Paulsen v. Local No. 856 of Int'l Bhd. of Teamsters

• Decision Date: 18 March 2011
• Docket Number: No. A126633.,A126633.
• Citation: 11 Cal. Daily Op. Serv. 3366,193 Cal.App.4th 823,2011 Daily Journal D.A.R. 4039,123 Cal.Rptr.3d 332
• Parties: Kathleen PAULSEN et al., Plaintiffs and Appellants, v. LOCAL NO. 856 OF INTERNATIONAL BROTHERHOOD OF TEAMSTERS et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

193 Cal.App.4th 823

123 Cal.Rptr.3d 332

11 Cal. Daily Op. Serv. 3366

2011 Daily Journal D.A.R. 4039

Kathleen PAULSEN et al., Plaintiffs and Appellants,

v.LOCAL NO. 856 OF INTERNATIONAL BROTHERHOOD OF TEAMSTERS et al., Defendants and Respondents.

No. A126633.

Court of Appeal, First District, Division 4, California.

March 18, 2011.

Certified for Partial Publication.^*

Kahn Brown & Poore LLP, David M. Poore, Esq., for Plaintiff and Appellant.

Beeson, Tayer & Bodine, Andrew Baker, Esq., Oakland, for Respondent.

RIVERA, J.

Plaintiffs Kathleen Paulsen and others ¹ appeal a judgment entered after the trial court sustained without leave to amend the demurrer of defendants Local No. 856 of the International Brotherhood of Teamsters (Local 856) and Joe Martinelli to plaintiffs' putative class action complaint. They contend on appeal that their action was not subject to the exclusive initial jurisdiction of the Public Employment Relations Board (PERB). We affirm.

I. STANDARD OF REVIEW

Our standard of review when considering a challenge to an order granting a demurrer is well settled. “ ‘ “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.] ... [W]e give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] ...’ ” ( Sanchez v. Truck Ins. Exchange (1994) 21 Cal.App.4th 1778, 1781, 26 Cal.Rptr.2d 812.)

II. BACKGROUND

Plaintiffs allege they are current, former, and retired deputy probation officers employed by the County of Marin (the County), and members of Local 856. According to the complaint, Local 856, its agent Martinelli—who had primary authority to represent plaintiffs at the County—and the union leadership entered into a secret deal with the County (a) not to negotiate overtime compensation for plaintiffs and the proposed class although defendants knew plaintiffs were working more than 40 hours a week and were not exempt under the Fair Labor Standards Act of 1938 (29 U.S.C. § 201 et seq.) (FLSA); (b) to conceal plaintiffs' right to overtime compensation from them; (c) to misrepresent to plaintiffs and the proposed class that they were “professionals” and therefore exempt from overtime compensation, although defendants knew they were not exempt; and (d) to encourage the union's officers to lie to its membership about the members' rights to overtime compensation under the FLSA. Plaintiffs alleged that defendants continued to conceal plaintiffs' entitlement to overtime compensation from 1995 until March 2009, when the complaint was filed.

Plaintiffs further allege that, in a November 6, 2006, meeting of persons representing the County and the Local 856 (including Martinelli), and a group of Probation Department employees (including plaintiffs), the County announced it might have been “ ‘out of compliance’ ” with the FLSA with respect to paying the deputy probation officers overtime, and advised plaintiffs to discuss the matter with their union if they had questions. Plaintiffs discussed the matter with Martinelli, who said defendants did not know anything about the issue, but that defendants would investigate and take appropriate action to grieve the process. However, defendants did nothing to assist plaintiffs and the proposed class members.

In their first cause of action, for breach of the duty of fair representation, plaintiffs allege defendants owed plaintiffs a duty of fair representation, including a duty to disclose material facts that could affect the terms and conditions of employment; that between 1994 and 2007, they knew or should have known that plaintiffs were nonexempt employees who were statutorily entitled to overtime pay and that the use of “ ‘professional hours' ” was a scheme or artifice to defraud plaintiffs of their right to overtime; that defendants conspired with the County to deprive plaintiffs of overtime compensation; and that during that time period defendants engaged in a pattern and practice of breaching the duty of fair representation toward plaintiffs and other proposed class members by (1) wrongfully classifying plaintiffs during negotiations and interactions with the County and plaintiffs as exempt employees, (2) entering into an undisclosed secret agreement with the County to deprive plaintiffs of overtime benefits, (3) failing to disclose to plaintiffs their right to overtime, (4) misleading plaintiffs into believing they were not entitled to overtime compensation and that such compensation could not be negotiated, and (5) engaging in unreasonable conduct.

In their second cause of action, for common law breach of fiduciary duty, plaintiffs allege that defendants, as union representatives, owed plaintiffs fiduciary duties and obligations in all dealings, and that they breached their duty in acting as described in the earlier allegations of the complaint.

In their third cause of action, for fraudulent concealment, plaintiffs allege that from 1994 through the present, defendants knew that plaintiffs were not exempt employees under the FLSA, that plaintiffs were working a significant amount of overtime under the guise of “ ‘professional hours' ” without compensation, that they were entitled to overtime compensation, and that the use of “ ‘professional hours' ” was a scheme or artifice to defraud plaintiffs of overtime compensation; that defendants intentionally, maliciously, and recklessly concealed these facts from plaintiffs and took active steps to cover up their right to overtime pay and benefits; and that plaintiffs were unaware of the facts and relied on defendants' representations to their detriment.

Defendants demurred to the complaint. The trial court sustained the demurrer to each cause of action without leave to amend on the ground it lacked subject matter jurisdiction. In doing so, it ruled: “The 1st Cause of Action for breach of the duty of fair representation falls within the exclusive jurisdiction of the Public Employment Relations Board as an ‘unfair labor practice.’ [Citations.] Plaintiffs are not exempt from PERB jurisdiction pursuant to Government Code [section] 3511, because they are defined as ‘peace officers' in Penal Code [section] 830.5[, subdivision] (a), not Penal Code [section] 830.1. Plaintiffs' further contention, that PERB does not have jurisdiction to hear class action claims, is not supported by their cited authorities available to the court. [¶] The 2nd and 3rd Causes of Action are also within PERB's exclusive jurisdiction, because ‘the essence’ of these claims is a breach of the duty of fair representation. [Citation.]” The trial court dismissed the complaint and entered judgment in favor of defendants.

III. DISCUSSION

A. Legal Background

“In California, labor relations between most local public entities and their employees are governed by the Meyers–Milias–Brown Act (MMBA) (Gov.Code, § 3500 et seq.), which recognizes the right of public employees to bargain collectively with their employers over wages and other terms of employment. The administrative agency authorized to adjudicate unfair labor practices charges under the MMBA is California's Public Employment Relations Board (PERB). Subject to certain exceptions, local public agencies and their employees must exhaust their administrative remedies under the MMBA by applying to PERB for relief before they can ask a court to intervene in a labor dispute.” ( City of San Jose v. Operating Engineers Local Union No. 3 (2010) 49 Cal.4th 597, 601, 110 Cal.Rptr.3d 718, 232 P.3d 701( City of San Jose ).)

In City of San Jose, our Supreme Court discussed the background of PERB's authority to adjudicate unfair labor practices under the MMBA. “The history of PERB begins in 1975, when the Legislature enacted the Educational Employment Relations Act (EERA) (Gov.Code, §§ 3540–3549.3). The law established the Educational Employment Relations Board (EERB), which in 1977 was renamed the Public Employment Relations Board. [Citation.] As an administrative agency, PERB was to adjudicate unfair labor practice charges under the EERA, and its jurisdiction was set forth in Government Code section 3541.5. That statute provided and still provides, in part: ‘The initial determination as to whether the charges of unfair practices are justified, and, if so, what remedy is necessary to effectuate the purposes of this chapter, shall be a matter within the exclusive jurisdiction of the board.’ (Italics added.)” ( City of San Jose, supra, 49 Cal.4th at pp. 603–604, 110 Cal.Rptr.3d 718, 232 P.3d 701.) Adopting a rule developed by the federal courts under the National Labor Relations Act (29 U.S.C. § 151 et seq.) (NLRA), our high court later concluded that “the administrative agency ‘is held to have exclusive jurisdiction over activities arguably protected or prohibited by’ the governing labor law statutes.” ( City of San Jose, supra, 49 Cal.4th at p. 604, 110 Cal.Rptr.3d 718, 232 P.3d 701, quoting El Rancho Unified School Dist. v. National Education Assn. (1983) 33 Cal.3d 946, 953, 192 Cal.Rptr. 123, 663 P.2d 893( El Rancho Unified School Dist.), italics added.)

“In 2000, the Legislature extended PERB's jurisdiction to cover matters arising under the MMBA—this was done through enactment of Government Code section 3509, which became effective July 1, 2001. (Stats.2000, ch. 901, § 8.) Subdivision (b) of that statute provides in relevant part: ‘A complaint alleging any violation of [the MMBA] ... shall be processed as an unfair practice charge by [PERB]. The initial determination as to whether the charge of unfair practice is justified and, if so, the appropriate remedy necessary to effectuate the purposes of this chapter, shall be a matter within the exclusive jurisdiction of [PERB].’ (Italics added.) This enactment removed ‘from the courts their initial jurisdiction over MMBA unfair practice charges' [citation...