Wood v. Kaiser Found. Hosps.

• Decision Date: 24 February 2023
• Docket Number: D079528
• Parties: ANA WOOD, Plaintiff and Appellant, v. KAISER FOUNDATION HOSPITALS, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

ANA WOOD, Plaintiff and Appellant, v. KAISER FOUNDATION HOSPITALS, Defendant and Respondent.

D079528

California Court of Appeals, Fourth District, First Division

February 24, 2023

APPEAL from a judgment of the Superior Court of San Diego County Super. Ct. No. 37-2021-00005146-CU-OE-CTL Ronald F. Frazier Judge. Reversed. Wood's requests for judicial notice denied; Kaiser's request for judicial notice granted.

Mashiri Law Firm, Alex Asil Mashiri; The Jami Law Firm and Tamim Jami for Plaintiff and Appellant.

Seyfarth Shaw, Christian J. Rowley, Kerry Friedrichs and Kiran Aftab Seldon for Defendant and Respondent.

DATO J.

The judiciary's responsibility to interpret statutes often places courts in the position of trying to decide how the Legislature would have resolved an issue we strongly suspect it never actually considered. We endeavor, as best we can, to be prognosticators. Sometimes, however, our role in statutory interpretation is more that of a detective. The Legislature included a provision or used a particular term in a statute, and it is our job to uncover what it had in mind when it employed those words. In this case we function largely as detectives, hopefully more like Sherlock Holmes than Inspector Clouseau.

California's Healthy Workplaces, Healthy Families Act of 2014 (the Act) (Labor Code,^[1] § 245 et seq.) generally requires employers to provide eligible employees with at least three paid sick days per year. The Labor Commissioner and the Attorney General are charged with enforcing this law. Violators may be assessed compensatory as well as liquidated damages, plus civil penalties. (§ 248.5.)

The last clause of section 248.5, subdivision (e) is the focus of this appeal. It provides that "any person or entity enforcing this article on behalf of the public as provided for under applicable state law shall, upon prevailing, be entitled only to equitable, injunctive, or restitutionary relief ...." (Ibid.) It would seem fairly obvious that the Legislature had something specific in mind when it used the phrase, "enforcing this article on behalf of the public as provided for under applicable state law." It was envisioning some kind of enforcement action. But what was it? In particular, did the Legislature mean to include-and thus restrict-actions by aggrieved employees to recover civil penalties under the Labor Code Private Attorney General Act of 2004 (PAGA) (§ 2698 et seq.) as defendant Kaiser Foundation Hospitals (Kaiser) contends? Or instead, as plaintiff Ana Wood argues, did the Legislature have in mind an entirely different statutory scheme, the Unfair Competition Law (UCL) (Bus. &Prof. Code, § 17200 et seq.)?

The procedural setting of this case perfectly frames the issue as one of statutory interpretation. Wood filed a PAGA action against her former employer Kaiser seeking penalties for alleged violations of the Act. The trial court sustained Kaiser's demurrer without leave to amend, determining that a PAGA action is one brought "on behalf of the public" and since it seeks only civil penalties, is prohibited by section 248.5, subdivision (e).

Following our independent review, we reach a different conclusion. As we explain, the statute's text and history provide compelling evidence that the phrase "on behalf of the public as provided under applicable state law" in section 248.5, subdivision (e) was intended to refer to actions prosecuted under the UCL-not PAGA. Accordingly, we reverse the judgment of dismissal.

FACTUAL AND PROCEDURAL BACKGROUND^[2]

Kaiser owns and operates hospitals and medical facilities throughout California. Wood, a nonexempt employee, was paid hourly wages by Kaiser. In February 2021, she filed a PAGA action against Kaiser alleging that as an" 'aggrieved employee'" she was "properly suited to act on behalf [of] the state, and collect civil penalties for all violations committed against" other aggrieved Kaiser employees in California. Her first cause of action claimed that Kaiser violated the Act by not paying sick leave at "the correct rate."

The second cause of action alleges that Kaiser wrongfully denied employees the right to use sick leave. In the third, Wood maintained that Kaiser violated Labor Code provisions regarding vacation pay.

Kaiser demurred to the first cause of action on the grounds that the Act "does not authorize PAGA actions for civil penalties." After an unreported hearing, the court sustained the demurrer without leave to amend.^[3]Following voluntary dismissals (without prejudice) of the remaining causes of action, the court entered a judgment of dismissal in Kaiser's favor.

DISCUSSION

" 'In construing a statute, our task is to ascertain the intent of the Legislature so as to effectuate the purpose of the enactment. [Citation.] We look first to the words of the statute, which are the most reliable indications of the Legislature's intent. [Citation.] We construe the words of a statute in context, and harmonize the various parts of an enactment by considering the provision at issue in the context of the statutory framework as a whole.' [Citation.] 'If the statutory language is unambiguous then its plain meaning controls. If, however, the language supports more than one reasonable construction, then we may look to extrinsic aids, including the ostensible objects to be achieved and the legislative history.'" (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 83 (Kim).)

The phrase "enforcing this article on behalf of the public" in section 248.5, subdivision (e) is ambiguous. It is susceptible of at least two possible meanings. It could refer to a PAGA action, because relief under PAGA has been characterized as being "designed primarily to benefit the general public, not the party bringing the action." (Kim, supra, 9 Cal.5th at p. 81.) But how PAGA relief has been characterized by the courts and who it "primarily" benefits does not necessarily indicate that the Legislature had PAGA in mind when it referred to "enforcing this article on behalf of the public." (§ 248.5, subd. (e), italics added.) It might have instead been describing an action alleging a claim under the UCL, which can be brought on behalf of the public by various government officials, and in which even private individuals can seek public injunctive and restitutionary relief. (See, e.g., McGill v. Citibank, N.A. (2017) 2 Cal.5th 945, 959; Animal Legal Defense Fund v. Mendes (2008) 160 Cal.App.4th 136, 147 [noting that under the UCL, the Attorney General and certain other public officials can sue on behalf of the public at large].) Even Kaiser concedes that the UCL "may serve as a vehicle to enforce provisions of the [Act]." As in every question of statutory interpretation, the crucial issue is what did the Legislature mean?

PAGA became effective in 2004, a decade before the Act was adopted. (Stats. 2003, ch. 906 (2003-2004 Reg. Sess.) (Sen. Bill No. 796); Stats. 2014, ch. 317, § 3 (2013-2014 Reg. Sess.) (Assem. Bill No. 1522).)^[4] The Legislature is presumed to have been aware of PAGA when it adopted the Act (Hirschfield v. Cohen (2022) 82 Cal.App.5th 648, 661), and because the premise for Kaiser's argument is that the Legislature intended to restrict the use of PAGA to enforce of the Act, we start our analysis with PAGA.

Prior to 2004, California's Labor Code was enforced by the Labor and Workforce Development Agency (LWDA), which could assess and collect civil penalties for violations. (See Sen. Com. on Judiciary, Analysis on Sen. Bill No. 796 (2003-2004 Reg. Sess.) as amended Apr. 22, 2003, p. 1 (Bill Analysis).)^[5] In 2003, a federal study indicated that garment industry employers in Los Angeles alone, collectively employing more than 100,000 workers, had over 33,000 serious and ongoing wage violations; during the same period, the LWDA had issued fewer than 100 wage citations per year for all industries throughout the state. (Bill Analysis, supra, Sen. Bill No. 796, p. 2.) Two core problems were hampering the prosecution of Labor Code violations. First, district attorneys were reluctant to prosecute them because labor matters were considered low priorities. Second, allocated government resources simply could not keep pace with the sprawling, and often "underground" economy.

The Legislature's solution was to" 'deputize and incentivize employees uniquely positioned to detect and prosecute . . . violations.'" (Medina v. Vander Poel (E.D.Cal. 2015) 523 B.R. 820, 824-825.) Effective January 2004, PAGA declared it was "in the public interest to allow aggrieved employees, acting as private attorneys general, to recover civil penalties for Labor Code violations, with the understanding that labor law enforcement agencies were to retain primacy over private enforcement efforts." (Arias v. Superior Court (2009) 46 Cal.4th 969, 980 (Arias).)

PAGA does not create any new substantive rights or legal obligations. It"' "is simply a procedural statute allowing an aggrieved employee to recover civil penalties-for Labor Code violations-that otherwise would be sought by state labor law enforcement agencies." '" (Bautista v. Fantasy Activewear, Inc. (2020) 52 Cal.App.5th 650, 657.) Although an aggrieved employee is the named plaintiff in a PAGA action, the dispute is actually between the state and the employer. (Arias, supra, 46 Cal.4th at p. 986.) Under PAGA, 75 percent of the penalties recovered go to the LWDA; the remaining 25 percent are disbursed to employees aggrieved by the particular violation. (§ 2699, subd. (i).)

The UCL in its current form was enacted in 1977 (Stats. 1977, ch 299, § 1, p. 1202; Bus. &Prof. Code, § 17200 et seq.), although it incorporated existing elements from a predecessor statute that had been in place for many years. (See generally Kraus v. Trinity...