Amalgamated Transit Union v. Superior Court

55 Cal.Rptr.3d 585

148 Cal.App.4th 39

AMALGAMATED TRANSIT UNION, LOCAL 1756, AFL-CIO, et al., Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent First Transit, Inc., et al., Real Parties in Interest.

No. B191879.

Court of Appeal, Second District, Division 8.

February 28, 2007.

As Modified on Denial of Rehearing March 22, 2007.

Neyhart, Anderson, Flynn & Grosboll, John L. Anderson, Orange, and Scott M. De Nardo, San Francisco, for Petitioners.

No appearance for Respondent.

McMahon Berger, James N. Foster, Jr. and Michelle M. Cain; Kampe & Kampe and K.W. Kampe, III for Real Party in Interest First Transit, Inc.

Gleason & Favarote, Paul M. Gleason and Torey J. Favarote for Real Party in Interest ATC/Vancom, Inc.

Jenkens & Gilchrist, Margaret Rosenthal and Sabrina L. Shadi, Los Angeles, for Real Parties in Interest Progressive Transportation Services, Inc. and Coach USA Transit Services.

Littler Mendelson and Theodore R. Scott, San Diego, for Real Party in Interest Laidlaw Transit Services, Inc.

BOLAND, J.

SUMMARY

In this writ proceeding, we hold:

(1) An individual's assignment of a cause of action to a third party does not carry with it the individual's statutory right to sue in a representative capacity conferred under the Labor Code Private Attorneys General Act of 2004 (Labor Code section 2699) and under the unfair competition law (Business and Professions Code section 17203).

(2) Section 17203 of the unfair competition law, as amended by Proposition 64, providing that representative claims may be brought only if the injured claimant "complies with Section 382 of the Code of Civil Procedure," means that private representative claims must meet the procedural requirements applicable to class action lawsuits.

FACTUAL, LEGAL AND PROCEDURAL BACKGROUND

Under the Labor Code, an employer who fails to provide required meal and rest periods is required to pay the employee one additional hour of pay at the employee's regular rate of compensation for each work day that the meal or rest period is not provided. (Lab.Code, § 226.7, subds.(a) & (b).) Employers who violate regulations governing hours and days of work are also subject to civil penalties under Labor Code section 558. The Labor Code Private Attorneys General Act of 2004 (PAGA) authorizes an aggrieved employee to bring a civil action, on behalf of himself or herself and other current or former employees, to recover civil penalties for violations of any section of the Labor Code that provides for assessment and collection of civil penalties by the Labor and Workforce Development Agency or any of its departments or divisions. (Lab.Code, § 2699, subd. (a).)

Two labor unions that represent mechanics and transit operators (Unions), along with 17 members or former members of the unions (collectively, plaintiffs), filed a lawsuit against several transit company employers.¹ Plaintiffs alleged the employers failed to provide their employees with the meal and rest periods required by law, and sought unpaid wages estimated at over 10 million dollars, an award of civil penalties estimated at over $2.6 million, and other relief. In a second cause of action, plaintiffs asserted the employers' failure to provide the legally required meal and rest periods violated the unfair competition law (UCL), and sought injunctive relief and restitution of unpaid wages. (Bus. & Prof.Code, § 17200 et seq.) The fourth amended complaint alleged the Unions were suing in their representative capacity on behalf of members who are or were employed by the defendant employers. In addition, the Unions brought the action as assignees of rights transferred to the Unions by over 150 employees and former employees of the defendant employers, "including the right to sue in a representative capacity on behalf of all other current and former aggrieved employees of Defendants. . . ."

At the trial court's suggestion, the parties identified several threshold issues as controlling questions of law, including (1) whether the unions had standing to sue under the UCL and under PAGA; (2) whether the action must be brought as a class action; and (3) whether the payments specified in Labor Code section 226.7 constituted a "penalty" or a "wage." The trial court deferred considering whether section 226.7 payments constitute a penalty or a wage, an issue which is now pending before the Supreme Court in Murphy v. Kenneth Cole Productions, review granted Feb. 22, 2006, S140308.² The parties briefed the other issues, a hearing was held, and on April 25, 2006, the trial court ruled, inter alia, that:

• The unions do not have standing to recover civil penalties or attorney fees under PAGA, which requires such actions to be brought "by an aggrieved employee on behalf of himself or herself and other current or former employees. . . ." (Lab.Code, § 2699, subd. (a).)

• The unions do not have standing to sue for violations of the UCL which, as a result of Proposition 64, allows a private party to bring a UCL action only if the person "has suffered injury in fact and has lost money or property as a result of such unfair competition." (Bus. & Prof.Code, § 17204.)

• The assignments which the unions obtained from some of their members did not confer standing on the unions to prosecute PAGA, representative or class claims on behalf of all members of the unions.

• Proposition 64's requirement that a person may pursue representative claims, or relief on behalf of Others, only if the person meets the standing requirements "and complies with Section 382 of the Code of Civil Procedure," was intended to impose class action procedures on claims such as those asserted in the complaint.

The Unions filed a petition for writ of mandate and a request for a stay of the trial court proceedings. They requested a writ directing the trial court to vacate its order and enter a new order holding the Unions have standing to recover civil penalties and attorney fees under PAGA; the Unions have standing to sue for violations of the UCL; and the assignments obtained by the Unions confer standing on the Unions to prosecute PAGA and representative claims on behalf of all members of the Unions. This court issued a temporary stay order and directed the real parties in interest to file a preliminary response to the petition, and particularly to discuss whether the assignments from current and former union members to the Unions conferred standing on the Unions. After a preliminary response and a reply from the Unions were filed, the court issued an order to show cause why the trial court should not be compelled to vacate portions of its order and enter a new order, concluding that the causes of action are assignable and that the Unions have complied with the requirements of Code of Civil Procedure section 382.

Written returns were filed by the real parties in interest; the Unions filed a reply; and the order to show cause was heard on November 28, 2006. We now deny the writ petition.

DISCUSSION

The Unions concede they are not "aggrieved employee[s]" under PAGA and have not suffered an "injury in fact" under the UCL. They assert standing to sue based on the assignment to the Unions by some of their members of the members' claims for recovery of wages. They further assert the assignments confer standing upon the Unions to sue in a representative capacity, and that the Unions may sue under the UCL in a representative capacity without meeting the procedural requirements applicable to class actions.

Our conclusions are these:

(1) We agree the Unions have standing as assignees to assert the claims of union members who have assigned to the Unions their rights to recover wages owing to them. The Unions may not, however, assert claims on behalf of members who have not assigned their claims to the Unions.

The assignment of a cause of action, as authorized by Civil Code sections 953 and 954, is the transfer "by the owner" of "a right to recover money or other personal property" in a judicial proceeding. An individual's statutorily conferred right to sue on behalf of others is not itself a cause of action, or any other form of property, that is owned and therefore assignable within the meaning of the Civil Code. Accordingly, while a person may assign his own cause of action to another, the assignment does not carry with it the right to sue in a representative capacity. Nothing in Vermont Agency of Natural Resources v. United States ex rel. Stevens (2000) 529 U.S. 765, 120 S.Ct. 1858, 146 L.Ed.2d 836 (Vermont Agency), upon which the Unions rely, supports a contrary conclusion. Consequently, the Unions do not have standing under PAGA or the UCL to assert the rights of members who have not assigned their recovery rights to the Unions.

(2) We further conclude that the UCL requirement that a person pursuing relief on behalf of others must both meet standing requirements and "[compl[y] with Section 382 of the Code of Civil Procedure" means, as stated in the Voter Information Guide for Proposition 64, that unfair competition lawsuits on behalf of others, initiated by persons other than the Attorney General and local public prosecutors, must "meet the additional requirements of class action lawsuits." (Voter Information Guide, Gen. Elec. (Nov. 2, 2004) analysis of Prop. 64 by Legislative Analyst, p. 39 (hereafter Guide).)

We address each issue in turn.

A. Although an employee may assign his right to recover money to the Union, such an assignment does not carry with it the employee's statutorily granted right to pursue claims on behalf of others.

The Unions contend they have the right to pursue representative claims on behalf of others because one or more employees with that right assigned their causes of action to the Unions. The Unions' contention necessarily depends upon the premise that a legislative grant of the procedural right to bring a representative action is a type of property, like a cause of action, that can be owned...