Thurman v. Bayshore Transit Mgmt., Inc.

12 Cal. Daily Op. Serv. 2314

138 Cal.Rptr.3d 130

2012 Daily Journal D.A.R. 2586

203 Cal.App.4th 1112

Leander H. THURMAN, Plaintiff and Appellant,

v.BAYSHORE TRANSIT MANAGEMENT, INC. et al., Defendants and Appellants.

No. D055586.

Court of Appeal, Fourth District, Division 1, California.

Feb. 27, 2012.

Held Invalid

8 CCR § 11090(11), (12).

Neyhart, Anderson, Flynn & Grosboll, San Francisco, John L. Anderson and Benjamin K. Lunch for Plaintiff and Appellant.

Paul, Plevin, Sullivan & Connaughton, San Diego, J. Rod Betts and Michael J. Etchepare for Defendants and Appellants.AARON, J.

In January 2004, Amalgamated Transit Union, Local 1309, AFL–CIO (the union) filed a representative action on behalf of its member bus drivers who worked in and around National City, California, alleging that the various defendant employers had violated provisions of the Labor Code ¹ that require employers to provide meal and rest periods for their employees. In February 2005, the union filed an operative verified third amended complaint, which added a number of individual employees as plaintiffs, including appellant Leander Thurman. The named defendants included appellants Bayshore Transit Management, Inc. (Bayshore) and its parent corporation McDonald Transit Associates, Inc. (McDonald) (collectively defendants), who, until March 3, 2007, contracted with the City of National City to operate National City Transit (NCT), a carrier that ran three fixed bus routes in the city.² At the time of trial, Thurman was the only remaining plaintiff, and McDonald and Bayshore were the only remaining defendants in the action.

After a bench trial, the trial court filed a statement of decision and entered a judgment imposing civil penalties, including unpaid wages, in the total amount of $358,588.22, against defendants under the Private Attorneys General Act of 2004 (PAGA), section 2698 et seq. The court also awarded Thurman restitution in the amount of $28,605 under the Unfair Competition Law (UCL) ( Bus. & Prof.Code, § 17200 et seq.), and prejudgment interest in the amount of $10,253. Both Thurman and defendants appeal from the judgment.

Thurman contends that the trial court committed reversible error in (1) denying his request to continue the trial to allow him to bring a noticed motion for class certification, after the California Supreme Court issued a decision that precluded the union from maintaining its representative action; (2) denying class certification; ³ (3) denying him recovery of civil penalties under both section 558, and Wage Order No. 9–2001 issued by the Industrial Welfare Commission (IWC), codified in California Code of Regulations, title 8, section 11090 (Wage Order No. 9); (4) reducing defendants' civil penalties under section 2699, subdivision (e); and (5) ruling that defendants' liability for his UCL claims began on January 1, 2002, rather than on October 1, 2000, due to the collective bargaining exemption in the former version of section 514. With respect to this claim, Thurman further contends that even if former section 514 created a collective bargaining exemption, section 226.7 provides an independent basis for recovering unpaid wages for missed meal and rest periods, effective January 1, 2001.

Defendants contend that the trial court erred in (1) awarding unpaid wages under section 558 as a civil penalty; (2) awarding Thurman relief under the PAGA, because Thurman failed to exhaust his administrative remedies before he was named as a plaintiff in the third amended complaint; (3) allowing Thurman to recover PAGA penalties on behalf of other bus operators for missed rest periods under section 558, because that statute allows recovery for missed meal periods only, and not for missed rest periods; and (4) allowing Thurman to avoid the judicial admission, set forth in his complaint, that defendants had provided meal periods since July 2003, and permitting him to recover for missed meal periods after July 2003. We agree with defendants' last contention. Accordingly, we reverse the portions of the judgment awarding recovery for missed meal periods and remand for a redetermination of that recovery. In all other respects, we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND ⁴

NCT operated three bus routes in the National City area, designated as Routes 601, 602, and 603. Thurman began his employment with NCT as a bus driver in 1993. The union represented the NCT bus drivers, including Thurman, and negotiated two collective bargaining agreements with NCT that are relevant to this case. The first collective bargaining agreement was in effect from August 1, 1996 through July 31, 2002; the second collective bargaining agreement was in effect from August 1, 2002 through July 2007.

When the second collective bargaining agreement went into effect on August 1, 2002, NCT bus drivers were assigned to drive Routes 601, 602, or 603 as either a “straight run” or a “split run.” A driver who worked a straight run would drive continuously from the beginning of a shift until the end of the shift, with no break period or “split” during the shift. Drivers on straight runs were not provided a 30–minute meal period. Drivers who worked split runs would take an unpaid break of 30 minutes to an hour at some point during their shifts.

In 1999, the Legislature enacted section 512, which requires employers to provide a meal period of at least 30 minutes for a daily work period of more than five hours' duration. In October 2000, the IWC issued Wage Order No. 9–2000, which authorized penalties for an employer's failure to provide required meal and rest periods.⁵

In January 2003, Stephen Keiper, a management employee of NCT,⁶ had a lunch meeting with the union's president, George Thompson, at which they discussed meal and rest periods. Thompson told Keiper that the union and the drivers were strongly opposed to working split runs as a means of implementing the required meal breaks because doing so would extend their work day, without any additional pay. The union's shop steward, Leonard James, also told Keiper on several occasions that the employees were opposed to split runs. Keiper asked Thompson to provide “some kind of document” that would operate as a release of NCT's obligation to provide meal periods, and Thompson agreed to provide a letter from the union to that effect.

Keiper never received a letter from Thompson. Keiper eventually called Thompson to inform him that NCT would have to implement a plan to provide meal periods for the drivers. Thompson told Keiper that he was unable to provide the letter that they had discussed because the union was now taking a different position. On July 6, 2003, NCT imposed split runs on all of its bus routes, despite objections voiced by local union representatives and individual bus drivers, in order to comply with the law that required that meal periods be provided. The trial court found that during the “straight run era” (prior to July 6, 2003), meal periods were provided on 13 percent of the NCT runs, and were not provided on 87 percent of the runs. The court found that between July 6, 2003 and March 3, 2007, NCT provided meal periods of at least 30 minutes to all drivers whose shifts had splits of 36 minutes or more.

In June 2004, NCT posted a memorandum reminding its bus drivers that they were permitted to take a 10–minute rest period for each four-hour period that they worked, and directing them to take their rest break during the “ ‘recovery time’ already ‘built in’ at the start/end of [their] runs....” The memorandum instructed drivers who worked schedules that provided less than the required rest time to make sure that they “allow[ed] for this rest period even if it [meant] leaving a few minutes late from [their] starting/ending time points.” NCT also posted a second memorandum that further explained the procedure drivers were to follow for taking 10–minute rest periods. On June 28, 2004, NCT's general manager Webster sent a letter to Thompson stating that the rest periods were working smoothly, and asking Thompson to let Webster know if Thompson had any questions or concerns regarding the manner in which NCT was handling the rest period issue. Thompson did not respond to Webster's letter.

In March 2005, NCT complied with a request by then union president Steve Alcove to send him documentation showing NCT's route schedules and reflecting that NCT was providing the bus drivers with 10–minute rest periods and 30–minute meal periods. Alcove responded with an email message stating that he had received the schedules and would show the union's attorney that “the 10–[minute] breaks were included in the schedule.” In July 2005, Thurman, who was then the union steward, told Webster and NCT operations manager Gabriel Marquez that he had informed Alcove that the NCT drivers were taking their 10–minute rest breaks.

In January 2004, the union filed a verified complaint against NCT and other defendants ⁷ as a representative action on behalf of its members and other bargaining unit employees who were employed by the defendants during the relevant time period. In February 2005, the union filed the operative verified third amended complaint, which added Thurman as a plaintiff and included two causes of action—a first cause of action alleging that defendants had violated sections 226.7 and 512 and Wage Order No. 9 by failing to provide meal and rest periods or compensation in lieu of meal and rest periods, and a second cause of action for violation of the UCL, based on the same allegations as the first cause of action.

Defendants filed a demurrer and motion to strike portions of the third amended complaint. Defendants demurred to the first cause of action on the grounds that the union lacked standing to bring that cause of action on behalf of its members under the PAGA, and that all plaintiffs had failed to exhaust their administrative remedies, as required under section 2699.5, as a...