Wood v. Kaiser Foundation Hospitals ( 2023 )

Filed 2/24/23
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ANA WOOD, D079528
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2021-00005146-
CU-OE-CTL)
KAISER FOUNDATION HOSPITALS,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County,
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.
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
1 Undesignated statutory references are to the Labor Code.
2
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 BACKGROUND2
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.”
2 Because this case arises after the trial court sustained a demurrer
without leave to amend, we assume as true all properly pleaded material
facts, but not conclusions of fact or law asserted in the complaint. (See Sheen
v. Wells Fargo Bank N.A. (2022) 12 Cal.5th 905, 916.)
3
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).)
3 The court’s minute order initially states that the demurrer is sustained
“without leave to amend.” But the last paragraph of the order purportedly
grants leave to amend and states, “Nothing in this ruling prevents plaintiff
from pursuing a PAGA claim; instead, only penalties are prohibited.”
However, because PAGA “only creates a cause of action for civil penalties”
(ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175, 188), no amendment
consistent with the trial court’s ruling was possible. We therefore construe
the facially ambiguous order as having sustained the demurrer without leave
to amend.
4
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
4 Kaiser’s request for judicial notice of all versions of Assembly Bill
No. 1522 and of the Senate Judiciary Committee analysis of that bill as
amended June 15, 2014 is granted. (Evid. Code, §§ 452, subd. (c), 459.)
5
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).)
5 This bill analysis is cited and discussed in both parties’ briefs, but
neither side specifically requested that we take judicial notice of it. We do so
on our own motion. (Evid. Code, §§ 452, 459.)
6
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 Management Services, Inc. (2000) 23
Cal.4th 116, 129–131.) When considering the enactment of PAGA more than
20 years later, the Legislature realized that the UCL already authorized a
private action alleging unfair business practices. But for two reasons, it was
considered an “inadequate tool” for enforcing the Labor Code. First, the UCL
“only permits private litigants to obtain injunctive relief and restitution,” and
that was considered an insufficient deterrent. (Bill Analysis, supra, Sen. Bill
No. 796, as amended Apr. 22, 2003, p. 5.) Second, it did not provide for an
attorney’s fee award to a prevailing plaintiff, and the sponsors of the
proposed PAGA legislation believed that “few aggrieved employees can afford
to bring an action to enjoin the violations.” (Bill Analysis, supra, Sen. Bill
No. 796, p. 6.)
The Legislature was also “mindful” of “well-publicized” pre-Proposition
64 allegations of abuse of the UCL by private plaintiffs who had not suffered
7
actual harm. (See People ex rel. Lockyer v. Brar (2004) 115 Cal.App.4th 1315,
1317.)6 Determined to avoid a similar issue in PAGA, the bill granted
standing only to “aggrieved” employees. As explained in the Bill Analysis:
“First, unlike the UCL, this bill would not open private
actions up to persons who suffered no harm from the
alleged wrongful act. Instead, private suits for Labor Code
violations could be brought only by an ‘aggrieved
employee’—an employee of the alleged violator against
whom the alleged violation was committed. . . .
“Second, a private action under this bill would be brought
by the employee ‘on behalf of himself or herself or others—
that is, fellow employees also harmed by the alleged
violation—instead of ‘on behalf of the general public’
as private suits are brought under the UCL.” (Bill
Analysis, supra, Sen. Bill No. 796, as amended Apr. 22,
2003, p. 7, italics and boldface added.)7
6 In November 2004 the UCL was amended by Proposition 64 to provide
that only private persons “ ‘who [have] suffered injury in fact and [have] lost
money or property’ ” may sue to enforce it. (See generally, Branick v. Downey
Savings & Loan Assn. (2006) 39 Cal.4th 235, 240–241.)
7 Kaiser asserts that the Senate Committee analysis “does not help”
because when the Act became law in 2014, the UCL no longer authorized
actions by any person acting on behalf of the general public. (See fn. 6, ante.)
Thus, it maintains that section 248.5, subdivision (e)’s use of the term “on
behalf of the public” cannot refer to UCL claims because by 2014, those
claims had standing requirements much like PAGA’s. But while that might
be true as to individual plaintiffs, a civil action under the UCL may be
brought on behalf of the public by the Attorney General, any district
attorney, or any city attorney in a city having a population in excess of
750,000. (Bus. & Prof. Code, § 17204.) Proposition 64 did not change that.
(Abbott Laboratories v. Superior Court (2020) 9 Cal.5th 642, 658.) Thus, even
after Proposition 64, local prosecuting authorities not otherwise given
standing under the Act may bring a civil action on behalf of the public under
the UCL. (Bus. & Prof. Code, § 17204.) Such an action would fall within the
last clause of section 248.5, subdivision (e) limiting remedies.
8
This legislative understanding—that PAGA actions were brought by an
aggrieved employee “on behalf of himself or herself” and “fellow employees
also harmed” (as distinguished from UCL actions, which were brought “on
behalf of the general public”)—was given the force of law. Section 2699,
subdivision (a) provides in part:
“Notwithstanding any other provision of law, any provision
of this code that provides for a civil penalty to be assessed
and collected by the [LWDA] . . . for a violation of this code,
may, as an alternative, be recovered through a civil action
brought by an aggrieved employee on behalf of himself or
herself and other current or former employees . . . .” (Ibid.,
italics added.)
So is a PAGA action one that is brought “on behalf of the public”? The
answer is one that perhaps only a law professor could love: yes and no.
In a PAGA action, courts recognize that the aggrieved
employee/plaintiff acts as an agent of the state. Like any other agency
relationship, the agent in a PAGA action (the aggrieved employee/plaintiff)
acts for the benefit of the principal.8 In this sense, a PAGA action is brought
on behalf of the state or public. (See ZB, N.A. v. Superior Court (2019) 8
Cal.4th 175, 185 [“All PAGA claims are ‘representative’ actions in the sense
that they are brought on the state’s behalf. The employee acts as ‘ “the proxy
or agent of the state’s labor law enforcement agencies” and “represents the
same legal right and interest as” ’ those agencies — ‘ “namely, recovery of
8 There are, however, also some unique aspects to the PAGA agency
relationship. Unlike the typical agent, the PAGA plaintiff must have been
personally affected by the same wrong that it complains about on behalf of its
principal. (§ 2699, subd. (c).) And unlike an ordinary principal, in a PAGA
action the state delegates enforcement to the employee entirely and
irrevocably. (See Lewis v. Simplified Labor Staffing Solutions, Inc. (2022) 85
Cal.App.5th 983, 998–999.)
9
civil penalties that otherwise would have been assessed and collected by the
[LWDA]” ’ ”]; see also Arias, supra, 46 Cal.4th at p. 986; Kim, supra, 9
Cal.5th at p. 87 [“every” PAGA action is one “on behalf of the state” with the
plaintiff acting “as the state’s designated proxy”].)
But from the Legislature’s perspective and particularly as compared to
a UCL claim, a PAGA action is not brought “on behalf of the public,” but
instead on behalf of other aggrieved employees. The text of section 2699,
subdivision (a) plainly says so. (See Santos v. El Guapos Tacos, LLC (2021)
72 Cal.App.5th 363, 372, [stating that “as a matter of law” a PAGA claim is
“ ‘brought by an aggrieved employee on behalf of himself or herself and other
current or former employees’ ”].) In light of the express language in PAGA’s
section 2699, subdivision (a), it would be surprising for the Legislature to
refer to an enforcement action “on behalf of the public” if it meant a PAGA
claim.
Seeking further clarification, we turn to the Act’s legislative history.
Although ultimately enacted in 2014, proposed legislation involving
mandatory sick pay—and particularly section 248.5, subdivision (e)—actually
traces its roots to 2008.9 That part of the initial Assembly Bill No. 2716
(2007–2008 Reg. Sess.) is a single long paragraph, but it can conveniently be
broken down into three parts: (1) Standing, (2) Remedies, and (3) Exceptions
to remedies. The first part on standing stated:
9 As a general rule, unpassed legislation provides only limited guidance
when interpreting legislation enacted into law. But an exception to that rule
exists where, as here, reasonable inferences can be drawn from the evolution
of statutory text. (See, e.g., Athletics Investment Group LLC v. Dept. of Toxic
Substances Control (2022) 83 Cal.App.5th 953, 974 [“The fact that the
Legislature made this change to the language of the bill during the political
process has implications for a proper construction of the statute.”].)
10
“The department [of Industrial Relations], the Attorney
General, a person aggrieved by a violation of this article, an
entity a member of which is aggrieved by a violation of this
article, or another person or entity acting on behalf of the
public as provided for under applicable state law, may
bring a civil action in a court of competent jurisdiction
against the employer or other person violating this
article . . . .” (See Legis. Counsel’s Dig., Assem. Bill No.
2716 (2007–2008 Reg. Sess.) as introduced Feb. 22, 2008,
§ 6 [proposed § 248.5, subd. (e)].)
The second part on remedies stated:
“and, upon prevailing, shall be entitled to such legal or
equitable relief as may be appropriate to remedy the
violation, including reinstatement, back pay, the payment
of any sick leave unlawfully withheld, the payment of an
additional sum as liquidated damages in the amount of fifty
dollars ($50) to each employee or person whose rights
under this article were violated for each day or portion
thereof that the violation occurred or continued, plus, if the
employer has unlawfully withheld paid sick leave to an
employee, the dollar amount of paid sick leave withheld
from the employee multiplied by three; or two hundred fifty
dollars ($250), which amount is greater; and reinstatement
in employment or injunctive relief; and further shall be
awarded reasonable attorney’s fees and costs . . . .” (See
Legis. Counsel’s Dig., Assem. Bill No. 2716 (2007–2008
Reg. Sess.) as introduced Feb. 22, 2008, § 6 [proposed
§ 248.5, subd. (e)].)
The third part on exception to remedies stated:
“provided, however, that any person or entity enforcing this
article on behalf of the public as provided under applicable
state law shall, upon prevailing, be entitled only to
equitable, injunctive, or restitutionary relief, and
reasonable attorney’s fees and costs.” (See Legis. Counsel’s
Dig., Assem. Bill No. 2716 (2007–2008 Reg. Sess.) as
introduced Feb. 22, 2008, § 6 [proposed § 248.5, subd.
(e)].)as introduced Feb. 22, 2008, § 6 [proposed § 248.5,
subd. (e)].)
11
Thus, as originally drafted as part of 2008 Assembly Bill No. 2716,
section 248.5, subdivision (e)’s standing provision distinguished between an
action by (1) state officials, (2) a person aggrieved, (3) a labor organization for
an aggrieved member, and (4) “another person or entity acting on behalf of
the public as provided for under some other state law.” (See Legis. Counsel’s
Dig., Assem. Bill No. 2716 (2007–2008 Reg. Sess.) § 6 [proposed § 248.5, subd.
(e)].) The “some other state law” in category (4) must be a reference to the
UCL rather than PAGA. Only aggrieved employees can bring PAGA claims,
so the fourth category would be unnecessary and duplicative of category (2) if
it was intended to mean a PAGA action. In contrast, local prosecutors (not
otherwise identified in section 248.5) can file UCL actions, so interpreting the
fourth category to mean a UCL action adds something substantive to the
standing provisions.
After the discussion of standing, the next part of the paragraph
provided a smorgasbord of remedies, including compensatory damages,
liquidated damages, and civil penalties. This structure (standing first, then
remedies) was logical, but it presents an obvious drafting problem. Some of
the remedies contained in the second part (such as liquidated damages and
penalties) were not recoverable as a matter of law by certain types of
plaintiffs given standing in the first part. For example, as a matter of law in
a UCL action brought by a private person, only injunctive relief and
restitution would be available remedies. (Bus. & Prof. Code, §§ 17203;
17535.) Thus, if the action brought “on behalf of the public” was a reference
to a UCL action, then somewhere else the statute had to make clear that
liquidated damages and penalties were not recoverable.
The final clause in section 248.5, subdivision (e) must have been
drafted for this purpose, and thus it is no coincidence that the restriction to
12
“equitable, injunctive, or restitutionary relief” matches the limited remedies
available under the UCL. (See Hambrick v. Healthcare Partners Medical
Group, Inc. (2015) 238 Cal.App.4th 124, 155 (Hambrick).) Any person or
entity enforcing the statute “on behalf of the public as provided under
applicable state law”—i.e., a UCL plaintiff—would be limited to UCL
remedies. This was meant to clarify that to the extent the preceding clauses
in section 248.5 provided for relief beyond that available under the UCL,
those additional remedies were not available in a UCL action based on a
violation of the mandatory sick pay law.10
Although the 2008 legislation was not passed, it was resurrected the
following year as Assembly Bill No. 1000. (See Legis. Counsel’s Dig., Assem.
Bill No. 1000 (2009–2010 Reg. Sess.).) Deletions from the 2008 version are
indicated in strikeout, and additions in double underlining below. The first
part on standing stated:
“(e) The department [of Industrial Relations], The Labor
Commissioner, the Attorney General, a person aggrieved by
a violation of this article, or an entity a member of which is
aggrieved by a violation of this article, or another person or
entity acting on behalf of the public as provided for under
applicable state law, may bring a civil action in a court of
competent jurisdiction against the employer or other person
violating this article . . . .”11 (See Legis. Counsel’s Dig.,
Assem. Bill No. 1000 (2009–2010 Reg. Sess.) as introduced
Feb. 27, 2009 [proposed § 248.5, subd. (e)].)
10 Thus, contrary to Kaiser’s assertion, the limitation of remedies for UCL
actions is not “redundant.” Without that clarification in the last clause of
section 248.5, subdivision (e), the statute might be read to expand UCL
remedies for sick pay violations.
11 The second part on remedies and the third part on limitations for UCL
remedies was unchanged from the 2008 version. (Assem. Bill No. 1000
(2009–2010 Reg. Sess.).)
13
Thus, the bill’s author deleted language appearing in the earlier 2008
version that provided an enforcement action could be brought by “another
person or entity acting on behalf of the public as provided for under
applicable state law.” But interestingly, the last clause in section 248.5,
subdivision (e), restricting remedies in such an action, remained unchanged
in the 2009 version.
Why would this new version of the bill delete the action “on behalf of
the public” in the standing provision but retain the “on behalf of the public”
limitation of remedies? Because the UCL itself already conferred standing,
the drafters of the legislation likely concluded that an express reference to
standing for a UCL claim was unnecessary. In enacting the statute on
mandatory sick pay, it simply went without saying that a person or entity
could bring the action on behalf of the public as provided under some other
state law. If some other law provided a right to enforce sick leave rules, then
there was no need to repeat that again in section 248.5, subdivision (e). At
the same time, the limitation on UCL remedies in the last clause did no harm
in that it accurately conveyed the Legislature’s intent and forestalled any
argument that the Act should be construed to expand UCL remedies when a
sick pay violation was involved. And because attorney fees are not
recoverable under the UCL (see Hambrick, supra, 238 Cal.App.4th at p. 157),
it also assured UCL plaintiffs successfully enforcing the Act the right to seek
attorney’s fees.
In any event, the 2009 bill also died, and similar legislation was not
proposed again until Assembly Bill No. 400 in 2011. (See Legis. Counsel’s
Dig., Assem. Bill No. 400 (2011–2012 Reg. Sess.) as introduced Feb. 14, 2011
[proposed § 248.5, subd. (e)].) The 2011 version of section 248.5, subdivision
14
(e) was identical to that in the 2009 bill. The 2011 bill suffered the same fate,
and similar legislation would not be reintroduced until 2014.
In 2014, the Legislature finally enacted mandatory sick pay in
Assembly Bill No. 1522. (Stats. 2014, ch. 317, § 3 (2013–2014 Reg. Sess.)
effect. Jan. 1, 2015.) Pertinent here, there were two changes from the prior
(unpassed) versions.
Like its predecessor bills, as introduced Assembly Bill No. 1522
authorized the Labor Commissioner, the Attorney General, an aggrieved
person, or an entity a member of which is aggrieved to bring a civil
enforcement action. (See Legis. Counsel’s Dig., Assem. Bill No. 1522 (2013–
2014 Reg. Sess.) Jan. 16, 2014, § 4 [proposed § 248.5, subd. (e)].) But
opponents had raised “particular concern about some of the enforcement
mechanisms contained in this bill, including the private right of action.”
(Assem. Floor Analyses, 3d reading analysis of Assem. Bill No. 1522 (2013–
2014 Reg. Sess.) as amended May 28, 2014, p. 4.) Addressing that concern,
on May 28, 2014, the bill was amended to delete the authorization for both
the private right of action (aggrieved persons) and the action brought by a
labor organization (i.e., an entity of which such a person was a member).
The changes in this amended version of the bill are indicated below:
“The Labor Commissioner, or the Attorney General, a
person aggrieved by a violation of this article, or an entity a
member of which is aggrieved by a violation of this article,
or another person or entity acting on behalf of the public as
provided for under applicable state law, General may bring
a civil action in a court of competent jurisdiction against
the employer or other person violating this article . . . .”
(Assem. Com. on Appropriations, Analysis of Assem. Bill
No. 1522 (2013–2014 Reg. Sess.) as amended May 28, 2014,
p. 13 [proposed § 248.5, subd. (e)].)
15
Did these changes manifest an intent to preclude an aggrieved
employee from bringing a PAGA action? Every indication is that it did not.
PAGA itself creates standing for aggrieved employees to collect civil penalties
otherwise recoverable by the LWDA. (§ 2699, subd. (a).) Thus, eliminating a
private right of action for damages is an entirely different issue. Moreover,
despite deleting the private right of action, the May 28, 2014 bill analysis
assured its readers that although “recent amendments” deleted standing for
aggrieved persons, “it should be noted that the provisions of this bill are in
addition to and independent of any other rights, remedies, or procedures
available under any other law and do not diminish, alter or negate any other
legal rights, remedies, or procedures available to an aggrieved person.”
(Assem. Floor Analyses, 3d reading analysis of Assem. Bill No. 1522 (2013–
2014 Reg. Sess.) as amended May 28, 2014, p. 4.) Those “other . . .
procedures” included PAGA.
About two weeks later, the bill was amended to give this assurance the
force of law. On June 15, 2014, section 245, subdivision (b) was added to the
bill, providing:
“The provisions of this article are in addition to and
independent of any other rights, remedies, or procedures
available under any other law and do not diminish, alter, or
negate any other legal rights, remedies, or procedures
available to an aggrieved person.” (See Legis. Counsel’s
Dig., Assem. Bill No. 1522 (2013–2014 Reg. Sess.) as
amended June 15, 2014, p. 8 [proposed § 245, subd. (b),
italics omitted].)
These two changes: (1) deleting the private right of action, but
(2) making clear that it was not intended to “diminish, alter, or negate”
any existing rights or procedures available to an “aggrieved person,”
16
remained part of the bill and were enacted into law. (§ 245, subd. (b); Stats.
2014, ch. 317, § 3 (Assem. Bill No. 1522).)
The reasonable inferences from this history all point in the same
direction. PAGA was created because of the stark reality that the Labor
Commissioner and Attorney General lacked adequate resources to enforce
labor laws. The Legislature believed that unless aggrieved employees acting
as private attorneys general were authorized to enforce those laws, employers
would continue to violate them on a massive scale. Studies showed these
violations were costing the state enormous amounts of cash—between $3 to
$6 billion annually—as a result of employers operating outside the state’s
labor laws. (Bill Analysis, supra, Sen. Bill No. 796, as amended Apr. 22,
2003, p. 2.)
This recognized need for private enforcement of labor laws was
compounded by the many robust policy reasons for mandating paid sick
leave. As of 2014 when the Act became law, roughly 39 percent of the state
workforce received no sick leave benefits, leaving “seven million Californians
with few options when personal or family needs arise.” (Sen. Rules Com., Off.
of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 1522 (2013–
2014 Reg. Sess.) as amended Aug. 18, 2014, p. 9.) Workers without paid sick
leave were either expected to work while sick, risking the health and safety of
coworkers and customers, or stay home and forego wages, jeopardizing the
worker’s own financial ability to survive. (Ibid.)
Given the perceived necessity for mandating minimum paid sick leave,
coupled with its documented understanding that traditional government
institutions would be unable to adequately assure compliance, it seems
inconceivable that the Legislature intended to prohibit PAGA actions to
enforce the Act. Doing so would essentially leave only the Labor
17
Commissioner and the Attorney General to litigate violations—and the
Legislature had already determined a decade earlier that these agencies were
flatly incapable of adequately enforcing labor laws. To accept Kaiser’s
argument is to believe the Legislature intended the Act to be nothing more
than statutory cotton candy—something that looks nice but has no substance.
We are confident that was not its intent.
Moreover, when amending Assembly Bill No. 1522 in May and June
2014, the Legislature could have easily and expressly abolished a PAGA
remedy when, in the face of staunch opposition to the bill, it deleted the
private right of action. But instead, it did the opposite. In section 245,
subdivision (b), it codified that the Act does not “diminish, alter, or negate”
any other procedures “available to an aggrieved” person. (Ibid.) It is no
small coincidence that PAGA is a procedural device that uses the same
terminology, conferring standing to an “aggrieved employee.” (§ 2699,
subd. (a).)12
12 Disagreeing with this analysis, Kaiser contends that section 245,
subdivision (b) is best understood as protecting a private plaintiff’s ability to
pursue a UCL action. But if that were the intent, one would expect the
Legislature to have used then-existing UCL terminology—preserving an
action by “a person who has suffered injury in fact and has lost money or
property” as a result of the violation. (See Bus. & Prof. Code, § 17204.)
Instead, however, the Legislature used PAGA terminology—“aggrieved”
employee. Kaiser also maintains that section 245, subdivision (b) was
intended to carve out “the Kin Care statute[s],” sections 233 to 234, which
permit employees to use half of their provided sick leave to care for certain
family members. But there is not so much as a whisper of that intent in the
legislative history. And given the timing of the amendment adding section
245, subdivision (b), the more reasonable interpretation is the Legislature
wanted to make clear that despite eliminating the private right of action, a
PAGA action was still authorized.
18
It is of course true, as Kaiser points out, that section 248.5, subdivision
(e) only authorizes the Labor Commissioner or the Attorney General to collect
penalties. But that should not be interpreted to prohibit an aggrieved
employee from bringing a PAGA action. Section 248.5, subdivision (e) does
not need to authorize a PAGA action because such actions are already
authorized by the PAGA statute itself. It begins by stating,
“Notwithstanding any other provision of law, any provision of this code that
provides for a civil penalty to be assessed and collected by the [LWDA] . . .
may, as an alternative, be recovered through a civil action brought by an
aggrieved employee . . . .” (§ 2699, subd. (a), italics added.) The statutory
phrase “ ‘notwithstanding any other provision of law’ ” is a term of art that
“ ‘declares the legislative intent to override all contrary law.’ ” (Arias, supra,46 Cal.4th at p. 983.) It means that an aggrieved employee’s rights under
PAGA control, despite the existence of other laws that might otherwise
govern or restrict. (See California Taxpayers Action Network v. Taber
Construction, Inc. (2017) 12 Cal.App.5th 115, 130.) Illustrating this point,
there are many other statutes that on their face would only permit the Labor
Commissioner to recover penalties, yet have instead been enforced by an
aggrieved employee under PAGA. (See, e.g., § 226.3 [providing that “the
Labor Commissioner shall” enforce this section], Raines v. Coastal Pacific
Food Distributors, Inc. (2018) 23 Cal.App.5th 667, 675 [PAGA action to
enforce § 226.3]; § 256 [providing that “[t]he Labor Commissioner shall
impose a civil penalty”], and Villacres v. ABM Industries Inc. (2010) 189
Cal.App.4th 562, 579 [PAGA action to recover a civil penalty for violation of
section 256].)
Similarly, that an employee cannot file an individual action for
violations of the Act does not mean the Legislature also intended to preclude
19
a PAGA action based on the same alleged violation. PAGA is not a private
right of action, but rather a procedural device under which an agent or proxy
of the state enforces the government’s ability to collect penalties. It applies
even where there is no private right of action. (See, e.g., Noe v. Superior
Court (2015) 237 Cal.App.4th 316, 339 [where a Labor Code provision
provides for a civil penalty and contains no language suggesting it is
recoverable directly by employees, a PAGA action is available, although no
private right of action].)
In response to a question during oral argument, Kaiser’s attorney
asserted that the last clause in section 248.5, subdivision (e)—“any person or
entity enforcing this article on behalf of the public”—could only refer to a
private person bringing a UCL action (and not a “public actor” such as a local
prosecutor) because (1) Labor Code section 18 defines “person” in a way that
excludes public entities, and (2) in Wells v. One2One Learning Foundation
(2006) 39 Cal.4th 1164 (Wells), the Supreme Court held “that same language,
that definition of person” does not include “public actors.”
For several reasons, we understand the statute differently. Section 18
defines “person” to mean “any person, association, organization, partnership,
business trust, limited liability company, or corporation.” The literal textual
meaning of this definition might seem to exclude government agencies.
Obviously, a government entity is not a natural person or any of the types of
business organizations listed in section 18.
But as in so many other areas of law, what may seem simple on its face
is not. To begin with, Kaiser’s argument conveniently overlooks the word
“entity” in this part of the statute. Moreover, nothing in section 18 expressly
excludes government entities either. As Wells recognized, “[G]overnment
agencies are excluded from the operation of general statutory provisions ‘only
20
if their inclusion would result in an infringement upon sovereign
governmental powers . . . . Pursuant to this principle, governmental agencies
have been held subject to legislation which, by its terms, applies simply to any
‘person.’ ” (Wells, supra, 39 Cal.4th at p. 1192, italics added.)
For example, in State v. Marin Municipal Water Dist. (1941) 17 Cal.2d
699, the Streets and Highways Code provided that any “person” maintaining
a pipeline could be required to move it upon written demand when necessary
for safety or public improvement purposes. The issue was whether it
encompassed municipal water districts. Much like Labor Code section 18
here, another provision of the Streets and Highways Code defined “person”
as “ ‘any person, firm, partnership, association, corporation, organization, or
business trust.’ ” (Marin Municipal Water Dist., at p. 704.) Applying this law
to municipal water districts would not limit their otherwise valid power but
would only operate to prevent them from exercising their franchises in a
manner contrary to law. Thus, the Supreme Court concluded that the
Legislature intended to embrace municipal water districts within the
statute’s application. In short, the statutory definition of a “person”
encompassed a government entity.
As explained in Los Angeles v. San Fernando (1975) 14 Cal.3d 199 (Los
Angeles), the rule Kaiser invokes here—excluding governmental agencies
from the operation of general statutory provisions—applies “only if their
inclusion would result in an infringement upon sovereign governmental
powers. ‘Where . . . no impairment of sovereign powers would result, the
reason underlying this rule of construction ceases to exist and the Legislature
may properly be held to have intended that the statute apply to
governmental bodies even though it used general statutory language only.’ ”
(Id. at pp. 276–277.) Thus, in Los Angeles, the court interpreted the language
21
“person, firm or corporation” in Civil Code section 1007 (pertaining to title by
prescription) to include governmental agencies. (See also Regents of
University of Cal. v. Superior Court of Alameda County (1976) 17 Cal.3d 533,
536 [concluding that “ ‘person, association, copartnership or corporation’ ” in
usury laws included public entity); Flournoy v. State (1962) 57 Cal.2d 497,
498–499 [applying to a state government a wrongful death statute attaching
liability to any “person” responsible for another’s death].)
Wells is a good illustration of the principle. That case involved a
lawsuit against a school district that allegedly defrauded the State. The
Supreme Court considered whether public school districts were “persons”
subject to suit under the California False Claims Act. (Wells, supra, 39
Cal.4th at p. 1179; Gov. Code, § 12650 et seq.) It concluded that the statutory
definition—“any natural person, corporation, firm, association, organization,
partnership, limited liability company, business, or trust” excluded public
schools for purposes of imposing liability. (Wells, at p. 1166.) The Wells court
explained the need to protect public school districts from “draconian
liabilities” of the California False Claims Act, which include double and
treble damages. (Id. at p. 1193.) The court reasoned that the Legislature
could not have intended to subject financially strapped school districts to
such liabilities, given their responsibility to provide free public
education. (Id. at pp. 1193–1197.)
But in sharp contrast here, we are not dealing with a statute that
imposes liability or some other negative consequence on a government entity.
To the contrary, to the extent it is capable of enforcing the Labor Code, the
government’s role is to do just that—enforce it against private employers.
The rationale for the Wells holding simply does not apply here.
22
In short, whether the Legislature intends a governmental entity to be a
“person” is not a simple question, and the answer is almost always
contextual. Here, the phrase “person or entity” in the last clause of section
248.5, subdivision (e) is broad enough to include public agencies seeking to
enforce the UCL, and we think the Legislature likely acted with that
understanding when it passed the Act.
Perhaps Kaiser’s best argument is that “[e]very federal district court to
have considered the issue” has reached the opposite conclusion—that the Act
“ ‘expressly prohibits a private plaintiff from recovering PAGA penalties.’ ”
The leading case is Stearne v. Heartland Payment Sys. LLC (E.D.Cal., Feb. 6,
2018, No. 2:17-cv-01181-MCE-CKD) 2018 U.S. Dist. Lexis 20679 (Stearne).
But without analyzing the PAGA statute itself or any legislative history
whatsoever, the district court in Stearne thought section 248.5, subdivision
(e) “makes clear that persons or entities seeking to recover on behalf of the
public may not recover penalties” and, therefore, a PAGA action, which is
brought on “behalf of the public” is barred because it seeks only penalties.
(Stearne, at p. *6.)
Although we are not bound by federal district court decisions (Sanchez
v. Bezos (2022) 80 Cal.App.5th 750, 769), we look to “analytically sound”
reasoning in federal opinions as persuasive. (Futrell v. Payday California,
Inc. (2010) 190 Cal.App.4th 1419, 1432, fn. 6.)13 For reasons already
discussed, we are not persuaded by the reasoning in Stearne. The other
federal trial court decisions that Kaiser relies on—Segal v. Aquent LLC
13 Conversely, California state trial court decisions in other cases have no
precedential value and cannot be cited. (Bolanos v. Superior Court (2008)
169 Cal.App.4th 744, 761; Cal. Rules of Court, rule 8.1115.) Accordingly,
Wood’s requests for judicial notice of minute orders in four other superior
court cases is denied.
23
(S.D.Cal., Sept. 24, 2018, No. 18cv346-LAB (JLB)) 2018 U.S. Dist. Lexis
164610, page *19, footnote 5 and Rudolph v. Herc Rentals (C.D.Cal., Aug. 27,
2021, No. 2:20-cv-05412-ODW (Ex)) 2021 U.S. Dist. Lexis 244970, page *14
also contain no serious statutory analysis, do not discuss any legislative
history materials, and merely cite Stearne and other district court decisions
that have followed it. We decline to follow these federal district court
decisions for the same reasons.14
Kaiser also maintains that if interpreted to preserve PAGA claims,
section 245, subdivision (b) (providing that the Act is “in addition to” any
other “rights, remedies, or procedures” under “any other law”) is
“irreconcilable with” section 246, subdivision (i). That statute requires
employers to provide employees with written notice of the amount of paid
sick leave available. Section 246 gives the employer the option of including
that notice in a wage statement already required by section 226, which shows
certain information including gross wages earned, deductions, and net wages
earned.15 Or it can provide the employee with a separate sick leave
document. Either way, the penalties for noncompliance specified in section
246 shall be “in lieu of the penalties provided for a violation of [s]ection 226.”
In other words, the fact that section 246 notice can be satisfied in a section
14 Kaiser also relies on Titus v. McLane Foodservice, Inc. (E.D.Cal., Sept.
14, 2016, No. 2:16-cv-00635-KJM-EFB) 2016 U.S. Dist. Lexis 125116.
However, that court expressly declined to address the argument that section
248.5, subdivision (e) bars a PAGA action. (Titus, at p. *15.)
15 Section 226, subdivision (a) generally requires an employer to provide
employees with an itemized written statement showing total hours worked,
the number of piece-rate units earned and any applicable piece rate if the
employee is paid on a piece-rate basis, all deductions, gross/net wages earned,
the dates for which the employee is being paid, and other identifying
information.
24
226 wage statement does not permit the employee to recover section 226
penalties for what is, fundamentally, a section 246 violation.
Kaiser appears to argue that if section 245, subdivision (b) is read to
authorize all remedies (including a PAGA action), then any remedy excluded
under section 246, subdivision (i) would nevertheless be available under
section 245, subdivision (b)—an internal inconsistency creating an absurd
result. We find this argument difficult to follow, and more difficult to accept.
Section 245, subdivision (b) simply provides that to the extent an aggrieved
person has greater rights, remedies, or procedures available under some
other law, nothing in the Act diminishes, alters, or negates such rights.
Section 226 does not provide a right to written notice of available paid sick
leave. So the fact that sick leave notice can be included in a section 226 wage
statement, avoiding the need for a separate sick leave document, does not
create an otherwise “available” remedy, a point that section 246 merely
clarifies. There is no conflict between section 245, subdivision (b) and section
246, subdivision (i).
In sum, we hold that section 248.5, subdivision (e) does not preclude an
aggrieved employee from bringing a PAGA action for violations of the Act.
Reasonably construed according to its text, history, and context, the phrase,
“on behalf of the public as provided for under applicable state law” refers to a
UCL claim and not a PAGA action. (§ 248.5.) Because the superior court’s
ruling was based on the opposite conclusion, the judgment of dismissal must
be reversed.16
16 Because of this disposition, it is unnecessary to consider Wood’s
alternative arguments that PAGA penalties are not “equitable” remedies
within the meaning of section 245.8, subdivision (e).
25
DISPOSITION
The judgment of dismissal is reversed. Wood is entitled to costs on
appeal.
DATO, J.
WE CONCUR:
HUFFMAN, Acting P. J.
DO, J.
26