(Super. Ct. No. GIC824139) APPEALS from a judgment of the Superior Court of San Diego County, Kevin A. Enright and Timothy Taylor, Judges.
The opinion of the court was delivered by: Aaron, J.
CERTIFIED FOR PUBLICATION
Reversed in part, affirmed in part and remanded with directions.
In January 2004, Amalgamated Transit Union, Local 1309, AFL-CIO (the union) filed a representative action on behalf of its member bus drivers who worked in and around National City, California, alleging that the various defendant employers had violated provisions of the Labor Code*fn1 that require employers to provide meal and rest periods for their employees. In February 2005, the union filed an operative verified third amended complaint, which added a number of individual employees as plaintiffs, including appellant Leander Thurman. The named defendants included appellants Bayshore Transit Management, Inc. (Bayshore) and its parent corporation McDonald Transit Associates, Inc. (McDonald) (collectively defendants), who, until March 3, 2007, contracted with the City of National City to operate National City Transit (NCT), a carrier that ran three fixed bus routes in the city.*fn2 At the time of trial, Thurman was the only remaining plaintiff, and McDonald and Bayshore were the only remaining defendants in the action.
After a bench trial, the trial court filed a statement of decision and entered a judgment imposing civil penalties, including unpaid wages, in the total amount of $358,588.22, against defendants under the Private Attorneys General Act of 2004 (PAGA), section 2698 et seq. The court also awarded Thurman restitution in the amount of $28,605 under the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.), and prejudgment interest in the amount of $10,253. Both Thurman and defendants appeal from the judgment.
Thurman contends that the trial court committed reversible error in (1) denying his request to continue the trial to allow him to bring a noticed motion for class certification, after the California Supreme Court issued a decision that precluded the union from maintaining its representative action; (2) denying class certification;*fn3 (3) denying him recovery of civil penalties under both section 558, and Wage Order No. 9-2001 issued by the Industrial Welfare Commission (IWC), codified in California Code of Regulations, title 8, section 11090 (Wage Order No. 9); (4) reducing defendants' civil penalties under section 2699, subdivision (e); and (5) ruling that defendants' liability for his UCL claims began on January 1, 2002, rather than on October 1, 2000, due to the collective bargaining exemption in the former version of section 514. With respect to this claim, Thurman further contends that even if former section 514 created a collective bargaining exemption, section 226.7 provides an independent basis for recovering unpaid wages for missed meal and rest periods, effective January 1, 2001.
Defendants contend that the trial court erred in (1) awarding unpaid wages under section 558 as a civil penalty; (2) awarding Thurman relief under the PAGA, because Thurman failed to exhaust his administrative remedies before he was named as a plaintiff in the third amended complaint; (3) allowing Thurman to recover PAGA penalties on behalf of other bus operators for missed rest periods under section 558, because that statute allows recovery for missed meal periods only, and not for missed rest periods; and (4) allowing Thurman to avoid the judicial admission, set forth in his complaint, that defendants had provided meal periods since July 2003, and permitting him to recover for missed meal periods after July 2003. We agree with defendants' last contention. Accordingly, we reverse the portions of the judgment awarding recovery for missed meal periods and remand for a redetermination of that recovery. In all other respects, we affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND*fn4
NCT operated three bus routes in the National City area, designated as Routes 601, 602, and 603. Thurman began his employment with NCT as a bus driver in 1993. The union represented the NCT bus drivers, including Thurman, and negotiated two collective bargaining agreements with NCT that are relevant to this case. The first collective bargaining agreement was in effect from August 1, 1996 through July 31, 2002; the second collective bargaining agreement was in effect from August 1, 2002 through July 2007.
When the second collective bargaining agreement went into effect on August 1, 2002, NCT bus drivers were assigned to drive Routes 601, 602, or 603 as either a "straight run" or a "split run." A driver who worked a straight run would drive continuously from the beginning of a shift until the end of the shift, with no break period or "split" during the shift. Drivers on straight runs were not provided a 30-minute meal period. Drivers who worked split runs would take an unpaid break of 30 minutes to an hour at some point during their shifts.
In 1999, the Legislature enacted section 512, which requires employers to provide a meal period of at least 30 minutes for a daily work period of more than five hours' duration. In October 2000, the IWC issued Wage Order No. 9-2000, which authorized penalties for an employer's failure to provide required meal and rest periods.*fn5
In January 2003, Stephen Keiper, a management employee of NCT,*fn6 had a lunch meeting with the union's president, George Thompson, at which they discussed meal and rest periods. Thompson told Keiper that the union and the drivers were strongly opposed to working split runs as a means of implementing the required meal breaks because doing so would extend their work day, without any additional pay. The union's shop steward, Leonard James, also told Keiper on several occasions that the employees were opposed to split runs. Keiper asked Thompson to provide "some kind of document" that would operate as a release of NCT's obligation to provide meal periods, and Thompson agreed to provide a letter from the union to that effect.
Keiper never received a letter from Thompson. Keiper eventually called Thompson to inform him that NCT would have to implement a plan to provide meal periods for the drivers. Thompson told Keiper that he was unable to provide the letter that they had discussed because the union was now taking a different position. On July 6, 2003, NCT imposed split runs on all of its bus routes, despite objections voiced by local union representatives and individual bus drivers, in order to comply with the law that required that meal periods be provided. The trial court found that during the "straight run era" (prior to July 6, 2003), meal periods were provided on 13 percent of the NCT runs, and were not provided on 87 percent of the runs. The court found that between July 6, 2003 and March 3, 2007, NCT provided meal periods of at least 30 minutes to all drivers whose shifts had splits of 36 minutes or more.
In June 2004, NCT posted a memorandum reminding its bus drivers that they were permitted to take a 10-minute rest period for each four-hour period that they worked, and directing them to take their rest break during the " 'recovery time' already 'built in' at the start/end of [their] runs . . . ." The memorandum instructed drivers who worked schedules that provided less than the required rest time to make sure that they "allow[ed] for this rest period even if it [meant] leaving a few minutes late from [their] starting/ending time points." NCT also posted a second memorandum that further explained the procedure drivers were to follow for taking 10-minute rest periods. On June 28, 2004, NCT's general manager Webster sent a letter to Thompson stating that the rest periods were working smoothly, and asking Thompson to let Webster know if Thompson had any questions or concerns regarding the manner in which NCT was handling the rest period issue. Thompson did not respond to Webster's letter.
In March 2005, NCT complied with a request by then union president Steve Alcove to send him documentation showing NCT's route schedules and reflecting that NCT was providing the bus drivers with 10-minute rest periods and 30-minute meal periods. Alcove responded with an email message stating that he had received the schedules and would show the union's attorney that "the 10-[minute] breaks were included in the schedule." In July 2005, Thurman, who was then the union steward, told Webster and NCT operations manager Gabriel Marquez that he had informed Alcove that the NCT drivers were taking their 10-minute rest breaks.
In January 2004, the union filed a verified complaint against NCT and other defendants*fn7 as a representative action on behalf of its members and other bargaining unit employees who were employed by the defendants during the relevant time period. In February 2005, the union filed the operative verified third amended complaint, which added Thurman as a plaintiff and included two causes of action--a first cause of action alleging that defendants had violated sections 226.7 and 512 and Wage Order No. 9 by failing to provide meal and rest periods or compensation in lieu of meal and rest periods, and a second cause of action for violation of the UCL, based on the same allegations as the first cause of action.
Defendants filed a demurrer and motion to strike portions of the third amended complaint. Defendants demurred to the first cause of action on the grounds that the union lacked standing to bring that cause of action on behalf of its members under the PAGA, and that all plaintiffs had failed to exhaust their administrative remedies, as required under section 2699.5, as a prerequisite to bringing a PAGA claim. As to the union, defendants demurred to the second cause of action on the ground that the union, itself, had not been injured by defendants' alleged improper meal and rest period practices, and that it therefore lacked standing to assert a cause of action under the UCL. Defendants also demurred to the second cause of action to the extent that it sought relief on a representative basis, arguing that a private person may bring a representative action under the UCL only if that person complies with class action certification requirements, and contending that none of the plaintiffs had adequately pleaded a class action.*fn8
On December 6, 2005, the trial court overruled defendants' demurrer and denied their motion to strike, concluding that the union had standing to bring both causes of action because it had obtained assignments of claims from all of its members. The court's ruling did not address defendants' demurrer to the first cause of action on the ground that all plaintiffs had failed to exhaust their administrative remedies before bringing a PAGA claim. On December 16, 2005, defendants filed a motion for reconsideration based on the circumstance that on November 23, 2005, after the court had taken the demurrer and motion to strike under submission but before it issued its ruling, the Second District Court of Appeal held in Caliber Bodyworks v. Superior Court (2005) 134 Cal.App.4th 365, 378 (Caliber Bodyworks), that a plaintiff must exhaust administrative remedies under the PAGA before filing an action to recover civil penalties that the State could otherwise pursue. The Caliber Bodyworks court held that a demurrer on the ground of failure to exhaust administrative remedies must be sustained as to a cause of action that seeks only recovery of civil penalties, and that a motion to strike on that ground is appropriate if a cause of action seeks recovery of civil penalties and other relief. (Caliber Bodyworks, supra, at pp. 381-385) Accordingly, defendants asked the court to strike the portions of the third amended complaint that sought civil penalties subject to the PAGA's exhaustion requirements.
After reconsidering its ruling on defendants' demurrer and motion to strike, the trial court declined to change the ruling. The court determined that Caliber Bodyworks did not apply to this action because the statutory amendments that created the administrative remedies that a plaintiff must exhaust in order to recover civil penalties under the PAGA were enacted after the action was filed.
In October 2006, the trial court stayed the case for six months, pursuant to the parties' stipulation. The purpose of the stay was "to give the parties and the Court the benefit of the California Supreme Court's consideration and resolution of the conflicting [appellate court] decisions concerning the applicable statute of limitations [for claims] of Labor Code [section] 226.7 violations." The stay was lifted by stipulation and order on June 1, 2007, and the case was set for trial on May 30, 2008.
In January 2008, the parties stipulated to continue the trial date to September 8, 2008. Among other reasons, the parties stipulated to the continuance "to permit the California Supreme Court to issue a decision in the matter captioned Amalgamated Transit Union, Local 1756, et al. v. First Transit, Inc., et al., Case No. S151615 . . . ." In their ex parte application to the trial court for the stipulated continuance, plaintiffs explained that the outcome of the Supreme Court case "would fundamentally affect the case at bar in that an adverse ruling against Plaintiffs would necessitate class certification which would leave the case in a considerably different procedural posture, potentially on the eve of trial . . . ."*fn9 The trial court continued the trial date to September 12, 2008. In May 2008, the parties again stipulated to a trial continuance to allow the California Supreme Court to issue its opinion in Amalgamated Transit prior to the trial in this case. The trial court continued the trial date to January 9, 2009, based on the parties' stipulation. In September 2008, the trial court again continued the trial date to June 5, 2009.
In April 2009, the union and its coplaintiffs applied ex parte to continue the trial date to at least January 15, 2010, based on the unavailability of plaintiffs' counsel*fn10 and the fact that the California Supreme Court had not yet issued its decision in Amalgamated Transit and was considering another case that could affect the outcome of the present case. Defendants filed a response stating that they did not oppose a continuance of the trial to accommodate plaintiffs' counsel's 60-day emergency medical leave of absence, but that they objected to continuing the trial to January 2010. Noting that the California Supreme Court was expected to issue its decision in Amalgamated Transit by June 2009, defendants argued that a new trial date of July 20 or 27, 2009 would be appropriate. The trial court continued the trial date to July 24, 2009.
On June 29, 2009, the California Supreme Court filed its decision in Amalgamated Transit. The court held that a labor union that has not suffered actual injury under the UCL and is not an "aggrieved employee" under the PAGA may not bring a representative action under those laws, either as an assignee of employees who have suffered actual injury and are aggrieved employees, or as an association whose members have suffered actual injury and are aggrieved employees. (Amalgamated Transit, supra, 46 Cal.4th at p. 998.) On July 2, 2009, plaintiffs filed a "NOTICE OF DECISION BY CALIFORNIA SUPREME COURT," in which they asserted that because the union no longer had standing to bring a representative action in light of the Amalgamated Transit decision, in order for the case to proceed, it would have to be certified as a class action with an individual class representative. Plaintiffs stated that they intended to propose Thurman as the class representative, and requested that the trial court vacate the July 24, 2009 trial date pending their contemplated motion for class certification. Defendants filed a response in which they strongly objected to any further continuance of the trial date.
On July 7, 2009, Thurman filed a formal request for a continuance of the trial, to permit him to bring a motion for class certification. Defendants filed an opposition to the request. At the trial readiness conference on July 10, 2009, the trial court denied Thurman's request to continue the trial. Thurman filed a petition for writ of mandate and request for stay with this court on July 13, 2009, challenging the trial court's denial of his request for a continuance of the trial date. This court denied Thurman's petition on
The bench trial began on July 24, 2009. On Friday, July 31, a week into the trial, Thurman filed a motion for class certification. The trial court denied the motion the following Monday. After the trial, the court filed a statement of decision and entered a judgment imposing civil penalties, including unpaid wages, against defendants under the PAGA in the total amount of $358,588.22, and awarding Thurman restitution under the UCL in the amount of $28,605 and prejudgment interest in the amount of $10,253.
"Under the Labor Code, the Labor and Workforce Development Agency (LWDA) and its constituent departments and divisions are authorized to collect civil penalties for specified labor law violations by employers. [Citation.] To enhance the enforcement of the labor laws, the Legislature enacted PAGA in 2003." (Home Depot U.S.A., Inc. v. Superior Court (2010) 191 Cal.App.4th 210, 216 (Home Depot). In doing so, the Legislature "declared that adequate financing of labor law enforcement was necessary to achieve maximum compliance with state labor laws, that staffing levels for labor law enforcement agencies had declined and were unlikely to keep pace with the future growth of the labor market, and that it was therefore 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).)
Section 2699, subdivision (a), of the PAGA "permits aggrieved employees to recover civil penalties that previously could be collected only by LWDA. [Citation.] In addition, to address violations for which no such penalty had been established, subdivision (f) of the statute created 'a default penalty and a private right of action' for aggrieved employees."[*fn11 ] (Home Depot, supra, 191 Cal.App.4th at p. 216.) Section 2699.3 sets forth certain administrative procedures that an aggrieved employee must follow before bringing a PAGA action.
Denial of Trial Continuance
Thurman contends that the trial court's denial of his request for a continuance of the trial date to allow him time to bring a noticed motion for class certification was reversible error. "The decision to grant or deny a continuance is committed to the sound discretion of the trial court. [Citation.] The trial court's exercise of that discretion will be upheld if it is based on a reasoned judgment and complies with legal principles and policies appropriate to the case before the court. [Citation.] A reviewing court may not disturb the exercise of discretion by a trial court in the absence of a clear abuse thereof appearing in the record." (Forthmann v. Boyer (2002) 97 Cal.App.4th 977, 984-985.) California Rules of Court, rule 3.1332(d),*fn12 provides that in ruling on a request for a continuance "the court must consider all the facts and circumstances that are relevant to the determination." Among other facts and circumstances, the trial court properly considers the proximity of the trial date, whether there were previous trial continuances, the length of the requested continuance, and the prejudice that parties or witnesses would suffer as a result of the continuance. (Rule 3.1332(d).)
We find no abuse of discretion in the trial court's denial of a continuance of the trial to allow Thurman to seek class certification. Trial continuances are disfavored and may be granted only on an affirmative showing of good cause. (Rule 3.1332(c); County of San Bernardino v. Doria Mining & Engineering Corp. (1977) 72 Cal.App.3d 776, 781.) Thurman argues that the California Supreme Court's decision in Amalgamated Transit constituted good cause to continue the trial because that decision essentially reversed the trial court's earlier ruling on demurrer that the union had standing to prosecute the PAGA and UCL claims in the third amended complaint in a representative capacity on behalf of its member employees. Thurman states that the trial court's "apparent suggestion that [he] should have moved for class certification before the Supreme Court's decision in Amalgamated Transit . . . is perplexing [because] the California courts' resources are presumably better spent adjudicating actual disputes rather than hearing motions that a court has ruled to be unnecessary."
Notwithstanding the trial court's earlier ruling that the union had standing to bring representative claims, Thurman's counsel's decision not to pursue a class action unless and until the California Supreme Court in Amalgamated Transit issued a decision contrary to the trial court's ruling was a dubious strategy, particularly in light of the procedural history of Amalgamated Transit. The trial court in Amalgamated Transit ruled that the plaintiff unions lacked standing under the UCL because they had not suffered actual injury, and that they also lacked standing under the PAGA because they were not "aggrieved employees." (Amalgamated Transit, supra, 46 Cal.4th at p. 999.) The trial court further ruled that employee assignments of rights to the plaintiff unions did not confer standing, and that the UCL claims brought on behalf of others must be brought as a class action. (Ibid.) The plaintiff unions petitioned the Second District Court of Appeal for a writ of mandate and a stay of the trial court's ruling. After issuing a stay and an order to show cause, the Court of Appeal denied the petition. (Ibid.)
Thurman's counsel in the present case represented the plaintiffs in Amalgamated Transit and was therefore well aware of the Second District Court of Appeal's decision in that case. Counsel should also have been aware of the distinct possibility that the California Supreme Court would uphold the Court of Appeal's decision. If Thurman's counsel's strategy was to pursue a class action in the event the Supreme Court decided against the union's representational standing in Amalgamated Transit, the prudent course would have been to amend the complaint in this case to allege a class action, and to move for class certification soon after the Court of Appeal filed its decision, rather than waiting until the eve of trial to do so. Counsel chose the latter course at its peril, particularly in light of the fact that the process of seeking certification and the time needed to prepare to try a class action would have necessitated a substantial continuance in a case that had already been pending for over five years.
In denying Thurman's request for a continuance, the trial court stated that Thurman had not made an affirmative showing of good cause for a continuance, noting that the trial date had been continued "already at least once."*fn13 In its statement of decision, the trial court explained that in denying the request for another continuance, it had "considered the applicable law and pertinent facts and balanced all relevant factors, including the prolonged nature of this case, the absence of class allegations in the [third amended complaint], and the undue prejudice to defendants if the trial were again continued."
The trial court reasonably found that defendants would be unduly prejudiced by another continuance of the trial date. As defendants point out, cases are statutorily required to be brought to trial within five years (Code Civ. Proc., § 583.310), to " 'prevent prosecution of stale claims where defendants could be prejudiced by loss of evidence and diminished memories of witnesses [and] to protect defendants from the annoyance of having unmeritorious claims against them unresolved for unreasonable periods of time.' " (Sagi Plumbing v. Chartered Const. Corp. (2004) 123 Cal.App.4th 443, 447.) The trial court noted during posttrial proceedings that its decision to deny Thurman's request for a trial continuance was justified in hindsight by the fact that, in the court's words, "[t]here were many witnesses with faulty memories, and that situation would have gotten worse, not better, if I had adopted plaintiff's proposal to continue the trial again to allow for an amendment to the complaint and a motion to certify the case as a class action. . . . The foibles of memory are real, and they were repeated numerous times through the course of this trial."
Thurman essentially gambled that the Supreme Court would reverse the Court of Appeal on the standing issue in Amalgamated Transit, and lost. The trial court reasonably decided that Thurman should bear the consequences of that gamble rather than subject defendants to the prejudice that would result from continuing the trial again for the purpose of allowing Thurman to pursue class certification. Given the protracted history of the case, the prior continuances, and the prejudice to defendants that would result from an additional continuance, the trial court acted well within its discretion in denying Thurman's request for a trial continuance.