Opinion
A075456/A078523 (Sonoma County Super. Ct. No. 206318)
Filed June 10, 1998
Trial Court: Sonoma County Superior Count Trial Judge: Honorable Mark Tansil
Cameron M. Cunningham, Newman Strawbridge for Plaintiff and Appellant.
Rosner, Owens Nunziato, Tom. A. Nunziato, Phil J. Montoya, Jr. for Defendant and Appellant.
These consolidated appeals follow the trial of claims arising from a failure to pay overtime wages. Rosalba Cortez (Cortez) sued Purolator Air Filtration Products Company (Purolator) for back overtime pay, which accrued as a result of Servodyne Company's (Purolator's predecessor corporation) failure to comply with certain regulations when it changed its workers' schedules from five 8-hour days to four 10-hour days. In addition to her individual claim, Cortez prosecuted an Unfair Business Practices Act claim (Bus. Prof. Code, § 17200 et seq.) seeking restitution of the overtime wages withheld from approximately 175 Purolator employees. Cortez prevailed on her individual claim and the trial court awarded her substantial attorneys' fees. The trial court denied her request for restitution on the Unfair Business Practices Act claim. She appeals from that ruling. Purolator also appeals seeking to overturn the individual award to Cortez for lack of substantial evidence and the award of attorneys' fees on the ground that the amount awarded was excessive. We reverse the denial of restitution, but otherwise affirm the judgment.
BACKGROUND
This lawsuit addresses whether Purolator failed to pay required overtime wages to employees at its filter manufacturing facility located in Santa Rosa. The Santa Rosa plant was established in the 1970's by Servodyne Corporation (Servodyne), which was owned by the DeBaun family. At the end of the business year of 1988, Servodyne sold the plant to Purolator.
By the end of 1994, Purolator completed the move of its Santa Rosa operations to a Sacramento facility. In connection with the move, Purolator gave its employees a "stay bonus" and offered every employee the opportunity to transfer to Sacramento. Initially, the bonus package contained a general release. The release was later withdrawn apparently after protest by Cortez's counsel.
On December 2, 1994, Purolator filed a complaint against Servodyne and the DeBauns seeking indemnity and declaratory relief relating to the Cortez lawsuit.
It is undisputed that, during the relevant times, Purolator operated the plant on a 40-hour workweek made up of four 10-hour days, rather than the more traditional five 8-hour days. The schedule conversions occurred sometime in the 1980's when Servodyne owned the plant. In July 1994, Purolator converted back to a standard five-day workweek.
At all relevant times, Purolator or Servodyne was subject to the California Industrial Welfare Commission Wage Orders (Wage Order) No. 1-80 and then 1-89. Wage Order No. 1-80 permitted a manufacturing employer to set a workweek of four 10-hour days without paying overtime for the ninth and tenth hours of the workday if certain conditions were met prior to the adoption of the four-day schedule. These conditions included the voluntary execution by at least two-thirds of the affected workforce of a written agreement prior to implementation of the schedule change. (Wage Order No. 1-80(3)(B).) In July of 1989, the regulation was amended by Wage Order 1-89 to include more stringent requirements, including a secret balloting process, that must be met. (Wage Order No. 1-89(3)(B).) Subsequently, the California Labor Commissioner circulated an interpretive bulletin stating that an agreement adopted under Wage Order No. 1-80 remained valid under Wage Order No. 1-89 without the necessity of a new employee vote complying with the requirements of the more recent order. (Division of Labor Standards Enforcement Interpretative Bulletin No. 89-3, dated Nov. 30, 1989.)
Both Wage Orders are former versions of California Code of Regulations, title 8, section 11010.
Effective January 1, 1998, the regulation was again amended, this time to eliminate the stringent requirements for converting to a workweek of four 10-hour days.
Cortez was employed by Purolator for several years prior to her termination in May 1993. Believing that she may have been wrongfully terminated, Cortez contacted Michelle Crawford (Crawford), a staff attorney with California Rural Legal Assistance. Crawford obtained Cortez's employment records from Purolator and advised Cortez that "it appeared to be, to have been a lawful or legal termination." Crawford noted, however, that Cortez had worked a four-day, ten-hour per-day, workweek. Crawford contacted Esther Martinez (Martinez), Purolator's Human Resources Administrator, regarding the company's compliance with the applicable wage orders. Martinez agreed to look for documentation relating to the four-day schedule. She subsequently told Crawford "that she had gone all the way back to 1979 and couldn't find any documents." Crawford then referred the case to private counsel.
In November of that year, Cortez filed a complaint stating two causes of action against Purolator. The first claim was asserted on behalf of Cortez and the general public and charged Purolator with engaging in unfair business practices within the meaning of California's Unfair Business Practices Act (Bus. Prof. Code, § 17200 et seq.) Cortez requested relief including restitution, injunctive relief, disgorgement, civil penalties, and attorneys' fees. In connection with this claim, Cortez alleged that overtime pay had been improperly withheld from approximately 175 Purolator employees during the time relevant under the applicable statute of limitations.
The second cause of action stated Cortez's individual claim for failure to pay overtime wages pursuant to Labor Code section 1198 Cortez sought restitution of the overtime wages, civil penalties and attorneys' fees in connection with this claim.
The matter came to trial without a jury in October of 1995. Purolator bore the burden of proving that its employees were exempt from the standard overtime wage requirements. ( Norquist v. McGraw-Hill Broadcasting Co. (1995) 32 Cal.App.4th 555, 562.) Martinez confirmed at trial that, after a diligent search, Purolator had been unable to locate any written agreement relating to the adoption of the four 10-hour day schedule. Therefore, the bulk of the trial testimony addressed when and how the schedule change or changes were implemented.
Cortez called four former employees of Purolator to testify about their memories of the schedule conversion. Dolores Andrade (Andrade), who was employed by Purolator from 1978 to 1992, was not asked to sign any agreement and was not told that, by agreeing to the change, she was giving up the right to overtime pay for the ninth and tenth hours worked. Similarly, Ivalee Mueller (Mueller), who was employed from 1973 to 1991, did not recall signing any agreement regarding the schedule change. Maria Rosas (Rosas), who was employed from 1982 to 1994, recalled being told of the conversion; however, no one explained that she was giving up rights to overtime pay and she never signed any agreement. She testified: "I can only tell you they told us that we had to work that day — ten hours a day." Oscar Monderrosa, the Production Manager at the time the night-shift changed schedules, testified that he recalled no election and no written agreement relating to the change. To implement the change, he "had to just tell the second-shift supervisor about the change."
Dean DeBaun, General Manager and then President of Servodyne, testified that he did not think that the night-shift ever converted to the longer four-day workweek. He did not recall the details of the day-shift conversion, but believed that proper procedures had been followed. He explained: "[W]e went through a polling of the employees because that was one of the requirements to make the change. I'm not able to recall whether it was done, you know, verbally or in a written manner. And the results indicated the employees were in favor of it, and we made the conversion."
Peter Conrow (Conrow), Plant Manager for Servodyne, also was unable to confirm that a written agreement was obtained in connection with the schedule change. He testified that a meeting of the employees was held in 1986 where he answered questions and that a vote was taken regarding a trial period for the new schedule with only a few negative votes registered. Conrow could not recall if a second employee vote was taken after the trial period. He simply recalled that, after the month elapsed, "[t]he supervisors came back to me and basically stated that it was a go." The following exchange occurred on the subject of whether the employees signed an agreement:
"Q. Do you recall the supervisors obtaining signatures from any of the employees with regard to the new schedule?
"A. Normally just to show that — you always had this kind of problem where people say, `No one told me about it.' So I solved that problem by having — after the supervisors would discuss things or a memorandum — instead of passing out each one, an individual memorandum, they would get their memorandum, and then they would have to sign the supervisor's copy. Then it would get back to me. That's how we maintained files; so I would be sure that everyone actually saw we were aware that this was going on at the plant. . . ."
"Q. You recall that with the changeover from five to four [days]?
"A. I recall this was my standard procedure, the way I ran things. As to that specifically happening, no."
Esperanza Pena (Pena), who was employed as a night-shift supervisor from 1978 through 1994, testified that the night-shift changed schedules in July or August of 1986. According to Pena, "Pete Conrow called us to the dining room to tell us that they were going to change the shift to ten hours, the reason being that they needed one day to fix the machinery." A vote was taken and the employees were content with the change. Pena further stated that the employees were given a memorandum, which they signed, that explained "the reason why the shift was being changed to four days, ten hours, so that the employees would not be confused."
Purolator also introduced testimony regarding the lack of employee complaints regarding the four-day schedule.
Because of the issues raised and our resolution of the issues on appeal, we need not detail the testimony relating to damages. Suffice it to say that Cortez introduced testimony supporting her own damage award and supporting restitution and penalties on the Unfair Business Practices Act claim.
On April 2, 1996, the trial court issued its statement of decision and judgment was then entered on June 20, 1996. The court ruled that "[Purolator] did not meet [its] burden to prove there was an exception to Wage Order 1-89's requirement that workers must be paid overtime for all hours over eight hours per day." Accordingly, Cortez was awarded overtime wages of $2,860, waiting time penalties of $2,100 and interest in the amount of $524.33 on her Labor Code claim. In considering the Unfair Business Practices Act claim, the trial court concluded that, in light of Purolator's conversion back to a standard five-day schedule and its belief that it had complied with the requirements for the conversion to the four-day schedule, there was no basis for injunctive relief. The trial court further reasoned that "[w]ithout injunctive relief, the court is not in a position to award restitution to un-named plaintiffs." The court therefore awarded judgment to Purolator on the first cause of action.
The trial court also ruled that Cortez was the prevailing party and was entitled to her reasonable costs and attorneys fees pursuant to Labor Code sections 218.5 and 1194, subdivision (a). Motion papers were subsequently filed and a hearing held on this issue. The trial court awarded Cortez $88,735.30 in attorneys' fees and costs on October 22, 1996. An amended judgment was filed on April 23, 1997.
Cortez filed a notice of appeal on August 19, 1996. Purolator filed a notice of cross-appeal on August 26, 1996. The parties subsequently filed notices of appeal from the trial court's award of attorneys' fees, all of which we ordered consolidated with the earlier appeal.
DISCUSSION
I. Substantial Evidence Supports the Trial Court's Finding of Failure to Comply with the Applicable Wage Orders
Purolator points out contradictions in the testimony and purported credibility problems with Cortez's witnesses in an attempt to overturn the trial court's finding that it did not carry its burden of proving that it complied with the applicable regulations in changing to the four 10-hour day schedule. Purolator simply ignores the relevant standard of review on appeal. Whether Purolator complied with the applicable regulations is a question of fact subject to the substantial evidence standard of review. "`When a finding of fact is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the finding of fact. [Citations.] [¶] When two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court.' [Citation.]" ( Scott v. Common Council (1996) 44 Cal.App.4th 684, 689, quoting Green Trees Enterprises, Inc. v. Palm Springs Alpine Estates, Inc. (1967) 66 Cal.2d 782, 784-785.) The testimony of a single credible witness may constitute substantial evidence. ( In re Marriage of Mix (1975) 14 Cal.3d 604, 614.)
The record contains ample evidence to support the trial court's finding. Andrade and Rosas both testified that they were not asked to sign any agreement regarding the change and were not told prior to any polling that they would be giving up rights to overtime pay if they agreed to the schedule change. Mueller did not recall signing any paper relating to the schedule change. Purolator was unable to produce any written agreement regarding the schedule change. DeBaun, the company president at the time, could not recall if any document was signed by the employees in connection with the schedule change. Conrow, the plant manager at the time, recalled that the day-shift employees were polled prior to the implementation of the 30-day trial period of the new schedule. He could not recall if they were polled again before the schedule change was permanently adopted. He did not specifically remember whether any written agreement was prepared in connection with the schedule change, but testified that it was his practice to have employees sign memorandums explaining changes in operations at the plant. On this record, we must affirm the trial court's finding.
Purolator's brief contains a section addressed to certain objections by Cortez to testimony on the grounds of the best evidence rule. However, Purolator neither provides citations to the record to where the pertinent testimony can be found nor reports how the trial court ruled on the objections. Finding the briefing of this point wholly inadequate, we deem the argument waived. (Eisenberg, et al., Civil Practice Guide: Civil Appeals and Writs (Rutter 1996) § 9:21, rev. #1, 1997, pp. 9-5-9-6.)
II. The Trial Court Improperly Denied the Restitution Sought in the Unfair Business Practices Act Claim
Plaintiff's first cause of action requested restitution of lost overtime wages, interest, and Labor Code section 203 penalties relating to the overtime wages withheld from all Purolator workers during the applicable statute of limitations, pursuant to Business and Professions Code sections 17200 and 17203. (All further unspecified code sections refer to the Business and Professions Code.) The trial court denied monetary relief, reasoning that injunctive relief, which the trial court found inappropriate here, was a prerequisite to restitution. The trial court's reasoning was incorrect. After the trial court ruled, our Supreme Court held that "section 17203 authorizes a trial court to order restitution of money lost through acts of unfair competition, as defined in section 17200, whether or not the court also enjoins future violations." ( ABC Internat. Traders, Inc. v. Matsushita Electric Corp. (1997) 14 Cal.4th 1247, 1271, fn. omitted ( ABC).)
Purolator concedes that the court's reasoning is not in accordance with ABC but it contends that the court's ruling was sound because (1) plaintiff had no standing to bring the restitution claim, (2) Purolator's good faith and equitable defenses defeat any claim for restitution, (3) plaintiff is requesting damages rather than restitution, (4) the statute of limitations bars the claim, and (5) the evidence regarding the measurement of overtime was incomprehensible. We find none of these arguments persuasive.
A. Plaintiff Had Standing
Purolator contends that this claim had to be brought as a class action, and it relies on Bronco Wine Co. v. Frank A. Logoluso Farms (1989) 214 Cal.App.3d 699 ( Bronco Wine). Plaintiff responds that she has standing to bring this lawsuit ( Saunders v. Superior Court (1994) 27 Cal.App.4th 832; Hernandez v. Atlantic Finance Co. (1980) 105 Cal.App.3d 65), and a class action was not required under Dean Witter Reynolds, Inc. v. Superior Court (1989) 211 Cal.App.3d 758 ( Dean Witter). For the reasons set forth below, we agree with plaintiff.
The party seeking a class certification must establish that a class action provides a superior forum for resolution of the controversy ( Caro v. Proctor Gamble Co. (1993) 18 Cal.App.4th 644, 657-660), and that it will provide substantial benefits to both the litigants and court ( City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 459). "[I]n the absence of other error, this court will not disturb a trial court ruling on class certification which is supported by substantial evidence unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation]." ( Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.)
The trial court concluded that Bronco Wine was factually distinguishable from this case. It then concluded that Purolator had failed to present "superior reasons for going to a class action . . . ."
Even presuming that Purolator raised the issue of class certification in a timely manner, we conclude that this case is not analogous to Bronco Wine, supra, 214 Cal.App.3d 699. In Bronco Wine, a grape grower challenged certain practices by a bulk winemaker, which led to underpayments for the grower's grapes. The nonparty growers had separate contracts containing different terms with the winemaker, and only 20 of the 100 distinct contracts were introduced into evidence. Because different contracts were involved, the amount of restitution owed to each grower varied. Moreover, some nonparty growers had business reasons for not wanting to pursue a breach of contract claim. Since some of the nonparty growers did not receive notice of the lawsuit and the court did not receive all the necessary evidence, the restitution fund could not be properly allocated. The Bronco Wine court therefore held that proceeding without a class certification in this situation violated the nonparty growers' due process rights. ( Id. at pp. 718-720.)
In contrast, this case does not pose any due process concern. The amount of restitution for each employee may not be identical, but the method used to calculate the amount of overtime is identical for each employee. All of the necessary information was formally before the trial court, including the identity of all the workers, their hours worked, wages paid, and the amount of overtime wages owed to them.
Purolator contends that it should have had the right "to demand that each [employee] file a claim under oath that [he or she] did not participate" in the four-day, ten-hour workweek election. However, Purolator was not denied the opportunity to garner or furnish evidence, and it certainly was aware of the identity of the employees who were allegedly owed back pay. Thus, Purolator was not denied its opportunity to be heard.
In Dean Witter, supra, 211 Cal.App.3d 758, we held that a trial court's decision to permit a consumer's section 17200 claim to proceed as a class action constituted an abuse of discretion. We observed in Dean Witter: "[T]he management of a class action is `a difficult legal and administrative task.' [Citation.] Its only apparent advantage to victims of an unlawful business practice, vis vis an individual action under the unfair competition statute, is that it may theoretically afford them a better opportunity to protect their interests. [Citation.] Nothing in the record before the trial court, however, gave substance to this abstract possibility in the context of the present case. Absent persons generally are not bound by a judgment unless they were in privity with a party and the adjudication of their rights comports with due process. [Citation.] The possibility that such persons will pursue their own remedies may pose some threat to the defendant; here, however, the defendant opposes class certification and will presumably not be heard to complain later if it suffers adverse consequences as a result." ( Id. at pp. 773-774.)
Here, Purolator does not face the possibility that individual persons will pursue their own remedies since the statute of limitations (§ 17208) has run. Purolator has not provided any evidence to demonstrate that a class action would have been advantageous in this situation. We therefore conclude that substantial evidence supported the trial court's refusal to require class certification.
B. Purolator's Claim that it Acted in Good Faith does not Defeat a Claim of an Unlawful Business Practice
Purolator contends that equitable principles underlie the application of the Unfair Business Act, and the undisputed evidence established that Purolator had a reasonable, good faith belief that it had complied with the law. Moreover, it argues that the four-day, ten-hour per-day, workweek was not a fundamental right, and its enforcement does not reflect an important interest of the state.
None of the above factors, however, has any bearing on an action pursuant to section 17200 when the claim involves an unlawful act. (See, e.g., Hewlett v. Squaw Valley Ski Corp. (1997) 54 Cal.App.4th 499, 520 [intent is not an element of a violation of an unlawful business act].) Section 17200 provides the following: "As used in this chapter, unfair competition shall mean and include any unlawful, unfair, or fraudulent business act or practice . . . ." "The `unlawful' practices prohibited by section 17200 are any practices forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made. [Citation.]" ( Saunders v. Superior Court, supra, 27 Cal.App.4th at pp. 838-839.) While "unfair" practices require the application of a balancing test of "harm" versus "benefits," Purolator cites no authority which requires such balancing as to "unlawful" business practices. (See, e.g., Barquis v. Merchants Collection Assn. of Oakland, Inc. (1972) 7 Cal.3d 94, 112 [The court "need not undertake the task of determining the `fairness' of defendant's alleged conduct in light of contemporary standards," because defendant violated the law.].) Here, plaintiff bases her claim on the unlawful failure to pay overtime wages in violation of Wage Order 1-89 and Labor Code section 510
This Division has previously held that a violation of the Labor Code may be the basis for a claim under the unlawful prong of section 17200 ( Hudgins v. Neiman Marcus Group, Inc. (1995) 34 Cal.App.4th 1109, 1126; see also People v. Los Angeles Palm, Inc. (1981) 121 Cal.App.3d 25, 32-33 ( Palm).) This holding is consistent with our Supreme Court's admonishment in Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 578 that any restrictions on section 17200 claims should come from the Legislature. The Legislature has not limited the applicability of section 17200 to exclude violations of the Labor Code. Moreover, our Supreme Court recently cited Palm with apparent approval in Manufacturers Life Ins. Co. v. Superior Court (1995) 10 Cal.4th 257, 275-276, footnote 8.
For the same reasons the good faith argument is unpersuasive, Purolator's contention regarding its equitable defenses to a claim for restitution also has no merit. An unlawful violation of a statute imposes strict liability ( State Farm Fire Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093, 1102), and principles "of equity cannot be used to avoid a statutory mandate" ( Ghory v. Al-Lahham (1989) 209 Cal.App.3d 1487, 1492). Purolator is limited to the defenses set forth in the Labor Code, which does not include equitable defenses. (See, e.g., Hobby Industry Assn. of America, Inc. v. Younger (1980) 101 Cal.App.3d 358, 372 ["[W]e look to the particular unlawful practice in question . . . to determine the available defenses, rather than to the section which creates the additional enforcement vehicle (§ 17200)."]; see also People ex rel. Van de Kamp v. Cappuccio, Inc. (1988) 204 Cal.App.3d 750, 763.) The only defense available to Purolator is that it did not violate the Labor Code.
C. The Claim is for Restitution not Damages
Purolator contends that plaintiff's section 17200 claim for the difference between the standard wages paid and the overtime wage owed is not a claim for restitution, but rather a de facto claim for damages. ( Californians for Population Stabilization v. Hewlett-Packard Co. (1997) 58 Cal.App.4th 273, 295 ["unpaid wages are economic damages which are unavailable in a section 17200 action"]; Tippett v. Terich (1995) 37 Cal.App.4th 1517, 1537 [section 17200 cause of action "does not support a claim for damages based on the difference between the wages paid and the prevailing wage"].) Both of the above cases state in a single sentence that unpaid wages are damages which cannot be recovered in a section 17200 action, but neither case provides any analysis and conflicts with federal authority that holds a remedy is not legal simply because a monetary award is being sought ( Teamsters v. Terry (1990) 494 U.S. 558, 570 ( Terry)).
The United States Supreme Court in Terry, supra, 494 U.S. at p. 570 held that back pay or any award of monetary relief may be equitable when the damages are restitutionary, such as in an action to disgorge improper profits. The Terry court held that the plaintiff's request for back pay was a claim for damages because it was not based on an allegation that the money had been wrongfully held. Instead, the back pay involved wages the plaintiffs would have received had the union processed the employees' grievances properly. ( Id. at pp. 570-571.)
Here, plaintiff is not requesting compensation for any injury she suffered, which would clearly constitute damages. Rather, she is claiming that Purolator profited from breaking the law, and such a profit, which was wrongfully obtained, should be disgorged. "Restitution is generally defined as an equitable remedy designed to cure unjust enrichment of the defendant absent consideration of the plaintiff's losses. [Citations.]" ( Waldrop v. Southern Co. Services, Inc. (11th Cir. 1994) 24 F.3d 152, 158.)
Plaintiff's unpaid wages therefore are simply one method by which to measure the disgorgement of a wrongful benfit. Because the unpaid wages would restore plaintiff to the position where she would have been if not for Purolator's illegal conduct, this remedy is equitable in nature and therefore appropriately recoverable under section 17203. (Cf. Russell v. Northrop Grumman Corp. (E.D.N.Y. 1996) 921 F. Supp. 143, 151-152 ["[I]f the damages `restore the status quo and return the amount rightfully belonging to another,' they will be regarded as restitutionary and equitable. [Citations.]"]; see also Terry, supra, 494 U.S. at p. 570.)
Further, our holding advances the objective of section 17203. The purpose for providing a remedy under section 17203 is "`to deter future violations of the unfair trade practice statute and to foreclose retention by the violator of its ill-gotten gains.'" ( Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1267, quoting Fletcher v. Security Pacific National Bank (1979) 23 Cal.3d 442, 449 ( Fletcher).) The Supreme Court reaffirmed the deterrent purpose of this statute in ABC, supra, 14 Cal.4th at pp. 1268-1272. The Supreme Court stressed, "`the necessity for deterring future acts require[s] that the wrongdoer be prevented from retaining the illegal profits.' [Citation.]" ( Id. at p. 1270.) The Supreme Court further explained: "[I]t is unlikely the Legislature, in providing courts with broad equitable powers to remedy violations under section 17203, intended those powers be limited in an illogical, unfair and counterproductive manner." ( Ibid.)
"We do not deter indulgence in fraudulent [or unlawful] practices if we permit wrongdoers to retain the considerable benefits of their unlawful conduct." ( Fletcher, supra, 23 Cal.3d at p. 451.)
A court may exercise its full range of powers "`in order to accomplish complete justice between the parties, restoring if necessary the status quo ante as nearly as may be achieved.' [Citation.]" ( Fletcher, supra, 23 Cal.3d at p. 452.) Here, restoring the status quo ante means disgorging the amount of money Purolator saved by failing to pay the wages required by law.
D. The Statute of Limitations is Four Years
Purolator contends that the applicable statute of limitations should be three years under the applicable provisions of the Labor Code. However, section 17208 states the following: "Any action to enforce any cause of action pursuant to [the Unfair Business Practices Act] shall be commenced within four years after the cause of action accrued. . . ." Since we have concluded that plaintiff may claim restitution pursuant to section 17203, the four-year statute of limitations applies. (See also Levine v. Diamanthuset, Inc. (N.D.Cal. 1989) 722 F. Supp. 579, reversed on other grounds in Levine v. Diamanthuset, Inc. (9th Cir. 1991) 950 F.2d 1478 [applied the four-year statute of limitations, rather than the one-year statute for a legal malpractice action, to an unfair business practice claim against an attorney].)
E. Measure of Restitution was Incomprehensible
Purolator contends that the testimony of plaintiff's expert witness regarding the overtime pay owed was incomprehensible. As plaintiff contends, this issue is not properly before us because the court has not yet ordered restitution. After remand, the hearing on restitution based upon the evidence presented at trial will resolve this issue.
III. The Trial Court Did Not Abuse Its Discretion in Awarding Attorneys' Fees to Cortez
Finally, Purolator contends the trial court's award of $85,000 in attorneys' fees to Cortez was unreasonable when viewed in light of her limited success at trial. As this court has repeatedly recognized, the reasonableness of a claim for attorneys' fees rests in "`the sound discretion of the trial court.'" (E.g., Stokus v. Marsh (1990) 217 Cal.App.3d 647, 656,-657, quoting Bruckman v. Parliament Escrow Corp. (1987) 190 Cal.App.3d 1051, 1062.) We further explained that "`[i]n determining what constitutes a reasonable compensation for an attorney who has rendered services in connection with a legal proceeding, the court may and should consider "the nature of the litigation, its difficulty, the amount involved, the skill required and the skill employed in handling the litigation, the attention given, the success of the attorney's efforts, his learning, his age, and his experience in the particular type of work demanded . . . ; the intricacies and importance of the litigation, the labor and necessity for skilled legal training and ability in trying the cause, and the time consumed." [Citation.]' [Citations.]" ( Id. at p. 657, editing marks in original.)
The trial court thoughtfully considered "all of the above factors in relation to [Cortez's] original demand for $131,121.25 in attorney's fees and the modified request for $112,521.25 in such fees." The trial court explained the amount awarded as follows: "The court believes that this action constituted an important labor law case. There were difficult legal and factual issues presented. [Cortez's] counsel were experienced and learned in these particulars. Defense counsel provided stiff, demanding opposition. A substantial portion of the court trial dealt with issues relevant to the second cause of action. Attorneys for [Cortez] presented legal arguments which were materially of assistance to the court. Finally, the court noted the time consumed and the success achieved." We find no abuse of discretion in the trial court's award of attorneys' fees.
The modified fee request was arrived at by subtracting fees relating solely to the prosecution of the section 17200 cause of action.
DISPOSITION
The judgment is affirmed in part, and reversed in part. We reverse the denial of restitution under the Unfair Business Practice Act, and remand for the trial court to determine the amount of restitution. We otherwise affirm the judgment. Plaintiff is awarded her costs on appeal.
_________________________ Lambden, J.
I concur:
_________________________ Ruvolo, J.
I concur, albeit most reluctantly on one point.
My reluctance derives from my overview of this case. As my colleagues in the majority correctly point out, the plaintiff in this case was employed by Purolator for only a few years before she was terminated. That termination was for cause, at least according to the California Rural Legal Assistance lawyer who looked into it for her. But that didn't end the lawyering in the case: it turned out that Purolator did not do all the "due diligence" it might have before taking over the plant from its predecessor in interest. Specifically, it either did not (a) verify that the predecessor's overtime scheme of "4 10s" had undergone the administratively-required process or (b) preserve the documentation of that process. In either event, its sins were relatively minor, but the price it may have to pay for them may well not be. I am thus concerned over the application of a possibly expansive interpretation of the relief permissible under Business and Professions Code section 17200 (hereafter section 17200) to this effectively innocent purchaser — a purchaser who, as the trial court noted, acted with alacrity and apparent good faith to correct the situation when it was brought to its attention.
More specifically, I am concerned with the majority's rather acceptance of the proposition that what is sought here, both behalf of the appellant and the quasi-class she is purporting represent, constitutes the sort of relief that is available section 17200 The proposition the majority adopts an issue of continuing (and even escalating) confusion our law as to the distinction — if any — between "restitutionary and "damages."
As the majority points out, two prior court of appeal cases state flatly and unmistakably that unpaid wages are "damages" and hence not recoverable under section 17200 ( Tippett v. Terich (1995) 37 Cal.App.4th 1517, 1537; Californians for Population Stabilization v. Hewlett-Packard Co. (1997) 58 Cal.App.4th 273, 295.) Both cite as support for this proposition our Supreme Court's opinion in Bank of the West v. Superior Court (1992) 2 Cal.4th 1254 ( Bank of the West). In that case, the court held that commercial general liability insurance policies covering "`damages'" for injury arising out of "`unfair competition'" occurring in the course of the "insured's `advertising activities'" do not cover claims for advertising injury arising under the Unfair Business Practices Act. ( Id. at p. 1258.) This is so because "damages are not available under section 17203. [Citations.] The only nonpunitive monetary relief available under the Unfair Business Practices Act is the disgorgement of money that has been wrongfully obtained or, in the language of the statute, an order `restor[ing] . . . money . . . which may have been acquired by means of . . . unfair competition.' [Citations.]" ( Id. at p. 1266; emphasis supplied.)
To support its statement that damages are not recoverable in a section 17200 action, the Bank of the West court cited, among other authorities, our decision in Dean Witter Reynolds, Inc. v. Superior Court (1989) 211 Cal.App.3d 758. In that case, we announced that "the better rule denies compensatory damages as distinct from the equitable remedy of restitution" for a section 17200 claim. ( Id. at p. 774; see also, to the same effect, Heller v. Norcal Mutual Ins. Co. (1994) 8 Cal.4th 30, 45, and Industrial Indemnity Co. v. Superior Court (1989) 209 Cal.App.3d 1093, 1095-1097.)
The question of the type of monetary relief available under section 17200 was at least potentially at issue in the recent decision of the Supreme Court in Stop Youth Addiction, Inc. v . Lucky Stores, Inc. (1998) 17 Cal.4th 553 ( Lucky Stores). The majority in that case held that a nonprofit corporation had standing to bring a section 17200 claim against the supermarket chain for selling cigarettes to minors in violation of law. While raising questions about the breadth of section 17200 claims, the majority concluded that any restrictions on such claims should come from the Legislature. ( Id. at p. 578.) The majority noted that the issue of whether the plaintiff's prayer for restitution payable to the state was appropriate was not before it on demurrer and therefore expressed no opinion on that question. ( Id. at p. 575, fn. 11.)
Concurring in the ruling, Justice Baxter expressed his deep reservations regarding the viability of the suit, including particularly the appropriateness of the restitutionary relief sought. ( Id. at pp. 578-584.) Justice Baxter stated: "Of equal concern, however, is the monetary relief sought by plaintiff. It is unclear from the complaint whether plaintiff seeks restitution, a remedy provided for by the UCL, or damages, a remedy not authorized by that law. `[D]amages are not available under section 17203. [Citations.] The only nonpunitive monetary relief available under the Unfair Business Practices Act is the disgorgement of money that has been wrongfully obtained or, in the language of the statute, an order "restor[ing] . . . money . . . which may have been acquired by means of . . . unfair competition." (§ 17203; cf. §§ 17206, 17207 [penalties].)' ( Bank of the West[, supra,] 2 Cal.4th [at p.] 1266.) [¶] To the extent that plaintiff seeks a monetary remedy, it is in the prayer for $10 billion to be paid to the State of California. `Restore' and `restitution' have a well understood meaning. ` Restore' means `return' and `restitution' is the act of returning the thing which is restored." ( Lucky Stores, supra, 17 Cal.4th at p. 581 [conc. opn. of Baxter, J.; emphasis supplied].)
The concept of "damages," by way of contrast, has always implicated the principle of compensating a plaintiff for a loss suffered. Thus, Civil Code section 3281 provides: "Every person who suffers detriment from the unlawful act or omission of another, may recover from the person in fault a compensation therefor in money, which is called damages." The most recent Supreme Court authority discussing this definition is AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, where the court explained: "As our cases have pointed out, this provision is intended to represent the plain and ordinary meaning of the word `damages.' [Citations.] Other lay and legal definitions are similar. One dictionary, for example, defines `damages' as `the estimated reparation in money for detriment or injury sustained: compensation or satisfaction imposed by law for a wrong or injury caused by a violation of a legal right.' (Webster's New Internat. Dict. (3d ed. 1981) p. 581.) Black's Law Dictionary similarly defines `damages' as `[a] pecuniary compensation or indemnity, which may be recovered in the courts by any person who has suffered loss, detriment, or injury, whether to his person, property, or rights, through the unlawful act or omission of another.' (Black's Law Dict. (4th ed. 1951) p. 466, col. 2.) Whatever their semantic differences, the statutory and dictionary definitions of `damages' share several basic concepts. Each requires there to be `compensation,' in `money,' `recovered' by a party for `loss' or `detriment' it has suffered through the acts of another." ( Id. at pp. 825-826, fn. omitted.)
If this is what "damages" means, and there is no overlap between that concept and what is recoverable under a restitutionary scheme, then clearly what appellant Cortez seeks here is classifiable as damages. Indeed, our Supreme Court has held at least three times that "[a]mounts recoverable as wrongfully withheld payments of salary . . . are damages" within the meaning of Civil Code section 3281 and its immediately following provisions. ( Olson v. Cory (1983) 35 Cal.3d 390, 402; see also Sanders v. City of Los Angeles (1970) 3 Cal.3d 252, 262-263; Benson v. City of Los Angeles (1963) 60 Cal.2d 355, 365-366.)
Does it follow from these authorities that a bright line separates the concepts of "restitutionary relief" and "damages"? I would have thought it does. In 1992, in the passage quoted above from Bank of the West, our Supreme Court apparently thought so, too: note again its flat statement that "damages are not available under section 17203." ( Bank of the West, supra, 2 Cal.4th at p. 1266.) And, as we have just seen, "damages," as that term is defined in Civil Code section 3281 and the cases interpreting it, are moneys payable to compensate a claimant for losses it has suffered. In contract cases, those losses are generally the differential between the values of what was promised and what was delivered. Thus, if plaintiff Cortez had had a contract with Purolator under which she was promised $X per week and if in fact she was paid less than that amount, her subsequent suit for damages for breach of contract would clearly be one for "damages" and hence not cognizable under section 17200 I do not believe the result should be any different because her suit is based principally upon violation of a Labor Code section relief for which is available under section 17200 Finally, I also agree with Justice Baxter's apparent understanding that restitutionary relief generally, if not universally, contemplates the return of something improperly secured or acquired by the defendant.
The fly in the ointment in all of this derives from terminology used by our Supreme Court in an opinion issued after Bank of the West but before Lucky Stores, i.e., ABC Internat. Traders, Inc. v. Matushita Electric Corp. (1997) 14 Cal.4th 1247 ( ABC). The majority has already noted that that case undermined the trial court's original rationale for denying restitutionary relief here. But it did more: in discussing the policies regarding the availability of restitutionary relief in section 17200 actions, it repeatedly — and apparently deliberately — used fairly broad terms. Thus, it spoke of "`foreclos[ing] retention of the violator of its ill-gotten gains' [citation]" and "`prevent[ing] a wrongdoer from retaining the benefits of its illegal acts,'" as well as using such phrases as "re[tention] [of] illicit profit," "restitution of money lost through acts of unfair competition," and alluding to the "broad equitable powers" the Legislature provided the courts via section 17200 ( Id. at pp. 1270-1271.)
To be sure, some of the terminology used in the majority opinion in ABC derived from two earlier cases, one from a court of appeal ( People v. Thomas Shelton Powers, M.D., Inc. (1992) 2 Cal.App.4th 330, 341-342) and one from the Supreme Court involving Business and Professions Code section 17535 ( Fletcher v. Security Pacific National Bank (1979) 23 Cal.3d 442, 449.) However, both of these cases preceded Bank of the West.
I reluctantly conclude that this terminology suggests an intent by our Supreme Court to (a) broaden the scope of what constitutes "restitution" and (b) effectively hold that there is now no bright line between that concept and the concept of "damages" but, rather, an area of overlap. I further conclude that, in view of the fact that respondent almost certainly "profited" from the non-payment of overtime pay to Cortez et al., the relief sought here, while it is certainly also "damages," is relief available under section 17200
See also, albeit dealing with totally different statutes and not binding on us, Teamsters v. Terry (1990) 494 U.S. 558, 570-571, cited by the majority.
I also concur in the remainder of the majority's holdings.
_________________________ Haerle, J.