Search This Blog

Thursday, March 15, 2012

Thurman v. Bayshore Transit: Court of Appeal Issues Broad PAGA Decision

In Thurman v. Bayshore Transit Management, Inc. (February 27, 2012), the Court of Appeal has decided a number of issues arising under the 2004 Labor Code Private Attorneys General Act (PAGA). Thurman was a bus driver.  His union filed an action against his employer, alleging violation of California's meal and rest period requirements and violation of the Unfair Competition Law (UCL). In a later pleading, it added Thurman as a plaintiff.

On June 29, 2009, the California Supreme Court held that a union may not bring a class action under the UCL or a representative action under PAGA on behalf of its members.  Amalgamated Transit Union v. Superior Court (First Transit, Inc.) (2009) 46 Cal.4th 993 (discussed here).  Thurman then asked the trial court to continue the trial, so that he could bring a motion for class certification.  The trial court (San Diego Superior, Judges Kevin A. Enright and Timothy Taylor) denied the motion, the case proceeded to bench trial, and the court awarded a judgment against the defendant for civil penalties and unpaid wages under PAGA, restitution for Thurman only under the UCL, and prejudgment interest. Both parties appealed.

The Court of Appeal held:

  1. The court did not abuse its discretion in refusing to continue trial. Thurman's counsel should have known that the Supreme Court might rule as it did in Amalgamated, and the failure to pursue certification was "a dubious strategy."  Slip op. at 15.  
  2. The court did not abuse its discretion in refusing to certify a class on the fourth day of trial. Insufficient notice under the California Rules of Court, undue prejudice to defendants, and due process concerns for putative class members who had not been notified and given the opportunity to opt out of the class all justified the refusal to certify.  Slip op. at 20.  
  3. The court did not err in refusing to award civil penalties under both Labor Code section 558 and Wage Order section 20.  PAGA allows the recovery of civil penalties only for violations of the Labor Code.  It does not allow recovery of the penalties stated in the Wage Orders.  Allowing Thurman to recover PAGA penalties under both section 558 and Wage Order No. 9 would "allow an impermissible double recovery for the same act."  Slip op. at 22.
  4. The court did not abuse its discretion in reducing the civil penalties by 30 percent under Labor Code section 2699(e)(2) based on the facts cited by the court in its statement of decision.  Slip op. at 29-30.  
  5. Liability for Thurman's UCL claims began on January 1, 2002, due to the collective bargaining exemption in the original version of Labor Code section 514, rather than on October 1, 2000, the effective date of Wage Order No. 9's penalty provision for failure to provide meal and rest breaks.  Slip op. at 30-31.  
  6. Labor Code section 558(a) provides a civil penalty that consists of both the $50 or $100 penalty amount and any underpaid wages, with the underpaid wages going entirely to the affected employee or employees as an express exception to the general rule that civil penalties recovered in a PAGA action are distributed 75 percent to the Labor and Workforce Development Agency (LWDA) and 25 percent to the aggrieved employees. Slip op. at 43-44. 
  7. Thurman did not have to exhaust administrative remedies by notifying the LWDA of his intent to seek PAGA penalties because the exhaustion requirement was enacted after the action was filed.  Slip op. at 50.  
  8. The court did not err in allowing Thurman to recover PAGA penalties under section 558 for missed rest periods.  Section 558 applies to "any provision regulating hours and days of work in any order" of the IWC, including the rest period requirement.  Slip op. at 56-57.  
  9. The court erred in allowing Thurman to recover for missed meal periods after July 2003 because his complaint contains judicial admissions that defendants have provided meal periods, as required, since July 2003.  Slip op. at 58.  
That's a lot of ground to cover.  At the end of the day, this opinion (assuming that the Supreme Court does not grant the defendant's petition for review) will be remembered for points three (no PAGA penalties under Wage Order section 20), four (court has discretion to reduce penalty award), six (section 558 includes unpaid wages, which then go to the aggrieved employees), and eight (penalties for missed rest periods).  The opinion also implicitly resolves the question of whether an employee can recover multiple penalties under PAGA for multiple violations.  The court did not address the issue directly, but its holding on point eight and its disposition seem to resolve the issue.

he opinion is available here.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.