Kim v. Regents of University of California

• Decision Date: 27 March 2000
• Docket Number: No. A087430.,A087430.
• Citation: 95 Cal.Rptr.2d 10,80 Cal.App.4th 160
• Court: California Court of Appeals Court of Appeals
• Parties: Jo KIM, Plaintiff and Appellant, v. The REGENTS OF the UNIVERSITY OF CALIFORNIA, Defendant and Respondent.

95 Cal.Rptr.2d 10

80 Cal.App.4th 160

Jo KIM, Plaintiff and Appellant, v. The REGENTS OF the UNIVERSITY OF CALIFORNIA, Defendant and Respondent.

No. A087430.

Court of Appeal, First District, Division 4.

March 27, 2000.

Dave Linn, Berkeley, for Appellant.

Gordon & Rees, LLP, Michael T. Lucey, Greta W. Schnetzler, Diane R. Crowley, San Francisco, for Respondent.

REARDON, J.

This appeal comes to us from a judgment of dismissal following the sustaining of a demurrer without leave to amend on a third amended complaint for "wrongful termination and failure to pay overtime." We affirm the judgment.

I. BACKGROUND

Under the established rule that we treat the demurrer as admitting all material facts properly pled but do not assume the truth of contentions, deductions or legal conclusions (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967, 9 Cal. Rptr.2d 92, 831 P.2d 317), appellant Jo Kim's third amended complaint reveals the following: Kim was employed by respondent the Regents of the University of California (hereafter, Regents or University), a public entity organized pursuant to the California Constitution, beginning November 1970. She agreed to work 40 hours a week with her best efforts in clerical, secretarial and administrative tasks for a specified rate of compensation. Her employment agreement provided "time and a half payment for hours worked above 40 in any week, pursuant to state and federal law.

From 1981 onward, terms of employment were subject to collective bargaining agreements between the Regents and her union. Those agreements also provided for "time and a half compensation above 40 hours.

Kim's performance was generally exemplary and she was promoted to principal clerk and eventually to administrative assistant. In late 1995 Charles Hill, as agent for Regents, "enticed" Kim to transfer laterally to the University Extension office. Hill promised that she would be "adequately trained" for the position, which Kim described as one of high responsibility. The position, budgeted for a 40-hour week, involved administering a 4-month certificate program for international students.

Kim agreed to the transfer but received no training. As a result of this lack of training, Kim was "forced" to work an average of 14 hours per day to adequately perform her duties. By working late hours, she was able to complete every assignment.

Kim was terminated on September 10, 1996. Regents gave two reasons for the termination: (1) she worked late hours, which caused the janitor to complain; and (2) the instructors in the department complained she was not completing her work. Kim alleged the latter reason was a sham because when she questioned the instructors, they denied complaining and affirmed she was doing a good job.

Kim "was replaced by two fulltime equivalent positions." (Original italics.) The new hires were "well under" 40 years old; Kim was "well over 40 years old, and under 65."

Kim also alleged she was "compelled to work approximately 500 hours of overtime" for which she has not been compensated. She earned $9,406 for overtime, but was only paid $3,467, with $5,939 unpaid. Kim asserts that the Regents were required to pay overtime under her employment agreement, the collective bargaining agreements, rulings of the state Industrial Welfare Commission (IWC) and the federal Fair Labor Standards Act of 1938 (FLSA) (29 U.S.C. § 201 et seq.).

Kim sued the Regents in September 1998. She did not have an attorney. Her first amended complaint, filed that December, was also prepared without assistance of counsel. However, thereafter she retained counsel; he appeared to oppose the Regents' demurrer.

The court permitted Kim to file two additional amended pleadings, culminating in the third amended complaint wherein she purported to allege causes of action for (1) breach of covenant of good faith and fair dealing; (2) violation of Labor Code section 1194; and (3) violation of Government Code section 12941 (age discrimination). This time the court sustained the Regents' demurrer to the third amended complaint without leave to amend and dismissed the action. The court concluded that Kim failed to plead the existence of a contract; failed to state a claim under Labor Code section 1194; and that her age discrimination claim was barred by the statute of limitations.

II. DISCUSSION

A. Kim Cannot State a Claim for Breach of the Implied Covenant

Kim has alleged that "the parties entered into a contract of employment. This contract was both written and oral, and contained provisions implied in fact and in law. The contract was accretive in nature, and changed in its essential terms over the years." The Regents demurred to the first cause of action on grounds that employees of the University of California hold their employment by statute, not contract.

The covenant of good faith and fair dealing arises out of the contract itself. It is read into contracts to protect the express contractual promises of the contract, rather than to protect a general public policy interest not directly tied to the contract's purposes. (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 690, 254 Cal.Rptr. 211, 765 P.2d 373 (Foley).) Since the good faith covenant is an implied term of a contract, the existence of a contractual relationship is thus a prerequisite for any action for breach of the covenant. (Smith v. City and County of San Francisco (1990) 225 Cal.App.3d 38, 49, 275 Cal.Rptr. 17 [appellants could not state cause of action for breach of implied covenant because they were in relationship of real estate developer to government land use regulators, not in contractual relationship].)

In California public employment is held not by contract, but by statute. (Miller v. State of California (1977) 18 Cal.3d 808, 813, 135 Cal.Rptr. 386, 557 P.2d 970 (Miller).) Relying on Miller, our Supreme Court has made it clear that civil service employees cannot state a cause of action for breach of contract or breach of the implied covenant of good faith and fair dealing. (Shoemaker v. Myers (1990) 52 Cal.3d 1, 23-24, 276 Cal.Rptr. 303, 801 P.2d 1054.) This same general principle of law applies to civil service and noncivil service public employees alike. (Hill v. City of Long Beach (1995) 33 Cal.App.4th 1684, 1690, 40 Cal.Rptr.2d 125 (Hill).)

In Hill, supra, 33 Cal.App.4th 1684, 40 Cal.Rptr.2d 125, a city employee who lost his management position went to trial and won on his breach of the implied covenant cause of action. Vacating this judgment, the reviewing court held that the terms of Hill's employment were established by law, not contract (id. at p. 1692, 40 Cal. Rptr.2d 125), and "[t]hus as a matter of law, [he] was not entitled to contract remedies against the City for his removal from the position of managing director. His remedies, if any, were confined to those provided by statute or ordinance." (Id. at p. 1690, 40 Cal.Rptr.2d 125.)

The University is a statewide administrative agency with constitutionally derived powers. (Cal. Const., art. IX, § 9, subd. (a); Regents of University of California v. City of Santa Monica (1978) 77 Cal.App.3d 130, 135, 143 Cal.Rptr. 276 (Santa Monica).) Its employees are public employees. (See Ishimatsu v. Regents of University of California (1968) 266 Cal. App.2d 854, 860-861, 72 Cal.Rptr. 756.) The University is administered by the Regents. (Cal. Const., art. IX, § 9, subd. (a).) Regents have rulemaking and policy-making power in regard to the University; their policies and procedures have the force and effect of statute. (Santa Monica, supra, 77 Cal.App.3d at p. 135, 143 Cal.Rptr. 276.)

Miller and Hill apply. Kim cannot state a cause of action against the Regents for breach of contract or breach of the implied covenant.

Interestingly, Kim does not mention Hill in her briefs. Rather, she relies first on Read v. City of Lynwood (1985) 173 Cal.App.3d 437, 219 Cal.Rptr. 26, wherein a city employee fired under procedures contrary to a city ordinance was permitted to sue for the tort of wrongful discharge. (Id. at pp. 443-445, 219 Cal.Rptr. 26.) Reed did not discuss any right the employee might have to sue for contractual breach of the implied covenant.

Appellant also cites Mouchette v. Board of Education (1990) 217 Cal.App.3d 303, 266 Cal.Rptr. 1. Again the employee's claim was for tortious breach of the implied covenant of good faith and fair dealing. The discussion in Mouchette focussed on the impact of Foley on this cause of action. With no inquiry into the public employment issue, the court rejected the argument that plaintiffs tort claim should be dismissed, noting that Foley permitted contractual remedies for breach of the covenant, and substantial evidence supported tort damages on another theory. (Id. at p. 315, 266 Cal.Rptr. 1.)

B. Kim Cannot State a Claim for Overtime Pay Under Labor Code Section 1194

Kim also asserts contractual and statutory rights to overtime payment. As to her contractual assertions, Miller and Hill are dispositive. As to statutory rights, she maintains entitlement to overtime under rulings of the state IWC and the federal FLSA, through the vehicle of Labor Code section 1194.¹ Neither claim has merit.

1. State Claim

It is the duty of the IWC to set minimum wages and maximum hours. (Lab. Code, §§ 1173, 1185; see Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690, 697-698, 166 Cal.Rptr. 331, 613 P.2d 579.) The wage order pertinent to Kim's occupation² specifically states that its provisions "shall not apply to employees directly employed by the State or any county, incorporated city or town or other municipal corporation...." (Cal.Code Regs., tit. 8, § 11040, subd. 1(B).) As well, the wage order's overtime provisions do not apply to "persons employed in administrative, executive, or professional capacities." (Id. at § 11040, subd. 1(A).)

Kim argues that although she was a public employee, she was not employed directly by the state, citing article...