In re Acknowledgment Cases CA4/2 ( 2015 )

Filed 6/5/15 In re Acknowledgment Cases CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
IN RE ACKNOWLEDGMENT CASES E058460
(Super.Ct.No. JCCP4412)
OPINION
APPEAL from the Superior Court of Los Angeles County. Elihu M. Berle, Judge.
Affirmed in part; reversed in part with directions.
The Law Offices of Jon Webster, Jon Webster, James A. Arcellana and Raymond
M. Yetka for Defendants and Appellants.
Michael N. Feuer, City Attorney, Amy Jo Field, Assistant City Attorney, Gregory
P. Orland, Brian I. Cheng and Juliann Anderson, Deputy City Attorneys, for Plaintiff and
Respondent.
1
INTRODUCTION
The City of Los Angeles (the city), the respondent in this case, requires that all
newly hired police officers attend and graduate from the Los Angeles Police Academy.
In the early 1990’s, the city realized that many officers who graduated from the academy
were leaving within a few years to join other law enforcement agencies. The city sought
to find a way to curtail the attrition. The city enacted Los Angeles Administrative Code
section 4.1700 (hereafter LAAC § 4.1700), which provides, in part, that any police
officer hired by the Los Angeles Police Department (LAPD) is required to reimburse the
city a prorated portion of the cost of training at the academy if he or she voluntarily
leaves the LAPD after serving less than 60 months following graduation and goes to
work for another law enforcement agency within one year after terminating employment
with the LAPD. LAAC section 4.1700 further provides that upon application for a job as
a police officer, the applicant shall sign an agreement stating that he or she intends to
maintain employment with the LAPD for at least 60 continuous months and agreeing to
reimburse the city for the direct and indirect costs of training if he or she leaves the
LAPD within five years after graduation and becomes employed by another law
2
enforcement agency within one year after leaving the LAPD. (LAAC § 4.1700.)1 The
agreement is called “the acknowledgment.”2
This case is a coordinated action involving 43 former officers of the LAPD, all but
three of whom were successfully sued by the city for breach of the acknowledgment.
Judgment was also entered against the former officers, referred to hereafter collectively
as appellants, on their cross-complaint. On appeal, they contend that the
acknowledgement fails as a contract for lack of consideration, but that if there was a
contract, it was unenforceable as contrary to multiple state and federal laws. We agree in
part with appellants’ contention that LAAC section 4.1700 violates Labor Code section
2802, and that the acknowledgment is void pursuant to Labor Code section 2804. As we
explain below, we do not reach appellants’ other contentions at this time.
1 The parties stipulated that exhibit 51, admitted at trial, is the version of LAAC
section 4.1700 which was operative on the dates that the four representative defendants
signed the acknowledgment (Apr. 13, 1998 (Alvo); Sept. 27, 1999 (Murdoch); Nov. 7,
2001 (Marsh); and Mar. 10, 2003 (Ramos)). The pertinent portion of the operative
ordinance, as reflected in exhibit 51, provides:
“1. Any Police Officer of the Los Angeles Police Department who receives basic
recruit training and any Police Specialist who receives lateral training at the Los Angeles
Police Department Police Academy shall reimburse the Police Department for the
estimated costs of that training should he/she voluntarily leave the Department before
having served sixty continuous months following successful completion of such training
and, within a year thereof, become employed by another law enforcement agency.”
The full title of the document is “Acknowledgment of Los Angeles Police
2
Department’s Intent To Seek Reimbursement Of Costs Of Basic And Lateral Training,
And Agreement To Repay Pro-Rated Costs Of Training.”
3
PROCEDURAL HISTORY3
On August 9, 2001, the city filed a complaint in the San Bernardino County
Superior Court for breach of contract, quantum meruit and fraud against Anthony Alvo, a
resident of that county, alleging that Alvo was required by the terms of the
acknowledgment to reimburse the city $34,000. Alvo answered the complaint, denying
the allegations and asserting multiple affirmative defenses, including the assertion that
the acknowledgment violated Labor Code section 2802. Alvo and Daniel Fernandez filed
a cross-complaint and then a first amended cross-complaint, on behalf of themselves and
others similarly situated. Fernandez was also a former LAPD officer who had signed the
acknowledgment, and the city had threatened him with legal action.4 The city then filed
breach of contract claims in Los Angeles County against additional defendants. Alvo and
Fernandez sought to have all of the lawsuits litigated in a coordinated proceeding in San
Bernardino County. The Chair of the Judicial Council authorized coordination of the
suits. The assigned coordination motion judge ordered coordination of the five cases, and
3 This is the second time this matter has come before this court. In In re
Acknowledgment Cases (Mar. 13, 2008, E040511) (nonpub. opn.), we held that the
defendants’ appeal from an order denying their motion to certify their cross-complaint as
a collective action under title 29 United States Code section 216(b) was premature. We
remanded the cause for further proceedings. Although most of the pertinent facts are
contained in the statement of decision filed in this case, a few background facts are not.
Accordingly, we will refer from time to time to our opinion in case No. E040511 as
“Acknowledgment Cases I.”
4 As of April 30, 2002, the date of filing the first amended cross-complaint, the
city had not yet filed suit against him. The city later filed suit against a Daniel
Fernandez.
4
recommended that the cases be tried in Los Angeles County, outside the city limits of the
City of Los Angeles. The coordination motion judge designated this court as the court
for any writ or appellate proceedings.5 Seven additional “add-on” cases, which had by
then been filed, were stayed until a coordination judge had been appointed in Los
Angeles County and had ruled on the appropriateness of coordinating the add-on cases.
(Acknowledgment Cases I, supra, E040511.)
The Honorable Daniel Solis Pratt, sitting in Norwalk, was assigned as the
coordination judge. Judge Pratt ordered what was by then a total of 34 cases coordinated.
However, he ordered the litigation to proceed only on the original five cases. The
remaining cases, and any additional cases filed thereafter, which would also be joined in
the coordinated actions, would be stayed pending resolution of the five original cases.
(Acknowledgment Cases I, supra, E040511.)
Thereafter, Alvo and Fernandez filed a motion to certify the cross-complaint as a
collective action pursuant to title 29 United States Code section 216(b). Judge Pratt
denied the motion. (Acknowledgment Cases I, supra, E040511.) Alvo and Fernandez
filed a notice of appeal from the order denying certification. (Ibid.) We held that the
order was not appealable as a final judgment because it did not terminate the action as to
all putative class members. (Ibid.)
5 Section 404.2 of the Code of Civil Procedure provides that the coordination
motion judge shall select the reviewing court having appellate jurisdiction if the actions
to be coordinated are within the jurisdiction of more than one appellate court. In contrast,
the coordination motion judge merely recommends to the Chair of the Judicial Council a
particular superior court for trial of the coordination proceedings. (Cal. Rules of Court,
rule 3.530(a).)
5
Following remand to the superior court for further proceedings, four cases were
selected for trial. The defendants in those cases were Anthony Alvo, Duncan Murdoch,
Randall Marsh and Juan Ramos. The operative pleadings were the city’s complaint
against each defendant, an amended consolidated answer, an amended consolidated
cross-complaint, and the city’s answer to the cross-complaint.
Trial was conducted primarily on the parties’ briefing, exhibits and argument. The
parties stipulated to allow testimony limited to cross-examination of opposing witnesses.
The parties stipulated that the judgment would apply to all pending cases. Following
trial, the court issued its statement of decision and entered judgment in favor of the city
against the representative defendants, except defendant Murdoch, as to whom the court
found the complaint time-barred. Judgment was entered as to the four representative
defendants. That judgment was later vacated, and the parties stipulated to a final
judgment on all pending cases, incorporating the terms of the original judgment and
stating the amount awarded to the city with respect to each defendant who was found
liable to the city. The stipulated judgment also provided that in addition to Murdoch,
defendants Daniel Baltazar and Marc Gonzales were awarded judgment against the city.
The judgment awarded costs and attorney fees to Murdoch, Baltazar, and Gonzales, and
to the city with respect to the remaining defendants.
This appeal followed.
6
LEGAL ANALYSIS
1.
LAAC SECTION 4.1700 AND THE ACKNOWLEDGMENT ARE VOID TO THE
EXTENT THAT THEY PROVIDE FOR REIMBURSEMENT OF TRAINING OTHER
THAN STATUTORILY MANDATED BASIC “POST” TRAINING
Both as an affirmative defense and as a cause of action in their cross-complaint,
appellants contend that the acknowledgment and its source, LAAC section 4.1700, run
afoul of Labor Code sections 2802 and 2804. The trial court found otherwise.
Appellants reassert this contention on appeal. We agree, in part.6
Labor Code section 2802, subdivision (a), provides, in pertinent part: “An
employer shall indemnify his or her employee for all necessary expenditures or losses
incurred by the employee in direct consequence of the discharge of his or her duties . . . .”
Appellants contend that because the LAPD requires all newly hired officers to attend its
academy, the cost of the academy is a necessary expenditure incurred as a direct
consequence of the discharge of the officer’s duties, and that LAAC section 4.1700 and
the acknowledgment are therefore void. The city responds that because appellants did
not pay for their training, they did not incur any out-of-pocket expense. However, the
city then contradicts itself by acknowledging that appellants did become liable for a
portion of the cost of their training because they failed to abide by the terms of the
6 We review independently both the interpretation of a statute (People ex rel.
Lockyer v. Shamrock Foods Co. (2000) 24 Cal. 4th 415, 432) and the application of a
statute to undisputed facts (International Engine Parts, Inc. v. Feddersen & Co. (1995)
9 Cal. 4th 606, 611).
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acknowledgment. The city also contends that Labor Code section 2802 does not apply
because the training recruits receive is mandated by law under the Peace Officer
Standards and Training (POST) legislation. (Pen. Code, §§ 832, 13510 et seq.)
Labor Code section 2802 does not explicitly provide that costs of employee
training are to be borne by the employer, nor does it expressly exclude training costs from
“necessary expenditures or losses incurred by the employee” in direct consequence of the
discharge of the employee’s duties. (Lab. Code, § 2802, subd. (a).) We have found no
cases addressing training as a cost covered by Labor Code section 2802. Accordingly,
the statute contains an unresolved ambiguity on this point. In interpreting a statute, a
court’s task is to attempt to discern and give effect to the Legislature’s intent. (Ross v.
California Coastal Com. (2011) 199 Cal. App. 4th 900, 922.) Where the language of a
statute is ambiguous, the court may look to outside sources to assist it in that task. (Ibid.)
Although courts have the final responsibility for interpreting a statute, an administrative
agency’s interpretation of a statute involving its area of expertise is entitled to great
weight. (Ibid.) Indeed, a court must defer to the agency’s interpretation of such a statute
unless that interpretation contradicts the clear language and purpose of the statute. (Id. at
p. 938.)
With respect to the question of liability for training costs under Labor Code
section 2802, the Department of Industrial Relations, Division of Labor Standards
Enforcement, or DLSE, has stated as follows:
“There is generally no requirement that an employer pay for training leading to
licensure or the cost of licensure for an employee. While the license may be a
8
requirement of the employment, it is not the type of cost encompassed by Labor Code
[section] 2802. The most important aspect of licensure is that it is required by the state or
locality as a result of public policy. It is the employee who must be licensed and unless
there is a specific statute which requires the employer to assume part of the cost, the cost
of licensing must be borne by the employee.
“There may be situations, however, where licensure is not actually required by
statute or ordinance but the employer requires either the training or the licensing (or both)
simply as a requirement of employment. In that case, the provisions of Labor Code
[section] 2802 would require the employer to reimburse the cost.” (DLSE Op. Ltr. (Nov.
17, 1994) at p. 1, fn. omitted.)
We agree with the DLSE’s analysis. As noted above, we have found no cases
which address whether training costs fall under Labor Code section 2802. However, it is
established that the broad purpose of Labor Code section 2802 is to require an employer
to bear all of the costs inherent in conducting its business and to indemnify employees
from costs incurred in the discharge of their duties for the employer’s benefit. (See
Edwards v. Arthur Andersen LLP (2008) 44 Cal. 4th 937, 952 and cases cited therein.)
It is consistent with this purpose to require that where an individual must, as a matter of
law, have a license to carry out the duties of his or her employment, the employee must
bear the cost of obtaining the license. It is also consistent with this purpose to require an
employer to bear the cost of training which is not required to obtain the license but is
intended solely to enable the employee to discharge his or her duties.
9
A POST certificate is a statutory prerequisite to exercising the powers of a peace
officer in California:
“(a) Every person described in this chapter as a peace officer shall satisfactorily
complete an introductory training course prescribed by the Commission on Peace Officer
Standards and Training. On or after July 1, 1989, satisfactory completion of the course
shall be demonstrated by passage of an appropriate examination developed or approved
by the commission. . . . [¶] (b) [¶] (1) Every peace officer described in this chapter, prior
to the exercise of the powers of a peace officer, shall have satisfactorily completed the
training course described in subdivision (a). [¶] (c) Persons described in this chapter as
peace officers who have not satisfactorily completed the course described in
subdivision (a), as specified in subdivision (b), shall not have the powers of a peace
officer until they satisfactorily complete the course.” (Pen. Code, § 832, subds. (a), (b),
(c).) POST certification is deemed by the Legislature to be a “professional certificate,”
(Pen. Code, § 13510.1, subd, (a)), and is in effect licensure to act as a peace officer.
Moreover, the POST commission, not the individual police agency, sets the
standards for training and certification of city police officers and other peace officers.
(Pen. Code, § 832, subd. (a).) And, POST training and certification is not exclusively
available through a police agency or exclusively available to individuals who have been
accepted as recruits by a police agency. On the contrary, any individual may obtain the
required training, testing and certification from any institution approved by the POST
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commission. (Pen. Code, §§ 832, subd. (g), 13511.) Approved training facilities include
community colleges throughout the state. (See Cal. POST list of basic training
academies [as of May 19,
2015].)
For these reasons, we conclude that basic POST certification training is not
employer-mandated training, as described by the Division of Labor Standards
Enforcement, and is not an expense of discharging the duties of employment, within the
meaning of Labor Code section 2802, but is rather an expense which is to be borne by the
individual officer. (DLSE Op. Ltr. (Nov. 17, 1994) at p. 1.)
Local police agencies may, however, establish standards for selection and training
of peace officers which exceed the minimum standards established by the POST
commission. (Pen. Code, § 13510, subd. (d).) At trial, the city emphasized that its
academy provides training in excess of the basic POST training that is available through
community colleges. The city’s academy training consists of 644 hours of POST training
and 420 hours of “department required” training. The department-required training
addresses, in part, “challenges that are present within the City of Los Angeles [such as]
crime occurrences, crime patterns, crime trends that are specific to the city.” Such
training, which is not required by statute or public policy but is rather instituted purely to
satisfy the needs of the city, is an expense which the city must bear. (DLSE Op. Ltr.
(Nov. 17, 1994) at p. 1.) Accordingly, Labor Code section 2802 precludes the city from
requiring recruits to reimburse it for the cost of the portion of the training which is in
excess of that required for basic POST certification. And, the city cannot avoid
11
application of Labor Code section 2802 by requiring recruits to enter into a contract such
as the acknowledgment: A contract which purports to waive the protection of Labor
Code section 2802 is void. (Lab. Code, § 2804; Edwards v. Arthur Andersen LLP, supra,
44 Cal.4th at pp. 951-952.) Accordingly, both LAAC section 4.1700 and the
acknowledgment are void to the extent that they require reimbursement for the cost of
training other than basic POST certification training.
The city contends, and the trial court held, that this case is governed by City of
Oakland v. Hassey (2008) 163 Cal. App. 4th 1477 (Hassey). In Hassey, the Court of
Appeal held that Oakland could require reimbursement of police training costs under
circumstances similar to—but yet distinguishable from—the circumstances in this case.
However, because the appellant in Hassey did not rely on Labor Code section 2802 either
in his answer to the complaint or in his cross-complaint and raised the issue only in his
reply brief, the court expressly declined to address the contention that Labor Code section
2802 prohibits the reimbursement requirement the city imposed. (Hassey, at pp. 1490-
1491.) Accordingly, Hassey is not authority with respect to the effect of Labor Code
sections 2802 and 2804 on the ordinance and/or the acknowledgment.7 Hassey is
distinguishable from this case in any event, because Oakland did not require its officers
to attend its police academy for basic POST training. Applicants who were already
POST certified, including lateral officers, attended a “mini academy” and were not
7 For the same reason, and contrary to the city’s contention, this case is one of
first impression with respect to Labor Code sections 2802 and 2804.
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subject to the reimbursement provisions which applied to recruits who chose to attend the
Oakland police academy for basic POST training. (Hassey, at p. 1484, fn. 2.)
Our ruling as to the effect of Labor Code sections 2802 and 2804 on the ordinance
and the acknowledgment only partially resolves the dispute between the parties. Because
the case was tried on an “all or nothing” basis—either appellants owed the full amount
demanded by the city or they owed the city nothing at all—there is no evidence in the
record which permits apportionment of the cost of academy training between basic POST
training and the department-mandated training. In addition, there is possible merit to
appellants’ contention that because the city requires all recruits to attend the academy for
all training, the entire training program is employer-mandated training, the full cost of
which the city must bear. The city contends that even with respect to POST training, its
academy provides training which is superior to that offered elsewhere—that its academy
is the Harvard of police academies—and that it wants all of its recruits, including lateral
officers and others who already have POST certification, to receive the full benefit of that
superior training. This arguably lends support to appellants’ assertion.8 However, the
record is not sufficiently developed to permit us to determine whether the
acknowledgment should be deemed entirely void for this reason. Further development of
the evidence bearing on these questions might also assist us in addressing some of
8 The issue was properly before the trial court because one of the four
representative defendants, Duncan Murdoch, stated in his declaration in lieu of testimony
that he had completed POST-certified training at Alan Hancock Junior College and the
LAPD reserve police officer academy, and was working as a reserve officer before he
was accepted to attend the academy.
13
appellants’ other contentions, such as whether the acknowledgment places an unlawful
burden on their ability to pursue their profession, in violation of Business and Professions
Code section 16600.
Accordingly, we will remand the matter for further proceedings to address whether
the city is entitled to recoup the cost of POST certification training from any of the
defendants. This would include the questions whether the city can require recruits who
do not have a current POST certificate to undergo POST training at its academy and
whether the city can require recruits who do have a current POST certificate to repeat
POST training at the academy. If the trial court determines that the city is entitled to
recoup the cost of POST training from some or all of the defendants, the city has the
burden of proving the cost of POST training during each of the relevant years.
2.
APPELLANTS’ REMAINING CONTENTIONS
Appellants contend that part of the training costs the city sought to recover
through the acknowledgment constituted their wages while they were attending the
academy, in violation of both state law and the federal Fair Labor Standards Act (29
U.S.C. § 201 et seq.), or that reimbursement amounts to an unlawful kickback, and that
the acknowledgment operates as an unlawful covenant not to compete. They contend the
acknowledgement is unlawful for a number of other reasons. If on remand the trial court
finds that Labor Code sections 2802 and 2804 do not preclude the city from recouping
the cost of POST certification training, appellants may revisit these other contentions on
appeal from the judgment entered following remand.
14
Appellants also contend that the trial court erred in refusing to allow them to opt in
to the cross-complaint as a collective action. They do not otherwise assert any error with
respect to the judgment on the cross-complaint. In the absence of any error in entering
judgment for the city on the cross-complaint, the collective action issue is moot, and we
decline to address it.
DISPOSITION
The judgment on the cross-complaint is affirmed.
The judgment on the complaint is reversed, and the cause is remanded for further
proceedings as described in the final paragraph of section 1, above. Upon entry of
judgment, the court shall enter a judgment of dismissal as to defendants Duncan
Murdoch, Daniel Baltazar and Marc Gonzales. All defendants are awarded costs and
attorney fees on appeal. (Lab. Code, § 2802, subd. (c).)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
McKINSTER
J.
We concur:
RAMIREZ
P. J.
KING
J.
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