Judge Teresa A. Beaudet, Case 20STCV30043 2023-05-15 Tentative Ruling

NELDA SANCHEZ, Plaintiff, vs. VANDERLANDE INDUSTRIES INC., et al., Defendants.	Case No.:	22STCV30043
	Hearing Date:	May 15, 2023
	Hearing Time:	10:00 a.m.
	[TENTATIVE] ORDER RE: DEFENDANT VANDERLANDE INDUSTRIES, INC.’S DEMURRER TO PLAINTIFF’S COMPLAINT

Defendant demurs to each of the causes of action of the Complaint. Plaintiff opposes.

Defendant asserts that Plaintiff’s sixth cause of action for Private Attorneys General Act (“PAGA”) penalties fails to state sufficient facts to constitute a valid cause of action as it is barred by res judicata. Specifically, Defendant contends that Plaintiff’s PAGA claim is subsumed and covered by a settlement and judgment in another action, and that Plaintiff’s claim was released in such action. Defendant indicates that on October 1, 2020, plaintiff Tia Bundley filed a Representative Private Attorney General Action against Defendant, entitled Tia Bundley v. Vanderlande Industries Inc., Case No. 20STCV37685 (the “Bundley Action”). (Defendant’s RJN, ¶ 1, Ex. 1.) On November 4, 2021, an “Approval of PAGA Settlement Judgment” was entered in the Bundley Action. (Defendant’s RJN, ¶ 2, Ex. 2.)

As to the first element, Defendant cites to Citizens for Open Access etc. Tide, Inc. v. Seadrift Assn. (1998) 60 Cal.App.4th 1053, 1065, where the Court of Appeal noted that “[t]he settlement agreement, as incorporated into the judgments in the Kelly and federal court actions, meets the first requirement of res judicata that there was a final decision on the merits…[A] stipulated judgment may properly be given collateral estoppel effect, at least when the parties manifest an intent to be collaterally bound by its terms…A judgment entered . . . by consent or stipulation, is as conclusive a . . . bar as a judgment rendered after trial.” (Internal quotations and citations omitted.) As set forth above, on November 4, 2021, an Approval of PAGA Settlement Judgment was entered in the Bundley Action. (Defendant’s RJN, ¶ 2, Ex. 2.) Plaintiff does not dispute that the first element is satisfied here.

As to the second element of the res judicata analysis, Defendant asserts that the Bundley Action and the settlement agreement in that case encompasses all of the claims alleged in the instant action.

Defendant notes that the Judgment in the Bundley Action provides, inter alia, that:

“The Court approves the following release of claims: Plaintiff, individually and as the representative acting as a proxy or agent of the LWDA, a State of California Executive Branch Agency, in this Action, agrees to release Defendant, its affiliates, subsidiaries, owners, members, partners, officers, directors, predecessors, successors, assigns, agents, shareholders, investors, insurers and legal representatives (‘Released Parties’) for penalties under the California Private Attorneys’ General Act predicated on the violation of Labor Code §§ 201, 202, 203, 204, 226(a), 226.7, 510, 512, 1194, 1197, and 1198 and Industrial Welfare Commission Order 9-2001 based on the facts as alleged in the proposed Complaint attached as Exhibit A that accrued at any time between September 27, 2018 to the date of this Judgment (‘Released Claims’).” (Defendant’s RJN, ¶ 2, Ex. 2, ¶ 7.)

The Judgment further provides that “[t]he express purpose of the Settlement and this Judgment to be entered by the Court following approval of this settlement is to forever bar Plaintiff, the LWDA, and any other individual or entity acting on behalf of or purporting to act on behalf of the LWDA (including all Aggrieved Employees) from asserting any of the Released Claims in any future litigation. It is the intent of the Parties that, to the greatest extent provided by law, including under the holding of Arias v. Superior Court, 46 Cal. 4^th 969, 986 (2009), the ability of Plaintiff, the State of California or any Aggrieved Employee to bring a PAGA claim on behalf of the LWDA is completely and forever foreclosed.” (Defendant’s RJN, ¶ 2, Ex. 2, ¶ 7.)

Defendant notes that “[b]ecause an aggrieved employee’s action under the Labor Code Private Attorneys General Act of 2004 functions as a substitute for an action brought by the government itself, a judgment in that action binds all those, including nonparty aggrieved employees, who would be bound by a judgment in an action brought by the government.” (Arias v. Superior Court (2009) 46 Cal.4th 969, 986.)

Defendant asserts that the claims need not identify the exact same facts or theories for recovery or allege the same wrongdoing for res judicata to apply, rather, that the complaints in the two actions need only “affect the same primary right.” In Citizens for Open Access etc. Tide, Inc. v. Seadrift Assn., supra, 60 Cal.App.4th at page 1067, the Court of Appeal noted that “[t]o define a cause of action, California follows the primary right theory, which conceives of a cause of action as 1) a primary right possessed by the plaintiff, 2) a corresponding primary duty devolving upon the defendant, and 3) a delict or wrong done by the defendant which consists in a breach of such primary right and duty. Thus, two actions constitute a single cause of action if they both affect the same primary right… [T]here is only a single cause of action for the invasion of one primary right, even if multiple theories of recovery are asserted.” (Internal quotations and citations omitted.)

Plaintiff counters that the claims in the instant action are aimed at protecting a primary right distinct from that resolved in the Bundley Action. As Plaintiff notes, the sole PAGA Cause of action alleged in the Bundley Action is based on alleged (1) failures to pay minimum wages, (2) failures to pay overtime wages, (3) failures to provide meal periods, (4) failures to provide rest periods, (5) failures to timely pay wages during employment, (6) failures to timely pay wages after separations of employment, and (7) pay stub violations. (Defendant’s RJN, ¶ 1, Ex. 1.) In addition, as set forth above, the subject release applies to claims for “penalties under the California Private Attorneys’ General Act predicated on the violation of Labor Code §§ 201, 202, 203, 204, 226(a), 226.7, 510, 512, 1194, 1197, and 1198 and Industrial Welfare Commission Order 9-2001 based on the facts as alleged in the proposed Complaint attached as Exhibit A that accrued at any time between September 27, 2018 to the date of this Judgment…” (Defendant’s RJN, ¶ 2, Ex. 2, ¶ 7.)

The sixth cause of action of the instant Complaint is for “civil penalties under Labor Code § 2699.” The sixth cause of action alleges that “Defendants, and each of them, violated the Labor Code sections described herein, including, without limitation, for the failure to: pay overtime wages and minimum wages; provide meal and rest periods or compensation in lieu thereof; provide accurate, itemized wage statements; pay timely wages during employment and after employment separation; provide employees the opportunity to inspect employment records; reimburse Aggrieved Employees for costs incurred in furtherance of their work duties; provide notice as required under Labor Code section 2810.5; provide the proper accrual and use of paid sick leave; paying employees all owed paid time off and vacation time owed by separation at the proper rate of pay; and placing restraints on competition, whistleblowing and freedom of speech[1], entitling Plaintiff and other Aggrieved Employees to civil penalties for each of these Labor Code violations in the amounts set forth in Labor Code section 2699, subdivision (f).” (Compl., ¶ 59.)

As set forth above, the PAGA cause of action in the Bundley Action similarly alleges failures to pay minimum wages and overtime wages, failures to provide meal periods and rest periods (or compensation in lieu thereof), failures to timely pay wages during employment and after separation of employment, and failures to provide accurate written wage statements. (Defendant’s RJN, ¶ 1, Ex. 1.) However, the Complaint in the Bundley Action does not appear to allege that Defendant failed to provide employees the opportunity to inspect employment records, failed to reimburse aggrieved employees for costs incurred in furtherance of their work duties, failed to provide notice as required under Labor Code section 2810.5, failed to provide the proper accrual and use of paid sick leave, failed to pay employees all owed paid time off and vacation time owed by separation at the proper rate of pay, or placed restraints on competition, whistleblowing, and freedom of speech.

Plaintiff asserts that “such a broad array of claims implicates much more than any ‘primary right’ arising under the Labor Code provisions relating to payment of wages and provision of meal and rest periods.” (Opp’n at p. 5:13-15.) Defendant asserts that “Plaintiff’s PAGA claim and her alleged Labor Code violations all stem from the same facts and the same primary right, the right to be paid for all hours worked and at the proper rates, litigated and settled in the Bundley Action. Thus, any slight differences are immaterial to the res judicata analysis…” (Demurrer at p. 13:27-14:2.) The Court does not agree that the entirety of Plaintiff’s PAGA cause of action in this case stems from the right to be paid for all hours worked and at the proper rates. The Court notes that the release of claims approved by the court in the Bundley Action defines the specific violations of the Labor Code released and identifies them as the “Released Claims;” although the release states that the Parties intend “to the greatest extent provided by law” to foreclose the ability of “Plaintiff, the State of California or any Aggrieved employee to bring a PAGA claim on behalf of the LWDA,” the next sentence is more precise and more limiting in that it states that “[a]ny Party to the Settlement may use the Settlement to assert that the Settlement and the Judgment bars any later-filed actions asserting any of the Released Claims against any of the Released Parties at any time between September 27, 2018 to the date of this Judgment.” (Emphasis added; RJN, EX. 2, para. 7.) If the parties to the settlement in the Bundley Action had intended to bar all PAGA claims, they could have expressly stated that a Party to the Settlement could use the Settlement to assert that it bars any later-filed PAGA claims for the relevant period.

In the demurrer, Defendant cites to v. Williams-Sonoma, Inc. (2018) 23 Cal.App.5th 1070, 1077, where the Court of Appeal in Shine found that “[i]n the present action, Mr. Shine seeks reporting-time pay for on-call shifts that were canceled in early 2013, within the period covered by the Morales settlement agreement. Because reporting-time pay is a form of wages, a claim for reporting-time pay could have been raised in the Morales action. (See Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1111–1112 [56 Cal. Rptr. 3d 880, 155 P.3d 284] [reporting-time pay, like split-shift and overtime pay, is a form of wages even though it serves a dual purpose of shaping employer behavior].) The fact that no claim for reporting-time pay was alleged in Morales does not alter our determination that the same primary right, to seek payment of wages due, was involved in both Morales and this case.” The Court finds that Shine is distinguishable. As Plaintiff notes, the Complaint in this action also alleges nonwage related claims.

Based on the foregoing, the Court does not find that Defendant has demonstrated that the entirety of Plaintiff’s sixth cause of action stems from the same primary right as the sole cause of action alleged in the Bundley Action.[2]

Defendant also asserts that “Plaintiff’s sixth cause of action for PAGA penalties fails as Plaintiff lacks standing because her employment ended prior to the Bundley Judgment.” (Demurrer at p. 15:5-6.)

Defendant cites to Robinson v. Southern Counties Oil Co. (2020) 53 Cal.App.5th 476, 479-480, where “Plaintiff Richard Robinson, on behalf of himself and other aggrieved employees, appeal[ed] from the judgment entered in favor of his former employer defendant Southern Counties Oil Company (Southern Counties). Robinson’s complaint seeks civil penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA)…based on Southern Counties’ alleged unlawful denial of meal and rest breaks.” The Robinson Court noted that “[i]n February 2019, the San Diego County Superior Court approved a settlement in a class action that sought individual damages as well as civil penalties under PAGA for the same alleged Labor Code violations. (Gutierrez v. Southern Counties Oil Co., No. 37-2017-00040850-CU-OE-CTL (Gutierrez).) The settlement covered all persons employed by Southern Counties in certain job classifications between March 17, 2013, and January 26, 2018. Robinson and three other employees opted out of the class settlement. Thereafter, Robinson amended the allegations of his complaint to represent employees of Southern Counties who opted out of the settlement in Gutierrez and persons who were employed by Southern Counties from January 27, 2018, to the present.” (Id. at p. 480.)

The Robinson Court found that “[t]he doctrine of claim preclusion bars Robinson’s claims with respect to violations settled in Gutierrez,” and that “[h]ere, there is no dispute that the present action and the Gutierrez action involve PAGA claims based on the same alleged violations of the Labor Code.” (Id. at pp. 481, 482.) The Robinson Court also found that “Robinson lack[ed] standing to bring a representative action for violations occurring after January 27, 2018.” (Id. at p. 483.) The Court noted that “Robinson purports to bring a representative action based on violations alleged to have occurred after the period covered in Gutierrez—that is, after January 27, 2018. By then, however, Robinson was no longer employed by Southern Counties and thus was not affected by any of the alleged violations.” (Id. at p. 484.) In addition, “the preclusion of Robinson’s claims for the period during which he was employed by Southern Counties deprive[d] him of standing to assert claims arising exclusively after he was so employed.” (Id. at p. 484.)

Defendant argues that here too, “Plaintiff has no standing to pursue a PAGA claim for the time period after the Bundley settlement because she was not employed by Vanderlande, she suffered no alleged Labor Code violations, and she cannot be considered an aggrieved employee after the release period.” (Demurrer at p. 15:21-25.)

However, the Court does not find that the holding of Robinson is applicable here. As set forth above, the Robinson Court found that “the preclusion of Robinson’s claims for the period during which he was employed by Southern Counties deprive[d] him of standing to assert claims arising exclusively after he was so employed.” (Robinson v. Southern Counties Oil Co., supra, 53 Cal.App.5th at p. 484.) The Court does not find that Defendant has shown that Plaintiff’s sixth cause of action here is precluded under the doctrine of res judicata. In addition, Plaintiff cites to Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 85, which provides that “PAGA standing is not inextricably linked to the plaintiff’s own injury. Employees who were subjected to at least one unlawful practice have standing to serve as PAGA representatives even if they did not personally experience each and every alleged violation.”

Based on the foregoing, the Court overrules the demurrer to the sixth cause of action.

Defendant asserts that Plaintiff’s first through fifth causes of action for civil penalties cannot be maintained as there is no private right of action to recover Labor Code civil penalties outside of a PAGA claim.

Defendant notes that “[a] violation of a state statute does not necessarily give rise to a private cause of action. Instead, whether a party has a right to sue depends on whether the Legislature has manifested an intent to create such a private cause of action under the statute. Such legislative intent, if any, is revealed through the language of the statute and its legislative history.” (Noe v. Superior Court (2015) 237 Cal.App.4th 316, 336 [internal quotations and citations omitted].)

Plaintiff’s first cause of action is for civil penalties under Labor Code section 210. In support of this cause of action, Plaintiff alleges that “pursuant to Labor Code section 210, Plaintiff and other Aggrieved Employees are entitled to recover civil penalties for Defendants’ violations of Labor Code section 204…” (Compl., ¶ 34.)

Defendant notes that Labor Code section 210, subdivision (b) provides that “[t]he penalty shall either be recovered by the employee as a statutory penalty pursuant to Section 98 or by the Labor Commissioner as a civil penalty through the issuance of a citation or pursuant to Section 98.3.” (Lab. Code, § 210, subd. (b).) Defendant asserts that accordingly, an employee can only recover the Labor Code section 210 “statutory penalties” through the Labor Commissioner’s administrative hearing process set forth in Labor Code section 98, and not through a civil court action unless it is brought “by the Labor Commissioner.”[3]

In the opposition, Plaintiff does not dispute that the first cause of action fails due to the lack of a private right of action. Defendant asserts that Plaintiff accordingly concedes this point. (Citing to D. I. Chadbourne, Inc. v. Superior Court of San Francisco (1964) 60 Cal.2d 723, 728, fn. 4, “[t]he declaration also set forth further allegations regarding the real parties’ need for inspection; but since petitioner did not oppose the motion on any ground save privilege, it is assumed that it concedes that sufficient cause for inspection of any but a privileged document was shown.”)

Based on the foregoing, the Court sustains the demurrer to the first cause of action.

Plaintiff’s second cause of action is for civil penalties under Labor Code section 226.3. In support of this cause of action, Plaintiff alleges that “[p]ursuant to Labor Code section 226.3, Plaintiff and other Aggrieved Employees are entitled to recover civil penalties for Defendants’ violation of Labor Code section 226, subdivision (a)…” (Compl., ¶ 4.)

Labor Code section 226.3 provides that “[a]ny employer who violates subdivision (a) of Section 226 shall be subject to a civil penalty in the amount of two hundred fifty dollars ($250) per employee per violation in an initial citation and one thousand dollars ($1,000) per employee for each violation in a subsequent citation, for which the employer fails to provide the employee a wage deduction statement or fails to keep the records required in subdivision (a) of Section 226…In enforcing this section, the Labor Commissioner shall take into consideration whether the violation was inadvertent, and in his or her discretion, may decide not to penalize an employer for a first violation when that violation was due to a clerical error or inadvertent mistake.” (Emphasis added.) Defendant asserts that accordingly, there is nothing in this statute expressly providing for a private right of action.

Defendant also notes that in Noe, the Court of Appeal found that with regard to Labor Code section 226.8, “the statute includes specific language indicating that the provision is to be enforced by the ‘Labor Commissioner.’ This language precludes a direct private right of action.” (Noe v. Superior Court, supra, 237 Cal.App.4th at p. 339.) Similar language is included in Labor Code section 226.3, as set forth above.

In the opposition, Plaintiff does not dispute that the second cause of action fails due to the lack of a private right of action.

Based on the foregoing, the Court sustains the demurrer to the second cause of action.

Plaintiff’s third cause of action is for violation of Labor Code section 558. In the third cause of action, Plaintiff alleges that “[a]s a direct and proximate result of the herein-described Labor Code violations, pursuant to Labor Code section 558, Plaintiff and other Aggrieved Employees are entitled to recover civil penalties for Defendants’ herein-described Labor Code violations…” (Compl., ¶ 44.)

Defendant notes that “[Labor Code] section 558 lacks a private right of action. An aggrieved employee can make use of section 558’s remedy only when she acts as the state’s proxy—and that’s a role she can play only through a PAGA action. Nevertheless, a close, contextual analysis of the statutory scheme reveals that the amount for unpaid wages referenced in section 558 is not part of that section’s civil penalty and is not recoverable through a PAGA action. Instead, as ZB says, this part of a section 558 citation represents compensatory damages. Section 558, in other words, authorizes only the Labor Commissioner to issue a citation that includes both a civil penalty and the same unpaid wages Lawson can alternatively recover under section 1194 through a civil action or an administrative hearing.” (ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175, 188 [internal emphasis omitted].)

In the opposition, Plaintiff does not dispute that the third cause of action fails due to the lack of a private right of action.

Based on the foregoing, the Court sustains the demurrer to the third cause of action.

Plaintiff’s fourth cause of action is for violation of Labor Code section 1174.5. In support of this cause of action, Plaintiff alleges that “pursuant to Labor Code section 1174.5, Plaintiff and other Aggrieved Employees are entitled to recover civil penalties for Defendants’ herein-described Labor Code violations…” (Compl., ¶ 51.)

Labor Code section 1174.5 provides that “[a]ny person employing labor who willfully fails to maintain the records required by subdivision (c) of Section 1174 or accurate and complete records required by subdivision (d) of Section 1174, or to allow any member of the commission or employees of the division to inspect records pursuant to subdivision (b) of Section 1174, shall be subject to a civil penalty of five hundred dollars ($500).” As Defendant notes, this provision does not contain any language expressly providing for a private right of action. In addition, the Noe Court noted that “plaintiffs were required to comply with PAGA to collect penalties under section 1174.5, which states that any employer who willfully fails to maintain the records required [under section 1174] … shall be subject to a civil penalty of [$500].” (Noe v. Superior Court, supra, 237 Cal.App.4th at p. 339 [internal quotations omitted].)

In the opposition, Plaintiff does not dispute that the fourth cause of action fails due to the lack of a private right of action.

Based on the foregoing, the Court sustains the demurrer to the fourth cause of action.

Plaintiff’s fifth cause of action is for violation of Labor Code section 1197.1. In support of this cause of action, Plaintiff alleges that “pursuant to Labor Code section 1197.1, Plaintiff and other Aggrieved Employees are entitled to recover civil penalties for Defendants’ herein-described Labor Code violations…” (Compl., ¶ 55.)

Labor Code section 1197.1 provides, inter alia, that “[a]ny 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, or by an order of the commission, shall be subject to a civil penalty, restitution of wages, liquidated damages payable to the employee, and any applicable penalties imposed pursuant to Section 203…” (Lab. Code § 1197.1, subd. (a).) Defendant notes that there is nothing in this statute expressly providing for a private right of action for civil penalties, and the statute specifically references the Labor Commissioner’s ability to issue citations.

Defendant also cites to Ridgeway v. Wal-Mart Stores Inc. (N.D. Cal. 2017) U.S.Dist.LEXIS 10510, where the Court concluded that “plaintiffs may not in the present lawsuit seek an award of the penalties listed in section 1197.1. This does not mean that an employee may never enforce section 1197.1 in a civil suit. As the Court reads the statute and the case law, an employee may enforce section 1197.1 through a representative action under PAGA.” (Id. at *30.)

The Ridgeway Court acknowledged that “[a]lthough California courts have yet to evaluate whether section 1197.1 allows the penalties described therein to be paid directly to an employee, the California Court of Appeal has evaluated when other sections of the California Labor Code provide for remedies payable to the employee.” (Id. at pp. at *23-24.)

In the opposition, Plaintiff does not dispute that the fifth cause of action fails to state facts sufficient to constitute a valid cause of action due to a private right of action. The Court thus sustains the demurrer to the fifth cause of action.

Based on the foregoing, Defendant’s demurrer to the first, second, third, and fourth causes of action is sustained, without leave to amend. Plaintiff does not oppose the demurrer to these causes of action or demonstrate how she could amend the Complaint to address the defects identified above. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349, “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.”) Defendant’s demurrer to the fifth cause of action is sustained, with leave to amend.

The Court orders Plaintiff to file and serve an amended complaint, if any, within 20 days of the date of this Order. If no amended complaint is filed within 20 days of this Order, Defendant is ordered to file and serve an answer within 30 days of the date of this Order.¿

[1]More specifically, Plaintiff alleges that “Defendants had and have a policy or practice of preventing Plaintiff and/or Aggrieved Employees from using or disclosing the skills, knowledge and experience they obtained at Defendants for purposes of competing with Defendants,” and that “Defendants had and have a policy or practice of preventing Plaintiff and/or other Aggrieved Employees from disclosing violations of state and federal law.” (Compl., ¶¶ 22-23.)

[2]The Court notes that “¿a demurrer cannot rightfully be sustained to part of a cause of action or to a particular type of damage or remedy.¿” (¿Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047¿; ¿see also PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682 [“A demurrer does not lie to a portion of a cause of action.”]¿.)

[3]Labor Code section 98 provides, inter alia, that “[t]he Labor Commissioner is authorized to investigate employee complaints. The Labor Commissioner may provide for a hearing in any action to recover wages, penalties, and other demands for compensation, including liquidated damages if the complaint alleges payment of a wage less than the minimum wage fixed by an order of the Industrial Welfare Commission or by statute, properly before the division or the Labor Commissioner, including orders of the Industrial Welfare Commission, and shall determine all matters arising under his or her jurisdiction.” (Lab. Code, § 98, subd. (a).)

Superior Court of California

County of Los Angeles

Department 50