Wage Law

A remittitur was issued last month in Konig v. U-Haul Company of California (2006) 145 Cal.App.4th 1243 (Not Citable—Superseded by Grant of Review). Upon the issuance of the Supreme Court's opinion in Gentry v. Superior Court (2007) 42 Cal.4th 443, the matter ws transferred to the Court of Appeal, Second Appellate District, Division Five, with directions to vacate its decision and to reconsider the cause in light of Gentry. An unpublished 2-1 decision affirming the order compelling arbitration and reversing the class action waiver, with directions to reconsider the order enforcing the class action waiver in light of Gentry, was issued in January. Thus, one of our least favorite pieces of dicta is forever put to rest. In the 2006 opinion, the court wrote:

For example, plaintiff's first cause of action alleges: he was regularly denied meal and rest breaks; this was pursuant to a “consistent and uniform policy”; and, as a result, he is entitled to unpaid compensation, penalties, and attorney fees. Plaintiff seeks Labor Code section 558 penalties which consist of $50 for the first violation and $100 for each subsequent failure to pay legally required compensation. If defendant in fact has a uniform policy of denying meal and rest breaks, in one month alone, the penalties payable to plaintiff would exceed $1,000. In plaintiff's Business and Professions Code section 17200 cause of action, he is seeking compensation and penalties for the four years preceding June 15, 2005, the filing date of the complaint.

Without doing the analysis, the court essentially declared that one could, theoretically, recover more than $48,000 per employee in Section 558 penalties. Although this was absurd (among other things, the penalty was limited to $100 per pay period under the code, the limitations period on such a penalty was one year, and there was not a clear private right of action) we had an objector take the theory and run, attempting to unwind a class action settlement on the grounds that we had recovered only a small fraction of the $113.6 billion in liability (the objector's math was as far off as his legal analysis) that the company faced if you took the Konig dicta at face value. Though the argument was truly ridiculous, to the casual reader of Konig v. U-Haul Company of California, it could have made sense, and we had to write two detailed briefs, in two separate disputes, to explain it. We're glad that opinion won't be coming back to life.