Dunlap v. Superior Court

• Decision Date: 27 July 2006
• Docket Number: No. B185247.,B185247.
• Citation: 142 Cal.App.4th 330,47 Cal.Rptr.3d 614
• Court: California Court of Appeals Court of Appeals
• Parties: Omar DUNLAP, Petitioner, v. SUPERIOR COURT of Los Angeles County, Respondent; Bank of America, N.A., Real Party in Interest.

47 Cal.Rptr.3d 614

142 Cal.App.4th 330

Omar DUNLAP, Petitioner, v. SUPERIOR COURT of Los Angeles County, Respondent;

Bank of America, N.A., Real Party in Interest.

No. B185247.

Court of Appeal, Second District, Division 3.

July 27, 2006.

Initiative Legal Group, Mark Yablonovich, Marc Primo, Los Angeles, and Shawn Westrick, for Petitioner.

No appearance for Respondent.

Paul, Hastings, Janofsky & Walker, M. Kirby C. Wilcox, San Francisco, Stephen P. Sonnenberg, Los Angeles, and Christopher M. Bissonnette, for Real Party in Interest.

KLEIN, P.J.

Plaintiff Omar Dunlap, a former employee of defendant Bank of America, N.A. ("Bank"), seeks a writ of mandate directing the trial court to vacate its order granting the Bank's motion to strike certain portions of Dunlap's first amended class action complaint and to enter an order denying the motion to strike.

The essential issue presented is whether the trial court properly struck Dunlap's claims for statutory penalties on the ground he failed to exhaust his administrative remedies in accordance with the Labor Code Private Attorneys General Act of 2004 (PAG Act) (Lab.Code, § 2698 et seq.).¹

Dunlap's second through fifth causes of action, which are at issue herein, did not seek any penalties which previously 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 PAG Act. Therefore, Dunlap was not required to comply with the PAG Act's administrative prerequisites to filing suit before pursuing statutory penalties in said causes of action.

Accordingly, the trial court erred in granting the motion to strike. We grant the relief requested.

FACTUAL AND PROCEDURAL BACKGROUND

On March 14, 2005, Dunlap filed the operative first amended proposed class action complaint individually and on behalf of current and former Bank employees as well as the general public. The complaint, which seeks damages as well as statutory penalties for various alleged Labor Code violations, pleads the following causes of action: (1) violation of sections 510 and 1198 [overtime compensation]; (2) violation of section 226, subdivision (a) [record keeping requirements]; (3) violation of sections 201 and 202 [immediate payment of wages upon discharge, layoff or resignation]; (4) violation of section 204 [duty to pay wages semimonthly]; (5) violation of sections 226.7, subdivision (a) and 512, subdivision (a) [mandated meal or rest periods]; (6) conversion and theft of labor; and (7) violation of Business and Professions Code section 17200 [unlawful business acts and practices].

By way of relief, Dunlap sought, inter alia, damages, statutory penalties pursuant to various Labor Code sections, prejudgment interest, costs and attorney fees. Dunlap also requested the matter be certified as a class action.²

Bank filed a motion to strike certain portions of the complaint as irrelevant, false and/or improper (Code Civ. Proc., § 435 et seq.) on the ground Dunlap had failed to exhaust his administrative remedies on his claims for statutory penalties pursuant to the PAG Act (§ 2698 et seq.) as amended in August 2004. (§§ 2699, 2699.3, 2699.5.) The motion to strike was directed at specific language in the complaint relating to Dunlap's claims for statutory penalties.

Bank contended the trial court lacked jurisdiction over Dunlap's claims for Labor Code penalties in counts two through five because he failed to exhaust his administrative remedies; the PAG Act amendments which took effect in August 2004 require that all claims for statutory penalties be administratively exhausted before a civil suit may be filed; and the exhaustion requirement applies to the Labor Code penalties sought in Dunlap's complaint.

In opposition, Dunlap argued the exhaustion requirements of the PAG Act do not apply to lawsuits brought directly under section 218, extant since 1937. The PAG Act, at section 2699.5, enumerates the Labor Code sections which are subject to the exhaustion requirement and section 218 is absent from that list. Had the Legislature intended for the PAG Act to apply to actions brought pursuant to section 218, it would have included section 218 among the statutes set forth in section 2699.5.

In reply, Bank asserted Dunlap had a right of private action under section 218 (which pertains only to "this article", i.e. sections 200 to 243), but prior to seeking statutory penalties for substantive violations under that article, a plaintiff must follow the administrative exhaustion procedures outlined in section 2699.3.

On June 22, 2005, the matter was heard and the trial court granted the motion to strike. The trial court concurred in the Bank's argument that Dunlap's interpretation "would make [section] 2699 effectively meaningless. No private litigant would ever bring an action under [section] 2699.[¶] ... [¶] They would always explain [section] 218 was ... the tool they were using."

The formal order struck various penalty allegations from the complaint "upon the grounds that [Dunlap] failed to exhaust his administrative remedies on his claims for statutory penalties under the California Labor Code as required by [the PAG Act]."

On August 19, 2005, Dunlap filed the instant petition for writ of mandate, seeking the issuance of a writ directing the trial court to vacate its order granting the motion to strike and to enter a new order denying the motion. This court issued an order to show cause.

CONTENTIONS

Dunlap contends the PAG Act's exhaustion of administrative remedies requirement does not apply to a plaintiff who is not bringing an action or seeking penalties under the PAG Act. He contends he is entitled to sue directly under section 218 for the broad relief that he is seeking on behalf of himself and others, and that such action is not subject to the PAG Act's exhaustion requirement.

DISCUSSION

1. Overview of section 200 et seq.

Labor Code Division 2, Part 1, Chapter 1, Article 1 (hereafter Article 1), consisting of sections 200 through 243, pertains to payment of wages. Article 1 was enacted in 1937 (Stats.1937, ch. 90), has been amended repeatedly over the years and remains extant.

The relevant substantive provisions of Article 1, as pled in the complaint, are section 226, subdivision (a) (second cause of action), sections 201, 202 and 203 (third cause of action), section 204 (fourth cause of action) and section 226.7, subdivision (a) (fifth cause of action).

Section 226, subdivision (a), imposes various record-keeping requirements with respect to wages, hours, deductions and the like. Section 226, at subdivision (e), authorizes an aggregate penalty not exceeding $4,000 for violation of subdivision (a) of said statute.

Sections 201 and 202, respectively, require immediate payment of wages upon discharge or resignation. If an employer willfully fails to pay wages in accordance with sections 201 or 202, section 203 imposes the following penalty: "the wages of the employee shall continue . . . from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days." (§ 203.)

Section 204 provides that with certain exceptions, "[a]ll wages . . . are due and payable twice during each calendar month...."

Section 226.7, subdivision (a), prohibits an employer from requiring an employee to work during any mandated meal or rest period. "If an employer fails to provide an employee a meal period or rest period in accordance with an applicable order of the Industrial Welfare Commission, the employer shall pay the employee one additional hour of pay at the employee's regular rate of compensation for each work day that the meal or rest period is not provided." (§ 226.7, subd. (b).)

With respect to enforcement of Article 1, the statutory scheme provides at section 217: "The Division of Labor Law Enforcement shall inquire diligently for any violations of this article, and, in cases which it deems proper, shall institute the actions for the penalties provided for in this article and shall enforce this article."

Section 218, upon which Dunlap relies, addresses the authority of the district attorney as well as the wage claimant to enforce Article 1. Section 218 provides: "Nothing in this article shall limit the authority of the district attorney of any county or prosecuting attorney of any city to prosecute actions, either civil or criminal, for violations of this article or to enforce the provisions thereof independently and without specific direction of the division. Nothing in this article shall limit the right of any wage claimant to sue directly or through an assignee for any wages or penalty due him under this article." (Italics added.) Thus, section 218 empowered a wage claimant to sue directly to recover any wages or penalties personally due the employee under Article 1.

The issue before us is the relationship of various provisions in Article 1, section 200 et seq., to the recently adopted PAG Act, section 2698 et seq. We now turn to this latest enactment.

2. The PAG Act created an alternative private attorney general system for labor law enforcement.

As explained below, the PAG Act was adopted to empower aggrieved employees, acting as private attorneys general, to seek civil penalties for Labor Code violations, penalties which previously could be assessed only by state agencies.³

The PAG Act does not purport to be the exclusive remedy for addressing Labor Code violations. Section 2699 states in pertinent part at subdivision (g)(1): "Nothing in this part [i.e., the PAG Act] shall operate to limit an employee's right to pursue or recover other remedies available under state or federal law, either separately or concurrently with an action taken under this part." (Italics added.)

a. The PAG Act was adopted to augment the...