ZB, N.A., et al. v. Superior Court (Lawson) holds that "wages" are not recoverable as a PAGA penalty through Labor Code section 558


So, it turns out that the answer to my question is GOAT, not goat (he says with tongue planted firmly in cheek). ZB, N.A., et al. v. Superior Court (Lawson) (September 12, 2019) was issued this morning, and, unsurprisingly I think, the Supreme Court dropped an off speed pitch over the plate and froze everybody. You could see the windup with the italics added by the Court to this passage:

Before the enactment of the PAGA, section 558 gave the Labor Commissioner authority to issue overtime violation citations for “a civil penalty as follows: [¶] (1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages. [¶] (2) For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.” (Id., subd. (a), italics added.)

Slip op, at 1-2. See that? It’s the tell for what’s coming:

What we conclude is that the civil penalties a plaintiff may seek under section 558 through the PAGA do not include the “amount sufficient to recover underpaid wages.” Although section 558 authorizes the Labor Commissioner to recover such an amount, this amount –– understood in context –– is not a civil penalty that a private citizen has authority to collect through the PAGA. ZB’s motion concerned solely that impermissible request for relief. Because the amount for unpaid wages is not recoverable under the PAGA, and section 558 does not otherwise permit a private right of action, the trial court should have denied the motion. We affirm the Court of Appeal’s decision on that ground. On remand, the trial court may consider striking the unpaid wages allegations from Lawson’s complaint, permitting her to amend the complaint, and other measures.

Slip op., at 2-3. So that’s it then.

There is, of course, a bit more, given that the Opinion is 30 pages long, but after the procedural history, the balance of the discussion is a detailed example of statutory construction. For instance, the Court finds that the wages referred to in Section 558 must be treated as a compensatory wage, else the provision would be internally inconsistent with Section 1197.1. Read it, if for no other reason than to see the thoroughness with which a sentence can be parsed, and persuasively I might add.

The Court was unanimous in its decision.

It isn’t entirely clear who you would call the “winner” here, given the disconnect between affirming the Court of Appeal and the practical result, but James L. Morris, Brian C. Sinclair and Gerard M. Mooney, of Rutan & Tucker, represented the Petitioners, who no longer have to deal with the potential for an award of unpaid wages as part of Section 558 penalties under PAGA.

ZB, N.A., et al. v. Superior Court (Lawson) will issue tomorrow


Another question that had divided courts will be decided tomorrow, when the California Supreme Court releases ZB, N.A., et al. v. Superior Court (Lawson). The question under review is whether a representative action under the Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) seeking recovery of individualized lost wages as civil penalties under Labor Code section 558 falls within the preemptive scope of the Federal Arbitration Act. That’s the stated issue. After the supplemental issue briefing, however, I’m putting my chips on the long-shot square and betting that everyone has been wrong. My Karnak the Magnificent prediction is that the Court will say that the “wages” mentioned in Section 558 cannot be recovered under PAGA because PAGA authorizes the recovery of “penalties” where a penalty amount is stated (or a catch-all penalty where no amount is specified) but not every type of relief otherwise available to the Labor Commissioner. Remember that Section 558 also includes true penalties of $50/$100 for initial and subsequent violations. There’s my guess. GOAT or goat, we’ll see tomorrow.