Summary
In Waisbein, a former employee opted out of class action that culminated in a court-approved class action settlement that included release of claims under sections 2802 and 2804. 2007 WL 4287334 at *1.
Summary of this case from Aguilar v. Zep Inc.Opinion
No. C-07-2328 MMC.
December 5, 2007
Before the Court is defendant UBS Financial Services Inc.'s ("UBS") motion for reconsideration of the Court's order of August 15, 2007, by which order the Court granted in part and denied in part defendant's motion to dismiss or, alternatively, strike class or representative allegations in plaintiff David Waisbein's ("Waisbein") First Amended Complaint ("FAC"). On September 7, 2007, the matter came before the Court for hearing. Joseph Cho of Initiative Legal Group LLP appeared on behalf of Waisbein. M. Kirby C. Wilcox and Molly Harcos of Paul, Hastings, Janofsky Walker LLP appeared on behalf of UBS. After the hearing, the parties, at the Court's direction, filed subsequent briefing with respect to the motion to dismiss or strike.
Having considered the parties' submissions and the arguments of counsel, the Court hereby GRANTS the motion for reconsideration, VACATES the order filed August 15, 2007, and, as to UBS's motion to dismiss or strike, rules as follows.
The Court finds further oral argument is unnecessary and, accordingly, VACATES the hearing scheduled for December 7, 2007.
BACKGROUND
On November 22, 2006, the Court granted final approval to a class action settlement in Bowman v. UBS Fin. Servs., Inc., No. C-04-03525. (See Def.'s Request for Judicial Notice ("RJN") Ex. A.) The Bowman plaintiffs had alleged UBS misclassified its Financial Advisors and Trainees ("Financial Advisors") as exempt from federal and state overtime laws, and, as a result, did not compensate Financial Advisors for overtime hours worked or provide them with required meal periods. (See id. Ex. B ¶¶ 13-31, 46.) Additionally, the Bowman plaintiffs alleged UBS violated the California Labor Code by taking unlawful deductions from wages, failing to reimburse incurred business expenses, and failing to promptly pay wages due upon termination. (See id. Ex. B ¶¶ 33-34, 49-55.) Pursuant to the settlement, UBS agreed to pay up to $44 million to the Bowman class members and their counsel; in exchange, the Bowman class released certain claims against UBS, including claims under §§ 200-243, 300-356, 400-410, 500-558, 1194, 2802, 2804 of the California Labor Code, the Private Attorneys General Act of 2004 ("PAGA"), codified at §§ 2698-2699.5 of the California Labor Code, and § 17200 of the California Business and Professions Code. (See id. Ex. A at 7-9, 12-15.)On January 10, 2007, Waisbein, a former UBS Financial Advisor who opted out of the Bowman class action, filed the instant action against UBS. In the FAC, Waisbein alleges a cause of action on his own behalf for violation of the Fair Labor Standards Act, based on a failure to pay overtime compensation. (See FAC ¶¶ 26-32.) Additionally, Waisbein alleges causes of action under state law, based on UBS's asserted failure to pay overtime compensation, failure to provide accurate pay stubs, failure to provide required meal and rest periods, taking unlawful deductions from wages, failure to reimburse incurred business expenses, and failure to promptly pay wages due after termination of employment. (See id. ¶¶ 33-86.) The state law claims, based on violations of §§ 201, 202, 221, 226(a), 226.7(a), 400-410, 510, 1194, and 2802 of the California Labor Code, are alleged under PAGA and under § 17200 of the California Business and Professions Code; each state law claim is asserted on behalf of Waisbein and on behalf of "other aggrieved employees." (See, e.g., id. ¶ 41.)
DISCUSSION
UBS argues the state law claims are subject to dismissal, to the extent Waisbein seeks relief on behalf of the Bowman class members, in light of the release set forth in the settlement agreement approved by the Court in Bowman.
As Waisbein points outs, the Bowman class members only released claims that had arisen during the period from June 30, 2000 to November 22, 2006. Consequently, the Court interprets UBS's motion as seeking dismissal of the FAC to the extent it is brought on behalf of any Bowman class member and is based on the period from June 30, 2000 to November 22, 2006.
A. PAGA Claims
The Second through Sixth Causes of Action, in which Waisbein seeks relief based on violations of §§ 201, 202, 221, 226(a), 226.7(a), 400-410, 510, 1194, and 2802 of the California Labor Code, are brought pursuant to PAGA.
Under California law, the State may "assess and collect" civil penalties from employers for violations of certain provisions of the Labor Code. See Cal. Labor Code § 2699(a). Under PAGA, however, if an "aggrieved" employee "give[s] written notice by certified mail to the [State] and the employer of the specific provisions of [the Labor Code] alleged to have been violated,"see Cal. Labor Code § 2699.3(a)(1), and the State thereafter decides not to investigate or does investigate and determines that a citation against the employer should not issue, the employee may "as an alternative" to enforcement by the State, bring a civil action under PAGA to recover the civil penalties "on behalf of himself or herself and other current or former employees," see id. "[C]ivil penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to the [State] and 25 percent to the aggrieved employees." Cal. Labor Code § 2699(i).
As noted, the Bowman class members released any claim they might have had under §§ 201, 202, 221, 226(a), 226.7(a), 400-410, 510, 1194, and 2802 of the California Labor Code and under PAGA, with respect to the period from June 30, 2000 to November 22, 2006. Waisbein argues the release does not bar him from bringing a PAGA cause of action based on a claim that UBS violated those statutes with respect to the Bowman class members. Specifically, Waisbein argues, because the plaintiffs in Bowman failed to follow the correct procedures to allege a claim and prosecute a claim under PAGA, they were never authorized by the State to bring a PAGA claim and, consequently, lacked authority to waive the State's ability to collect penalties against UBS.
Waisbein's argument is premised on the theory that a claim brought under PAGA by an aggrieved employee is not only a claim brought on behalf of the employee, but also a claim brought on behalf of the State. Waisbein cites no authority to support his interpretation of PAGA. As the California Court of Appeal has stated, "[PAGA] empowers or deputizes an aggrieved employee to sue for civil penalties `on behalf of himself or herself and other current or former employees' as an alternative to enforcement by the [State]." See Dunlap v. Superior Court, 142 Cal. App. 4th 330, 337 (2006) (internal citation omitted) (emphasis added). Indeed, as noted, a PAGA claim can only be filed where the State has made an affirmative decision not to pursue the matter, either by deciding not to investigate at all or by investigating and then deciding the employer should not be cited and subjected to penalties.
Contrary to Waisbein's argument, the question is not whether the State would be barred by the release from imposing penalties against UBS under Labor Code sections other than PAGA. See, e.g., Cal. Labor Code § 558 (providing Labor Commissioner may, upon "inspection and investigation," impose civil penalties on employer who violates § 510). Rather, the question is whether theBowman class members voluntarily entered into an agreement in which they accepted a monetary benefit from UBS in exchange for not pursuing their claims under PAGA. The indisputable answer to that question is "yes." (See RJN Ex. A ¶ 45.) As a result, Waisbein may not bring herein PAGA claims on behalf of the Bowman class members with respect to the time period identified in the release. See Howard v. America Online Inc., 208 F. 3d 741, 746-47 (9th Cir. 2000) (holding class action settlement, in which class settled claims arising under state law and released any claim "related to the matters" alleged in complaint, barred second action in which class members alleged federal claim based on facts related to those on which state law claims had been based).
Accordingly, the Second through Sixth Causes of Action are subject to dismissal, to the extent they are brought on behalf of any Bowman class member and is based on the time period from June 30, 2000 to November 22, 2006.
B. Section 17200
In the Seventh Cause of Action, Waisbein seeks, pursuant to § 17200, "restitution of the wages withheld, deducted and/or retained by [UBS], and losses and/or expenses unreimbursed or charged by [UBS]." (See FAC ¶¶ 84, 85.)
For the reasons discussed above, the Court finds the release in the Bowman settlement agreement bars the Seventh Cause of Action to the extent it is alleged on behalf of Bowman class members and is based on the time period from June 30, 2000 to November 22, 2006. See Howard, 208 F. 3d at 746-48.
Accordingly, the Seventh Cause of Action is subject to dismissal, to the extent it is brought on behalf of any Bowman class member and is based on the time period from June 30, 2000 to November 22, 2006.