Bearden v. U.S. Borax, Inc.

• Citation: 138 Cal.App.4th 429,41 Cal.Rptr.3d 482
• Decision Date: 07 April 2006
• Docket Number: No. B182625.,B182625.
• Court: California Court of Appeals
• Parties: Douglas S. BEARDEN et al., Plaintiffs and Appellants, v. U.S. BORAX, INC., Defendant and Respondent.

41 Cal.Rptr.3d 482

138 Cal.App.4th 429

Douglas S. BEARDEN et al., Plaintiffs and Appellants, v. U.S. BORAX, INC., Defendant and Respondent.

No. B182625.

Court of Appeal, Second District, Division 4.

April 7, 2006.

Neil M. Herring, Sebastopol and Robert D. Newman for Plaintiffs and Appellants.

Ogletree, Deakins, Nash, Smoak & Stewart, Scott J. Witlin and Dominick C. Capozzola, Los Angeles, for Defendant and Respondent.

EPSTEIN, P.J.

Six mine workers appeal from an order dismissing their complaint based on their employer's failure to allow a second meal break for the 12-hour shifts they were working. A statute requires that two meal breaks be allowed for shifts of that length. But an order of the Industrial Welfare Commission (IWC) exempts employees covered by a collective bargaining agreement. The principal issue before us concerns the validity of that order. We find that the exemption contravenes the statute and is invalid.

We also reject the employer's argument that the collective bargaining agreement between the employer and their employees' union requires that the employees arbitrate these claims. The parties raise an issue as to the retroactive application of our decision invalidating the IWC order. As we shall explain, except for application of Labor Code section 226.7, that issue must be litigated on remand. We also determine that the IWC and plaintiffs' union are not indispensable parties to this litigation.

FACTUAL AND PROCEDURAL SUMMARY

"In determining whether plaintiffs properly stated a claim for relief, our standard of review is clear: `"We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed." [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.' (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 [216 Cal.Rptr. 718, 703 P.2d 58]; see also McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415 [106 Cal.Rptr.2d 271, 21 P.3d 1189] [noting that our review is de novo].)" (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126, 119 Cal. Rptr.2d 709, 45 P.3d 1171.)

Plaintiffs are employees of U.S. Borax, Inc. (Borax) at its open pit mine operations in Boron, California. They allege that they are required to work 12.5 consecutive hours for each shift, but were given only one 30-minute meal break per shift. They sued Borax for denial of rest periods and meal periods mandated by Labor Code sections 226.7 and 512, subdivision (a),¹ and by IWC Order No. 16-2001 regulating wages, hours and working conditions for certain on-site occupations in the construction, drilling, logging and mining industries. (Cal.Code of Regs., tit. 8, § 11160, hereafter the Wage Order or Order.) They also sued for failure to pay wages due upon termination and for unfair business practices in violation of Business and Professions Code section 17200. Plaintiffs sought statutory penalties, unpaid wages, injunctive relief, and attorney fees and costs.

Borax removed the case to the United States District Court on the basis of federal preemption. That court adjudicated the first cause of action, which was for denial of rest periods, on the basis of preemption, and remanded the remainder of the causes of action to the Los Angeles Superior Court. On remand, Borax demurred to the complaint. It argued that the meal period exception in the Wage Order relieves it of the obligation to provide a second meal break, that the Order does not apply to plaintiffs because their employment is governed by a collective bargaining agreement, and alternatively, that under the terms of the collective bargaining agreement, plaintiffs' claims must be arbitrated. Borax also argued that the union representing plaintiffs is an indispensable party.

Plaintiffs opposed the demurrer on the grounds that the IWC exceeded its authority in adopting the Wage Order provision exempting employees covered by collective bargaining agreements from the meal period requirements of section 512. (Wage Order, 10(E).) They also argued that the meal period claims need not be arbitrated. The trial court sustained the demurrer without leave to amend and entered final judgment in favor of Borax. Plaintiffs filed a timely notice of appeal. Service was made on the California Attorney General pursuant to Business and Professions Code section 17209 and California Rules of Court, rule 44.5(a)(1).

DISCUSSION

I

We first consider whether the IWC exceeded its authority in adopting section 10(E) of the Wage Order, which exempts employees covered by qualifying collective bargaining agreements from meal period requirements. We begin with a brief review of the statutory scheme.

The IWC was a five-member appointive board established by the Legislature in 1913, authorized to formulate wage orders governing employment in California.² (Collins v. Overnite Transportation Co. (2003) 105 Cal.App.4th 171, 174, 129 Cal.Rptr.2d 254 (Collins).) In 1999, in response to the IWC's elimination of daily overtime rules in certain industries, the Legislature passed and the Governor signed Assembly Bill No. 60, the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999. (Stats.1999, ch. 134, § 14 (the Act).) Among other things, this legislation restored the eight-hour workday (§ 510) and mandated that the IWC conduct public hearings and adopt consistent wage orders (§ 517, subd. (a)) including orders pertaining to meal and rest periods (§ 516). (See National Steel and Shipbuilding Co. v. Superior Court (2006) 135 Cal.App.4th 1072, 1082, 38 Cal. Rptr.3d 253 (National Steel); Collins, supra, 105 Cal.App.4th at p. 176, 129 Cal. Rptr.2d 254.) The Act established a new statutory scheme governing hours of labor and overtime compensation for all industries and occupations. (Collins, supra, 105 Cal.App.4th at p. 176, 129 Cal.Rptr.2d 254.)

The Legislature enacted two provisions relating to meal periods. The first, section 512, was enacted in 1999. (Stats.1999, ch. 134 (Assem. Bill No. 60).) In pertinent part, it provides: "(a) An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes. . . . An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived."

Later in the 1999-2000 Regular Session, additional legislation was introduced to strengthen the enforcement of existing wage and hour standards contained in current statutes and wage orders. (Assem. Com. on Labor and Employment, Analysis of Assem. Bill No. 2509 (1999-2000 Reg. Sess.) as introduced Feb. 24, 2000, p. 7.) Section 226.7 was enacted as part of that legislation (effective on January 1, 2001). It states: "(a) No employer shall require any employee to work during any meal or rest period . . . . [¶] (b) If an employer fails to provide an employee a meal period or rest period . . ., 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."

The IWC adopted Wage Order 16-2001 effective January 1, 2001 governing employees in construction, drilling, logging, and mining. (Cal.Code of Regs., tit. 8, § 11160.) Section 10 of the Wage Order governs meal periods. Subdivisions (A) and (B) track the language of section 512, subdivision (a): "(A) No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes, except that when a work period of not more than six (6) hours will complete the day's work the meal period may be waived by mutual consent of employer and employee. (See Labor Code Section 512.)[¶] (B) An employer may not employ an employee for a work period of more than ten (10) hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of employer and employee only if the first meal period was not waived. (See Labor Code Section 512.)"

Borax relies on section 10(E) of the Wage Order in arguing that its employees are exempt from the second meal period requirement: "Collective Bargaining Agreements. Subsections (A), (B), and (D) of Section 10, Meal Periods, shall not apply to any employee covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage."

Plaintiffs argue that the IWC exceeded its authority in enacting section 10(E) because it creates an additional exemption for employees governed by collective bargaining agreements, beyond the exemptions expressly included in section 512. Section 512 provided only two exceptions to the requirement that employees who work more than 10 hours...