Villacres v. Abm Indus. Inc.

• Decision Date: 16 February 2011
• Docket Number: No. B219584.,B219584.
• Court: California Court of Appeals Court of Appeals
• Parties: Carlos VILLACRES, Plaintiff and Appellant, v. ABM INDUSTRIES INC., et al., Defendants and Respondents.

189 Cal.App.4th 562 117 Cal.Rptr.3d 398 10 Cal. Daily Op. Serv. 13,451 10 Cal. Daily Op. Serv. 13,534 2010 Daily Journal D.A.R. 16,185 Carlos VILLACRES, Plaintiff and Appellant, v. ABM INDUSTRIES INC., et al., Defendants and Respondents. No. B219584. Court of Appeal, Second District, Division 1, California. Oct. 22, 2010. Review Denied Feb. 16, 2011.

**403 Initiative Legal Group, Marc Primo, Sharla Ann Manley, Dina S. Livhits, Orlando Arellano, Los Angeles, and Glenn A. Danas for Plaintiff and Appellant.

Littler Mendelson, Keith A. Jacoby, Dominic J. Messiha and Heather M. Davis, **404 Los Angeles, for Defendants and Respondents.

MALLANO, P.J.

*569 In a prior class action, employees sued their employer, alleging failure to pay overtime compensation (see Lab.Code, §§ 510, 1194), failure to pay wages for a split shift (see Cal.Code Regs., tit. 8, § 11040, subd. (4)(C)), and violation of the unfair competition law (Bus. & Prof.Code, §§ 17200- 17209). The employees also sought civil penalties under the Labor Code. (See Lab.Code, § 558.) Ultimately, the action settled, with the employer agreeing to pay up to $2.5 million to class members and their counsel. The employer allocated up to $730,000 for penalties. The superior court approved the settlement agreement and dismissed the case with prejudice.

Two days later, plaintiff, a member of the prior class, filed this action against the same employer, seeking civil penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab.Code, §§ 2698-2699.5) for alleged violations of the Labor Code with respect to paying overtime compensation (see Lab.Code, §§ 510, 1194), furnishing employees with complete wage statements (see id., § 226, subd. (a)), providing meal and rest periods (see id., §§ 226.7, 512), indemnifying employees for business expenses and losses (see id., §§ 2800, 2802), and paying wages on a timely basis (see id., §§ 201, 202, 204).

The trial court granted the employer's motion for summary judgment on the ground that plaintiff's claims were barred under the doctrine of res judicata.

We agree with the trial court. A court-approved settlement in a prior suit precludes subsequent litigation on the same cause of action. Res judicata bars not only issues that were raised in the prior suit but related issues that could have been raised. Here, plaintiff attempted a second time to recover civil penalties for alleged Labor Code violations. But he could have sought to expand the scope of the prior action to include his additional penalty claims. In the alternative, he could have opted out of the class. Instead he reaped the benefits of the settlement in the prior action and then promptly filed this suit, seeking more penalties. We conclude res judicata applies and affirm.

*570 I

BACKGROUND

The allegations and facts in this case are taken from the papers and exhibits submitted in connection with the motions for summary judgment.

A. Prior Class Action

On February 23, 2006, Jennifer Augustus and Eleazer Hernandez filed a class action against American Commercial Security Services (ACSS), a wholly owned subsidiary of ABM Industries Inc., alleging that ACSS had failed to pay its employees overtime compensation (see Lab.Code, §§ 510, 1194) and had violated the unfair competition law (Bus. & Prof.Code, §§ 17200-17209) ( Augustus v. American Commercial Security Services, Inc. (L.A.Super.Ct., 2006, No. BC347914) ( Augustus )). The complaint sought penalties under Labor Code section 558.¹ A first amended complaint (complaint) followed, **405 adding a cause of action for failure to pay wages for a split shift (see Cal.Code Regs., tit. 8, § 11040, subd. (4)(C)).

Augustus was brought on behalf of a class of similarly situated current and former ACSS security guards. The Augustus plaintiffs and putative class members were represented by Roxborough, Pomerance & Nye and Benjamin T. Lee.

The parties in Augustus participated in mediation and reached a tentative settlement subject to the approval of the superior court. Under the terms of the proposed settlement, ACSS would contribute up to $2.5 million to compensate class members and representatives, pay attorney fees and costs, and cover expenses associated with class administration. Of the total amount, the parties allocated $730,000 to be paid as "civil and statutory penalties." The proposed settlement agreement obligated the parties to obtain an order preliminarily approving the settlement "subject only to the objections of Class Members and final review by the Court."

On August 23, 2007, the superior court, Judge David L. Minning presiding, issued an order granting preliminary approval of the Augustus settlement agreement. The court found that the "Notice of Proposed Class Action Settlement and Final Fairness and Approval Hearing" (Notice) "fully and accurately inform[ed] the Class members of all material elements of the *571 proposed Agreement, of the Class members' right to be excluded from the Class, and of each Class member's right and opportunity to object to the settlement." (Italics added.) The Notice also constituted "the best notice practicable under the circumstances and [is] in full compliance with the laws of the State of California, the Federal Rules of Civil Procedure, to the extent applicable, the United States Constitution, and the requirements of due process." A class member who filed a timely objection could appear at the "Final Fairness and Approval Hearing" and present oral argument and evidence supporting the objection. The settlement agreement defined the class as "[a]ll current and former security officers employed by [ACSS] who worked in the State of California anytime between February 23, 2002, and the date of the preliminary approval of this Settlement Agreement[, August 23, 2007]." The court granted conditional certification of the provisional settlement class.

The order also recited: "[T]he Agreement was the product of serious, informed, non-collusive negotiations conducted at arm's length by the parties. In making this preliminary finding, the Court considered the nature of the claims, the amounts and kinds of benefits paid in settlement, the allocation of the settlement among the class members, [and] the financial condition of the parties.... [T]he terms of the Agreement have no obvious deficiencies and do not improperly grant preferential treatment to any individual class member. Accordingly, the Court preliminarily finds that the Agreement was entered into in good faith...."

On October 10, 2007, the Notice was mailed to 11,140 putative class members, explaining the terms of the proposed settlement. The recipients had 60 days to request exclusion from, or to opt out of, the class; 201 opted out. No one objected to the settlement.

The Final Fairness and Approval Hearing was held on February 29, 2008. At the conclusion of the hearing, Judge Minning issued an order granting final approval of the settlement agreement. The order recited: "With this final approval of the proposed Settlement, it is hereby ordered that the claims defined more fully in the Settlement Agreement and below, are forever barred. The claims include claims for unpaid wages, interest, penalties and fees, **406 including but not limited to overtime, split shift premiums, 'off-the-clock' work [and] wai[t]ing time penalties ... for Class Members who were terminated from employment with Defendant on or after February 23, 2003, up to and including August 23, 2007...." (Italics added) The trial court certified a class in accordance with the class definition in the settlement agreement. The order also stated: "A full opportunity has been afforded to the Settlement Class Members to participate in this hearing, and all Settlement Class Members and other persons wishing to be heard have been heard. *572 Accordingly, the Court determines that all Class Members who did not timely ... submit an [opt-out form] are bound by this Order." Finally, the order provided that after all amounts had been paid pursuant to the settlement agreement, the case would be dismissed with prejudice.

In its final form, the settlement agreement stated: "Now therefore, in consideration of the mutual covenants, promises and warranties set forth herein, the Class Representatives, the Settlement Class ... and the Defendant agree ... that this Action, and any claims, damages, or causes of action arising out of the facts and allegations set forth in the Action, including those set forth in the First Amended Complaint, related to pay for all time allegedly worked but not compensated, including, but not limited to, 'off-the-clock' work, overtime, split shift premiums, any alleged failure to make wage payments in a timely manner, and any applicable penalties (including but not limited to those under California Labor Code section 203) shall be settled and compromised as between the Class Representatives, the Class Members and Defendant, subject to the terms and conditions set forth in this Agreement. This Agreement specifically excludes, however, the right of any Settlement Class Member to recover wages under California Labor Code section 226.7 for alleged missed meal and/or rest periods, as well as any corresponding claims for penalties resulting from untimely payment of such wages prior to February 23, 2003, as explained in further detail below." (Italics added.)

The agreement continued: "In consideration of the monetary sum provided by Defendant and upon final approval of this Agreement by the Court, the Settlement Class and each of the Class Members hereby ... waive, fully release and forever discharge the Releasees from any and all claims, debts, liabilities, demands, obligations, ... damages, action or causes of action of any kind, whether known or unknown, which have been or could have been asserted against the Releasees arising out of or related to all claims for wages, overtime pay, pay for all time allegedly worked but not compensated, and all other...