The Court of Appeal (First Appellate District, Division Three) was presented with more than the usual mouthful of major legal issues in Amaral v. Cintas (June 11, 2008) ___ Cal.Rptr.3d ___.  The case addresses issues of constitutionality of a living wage ordinance, class action issues, wage & hour issues, unfair competition claims, interest calculations, and attorney fee multipliers in class actions...to name a few.  The introduction to the case provides an excellent preview for what lies below:

“These appeals concern the constitutionality and application of a living wage ordinance enacted by the City of Hayward (City) and incorporated into its municipal contracts.  Although Cintas  entered into such contracts with the City, it did not provide the minimum wages or benefits required by the ordinance to employees who worked in the company’s stockroom or laundry production facilities, which are located outside of Hayward.  Plaintiffs, representing a class of such employees, sued Cintas for violations of the living wage ordinance, Labor Code section 200 et seq., Business and Professions Code section 17200 and breach of contract.  The trial court rejected Cintas’s challenges to the constitutionality of the ordinance and, on cross-motions for summary judgment or summary adjudication, found that Cintas violated the ordinance, breached its contracts with the City, and violated several Labor Code provisions as well as Business and Professions Code section 17200.  The court awarded back wages and unpaid benefits, imposed penalties for the Labor Code violations pursuant to the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.), and awarded plaintiffs statutory attorneys’ fees and costs.  Cintas challenges nearly every aspect of these rulings on appeal.  In separate cross-appeals, plaintiffs dispute the trial court’s finding that Cintas’s conduct was not “willful,” challenge the court’s calculation of penalties, and claim they are entitled to recover additional costs.

(Slip op., at pp. 1-2.)

This case is worth several posts, but one item in particular, the analysis of retroactivity of the Labor Code Private Attorneys General Act (PAGA), is worth a first mention.  Analyzing whether PAGA applied retroactively, the Court first noted that PAGA did not increase Cintas's liability, since the Labor Commissioner could have recovered the same penalties previously.  Continuing, the Court said:

“It does not matter that Cintas’s wrongful conduct occurred before PAGA was enacted because the legal consequences of this conduct remained the same.  “A statute is retroactive if it substantially changes the legal effect of past events.  [Citations.]  A statute does not operate retroactively merely because some of the facts or conditions upon which its application depends came into existence prior to its enactment.  [Citations.]”  (Kizer v. Hanna (1989) 48 Cal.3d 1, 7-8.)  Nor does it matter that Cintas may have expected to be held accountable for penalties to the Labor Commissioner instead of to plaintiff class members.  “A statute does not operate ‘retrospectively’ merely because it is applied in a case arising from conduct antedating the statute’s enactment [citation] or upsets expectations based in prior law.  Rather, the court must ask whether the new provision attaches new legal consequences to events completed before its enactment.”  (Landgraf v. USI Film Products, supra, 511 U.S. at pp. 269-270, fn. omitted.)  Because PAGA did not increase Cintas’s liability for Labor Code penalties, its application in this case was not retroactive.  (See Myers v. Philip Morris Companies, Inc., supra, 28 Cal.4th at p. 839 [defining a retroactive statute as one that operates to increase a party’s liability for past conduct].)

(Slip op., at p. 36.)

Brace yourselves for the PAGA explosion...