Amalgamated Transit Union v. Superior Court

• Decision Date: 29 June 2009
• Docket Number: No. S151615.,S151615.
• Citation: 95 Cal.Rptr.3d 605,209 P.3d 937,46 Cal. 4th 993
• Court: California Supreme Court
• Parties: AMALGAMATED TRANSIT UNION, LOCAL 1756, AFL-CIO et al., Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent; First Transit, Inc., et al., Real Parties in Interest.

209 P.3d 937

95 Cal.Rptr.3d 605

46 Cal. 4th 993

AMALGAMATED TRANSIT UNION, LOCAL 1756, AFL-CIO et al., Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent;

First Transit, Inc., et al., Real Parties in Interest.

No. S151615.

Supreme Court of California.

June 29, 2009.

Neyhart, Anderson, Flynn & Grosboll, John L. Anderson, Scott M. De Nardo and Benjamin K. Lunch, San Francisco, for Petitioners.

Davis, Cowell & Bowe, John J. Davis, Jr., and Paul L. More, San Francisco, for Heat and Frost Insulators Local 16, Plumbers and Steamfitters Local 159, Plumbers and Steamfitters Local 393 and Plasterers Local 200 as Amici Curiae on behalf of Petitioners.

Neighborhood Legal Services of Los Angeles County, David Pallack, Pacoima, José Tello, Linda Fang, Pasadena; National Employment Law Center, Laura Moskowitz, Washington, DC; Legal Aid Foundation of Los Angeles, Anel Flores; Asian Pacific American Legal Center, Yungsuhn Park; Legal Aid Society-Employment Law Center, Matthew Goldberg, San Francisco; The Worksafe Law Center, Danielle Lucido; The Watsonville Law Center and Dori Rose Inda, for Garment Worker Center, Inquilinos Unidos, Maintenance Cooperation Trust Fund, Yamin Yan and Yao Zhang as Amici Curiae on behalf of Petitioners.

California Rural Legal Assistance, Inc., Cynthia L. Rice, Santa Rosa, Blanca Bañuelos, Stockton, Michael L. Meuter, Salinas, and Julie Montgomery, for Jose Arias and California Rural Legal Assistance Foundation as Amici Curiae on behalf of Petitioners.

Altshuler Berzon, Scott A. Kronland and Barbara J. Chisholm, San Francisco, for American Federation of Labor and Congress of Industrial Organizations, International Brotherhood of Teamsters, Laborers International Union of North America, Service Employees International Union, United Brotherhood of Carpenters, United Food and Commercial Workers International Union and Unite Here as Amici Curiae on behalf of Petitioners.

No appearance for Respondent.

McMahon Berger, James N. Foster, Jr., Michelle M. Cain, St. Louis, MO; Kampe & Kampe and K.W. Kampe, III, for Real Party in Interest First Transit, Inc.

Gleason & Favarote, Paul M. Gleason, Torey J. Favarote and Richard Y. Chen, Los Angeles, for Real Party in Interest ATC/Vancom, Inc.

Fulbright & Jaworski, Marcus Torrano, Los Angeles, Rachel Salvin; Jenkens & Gilchrist, Margaret Rosenthal and Sabrina L. Shadi, Los Angeles, for Real Parties in Interest Progressive Transportation Services, Inc., and Coach USA Transit Service.

Littler Mendelson, Theodore R. Scott and Tami Falkenstein-Hennick, San Diego, for Real Party in Interest Laidlaw Transit Services, Inc.

O'Melveny & Myers, Scott H. Dunham, Los Angeles, Ryan W. Rutledge, Newport Beach; Law Offices of Steven Drapkin, Steven Drapkin, Los Angeles, National Chamber Litigation Center, Inc., and Robin S. Conrad, Washington, DC, for Employers Group, California Employment Law Council, Chamber of Commerce of the United States of America and California Chamber of Commerce as Amici Curiae on behalf of Real Parties in Interest.

Deborah J. La Fetra, Timothy Sandefur, Sacramento, and Elizabeth A. Yi, for Pacific Legal Foundation as Amicus Curiae on behalf of Real Parties in Interest.

KENNARD, J.

At issue here are two state laws. One is the unfair competition law, which allows a private party to bring an unfair competition action on behalf of others (Bus. & Prof.Code, § 17203), but only if the person "has suffered injury in fact and has lost money or property as a result of the unfair competition." (Id. § 17204.) The other law is the Labor Code Private Attorneys General Act of 2004, which provides that an "aggrieved employee" may bring an action to recover civil penalties for violations of the Labor Code "on behalf of himself or herself and other current or former employees...." (Lab.Code, § 2699, subd. (a).)

This case presents two issues. First, may a plaintiff labor union that has not suffered actual injury under the unfair competition law, and that is not an "aggrieved employee" under the Labor Code Private Attorney General Act of 2004, nevertheless bring a representative action under those laws (1) as the assignee of employees who have suffered an actual injury and who are aggrieved employees, or (2) as an association whose members have suffered actual injury and are aggrieved employees? The answer is "no." Second, must a representative action under the unfair competition law be brought as a class action? The answer is "yes," for the reasons stated in the companion case of Arias v. Superior Court (2009) ___ Cal.4th ___, 95 Cal.Rptr.3d 588, 209 P.3d 928.

I

Seventeen individual plaintiffs and two labor unions—Amalgamated Transit Union, Local 1756, AFL-CIO and Teamsters Joint Council 42, AFL-CIO (plaintiff unions)— brought this action against defendants First Transit, Inc., Progressive Transportation Services, Inc., and Laidlaw Transit Services, Inc.

In the fourth amended complaint plaintiff unions alleged: (1) they are the representatives of defendants' employees; (2) this action is brought on behalf of themselves and "all aggrieved transportation industry employees and former employees employed by" defendants; and (3) over 150 employees and former employees of defendants have assigned to plaintiff unions their rights under the unfair competition law and the Labor Code Private Attorney General Act of 2004, "including the right to sue in a representative capacity." With respect to the individual plaintiffs, they allege they are bringing this action on behalf of themselves as well as on behalf of current and former employees of defendants.

The fourth amended complaint further alleged that defendants have violated the unfair competition law, and that defendants are subject to civil penalties under the Labor Code Private Attorneys General Act of 2004 for failing to provide meal or rest periods as required by the Labor Code and by an Industrial Welfare Commission wage order. The complaint sought injunctive relief; restitution of $10,608,000 in unpaid wages; in lieu of unprovided meal and rest periods, 30 days' wages for each employee who was terminated without being paid; $2,626,500 in civil penalties; prejudgment interest; and attorney fees.

The case was assigned to a judge in the complex litigation program of the Los Angeles County Superior Court. The judge held an initial status conference, determined that this case was one of five related actions, and designated this action as the lead case. The parties stipulated to a briefing schedule and to a hearing date on which the trial judge would decide threshold legal issues, such as whether plaintiff unions had standing to sue and whether this representative action must be brought as a class action.

After briefing and oral argument, the trial court ruled: (1) plaintiff unions lack standing under the unfair competition law because they have not suffered actual injury, and they lack standing under the Labor Code Private Attorneys General Act of 2004 because they are not "aggrieved employees"; (2) employee assignments of rights to plaintiff unions did not confer standing on the unions to prosecute the claims in question, as doing so would circumvent the requirements of both the unfair competition law and the act and would render meaningless recent voter-enacted amendments to the unfair competition law; and (3) the unfair competition law claims brought on behalf of others must be brought as a class action.

Plaintiff unions petitioned the Court of Appeal for a writ of mandate and a stay of the trial court's ruling. After issuing a stay and an order to show cause, a divided Court of Appeal panel denied the petition. We granted plaintiff unions' petition for review.

II

We begin with a summary of the relevant aspects of both the unfair competition law and the Labor Code Private Attorney General Act of 2004, the two state laws at issue here.

A. Unfair Competition Law

The unfair competition law prohibits "any unlawful, unfair or fraudulent business act or practice...." (Bus. & Prof.Code, § 17200.) Before 2004, the unfair competition law allowed "any person acting for the interests of itself, its members or the general public" to seek restitution or injunctive relief against unfair acts or practices. (Bus. & Prof.Code, former § 17204, added by Stats.1977, ch. 299, § 1, p. 1202.) Thus, under the former law a plaintiff did not have to show any actual injury, and a representative action brought under the unfair competition law did not have to be brought as a class action. (Former §§ 17203, 17204; Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 126, fn. 10, 96 Cal.Rptr.2d 485, 999 P.2d 718; Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 561, 71 Cal. Rptr.2d 731, 950 P.2d 1086; see Corbett v. Superior Court (2002) 101 Cal.App.4th 649, 680-681, 125 Cal.Rptr.2d 46.)

But that changed in 2004, when voters, exercising their constitutionally granted power of initiative, enacted Proposition 64. In the preamble to that measure the voters declared that the broad standing permitted by the unfair competition law had been abused. (See Californians for Disability Rights v. Mervyn's, LLC (2006) 39 Cal.4th 223, 228, 46 Cal.Rptr.3d 57, 138 P.3d 207.) Proposition 64 amended the unfair competition law to allow private representative claims for relief to be brought only by those persons who satisfied the law's new standing requirements and who complied with Code of Civil Procedure section 382.¹ (Bus. & Prof.Code, § 17203.) The law now requires that a representative claim, that is, a claim seeking relief on behalf of others (id., § 17203), may be brought only by a "person who has suffered injury in fact and has lost money or property as a result of the unfair competition" (id., § 17204).² This replaced the former standing provision which had allowed an unfair competition law action to be brought "by any person acting for the interests of itself, its members or the...