Baptiste v. Ralphs Grocery Co.

1

OLLIE KATRINA BAPTISTE, Plaintiff and Appellant, v. RALPHS GROCERY COMPANY, Defendant and Respondent; DAVID J. GALLO, Objector and Appellant.

D082554

California Court of Appeals, Fourth District, First Division

May 28, 2024

NOT TO BE PUBLISHED

APPEALS from orders of the Superior Court of San Diego County No. 37-2022-00012259-CU-OE-CTL, Richard S. Whitney, Judge. Dismissed in part and affirmed in part.

Law Offices of David J. Gallo and David J. Gallo for Plaintiff and Appellant Ollie Katrina Baptiste and Objector and Appellant David J. Gallo.

Reed Smith, Mara D. Curtis, Kasey J. Curtis, and Rafael N Tumanyan for Defendant and Respondent.

IRION Acting P. J.

The trial court sustained without leave to amend a demurrer to Ollie Katrina Baptiste's claims against Ralphs Grocery Company (Ralphs) for failing to pay her minimum wages for using self-checkout stands at its grocery stores, but as to other claims it overruled the demurrer or sustained it with leave to amend. In a separate order on Ralphs' motion for sanctions, the court ruled the claims to which it had sustained the demurrer without leave to amend were frivolous and directed Baptiste's attorney, David J. Gallo, to pay Ralphs $35,000. Baptiste purports to appeal the order sustaining the demurrer and the sanctions order, and Gallo appeals the sanctions order. We dismiss Baptiste's appeals because the order on the demurrer is not appealable and she lacks standing to appeal the order sanctioning Gallo. We agree with the trial court's ruling that the claims to which it had sustained the demurrer without leave to amend were frivolous and affirm the order imposing sanctions on Gallo for having filed them.

I. BACKGROUND

A. Facts

Because this case comes to us at the pleading stage, we take as true the following facts alleged in Baptiste's operative pleading, the first amended class action complaint. (See, e.g., Southern California Gas Leak Cases (2019) 7 Cal.5th 391, 395.)

Ralphs operates retail grocery stores in California. To pay for their groceries, customers may proceed through either a checkout stand staffed by a cashier employed by Ralphs or a self-checkout stand operated by the customer. Baptiste shops at Ralphs' stores in San Diego County and has often used self-checkout stands. In doing so, she performed many of the same tasks as those performed by Ralphs' paid cashiers, but she received no compensation. Ralphs invites, encourages, and requests customers to use self-checkout stands, and it schedules fewer hours for cashiers to induce customers to use self-checkout stands so that they can avoid longer lines at staffed checkout stands. Such measures benefit Ralphs by reducing payroll costs, and harm society by increasing unemployment, exerting downward pressure on wages in the retail industry, and promoting sociological harms related to lack of employment. B. Pleadings

Baptiste, on behalf of herself and others similarly situated, filed a class action against Ralphs to recover minimum wages for all time customers spent using self-checkout stands. She asserted in her complaint two claims for relief: (1) recovery of minimum wages as damages under Labor Code section 1194; and (2) recovery of minimum wages as restitution under the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.).

Ralphs demurred on the ground customers who used self-checkout stands were not employees entitled to payment of minimum wages, and therefore the complaint failed to state facts sufficient to constitute a cause of action.

Baptiste mooted the demurrer by filing a first amended complaint. She repeated the claims for unpaid wages based on Labor Code section 1194 and the UCL, and added a third claim based on the theory of quasi-contract or unjust enrichment. Baptiste also added claims based on Ralphs' collection and sale of customers' personal information in alleged violation of the constitutional right of privacy and the UCL. We do not describe those claims in any detail because they are not relevant to the issues on appeal.

Ralph demurred to the entire first amended complaint. As to the three claims seeking recovery of minimum wages for time customers spent using self-checkout stands, Ralphs argued the claims failed as a matter of law because the customers were not its employees in that they had no reasonable expectation of compensation for using self-checkout stands, in doing so they performed no "work" within the meaning of the applicable regulation requiring payment of minimum wages, and Ralphs did not "suffer or permit" them to work within the meaning of the regulation. ^[1]

Baptiste opposed the demurrer. She argued the three claims for recovery of minimum wages sufficiently stated causes of action because customers who used self-checkout stands did work that benefitted Ralphs at their expense, and Ralphs suffered or permitted that work by failing to prevent it even though Ralphs knew the work was being done and could have stopped it by removing self-checkout stands.

The trial court sustained in part and overruled in part Ralphs' demurrer. It sustained the demurrer without leave to amend as to the three claims for recovery of minimum wages, on the ground customers who used Ralphs' self-checkout stands were not employees because in using the stands they performed no work that unjustly benefited Ralphs or for which they had a reasonable expectation of compensation by Ralphs. The court further noted that adoption of Baptiste's theory "would lead to absurd results - consumers in various contexts could claim an employment relationship based on voluntary decisions . . . that happen to provide convenience to both the consumer and the commercial business (e.g., use of self-serve soda machines, gas station pumps, self-service airline check-in, and ATMs)." The court overruled the demurrer or sustained it with leave to amend as to Baptiste's other claims. C. Motions for Sanctions

In connection with each demurrer, Ralphs served a motion seeking sanctions against Baptiste and Gallo under Code of Civil Procedure section 128.7 for filing a frivolous pleading.^[2] The motion related to the original complaint was never filed because Baptiste amended her complaint before the motion could be filed. Ralphs filed its motion related to the first amended complaint when Baptiste did not withdraw it within 21 days of service of the motion. (See Code Civ. Proc, § 128.7, subd. (c)(1).) Ralphs sought at least $150,000 in sanctions on the ground that Baptiste's claims for recovery of minimum wages were "patently frivolous" and never should have been filed because no legal authority supported the contention that customers who used self-checkout stands were employees of Ralphs. In support of the motion, Ralphs submitted a declaration from one of its attorneys stating Ralphs had incurred more than $150,000 in attorney fees to defend the action and itemizing those fees by task, attorney performing the task, attorney billing rate, and time spent on the task. Ralphs also sought judicial notice of pleadings and other documents filed in three other cases in which Gallo represented plaintiffs who asserted identical claims against other retailers. One of the documents was an order, entered two months before Ralphs demurred to Baptiste's first amended complaint, in which the San Francisco County Superior Court sustained without leave to amend a demurrer to a first amended class action complaint that alleged customers who used self-checkout stands at Albertsons grocery stores were employees entitled to payment of minimum wages. After judgment was entered against the plaintiff, no appeal was taken.

Baptiste opposed the motion for sanctions. She argued sanctions for filing a frivolous pleading were warranted neither as to the claims seeking recovery of minimum wages, because a reasonable attorney could conclude that by using a self-checkout stand a customer did work for Ralphs for which minimum wages had to be paid, nor as to the claims alleging Ralphs' unlawful use of customers' personal information, because the court overruled the demurrer or sustained it with leave to amend as to those claims. Baptiste also objected the amount of sanctions Ralphs requested was excessive. She asked the trial court to award her "$9,600 in compensatory sanctions" for opposing the motion. (See Code Civ. Proc, § 128.7, subd. (c)(1) ["If warranted, the court may award to the party prevailing on the motion the reasonable expenses and attorney's fees incurred in presenting or opposing the motion."].) Baptiste attached to her opposition several documents, including an order, entered a week before Ralphs served its sanctions motion and more than two months before the trial court ruled on its demurrer, in which another court sustained without leave to amend a demurrer to claims asserted by another client of Gallo that customers who used self-checkout stands at Vons grocery stores were employees entitled to payment of minimum wages. Baptiste also submitted a declaration from Gallo authenticating the documents and stating he spent approximately 12 hours, at an hourly rate of $800, preparing the opposition.

In reply, Ralphs reduced its sanctions request to $35,000, which was the amount of attorney fees it had incurred for drafting the demurrer to Baptiste's claims for recovery of minimum wages. It asked the trial court to take judicial notice of, among other documents, the registers of actions in three cases in which Gallo's clients had sued grocery stores to show that none of the demurrer rulings rejecting the claims had been challenged in an appellate court.

The trial court granted the motion for sanctions. The court stated:

"While the [c]ourt could understand why [Baptiste] would believe it is a matter of...