Wage Law

The First District Court of Appeal has held that penalty wages (waiting time penalties) are not recoverable under the Unfair Competition Law as restitution. Pineda v. Bank of America (2009) __ Cal.App.4th __.

Plaintiff Jorge A. Pineda appeals an adverse judgment entered after the trial court granted a motion for judgment on the pleadings by defendant Bank of America, N.A. He contends that the court applied the wrong statute of limitations to his claim under Labor Code section 203 for penalties incurred for the late payment of wages; that the court erred in concluding that section 203 penalties are not restitution within the meaning of Business and Professions Code section 17203; and that the court abused its discretion in denying him leave to amend. ... In the published portion of the opinion we affirm the trial court’s conclusion that section 203 penalties may not be recovered as restitution under Business and Professions Code section 17203.

The plaintiff acknowledged that all wages due him were paid before the complaint was filed, therefore, the Court of Appeal followed McCoy v. Superior Court(2007) 157 Cal.App.4th 225, and rejected his contention that the court erred in applying the one-year statute of limitations on actions to recover penalties (Code of Civil Procedure § 340(a)). Furthermore, the Court of Appeal found that the trial court did not abuse its discretion in denying plaintiff leave to amend his putative class action complaint to substitute or add a plaintiff for whom the waiting time penalties would be timely under the one-year statute.

the dictum in Murphy, supra, 40 Cal.4th at pages 1108-1109 (“the Legislature expressly provided that a suit seeking to enforce the section 203 penalty would be subject to the same three-year statute of limitations as an action to recover wages”) does not require a contrary conclusion. (McCoy, supra, 157 Cal.App.4th at p. 233.) 
...
Leave to amend a complaint is thus entrusted to the sound discretion of the trial court. ‘. . . The exercise of that discretion will not be disturbed on appeal absent a clear showing of abuse. More importantly, the discretion to be exercised is that of the trial court, not that of the reviewing court. Thus, even if the reviewing court might have ruled otherwise in the first instance, the trial court’s order will yet not be reversed unless, as a matter of law, it is not supported by the record.’ ” (Haley v. Dow Lewis Motors, Inc. (1999) 72 Cal.App.4th 497, 506.) Here, the trial court explained that “given that plaintiff has had several months to locate a substitute plaintiff/class representative and had thus far been unable to do so, if I granted leave to amend, this case would effectively become a lawsuit in search of a plaintiff, which while within my discretion to allow, I fail to see why I should. Plaintiff and his counsel have known since late November 2007 [when McCoy was decided] that there were serious questions as to the viability of the plaintiff as a class representative.”

The opinion was issued in December and ordered published last week. You can download the full text of Pineda here in PDF or Word format.