’ salaries). I don’t know if this interpretation is universal across the state, but, if it applies here, the decision could issue any time before the end of the month. And don’t forget that, in rare circumstances, the Court can essentially vacate the submission and resubmit the matter if the press of other business makes issuance of an opinion by its orginal due date impossible.

Section 206.5 fascinates me.  Maybe "fascinates" is a bit strong.  In any event, there is little in the way of decisional law about this Labor Code section, which states:

“(a) An employer shall not require the execution of a release of a claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of those wages has been made. A release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee. Violation of this section by the employer is a misdemeanor.

(b) For purposes of this section, "execution of a release" includes requiring an employee, as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.

Subdivision (b) is new, so the opinion can’t address that provision. That leaves subdivision (a). In the world of wage and hour class actions, the only time I ever ran across this section was when an employer was picking off class members by making them sign a release to get an offered payment. I believed that the releases obtained were void, but I never had the opportunity to test that belief. I’m very curious to see if that is the issue that has been presented in Chindarah. Of course, there is no guarantee of publication, but, as a matter of first impression (while I wildly speculate about the issues on appeal), one has to believe that publication would be certain.

And to digress for a moment, Twitter is definitely building momentum as a source for breaking news (amongst the nonsense about what somebody has decided to eat for dinner). You can read my recent posts in the sidebar on this blog or see whose posts I am following on Twitter by going to http://twitter.com/hsleviant (@hsleviant, in Twitter-ese).  If you start by reading posts from legal news sources, you may find that you can build a customized legal news amalgamation that suits your interests very precisely.

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Cristler v. Express Messenger says more about the standard of review on appeal than it does about class actions or employee misclassification

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Greatsealcal100When does a class action go to trial? That’s not an easy question to answer. The potential recovery is a factor, but not always. Personalities involved in the litigation are a factor, but not always. The jury pool is factor, but not always. However, when the class is seeking to declare unlawful a delivery company’s classification of delivery drivers as “independent contractors,” it looks like a sure bet that the class action will go to trial.

In Christler v. Express Messenger Systems, Inc. (February 11, 2009), the Court of Appeal (Fourth Appellate District, Division One) considered challenges to a number of rulings surrounding the trial of plaintiffs’ claim that defendant misclassified its delivery drivers as “independent contractors.” While this opinion does discuss the legal standard for determining employment, the Court of Appeal limited its review, based upon what appellant presented:

“ Cristler emphasizes throughout its briefing that other cases addressing the proper classification of package delivery drivers have resulted in findings that the drivers were employees, rather than independent contractors. (See Estrada, supra, 154 Cal.4th at pp. 11-12 [reciting litany of factors that provided substantial evidence to support trial court's finding that FedEx drivers were employees, including "FedEx's control over every exquisite detail of the drivers' performance, including the color of their socks and the style of their hair"]; JKH Enterprises, Inc. v. Department of Industrial Relations (2006) 142 Cal.App.4th 1046, 1065 [listing factors that provided substantial evidence for trial court's conclusion that drivers were employees and thus "reject[ing] JKH's contention" that the evidence "dictate[d] but one conclusion here — that the drivers are independent contractors"]; Air Couriers, supra, 150 Cal.App.4th at p. 938 [same].) The simple answer to these references is that these cases concerned different circumstances presented to a different finder of fact. Indeed, even if the facts of this case were identical to those in the cases Cristler cites (and they are not), we would not be authorized to overrule the determination of the jury to achieve conformity with other cases — particularly as Cristler does not even argue that the jury's verdict is unsupported by substantial evidence.

(Slip op., at p. 8, fn. 2.) If nothing else, this certainly suggests a trend when suing delivery companies who have, as their business model, decided to classify delivery drivers as “independent contractors.”

As part of the appeal, plaintiffs contended that the trial court erred by failing to continually review the class definition to ensure that class members were not inappropriately excluded: “In the instant case, regardless of whether the trial court erred in defining the class, Cristler fails to carry its burden of establishing reversible error as there is no showing of prejudice from the trial court's assertedly erroneous rulings.” (Slip op., at p. 11.) Continuing, the Court explained: “In light of the trial court's refusal to expand the class definition, the drivers who remained in the class — those without any employees of their own and who did not deliver even an occasional package for clients other than Express Messenger — were the most likely to be characterized as Express Messenger's employees rather than as independent contractors.” (Ibid.) Losing at trial with a narrow class didn’t do much for the plaintiffs’ arguments.

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UPDATED: Lu v. Hawaiian Gardens Casino, Inc. offers a reminder that the UCL can borrow statutes that do not themselves include a private right of action

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Greatsealcal100Better late than never, a brief comment about Lu v. Hawaiian Gardens Casino, Inc. (Jan. 22, 2009) is in order. In Lu, the Second Appellate District, Division Three, considered whether dealer tip pooling in casinos (1) gives rise to a private right of action under California Labor Code section 351 and/or 450, and (2) whether those or other Labor Code sections can serve as predicates for an Unfair Competition Law claim.

After reviewing the two Labor Code sections at issue, the Lu Court concluded with little difficulty that neither section (351 or 450) created a private right of action. However, the Lu Court then noted that such Labor Code sections could nevertheless serve as predicates for the “unlawful” conduct prong under the UCL:

“Nevertheless, Lu alleged a cause of action under the UCL for violation of Labor Code sections 351 and 450. “ ‘Virtually any law -- federal, state or local -- can serve as a predicate for an action under Business and Professions Code section 17200.’ [Citation.]” (Ticconi v. Blue Shield of California Life & Health Ins. Co. (2008) 160 Cal.App.4th 528, 539; cf. Louis v. McCormick & Schmick Restaurant Corp. (C.D.Cal. 2006) 460 F.Supp.2d 1153, 1156, fn. 5; Matoff v. Brinker Restaurant Corp., supra, 439 F.Supp.2d at pp. 1037-1038.) The UCL is a proper avenue for Lu to challenge violations of these Labor Code provisions. Therefore, we turn to the substantive question of whether the tip pool procedure here violates the Labor Code sections enumerated in the complaint such as would support UCL causes of action.

(Slip op., at p. 11.) The Court then analyzed various Labor Code sections asserted in the plaintiff’s complaint, concluding that section 351 could support a UCL “unlawful” prong claim sufficient to withstand summary judgment. (Slip op., at pp. 21-23.)

UPDATE:  Just when you get around to writing a post, wouldn't you know that the Court of Appeal changes the Opinion.  A Modified Opinion issued on February 11, 2009, which slightly alters the judgment.

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No restitutionary recovery of Labor Code section 203 wage penalties

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Greatsealcal100Is it a wage, subject to restitution under the Unfair Competition Law, or is it a penalty, which would be considered damages for purposes of the Unfair Competition Law? In connection with California’s Labor Code, this question has arisen on several occasions in recent years, the most memorable instance being Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094. In the most recent incarnation of this issue, the Court of Appeal (First Appellate District, Division Three) examined whether “penalties” under Labor Code section 203 are recoverable via the Unfair Competition Law in Pineda v. Bank of America, N.A. (January 21, 2009)

Labor Code section 203 provides, in part, that “If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefore is commenced; but the wages shall not continue for more than 30 days. . . . [¶] Suit may be filed for these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise.” In McCoy v. Superior Court (2007) 157 Cal.App.4th 225, the Court held that the extended statute of limitations set forth in section 203 applies only if the penalties are sought in connection with an action for unpaid wages. But if the action seeks only waiting time penalties under section 203, the one-year statute of limitations found in Code of Civil Procedure section 340, subdivision (a) applies. (McCoy, at p. 233.)

In Pineda, the Court of Appeal concluded that, since section 203 permitted recovery of something in excess in earned wages, it could not be considered property subject to restitution:

“ Penalties under section 203, however, are not imposed as compensation for the labor of the employee, but are triggered by the employer’s willful failure to timely pay the wages that have been earned. As the court explained in Tomlinson v. Indymac Bank, F.S.B. (C.D.Cal. 2005) 359 F.Supp.2d 891, 895, “the remedy contained in Section 203 is a penalty because Section 203 does not merely compel [the employer] to restore the status quo ante by compensating Plaintiffs for the time they worked; rather, it acts as a penalty by punishing [the employer] for willfully withholding the wages and forces [the employer] to pay Plaintiffs an additional amount. This type of payment clearly is not restitutionary, and thus cannot be recovered under the UCL.” (See also Montecino v. Spherion Corp. (C.D.Cal. 2006) 427 F.Supp.2d 965, 967 [“§ 203 payments are clearly a penalty, and thus cannot be claimed pursuant to the UCL”]; In re Wal-Mart Stores, Inc. Wage and Hour Litigation (N.D.Cal. 2007) 505 F.Supp.2d 609, 619; Murphy, supra, 40 Cal.4th at pp. 1108-1109.)

(Slip op., at pp. 1-2, footnote omitted.) Plaintiff Pineda advanced the theory that restitution was available because the penalty was a vested property interest due upon failure to timely pay wages.  The Court of Appeal rejected that theory, but complimented Plaintiff for creativity. Nice try, but no cigar.

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Don't be crabby about it, but plaintiffs can absolutely, positively discover class member identities and contact information in California, according to Crab Addison, Inc. v. Superior Court

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Greatsealcal100The Second Appellate Division, Division Seven, has had its hands full with class action-related decisions. In this post, I listed some of the significant decisions to issue from that Division, including Puerto v. Superior Court (2008) 158 Cal.App.4th 1242 and Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554. As luck would have it, Division Seven was asked to decide yet another matter involving the right of putative class members to obtain identity and contact information for putative class members, in Crab Addison, Inc. v. Superior Court (Martinez) (December 30, 2008).

This case is of interest because it includes an extra twist on the basic issue of class member identity discovery. The Petitioner, Crab Addison, Inc. (“CAI”), contended that the trial court should have used, if anything, an “opt-in” notice because it had provided forms to each employee regarding the release of their contact information in non-specific situations to non-specific third parties:

“[CAI] argued that its employees had a heightened expectation of privacy as to their contact information based on forms they signed regarding release of their contact information. Based on this heightened expectation of privacy, CAI claimed, if the court were to consider disclosure of the employees’ contact information, it should do so subject to an “opt in” notice requirement. That is, the employees would be contacted and only those who chose to “opt in” to the lawsuit would have their contact information disclosed to Martinez.

(Slip op., at pp. 3-4.) Noted by the Court at one point in its discussion, these “releases” were not signed by employees at the time they were first hired. They were provided by CAI to its employees after the plaintiff had propounded discovery seeking the identity of the putative class members. (Slip op., at pp. 16-17.) In any event, after recapitulating its Puerto decision in great detail, the Court turned to the last question before it:

“ This brings us to the key question in this case: the effect of the release forms. CAI argues that these forms gave their employees a heightened expectation of privacy in their contact information, requiring that the contact information be given greater protection and making an “opt in” notice procedure proper. We are unconvinced by this argument.

(Slip op., at p. 13.) To answer that question, the Court relied heavily upon the policy pronouncements in Gentry v. Superior Court (2007) 42 Cal.4th 443.

“ Gentry highlights the importance placed on the rights of employees to bring class action lawsuits to enforce their statutory rights to overtime pay. So high is the importance of these rights that courts may invalidate contractual provisions that infringe upon them.

Gentry also highlights the dangers of placing in the employer’s hands the responsibility for notifying employees of the pending litigation and requiring employees to opt in to the litigation. Current employees may decline to opt in to the litigation for fear of retaliation by their employer. This in turn could immunize the employer from liability for violation of statutory wage and overtime requirements. This would violate the public policy protecting employee rights.

(Slip op., at pp. 15-16.)  The Court essentially declared release forms like that used by CAI unconscionable.  Finally, the Court compared the circumstances before it to the facts in Alch v. Superior Court (2008) 165 Cal.App.4th 1412, review denied October 28, 2008, noting that, if anything, the privacy intrusion in Alch was noticeably greater. (Slip op., at pp. 18-19.)

Although it probably won’t, this decision, coupled with those before it, should signal to defendants that the issue of discoverability of class member identity and contact information is settled. Instead, it is more likely that we will see experiments with variations of the Release form used in this case to see if there is any way to thread the needle and force an “opt-in” notice procedure.

A thorough discussion of this decision can also be found at the UCL Pracitioner.

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Private actions under the California’s Consumer Credit Reporting Agencies Act are preempted by the Fair Credit Reporting Act

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Greatsealcal100There has been a fair bit of speculation that the weak economy would generate a substantial amount of consumer class action activity in areas of finance, including lending, consumer credit and debt collection.  In California, the door to one such area was slammed shut, absent action by the California Supreme Court or the United States Supreme Court.  In Liceaga v. Debt Recovery Solutions LLC (December 29, 2008) the Court of Apppeal (First Appellate District, Division One) held that the federal Fair Credit Reporting Act completely preemted private rights of action under California's Consumer Credit Reporting Agencies Act. 

“Plaintiff and appellant Rebecca Liceaga, apparently the victim of identity theft, filed a complaint against Debt Recovery Solutions, LLC, a collection agency, for damages that she claims were caused when it furnished to a consumer credit reporting agency information about her which it knew or should have known was inaccurate. The complaint alleged a violation of California’s Consumer Credit Reporting Agencies Act, Civil Code section 1785.1 et seq. (CCRAA). The trial court granted defendant’s motion for judgment upon the pleadings upon the ground that any private right of action provided by the CCRAA is preempted by the corresponding federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) (FCRA)).

In this appeal we are called upon to determine whether the FCRA preempts private rights of action as to “furnishers” of wrongful information and whether, if so, Congress has specifically excepted California actions from preemption. We conclude that private actions under the CCRAA are preempted, without exception, by FCRA.

(Slip op., at p. 1.)  The opinion that follows is a fairly standard analysis under the Supremacy Clause.  It is a loss for consumers, since economic downturns and debt collection misconduct have been known to loiter in each other's company.  Actions by California are not preempted, but it is a metaphysical certainty that cash-strapped California won't be keeping up with the prosecution of CCRAA actions at a level consistent with the likely rate of abuse.

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Marin v. Costco Wholesale Corporation explains how to calculate overtime on certain bonuses

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Greatsealcal100One might be tempted to conclude that all of the novel issues surrounding overtime pay would long ago have been exhausted.  But being that this is a law blog, and seeing as how this blog emphasizes developments in California law, you already know that this is a post about a new issue in overtime litigation.  In Marin v. Costco Wholesale Corporation (December 23, 2008), the Court of Appeal (First Appellate District, Division One), in a case of first impression, reviewed the lawfulness of Costco's formula for calculating overtime pay on semi-annual bonuses paid to hourly employees.

First, some clarifying information is in order.  The bonuses at issue in Marin were "nondiscretionary" bonuses that were paid out based upon the number of hours that certain long-term employees worked during the six months period before the semi-annual bonus dates.  (Slip op., at pp. 1-2.)  This type of bonus is distinguished from discretionary bonuses (such as year-end bonuses issued only when the employer declares a bonus) because nondiscretionary bonuses are, essentially, deferred compensation tied in some way to production (which, in this case, is simply the hours worked).  The Court explained generally how Costco's plan functions:

“Costco pays a formulaic bonus, based on paid hours, to long-term hourly employees. To be eligible for the bonus, paid in April and October, these employees must: (1) have been paid a specified number of hours for continuous service—8,000 hours (approximately four years) for those hired before March 15, 2004, and 9,200 hours (approximately 4.6 years) for those hired after that date; (2) generally be at the top of their pay scale; and (3) have been employed by defendant on April 1 for the April bonus and October 1 for the October bonus. The maximum semi-annual base bonus amount is $2,000 for those with less than 10 years of service, $2,500 for those with 10 to 14 years of service, $3,000 for those with 15 to 19 years of service, and $3,500 for those with 20 or more years of service.

To qualify for the maximum base bonus, the employee must have been paid for at least 1,000 hours in the six-month period preceding April 1 and October 1. Bonuses are prorated for those paid for less than 1,000 hours; the formula for the base bonus is thus: hours paid up to 1,000 ÷ 1,000 × maximum bonus amount.

(Slip op., at pp. 1-2, footnote omitted.)  The Court then explained how the parties calculated overtime owed to certain employees:

“Defendant calculated the overtime owed on the bonus by dividing the employee’s maximum base bonus by the minimum number of paid hours required to achieve that maximum bonus (1,000) to determine a regular hourly bonus rate, and then by multiplying the number of overtime hours worked during the bonus period by one-half of that regular bonus rate. Plaintiffs contend that defendant was required to calculate the regular bonus rate by dividing the base bonus the employee earned by the number of straight time hours worked during the bonus period, and then multiply the number of overtime hours by 1.5 times that regular bonus rate.

For example, under defendant’s formula, an employee who achieves a maximum base bonus of $2,500 by virtue of being paid for 840 straight time hours, 100 overtime hours, and 100 vacation hours during the bonus period is entitled to $125 of overtime pay on the bonus, calculated as follows: $2,500 (maximum base bonus) ÷ 1,000 (paid hours required for maximum base bonus) = $2.50 (regular hourly bonus rate) × 100 (overtime hours) × 0.5 = $125. Under plaintiffs’ formula, the same employee would receive $477 overtime on the bonus: $2,500 (base bonus earned) ÷ 840 (straight time hours worked) = $2.98 (regular bonus rate) × 100 (overtime hours) × 1.5 = $447.

(Slip op., at pp. 3-4.)

Turning to the opinion's analysis, the Court examined Skyline Homes, Inc v. Department of Industrial Relations (1985) 165 Cal.App.3d 239, Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557 and the "Division of Labor Standards Enforcement’s (DLSE) 2002 Enforcement Policies and Interpretations Manual (Manual) distinguishing 'flat sum' bonuses (Manual § 49.2.4.2) from bonuses 'based on a percentage of production or some formula other than a flat amount' (Manual § 49.2.4)" in its search for a framework in which to evaluate Costco's plan. The Court concluded that no source of controlling law specified a formula for calculating overtime on the nondiscretionary bonuses issued by Costco:

“In sum, no California court decision, statute, or regulation governs bonus overtime, the DLSE Manual sections on the subject do not have the force of law, and the DLSE advice letters on the subject are not on point. Consequently, defendant’s bonus plan cannot be deemed to violate California law. While this conclusion is dispositive of plaintiffs’ state law claims, we proceed to explain why in practical effect defendant’s bonus plan comports with the rationales for the pertinent sections of the Manual.

(Slip op., at p. 13.)  The primary reason that Costco's bonus plan caused any difficulty is that it operates as a hybrid of a "production" bonus and a "flat amount" bonus when employees work more than 1,000 hours in the six-month period used to calculate the bonus: "Defendant’s bonus does not fit neatly into either of the categories the DLSE has posited: bonuses for a “flat sum, such as $300 for continuing to the end of the season, or $5.00 for each day worked” (Manual § 49.2.4.2) and bonuses earned each payday “based on a percentage of production or some formula other than a flat amount” (Manual § 49.2.4)." (Slip op., at p. 13.).

After examining the public policies surrounding overtime premiums, and the various incentives created by overtime premiums, the Court concluded that Costco's plan did not run afoul of those concerns in a way that required a court to declare Costco's plan unlawful:  "To recapitulate, defendant’s bonus is in the nature of a production bonus until the 1,000 paid hour threshold is reached, and while the bonus has some qualities of a flat sum bonus on hours paid thereafter, it does not encourage imposition of overtime during the post-1,000 hour period in a way that would support the use of the DLSE’s flat sum bonus formula even as to overtime worked during that period." (Slip op., at p. 17.)

Of note, the Court of Appeal concluded that section 49.2.4.2 of the DLSE's Manual governing "flat sum" bonuses is a void regulation under Tidewater, because it was not  "'a standard of general application interpreting the law the DLSE enforce[s],' and 'not merely a restatement of prior agency decisions or advice letters.'" (Slip op., at p. 12.)

Of further note, the appellate counsel on both sides of this appeal were highly qualified, so I assume that they provided the Court of Appeal with high-quality policy arguments in a case of first impression where even suggestive authority is sparse.

Other blogs noting the decision include What's New in Employment Law.

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Petition for Review denied in Johnson v. Glaxosmithkline, Inc.

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Greatsealcal100This blog briefly reported on a new opinion in Johnson v. Glaxosmithkline, Inc. (September 19, 2008). You can read that post here. A Petition for Rehearing was filed on October 7, 2008. It was denied the day it was filed. On October 14, 2008, the Court of Appeal modified its opinion, without changing the judgment. In a later post, I guessed (not a stretch) that a Petition for Review was coming. The expected Petition was filed with the Supreme Court.  Today, the Supreme Court denied the Petition as part of its weekly conference.

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Cohn v. Corinthian Colleges, Inc., et al. suggests developing statutory construction trend in Fourth Appellate District, Division Three

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Greatsealcal100Statistically speaking, it is difficult to ascribe trends to any particular Court of Appeal on the basis of just a few opinions on a given topic. That said, one Appellate District in particular appears, at minimum, to be skeptical of the validity of class actions predicted upon statutory violations. In Cohn v. Corinthian Colleges, Inc. (pub. order December 19, 2008), the Court of Appeal (Fourth Appellate District, Division Three) affirmed a summary judgment granted in favor of various defendants, including Angels Baseball LP, in a case in which a Mother's Day tote bag giveaway to mothers was alleged to have violated the Unruh Civil Rights Act (Civ. Code, §§ 51, 52.).

In describing the nature of the appeal, the Court left little doubt about the nature of the opinion to follow:

“As we will explain, the Unruh Act protects against intentional discrimination that is unreasonable, arbitrary, or invidious. This important piece of legislation provides a safeguard against the many real harms that so often accompany discrimination. For this reason, it is imperative we not denigrate its power and efficacy by applying it to manufactured injuries such as those alleged by the plaintiff in this case.

(Slip op., at p. 2.)  The Court later suggest that the outcome was appropriate in light of the plaintiff's prior litigation activities:

“Cohn’s complaint gathers further suspicion because Cohn, his friends, and his counsel have been involved in numerous of what have been characterized as “‘shake down’” lawsuits. (E.g., Angelucci v. Century Supper Club (2007) 41 Cal.4th 160, 178.) They proclaim themselves equal rights activists, yet repeatedly attempted to glean money from the Angels through the threat of suit. The Unruh Act is a valuable tool for protecting our citizens and remedying true injuries. We are not convinced the Angels’ tote bag giveaway was in anyway unreasonable, arbitrary, or invidious discrimination.

(Slip op., at p. 6.)  However, if the Court was satisfied that the claim was so lacking in merit that summary judgment was the appropriate means of disposition, the need for the discussion about Cohn's motiviation seems unclear.  In fact, it weakens the Court's analysis by suggesting that the hinted inequity is a necessary supporting factor in the decision.  Presumably, the outcome would have been the same for a first-time litigant with no known associations with activists.

This decision could be viewed in isolation, as a fact-driven outcome.  However, there are some legitimate indications that this Division's construction of statutory rights favors a strict construction that tends to limit claims.  For example, in Starbucks v. Superior Court (Lords) (December 10, 2008) the District reversed an Order certifying a class action and denying summary judgment, holding that plaintiff job applicants lacked standing to sue and obtain penalties under a statutory scheme precluding inquiry into certain drug convictions.  (Full disclosure - I assisted with some of the appellate briefing in that matter)   There was no language in the statutory scheme suggesting that the legislature sought to limit standing only to convicted job applicants, as opposed to all job applicants.  Nevertheless, the Court limited the parties entitled to enforce a statutory mandate by the legislature.

And in McCoy v. Superior Court (Kimco) (2007) 157 Cal.App.4th 225 (review denied), the Third Division disregarded a discussion in Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094 when it held that Labor Code § 203 waiting time penalties are governed by a one-year statute of limitation.

At least circumstantially, it appears that the Third Division is not inclined to view statutory protection schemes as strict liability standards entitled to uniform enforcement.

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For the moment, California law is clear: no punitive damages for violations of labor code provisions regulating breaks

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Greatsealcal100Whether punitive damages are available for violations of various labor code provisions has been something of an open question in California. You may recall, for instance, that a jury found against Wal-Mart in the matter of Savaglio v. Wal-Mart, awarding $172 million to the class members, including $115 million in punitive damages.  In that particular case, after Wal-Mart argued that punitive damages amounted to a penalty on a penalty, Judge Ronald Sabraw rejected the argument that meal and rest break premiums were penalties.  That particular finding was later confirmed as the correct interpretation in Murphy v. Kenneth Cole (2007) 40 Cal.4th 1094.  In any case, without clear guidance on the question, it has seemed prudent to at least request punitive damages for such violations and let a Court say that they weren't recoverable.

Yesterday, however, a Court of Appeal approached this issue from a different perspective.  In Brewer v. Premier Golf Properties (December 3, 2008) the Court of Appeal (Fourth Appellate Distirct, Division One) reviewed, among other things, whether a punitive damage award for violation of various Labor Code sections was valid.  The Brewer Court concluded that punitive damages are not available for several violations of the Labor Code: 

“We are convinced, both by application of the "new right-exclusive remedy" doctrine and under more general principles that bar punitive damages awards absent breach of an obligation not arising from contract, punitive damages are not recoverable when liability is premised solely on the employer's violation of the Labor Code statutes that regulate meal and rest breaks, pay stubs, and minimum wage laws.

(Slip op., at pp. 10-11.)  The Brewer case was an individual action, but it is covered here because of the significant impact on many wage & hour class actions.  If you are curious about the "new right-exclusive remedy" doctrine, take a look at Rojo v. Kliger (1990) 52 Cal.3d 65.

It is worth noting that Savaglio remains on appeal and may ultimately affect this area of law.  However, Savaglio has been stayed pending the outcome in Brinker, so it will be several years before that case moves forward.

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