Briefing Requested on Norm's Restaurants Writ Petition
November 07, 2005
The 4th District Court of Appeal, Division 3 (Orange County) has requested an informal opposition to a writ petition filed in the Norm's Restaurants case, Ayala v. Norm's Restaurants, dealing with statutes of limitation and wage/penalty issues in a meal and rest period class action. This is from the same panel that denied a writ petition in one of our cases against Dollar Tree Stores a year or two ago. We are familiar with the attorneys for both sides. Roger Carter, our co-counsel in the El Torito case, represents Ayala. Greg Labate of Sheppard Mullin represents Norm's. We've been across the table from Greg once or twice, and we are familiar with many of his colleagues at Sheppard Mullin. We'll be watching this case with interest, since we have many cases dealing with this issue in Orange County.
I think it should be a slam dunk determination that the LC 226.7 remedy is a "wage." My reasons:
1. The issue is the nature of the remedy – whether damages, i.e., compensation for an injury, or a penalty, i.e., satisfaction for a wrong. According to my old Dobbs on Remedies hornbook, damages are awarded in many cases in which the injury is non-pecuniary. "The real purpose in such cases is to establish and vindicate a right that is deemed important, even though not pecuniary in its immediate consequence."
2. 226.7 was included in the statutory scheme of 2699. (LC 2699.5) A civil action is provided under 2699 (a) or (f). (LC 2699.3(a)) Which applies, 2699(a) or 2699(f)?
2699(a) applies when the statutory penalty goes to the Agency. But the 226.7 remedy doesn't go to the Agency, so 2699(a) obviously does not apply.
Thus, 2699(f) must apply - but 2699(f) applies to statutory sections that do NOT provide their own penalties. In other words, 2699(f) provides a civil penalty because 226.7 does not.
3. Since a penalty is a satisfaction for the wrong itself, the amount of a penalty is determined “without reference to the actual damage sustained” by the victim of the wrong. Prudential Home Mortgage Co. v. Superior Court (1998) 66 Cal.App.4th 1236, 1242. But consider two employees working for the same employer who both are required to miss their meal periods. The employer owes the one who makes $20/hr $20, while it owes the one making $7/hr $7. If the amount of the “penalty” is not determined by referring to the damage sustained, then why do the penalty amounts for identical wrongs differ? And why does the amount depend on the earnings rate of the victims?
4. Moreover, there is no rational basis for penalizing a wrong more severely if the wrong is perpetrated on someone who earns a lot than if it is perpetrated on someone who earns a little. Since there is no legitimate government interest that is served by this irrational classification scheme, a statutory penalty that operates in this fashion cannot pass equal protection scrutiny.
But statutes are to be construed so as to avoid constitutional questions if at all possible. So the 226.7 remedy should be construed as a "wage" to avoid reaching this constitutional question.
Posted by: dogfacegeorge | November 08, 2005 at 12:37 PM
"2699(a) applies when the statutory penalty goes to the Agency. But the 226.7 remedy doesn't go to the Agency, so 2699(a) obviously does not apply. "
I agree BUT Defense counsel is getting some traction with the argument that the 226.7 "penalty" goes to the Agency by virtue of the fact it is listed in 2699.5. (I know, it's crazy)
Posted by: MPrimo | November 11, 2005 at 04:02 PM
Yes, it is crazy that defense counsel is getting some traction with the argument that the 226.7 "penalty" goes to the Agency by virtue of the fact it is listed in 2699.5, since section 2699.5 lists virtually every wage statute out there: Section 96, Section 98.6, 201, 201.5, 201.7, 202, 203, 203.1, 203.5, 204, 204a, 204b, 204.1, 204.2, 205, 205.5, 206, 206.5, 208, 209, or 212, subdivision (d) of Section 213, Section 221, 222, 222.5, 223, or 224, subdivision (a) of Section 226, Section 226.7, 227, 227.3, 230, 230.1, 230.2, 230.3, 230.4, 230.7, 230.8, or 231, subdivision (c) of Section 232, subdivision (c) of Section 232.5, Section 233, 234, 351, 353, or 403, subdivision (b) of Section 404, Section 432.2, 432.5, 432.7, 435, 450, 510, 511, 512, 513, 551, 552, 601, 602, 603, 604, 750, 751.8, 800, 850, 851, 851.5, 852, 921, 922, 923, 970, 973, 976, 1021, 1021.5, 1025, 1026, 1101, 1102, 1102.5, or 1153, subdivision (c) or (d) of Section 1174, Section 1194, 1197, 1197.1, 1197.5, or 1198, subdivision (b) of Section 1198.3, Section 1199, 1199.5, 1290, 1292, 1293, 1293.1, 1294, 1294.1, 1294.5, 1296, 1297, 1298, 1301, 1308, 1308.1, 1308.7, 1309, 1309.5, 1391, 1391.1, 1391.2, 1392, 1683, or 1695, subdivision (a) of Section 1695.5, Section 1695.55, 1695.6, 1695.7, 1695.8, 1695.9, 1696, 1696.5, 1696.6, 1697.1, 1700.25, 1700.26, 1700.31, 1700.32, 1700.40, or 1700.47, paragraph (1), (2), or (3) of subdivision (a) of or subdivision (e) of Section 1701.4, subdivision (a) of Section 1701.5, Section 1701.8, 1701.10, 1701.12, 1735, 1771, 1774, 1776, 1777.5, 1811, 1815, 2651, or 2673, subdivision (a) of Section 2673.1, Section 2695.2, 2800, 2801, 2802, 2806, or 2810, subdivision (b) of Section 2929, or Section 3095, 6310, 6311, or 6399.7.
Applying that argument, all wages and penalties would be recoverable only by the Agency, even ordinary wages due upon termination, and waiting time penalties for them under section 201, 202, 203, etc.
Has any judge fallen for this trick?
Posted by: your competition | January 05, 2006 at 12:14 PM