Atempa v. Pedrazzani

• Decision Date: 28 September 2018
• Docket Number: D069001
• Citation: 27 Cal.App.5th 809,238 Cal.Rptr.3d 465
• Court: California Court of Appeals Court of Appeals
• Parties: Marco Antonio ATEMPA et al., Plaintiffs and Respondents, v. Paolo PEDRAZZANI, Defendant and Appellant.

27 Cal.App.5th 809

238 Cal.Rptr.3d 465

Marco Antonio ATEMPA et al., Plaintiffs and Respondents,

v.Paolo PEDRAZZANI, Defendant and Appellant.

D069001

Court of Appeal, Fourth District, Division 1, California.

Filed September 28, 2018

Lawton Law Firm, Dan Lawton and Joseph C. Kracht, San Diego, for Defendant and Appellant.

Carl M. Lewis ; Rodolfo Ruiz-Velasco ; and Thomas M. Diachenko, San Diego, for Plaintiffs and Respondents.

IRION, J.

Labor Code section 558,¹ subdivision (a) provides that an employer "or other person acting on behalf of an employer" who violates or causes a violation of the state's applicable overtime laws shall be subject to a civil penalty. Similarly, section 1197.1, subdivision (a) provides that an employer "or other person acting either individually or as an officer, agent, or employee of another person" who pays or causes to pay an employee less than the state's applicable minimum wage shall be subject to a civil penalty. Following a trial, the superior court issued civil penalties against an individual defendant—namely, the corporate employer's owner, president, secretary, and director—as the "other person" who caused violations of these two statutes.

There is no issue on appeal as to the requirements for, or the showing made in support of, the finding that Paola Pedrazzani qualified as a person other than the corporate employer who either violated the overtime pay and minimum wage laws or caused the statutory violations. Rather, on appeal the principal issue is whether, as a matter of substantive law, any individual other than the corporate employer can ever be found liable for the civil penalties associated with statutory violations in the payment of wages to a corporate employee where, as here, there is no allegation or finding that the corporate laws have been misused or abused for a wrongful or inequitable purpose. More specifically, we must determine whether section 558, subdivision (a) ( § 558(a) ), and section 1197.1, subdivision (a) ( § 1197.1(a) ) authorize recovery of the civil penalties for violation of specified overtime pay and minimum wage laws from a person other than the corporate employer that failed to pay the proper wages, where there is no allegation or contention that the alter ego doctrine applies or that there is any other basis on which to pierce the veil of the corporate employer.

As we will explain, the Labor and Workforce Development Agency (LWDA), which includes the Labor Commissioner,² is statutorily authorized to recover the Labor Code's civil penalties at issue in this appeal from the individual officer/agent of the corporate employer. ( §§ 558(a), 1197.1(a).) As we will further explain, the Labor Code Private Attorneys General Act of 2004 (PAGA) ( § 2698 et seq. ) authorizes an aggrieved employee to recover these civil penalties in lieu of the LWDA ( § 2699, subd. (a) ), and Pedrazzani does not argue that the trial court erred by applying this statute to the plaintiffs' claims for the civil penalties here. However, as to the awards of civil penalties under section 558(a), the parties agree that the court did not order the penalties distributed pursuant to the statutory scheme.

We will also conclude that, under the showing here, Pedrazzani did not meet his burden of establishing reversible error in the superior court's awards to plaintiff employees of attorney fees, costs, and postjudgment interest from the individual officer/agent of the corporate employer.

Accordingly, we will modify that portion of the judgment which awards certain civil penalties under section 558(a) and affirm the judgment as modified; and we will affirm a postjudgment order which set the amount of attorney fees for which Pedrazzani is liable.

I.FACTUAL AND PROCEDURAL BACKGROUND³

Defendant Pedrazzani incorporated defendant Pama, Inc. (Pama) in 2002. At all relevant times, Pedrazzani was the owner, president, secretary, and director of Pama, which did business as Via Italia Trattoria (Via Italia), a restaurant in Encinitas. During the time period for which the trial court awarded the civil penalties at issue, Pama employed 71 individuals at Via Italia.

Included among those Pama employees were plaintiffs Marco Antonio Atempa and Keilyn Reyes (together Plaintiffs).⁴ Hired in 2008, Atempa was first a dishwasher and later a cook. Reyes was hired in 2011 as a dishwasher. Plaintiffs both ended their work at Via Italia at different times in mid-2013.

Atempa filed the underlying action against Pama and Pedrazzani in July 2013. In the operative first amended complaint, Reyes joined the action and together with Atempa alleged the following seven employment-based causes of action against Pama: failure to pay overtime wages; failure to pay minimum and regular wages; failure to timely furnish accurate itemized wage statements; unfair business practices; waiting time penalties; failure to maintain personnel and payroll records; and failure to provide compliant meal and rest periods. In addition, Plaintiffs alleged an eighth cause of action against both Pama and Pedrazzani for civil penalties under PAGA.

In a bench trial, the parties tried their case over nine days during the January through April 2015 time period. At the end of Pama's counsel's opening statement, the court denied Pedrazzani's motion for nonsuit that raised the same issue that Pedrazzani raises in this appeal. Ultimately, the court issued a detailed statement of intended decision in Plaintiffs' favor on each cause of action in the operative complaint. The parties filed objections to and requests for clarification of the statement of intended decision, as well as responses to the other side's objections and requests, although the record does not contain a final statement of decision. Following proceedings related to whether Plaintiffs were entitled to interest and certain civil penalties, the court filed its judgment in July 2015.

The rulings that are at issue in this appeal are in favor of Plaintiffs and against Pedrazzani and Pama, jointly and severally, and include the following: $1,937 in civil penalties in favor of Atempa under section 558 (overtime violations); $2,036 in civil penalties in favor of Reyes under section 558 (overtime violations); and $27,101 in favor of Plaintiffs, on behalf of themselves and the State of California and all aggrieved employees, in civil penalties under section 1197.1 (minimum wage violations).⁵ These specified amounts total $31,074, as follows: $3,973 for section 558 penalties, and $27,101 for section 1197.1 penalties. The judgment also provides that Pedrazzani is liable to Plaintiffs for postjudgment interest on the civil penalties, as well as attorney fees and costs to be determined in later proceedings.

In postjudgment proceedings, the trial court granted and denied a number of posttrial motions. As relevant to issues in this appeal, the court set the amount of attorney fees, ruling that Plaintiffs could recover attorney fees of $315,014 from Pedrazzani pursuant to section 2699, subdivision (g)(1), which is part of PAGA and provides in part: "Any employee who prevails in any [PAGA] action shall be entitled to an award of reasonable attorney's fees ...."

Pedrazzani and Pama timely appealed from both the judgment and the postjudgment order regarding attorney fees.

During the pendency of this appeal, prior to briefing, Pama filed for bankruptcy. We stayed the appeal from approximately June 2016 through February 2017—at which time we dismissed Pama's appeal at the request of the trustee of Pama's bankruptcy estate, and Pedrazzani proceeded with his appeal. All of the awards at issue in this appeal were against Pedrazzani and Pama, jointly and severally. Because Pama is no longer a party, we will not mention the rulings against Pama except where necessary to place in context the rulings against Pedrazzani.

Also during the pendency of the appeal, we requested and received supplemental briefs from the parties.

II.DISCUSSION

In the judgment, the court ruled that, under PAGA ( § 2699, subd. (a) ), Plaintiffs had standing to recover from Pedrazzani civil penalties based on statutory overtime pay and minimum wage violations—violations that Pedrazzani does not challenge on appeal. More specifically, the judgment provides that Plaintiffs are entitled to recover from Pedrazzani $31,074 in civil penalties—$3,973 based on overtime pay violations ( § 558(a) ), and $27,101 based on minimum wage violations ( § 1197.1(a) )—plus postjudgment interest on the penalties, attorney fees, and costs. In a postjudgment order, the court ruled that, under PAGA ( § 2699, subd. (g) ), Plaintiffs were entitled to recover from Pedrazzani $315,014 in attorney fees, having successfully obtained their award of civil penalties.

The relevant statutes, each of which we discuss in greater detail post , provide in part as follows:

"Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter ... regulating hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty ...." ( § 558(a), italics added.)

"Any employer or other person acting either individually or as an officer, agent, or employee of another person , who pays or causes to be paid to any employee a wage less than the minimum fixed by an applicable state or local law ... shall be subject to a civil penalty .... ( § 1197.1(a), italics added.)

"[A]ny provision of th[e Labor C]ode that provides for a civil penalty to be assessed and collected by the [LWDA, including the Labor Commissioner] for a violation of this code, may, as an alternative, be recovered through a civil action brought by an aggrieved employee ...." ( § 2699, subd. (a).)

"[C]ivil penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to the [LWDA] ... and 25 percent to the aggrieved employees." ( § 2699, subd. (i).)

"Any employee who prevails in any [PAGA] action shall be entitled to

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