McLEAN v. STATE OF CALIFORNIARespondent, State of California, Petition for ReviewCal.September 29, 20146921554 Jn the Supreme Court of the State of California JANIS S. MCLEAN, Plaintiff and Appellant, Vv. STATE OF CALIFORNIA,ET AL., Defendants and Respondents. Case No. SUPREME COURT FILED SEP 29 2014 Frank A. McGuire Clerk Deputy Court of Appeal, Third Appellate District, Case No. C074515 Superior Court of California, County of Sacramento, Case No. 34-2012-00119161-CU-OE-GDS Honorable Raymond M.Cadei PETITION FOR REVIEW KAMALAD. HARRIS WILLIAM T. DARDEN Attorney General of California State Bar No. 155079 ALICIA FOWLER Deputy Attorney General Senior Assistant Attorney General FIEL D. TIGNO Supervising Deputy Attorney General 1515 ClayStreet, 20" Floor, P.O. Box 70550 Oakland, CA 94612-0550 Telephone: (510) 622-2196 Fax: (510) 622-2270 Attorneysfor Petitioner State of California In the Supreme Court of the State of California JANIS 8S. MCLEAN, Plaintiff and Appellant, Case No. Vv. STATE OF CALIFORNIA, ET AL., Defendants and Respondents. Court of Appeal, Third Appellate District, Case No. C074515 - Superior Court of California, County of Sacramento, Case No, 34-2012-00119161-CU-OE-GDS Honorable Raymond M.Cadei PETITION FOR REVIEW KAMALAD, HARRIS WILLIAM T. DARDEN Attorney General of California State Bar No. 155079 ALICIA FOWLER Deputy Attorney General Senior Assistant Attorney General 1515 Clay Street, 20" Floor, FIEL D. TIGNO P.O. Box 70550 Supervising Deputy Attorney General Oakland, CA 94612-0550 Telephone: (510) 622-2196 Fax: (510) 622-2270 Attorneysfor Petitioner State of California . . TABLE OF CONTENTS Page Tssues Presented ........cccecsscceseccscecessensesscereseeserscssecnseeseeceneensesesaeesserenseerenaes ] Petition for. ROVICW .......cccsceccescesssseseeceteenecssevserseesensessesseesceascsteesatseneesaeeces ] Summaryofthe Facts and of the Court of Appeal’s Decision .............0006 ] Legal DisCUSSION .......:cceseseseceseeeerseescsesaseaseeaeceessevaserseesessecacsesesensentenuenes 5 I, The court should grant review to determine whether the “State of California” is a proper defendant in a section 203 action for:penalties... cssesseeecseeesrereeeterenes 7 I. Review is needed to settle an important question of law regarding the applicability of section 203’s penalty PTOVISIONS tO TELITEES oeeee eeseeseeeneeneeesterscssaeereesaeenseeeseeees 14 A. The court of appeal’s decision will lead to confusion regarding distinct forms of separation from service and risks the imposition of significant and unwarrantedliability on state ALCTICIOS .0.....eeeeeeeeescsececencecesceeseeesateceseesseesseeeeseeeseeeees 14 B. The term “quit,” as used in section 203, does not include a “retirement?” ...........cesecsesseeseeresertseeeees 16 1. The usual and ordinary meaning of “quit” is different from the meaning of “TOLUTO” ..eceescssecssseceeseesessecessesesneeceseccestineesrees 16 2. Thelegislature itself distinguished between a quit and a retirementin the StALULEeeeeesccentecesteceneseneeseeteenersnerersaserenes 17 3. The legislature knew that a quit was different from a retirementat the timeit amended the statutory scheme under which McLean sued, and did not add retirees to the penalty and prompt PAYMENPOVISIONS 0.0... eee eeeeeeteeeeseeeteeeeneeeees 19 4. Defendant’s interpretation of the statute is not inconsistent with the legislative purpose behind the prompt paymentlaws..... 22 COMCIUSION. 0... ecceeceessssceseesceesseceeeerseseeeaeesseeseeenessastanerseesaeraecenesesengeeraeereas 23 TABLE OF AUTHORITIES Page CASES Bacich v. Board ofControl (1943) 23 Cal.2d 343 ...ccccscccssesscssereeeesnerssesesseeseeeseceneeeetneneenaees 11,12 City ofHuntington Beach v. Bd. ofAdmin. (1992) 4 Cal.4th 462 occcecccsseseesessessesecsesseessesssesssersesaereesseeneeraey 18 Columbov. State ofCalifornia’ (1991) 3 Cal.App. 4! 594 vo ccccssssssessssessssescsecseesseesseessseesssseseeessen 11 Com. ofSeven Thousand v. Superior Court (1988) 45 Cal.3d 49] oieeessesseesereeeeererseneeesaeeeneeseeseereceenerseens 16 Futrell v. Payday California (2010) 190 Cal.App.4™ 1419 vccccccccssssecsssssesssesesssssesesssssesssesseeestennee 9 Gore v. Yolo County D.A.’s Office (2013) 213 Cal.App.4th 1487 oo... ceceesesecreseceresessesserssessesseeas 15 Greyhound Lines v. Department ofthe California Highway Patrol (2013) 213 Cal.App.4™ 1129 vvcccesccsssessssssssecsecsseesecseeseessssesneesnecereessee 9 In re Marriage ofBowen (2001) 91 Cal.App.4th 129] ooeeeccseetsesesseersecneersenesseseessenesseas 15 In re Marriage ofLehman (1998) 18 Cal.4th 169eeeeeseeseseeneessescneeseessnereessenessesesnesessreres 15 Johnson v. Arvin-Edison Water Storage Dist. (2009) 174 Cal.App. 47 729 .occccccsssssssessssecssseesecseessnesieesnseeeneenneen 17 Lucas v. State of California (1997) 58 Cal.App.4th 744neersaecesevenseeaecescesesacesecseeseenes 15 Martinez v. Combs (2010) 49 Cal.435 vcicceccccccsccsscsssessssessessssssesssssscsrsanseseesseecseaneeees 7, 13 People ex rel Lockyer v. Superior Court (2004) 122 Cal.App.4™ 1060 veccccccsscsseccssscsssessecsecssssessnseesntsnesstseees 9 il People v. Hudson (2006) 38 Cal.4th 1002 oo. ceseeeccessectseeceeeeeseseessaseseteeseceeseareneees 18 People v. Scott (2014) 58 Cal.4th 1415 oieecscsecseeectseesseseesseseressessseeseesenees 21 Prof. Engineers in Cal. Gov. v. Schwarzenegger (2010) 50 Cal.4th 989 ooo ccsceceesteceneessseseaeeesntsaesseesneseeneeseeenees 10 Prof. Engineers in Cal. Gov. v. State Personnel Bd. (2001) 90 Cal.App.4th 678.000... cc cccssscccsseeesecesseeessrtsssseseseseseeennesnees 10 Reynolds v. Bement (2005) 36 Cal.4th 1075 oecicecsecessecsteecsteesseesecsseeenecereceerssaseeeees 13 Smith v. Superior Court (2006) 39 Cal.4th 77 ..cccccscccssccsssscscsnsceseeessecesseesecsessetecsseesensssaeeseees 22 Tirapelle v. Davis (1993) 20 Cal.App.4™ 131 7icccccccsscessesesscsssssssstssessessneesessees 3, 8,9, 10 STATUTES California Code of Regulations Title 8 § 11040 1.(B)ccceccccessccsssecesseessseeeecessnsepessesersesssssesoeseeessevesuseatees 7 Government Code S§ LLLOO-11201 vceeccsecsseccnesestsessneeessenscesseessssssesesesseesesseeseeensaes 9 S LLISO Leeeecsccsscsessseessececsceesssesseecsneseesassenseeceesessseesssteeeesererstssasees 8 § LVI2eee eeeeectessseesssesessecessecseeeceseeseeeesecseesesersatsersesenes Veseeeaseceseveess 8 § L154eeeecsessesestsessreesssesssseesaesssaeeseseeeesaesssessessesusesesseesentsensees 8 §§ 12470-12477 ooeeccccscssssecsscessesecetsesssesseeeeeeecseessssessesssesseseeseesatenes 13 SIL010)10 § 19050... eeceescccssccsseecsscecsscesessecesvenseesersecesasesestecsssassseseaueeeesaesesetensnes 9 § 19140(a) woeee essccssscccsessetccsesesersnseseesseeeescsnsesessersseesssessaasaseeaeavenss 14 § 19574ee eecesseeteessecsssecenseesescecsecessesseaecssaueseaecsaessevsecenegeessresensenaeess 9 § 19996 oeeccccccsesecesesesseeceeepecsuscssesestsesenseessseesesseeaussssasenaeeeesssesseesegs 15 § 19997 0 eeccccccscesccceeessecesenseeessnssecsseeeseesaeessesseseessesausaseceeseeseseessepen 10 §§ 21060-21120 eeeeccccccesscesseesseeesseeesseeecsnesssseessseestecseetecssteeneee 17 ill r Labor Code § 200 .eeeceecscsscsccsenseererseeneeseesesscsessssesssseeesssesseesssusseeesseseessessesaneaeeaeenesy 5 §§ 200 to 211eeeeeesscnecrssseeeneesceseseseessessseesesessseesessatsesesaesseeseess 20 § 20]eeeeeeeeseeceseeseserserseteesseneveeereceeesecseseseeesseseessssesessasneseess 6,9, 19 § QOLSG)... eessescseeecereeseseeeseevessseseauvevsseessessesussscessenssneeessereeseseasessgs 19 §§ 201 and 202 onccceseesnsesescsecseesseeesessratesereeesresseeseeenspassim §§ 201-203 oe ceeessceseesereersesceesesessessssersssecssseeseeassevecsresssessssecessteees 13 § QOL (A)... eececcscesseeesecsecserseesessesecseseessesasesseseeeesessesessesssiessesneeaseneeseey 6 § 202 wo.ecescesscesssssenerseeceessevscessessenesseesassessssesersscesesessaesessrssraseasenes passim §§ 202 and 203 oo. ceeceeeeeecsseessrsersersntesssessssseeesssneesesstssenersees 1, 17, 19 § 202(A)... eeccsecnccssererescnsessessesssserscsesssrecsesseseesseersesesesseneesnsseessseaey passim § 2O2(D)... ce eeeccscseeseesesseeeeseessecsevsesersnseesenssseseserseesesstensasersaserenenseseevaens 2 § 202(C) re eeerseseseeesscesssssesssssesscrsessecssenessssesesesneesesresseesssenaeeayegs passim § 203 vccescesccsscescenseseceseessceeeseessssessessessecesessesecsessarssessssnseneersesees passim § 215 through 219eeeeneneeeessessessessessessessssescesersesarernseateeeens 20 § 220 oie eeccccscescneteeseeeessceeseesensecesvsessssesaveusensseusesssesessssesesssasesseseanessgs 20 § 2208) ...ceecccsececcscececssceecteesecseverseesecaseeessesesesesssessassssassassersasnesssseseassy 20 § 1194 Lceeeteenecseeseeteeseetecsenecsersseeesersassesssenecssescssssssseeesissaesaseneeess 7 CONSTITUTIONAL PROVISIONS California Constitution Article TV-VII wou... eeeeessccsccccessceeeetvsvesseeateen ® COURT RULES California Rules of Court Rule 8,.500(b) .....ccccsscssscssscsccscesecsessecsecsecescnsessecsaessecesseseecaneeneseessaesenees 6 Rule 8.504(Db) ....cccccccssssssceseesseseescseesseseccseesecceessevsesseeeeserseeecnatsnseaeeraeees 1 Rule 8.504(b)(3) ....eccesseccessescescccssseeseresseecesseceseeseeserseesssensseesserseesseens 1 OTHER AUTHORITIES Sutherland, Statutes and Statutory Construction, 7" Ed. (2007), § 46:6 cesscsccccccsecsesscseessenesssssssssssesessesssusssstsinnssesvesseeseneeseee 17 iV ISSUES PRESENTED l. Whether, in a putative class action to recover penalties against an “employer” under Section 203 ofthe Labor Code, a formerstate employee may sue the “State of California” instead of the specific agency for which the employee previously worked. 2. Whether Sections 202 and 203 of the Labor Code, which provide a right of action for employees who “quit” their employment, authorize suit by an employee whoretires from herjob. PETITION FOR REVIEW RespondentState of California, et al.,' respectfully petitions this Court for review ofthe published decision ofthe Third District Court of Appeal in Janis McLeanv. State ofCalifornia, et al. (C074515) (McLeanv. State ofCalifornia), filed on August 19, 2014. A copy ofthe slip opinionis attached. (Cal. Rules of Court, Rule 8.504(b).)’ ' SUMMARYOF THE FACTS AND OF THE COURT OF APPEAL’S DECISION In the operative First Amended Complaint (“FAC”) Plaintiff Janis McLean (“McLean”) alleged a single cause of action for penalties under California Labor Code Section 203, based on claimed violations of Labor Code section 202. (AA000006-09.) Labor Codesection 203 permits an employee whois “discharged” or who “quits”to recover penalties in the event his or her “employer” willfully fails to pay wages owedatthe time of The opinion of the Court of Appeal affirmed the trial court’s judgmentof dismissal on behalf of the State Controller. ; NoPetition for Rehearing wasfiled with respect to the Court of Appeal’s opinion. (Cal. Rules of Court, Rule 8.504(b)(3).) discharge or quitting, if that failure to pay violates specified provisions of the Labor Code, including Labor Code section 202. (Labor Code § 203.) 3 McLeanalleged that her final paycheck was paid outside of the time frame required by section 202(a). (AA000003.) With respect to deposits of certain amounts of money from her accrued but unpaid leave and vacation time that she asked to have transferred into her supplemental retirement plan in accordance with the provisions of section 202(b) and (c), she alleged that those transfers were madeinto her retirement accounts outside of the time frames specified by those sections. (/bid.) For the year 2010, she claimed, the deposit into her account was not made within 45 days of her last day of employment, and, for the year 2011, the deposit was not madeby February 1, 2011. (Jbid.) Because McLean had been made whole prior to the initiation of her suit, no damages were sought; instead McLean’s suit sought only penalties under section 203, and attorneys’ fees and costs. (AA 000001-09; Opn., at 2-3.) McLean did not allege that she “quit” or was “discharged.” Instead, she alleged that she “senarated” from service with the Attorney General’s Office on November 16, 2010, the same dayshe “retired.” (AA000003) In fact, McLean’s pleadingitself alleged that those who “quit” and those who“retired” were separate categories: Her proposed class definition encompassed employees who“resigned orretired.” (AA00004,italics added.) Although McLean worked for DOJ, she did not sue DOJ. Instead, she:sued only the State Controller and “the State of California.” 3 Statutory references are to the Labor Code unless otherwise specified. | (AA000002.) Her suit alleged that “defendants” failed to make payments to her and the Plaintiff Class of state employees. It alleged that “Plaintiff and the Class may bring suit against the State, including its department and agencies” for alleged violations of section 202 and for relief under section - 203. (AA000007.) Defendants demurred on several grounds (AA00001 1-66), three of which are most relevantto this Petition. First, Defendants contended that section 203, which permits penalty wages to be awarded only to an employee whois “discharged” or who “quits,” does not apply to the separate category of employees who“retire.” (AA000024-26.) Based upon a detailed analysis of the statutory scheme,case law, and statutory law, Defendants contendedthat a “retirement” was understood by the Legislature to be different from a “quit” andthat a “retiree,” for reasons consistent with the rationale behind the prompt-payment laws, was not entitled to statutory penalties. (/d.) The trial court agreed. (AA000109- 112.) After McLean disavowed any intent to amend her complaint, thetrial court sustained the demurrer, at her request, without leave to amend. (AA000111; 116-117.) The Court of Appeal reversed. The opinion expressly recognized that, in the context of state civil service, a “retirement” is understood to be different from a “quit.” (Opn., at 12 [“[i]t appears that the Legislature specified “quits, retires, or disability retires” in section 202(c) because that subdivision, unlike section 202(a) or section 203, applies only to state employees by its express terms, and in that context, the terms have different meanings.”]) Although the court acknowledged that the Legislature never added those who “retire” to the protections of section 203, it held that McLean, who did not allege that she “quit” from state service, should nevertheless be considered to be a person who “quit” for purposes of section 203, because she “quit to retire.” (Opn.at p. 2, 8-14). Second, Defendants argued that McLean, by suing the State of California and the State Controller’s Office, sued the wrong defendants and improperly attempted to expand the scope of her class action beyond the DOJ, which was her “employer” for purposes of section 203. (AA000031- 36.) As to the argumentthat the “State of California” employed McLean, Defendants cited extensively to state law making clear that appointmentsto state civil service are made by each appointing authority — in other words, by each separate entity that appoints employeestothestate civil service and directly employs them. (/bid.) Importantly, Defendants also arguedthat, in the context of a section 203 action, the responsibility for makingthe final wage payments(giving rise to the penalty claim at issue in McLean’s suit) | lies directly with each employee’s appointing authority, here the DOJ. (AA000032-33; AA000042-43; AA000064.) Therefore, only DOJ would properly be subject to suit as McLean’s “employer” for purposes of section 203. (AA000031-36.) The Court of Appeal rejected this argument with little analysis. It reasoned that, since McLean wasa state civil service employee, and since the relevant statutes referred to “the state employer,” McLean’s section 203 employer was “clearly” the “State of California.” (Opn.at p. 12-13.) Defendants also argued that the State Controller did not employ McLean, and thus wasnot properly a defendant to McLean’s section 203 claim. (AA000031-34.) The Court of Appeal found that the FAC did allege “wrongful conduct” by the Controller’s office for purposes of section 203. Nevertheless, it found that dismissal of the State Controller was proper. (Opn.at p. 15.) The court reasoned that it was simply not necessary to namethe Controller’s office as a party defendant, since an “action against state agenciesin their capacity as such is, in effect, a suit against the state” and that it was therefore sufficient to name “only the state as a party defendant.” (/d.) Finally, Defendants challenged McLean’s class allegations, arguing that she could not represent a class of employees who quit, because she had not quit. Defendants also argued that, since McLean’s appointing power and employer was DOJ, she could only represent employees of DOJ, and could not represent any other employee employed by any separate appointing power.’ The Court of Appeal “easily disposed”ofthese contentions by repeating its conclusion that “quit” includes those who quit “whether to retire or for other reasons” and that those who quit and those whoretire “constitute a single group under the statutory scheme.” (Opn.at p. 16.) The opinion concluded: “Wehavealso explained that McLean’s employeris the State of California. We do not opine on the issue of class © certification or reach any other issue regarding McLean’s class allegations.” (Opn.at p. 16.) LEGAL DISCUSSION McLean sued under Labor Codesection 203, whichis part of a series of sections, beginningat section 200, dealing with payment of wages when an employeeis discharged or quits his or her employment. (See Lab, Code, * The opinion ofthe Court of Appeal stated that Defendants did not raise this argument below,but that it would consider the “new”theory on appeal. (Opn.at p. 15.) Defendants, however, did make these contentions below. (AA000035-26.) Division 2, Part 1, Chapter 1: Payment of Wages). As relevant here, section 202 governs the immediate payment of wages when a non-contract employee “quits” his or her employment, requiring payment within 72 hours, or, if at least 72 hours prior notice was given, upon quitting. (Lab. Code § 202(a).) Section 203 provides that if “an employer”willfully fails to pay, in accordance with, inter alia, section 202, any wages of an employee whois discharged or who quits, the employeris liable to pay a penalty of continued wages for up to 30 days until paid. (Lab. Code § 203.) The Court of Appealheld that the “employer” of a civil service employee for purposes of section 203 is the “State of California.” However, in the context of Labor Code wage and hourpenalty claims, the employee’s employmentrelationship is not with the “State of California,” but is instead with the employee’s specific agency employer. It is the specific agency that, in order to further its statutory mandate, appoints employeesinto the civil service, supervises them, and controls the terms and conditions of their employment. Instead of requiring Plaintiff to sue her own employer, the Court of Appeal permitted herto sue the “State of California,” potentially expanding McLean’s suit to include, as she requested, all employeesofall state agencies in all branches of government. This decision is inconsistent with the structure of California’s government, and will create serious practical and logistical concerns for courts and every government employerin the state. Review should be granted, under Rule 8.500(b), to settle this important question of law. ° Section 201 provides, with certain exceptions, that if an employer “discharges” an employee, earned and unpaid wages are generally due and payable immediately. (Lab. Code § 201(a).) I. THE COURT SHOULD GRANT REVIEW TO DETERMINE WHETHER THE “STATE OF CALIFORNIA”IS A PROPER DEFENDANTIN A SECTION 203 ACTION FOR PENALTIES While this Court has addressed the question of the definition of an “employer” for purposes of the minimum wagelawsas applied to employers in the private sector (Martinez v. Combs (2010) 49 Cal.4th 35), it has not considered the definition of an “employer” for purposes of prompt-payment wageclaims against state agencies that appoint individuals into the state civil service in order to further those agencies’ statutory mandate.© The Court of Appeal concluded that the “State of California” wasitself the employer, instead of the entity that actually employed the Plaintiff. Accordingly, nothing in the Court’s opinion would prevent an employee ofa single state agency with an asserted Labor Code claim from suing the State as a whole, seeking to pursue certification of a classofall employees in all state agencies acrossall branches of government, and engaging in broad discovery and extended motion practice to support her class assertions, as Plaintiff in this case is attempting to do. As discussed below,the decision is inconsistent with the statutory scheme andthe structure of state government. It will also create practical and logistical problemsthat will place significant and unwarranted burdenson thestate and require extra case managementefforts by trial courts from the beginning of any such litigation until its conclusion. 6 In Martinez, this Court held that the applicable Wage Orders will generally define the employmentrelationship, and thus whois liable as an employer, for purposes of the unpaid minimum wagestatute, Labor Code section 1194. (Martinez v. Combs, supra, 49 Cal 4h 35, at 52.) However, the State of California is largely exempt from the Wage Orders. (See, e.g., IWC wageorder 4-2001, Cal. Code. Regs., tit. 8, § 11040 1.(B).) Section 203 provides that if “an employer” willfully fails to pay, in accordance with,inter alia, section 202, any wages of an employee whois discharged or who quits, the employer is liable to pay a penalty of continued wagesfor up to 30 days until paid. (Lab. Code, § 203.) In the context of state civil service, the “employer” of any civil service employee is that employee’sappointing power, not the State as a unitary body. The non-unitary structural foundation for California’s governmentis set forth in the Constitution and statutes of California. The Constitution establishes the three branches of governmentand thestate civil service. (Cal. Const., art. IV-VIL.) . As the Third District Court of Appealitself has recognized, the work of the state is conducted by ‘its agencies, and it is those agencies that employ the civil servants they appoint: In view ofthe size and complexity of state government, it has long been necessary that the business ofthe state be entrusted to departments, boards, commissions and agents. (Ray v. Parker (1940) 15 Cal.2d 275, 291 [101 P.2d 665].) The Legislature has declared:“It is the policy of this State to vest in the Governor the civil administration of the laws of the State and for the purpose ofaiding the Governorin the execution and administration of the laws to divide the executive and administrative work into departments as provided by law.” (§ 11150.) So far as consistent with law, and subject to the approval of the Governor, the head of each department has authority over the operations of the department including the powerto appoint officers and employees, prescribe their duties, and fix their compensation. (§§ 11152, 11154.) (Tirapelle v. Davis (1993) 20 Cal.App.4" 1317, 1337.) State agencies are separate and distinct governmental entities, established under a variety of state laws and constitutional provisions. Each such appointing authority has its own unique mission and sphere of responsibility. (See generally, Gov. Code, Division 3; §§ 11000-1 1201.)/ In orderto fulfill that mission, each entity appoints employeesinto thecivil service. By statute, state employees are hired, supervised, andfired by their appointing authority - the agency for which they work. (See Gov. Code § 19050 [appointing powerfills positions in the civil service]; § 19574 [appointing powerresponsible for taking adverse action againstits employees].) More importantly, with respect to the specific obligation in this case — the responsibility to make final wage payments in accordance with sections 201 and 202 — that responsibility is placed upon the employing department, and not the State Controller or the “State of California.” (See AA000064, State Administrative Manual, § 8580.4 [Request for Judicial Notice, Exh. B] [“Departmentsare responsible to ensure that payments to separating employeesare in accordance with Labor Code Sections 201 and 202.”].) McLean’s appointing authority — the ‘Department of Justice — had the responsibility to ensure that any payments undersection 202 were timely made to her.® Forall of these reasons, the Department ofJustice was McLean’s employer for purposes ofsection 203. y (See also Greyhound Lines v. Department ofthe California Highway Patrol (2013) 213 Cal.App.4" 1129, 1134-35; see also People ex rel Lockyer v. Superior Court (2004) 122 Cal.App.4" 1060, 1077-79 [agencies of the state each have a separate existence, independent responsibilities, duties, and powers, and often have conflicting interests and thus, in an action involving only the Attorney General and Department of Consumer Affairs, the People had no obligation to produce documents from other agencies].) 8 This is true even if the controller had the duty to authorize the paymentout ofDOJ’s budget allocation. (See Tirapelle v. Davis, supra, 20 Cal. App. 4" 1317, 1327-30 [discussing duties and responsibilities of the Controller regarding payment of wages and other claims]; Futrell v. Payday California (2010) 190 Cal.App.4™ 1419, 1430-35 [payroll company not an “employer” for purposes of wage statutes under anytest].) The State (continued...) The Court of Appeal’s contrary conclusion (Opn. at p. 14) is in error. The statute’s use of the term “state employer” in section 202(c) (Opn.at p. 15) does not undermine the conclusion that the employeris the appointing authority. In this context, the word “state” serves as an adjective. As this Court has recognized, the “state employer” ofa state employee is the appointing power. (Prof Engineers in Cal. Gov. V. Schwarzenegger (2010) 50 Cal.4th 989, 1034, and fn. 28 [Government Code section 19997, which permits an “appointing power”to lay off employees, is a statutory provision enacted by the “Legislature ..... that explicitly authorizes a state employer”to lay off state employees].) In fact, the Third District Court of Appeal hasitself recognized that the business ofthe state is “entrusted to departments, boards, commissions and agents” (Tirapelle v. Davis, supra, 20 Cal.App.4th 1317, 1337) and that it is the “appointing power”that establishes positions in the state service, as authorized by law and subject to the budget, establishes qualifications for those positions, holds examinationsto fill them, and has discretion to select the appropriate candidates for appointmentto the state civil service based on the rule of three, without interference from any civil service board. (Prof. Engineers in Cal. Gov. v. State Personnel Bd. (2001) 90 Cal.App.4th 678, 689-697.) Moreover, the very statutory schemeat issue in this case (...continued) Controller installs and maintain a decentralized uniform state payroll system, but the responsibility for payroll entry into the system, and certification of the payroll, is with the appointing power. (Gov. Code §§ 12470-12477.) The Controller issues pay warrants, from the funds of each employer, in reliance upon the certification of employee pay information made by the appointing power. The Controller then authorizes payment of such warrants from the fund out of which the warrant is payable. (Id.; Gov. Code § 17000).) 10 demonstrates the Legislature’s understanding that any given “state employee” is employedby his or her “appointing power.” Section 202(c) itself specifically provides that when a “state employee” quits, retires, or disability retires, he must submit the written election to defer to “his or her appointing power,” which authorizes the state employer to defer payment. (Labor Code § 202(c).) The Court of Appeal should not have relied upon its decision in Columbo vy. State ofCalifornia (1991) 3 Cal. App. 4" 594, 598-99 in concluding that the “State of California” is the employerofcivil service employees for purposes of section 203. Colombo involved a CHPofficer whofiled a workers’ compensation claim for an on-duty injury againstthe CHPbut then filed a separate lawsuit against CalTransfor creating the dangerous condition that led to his injury. In order to prevent double recovery in this personal injury action, the Court of Appeal concluded that the CHPofficer was not employed by the CHP, but was rather, employed by the “State.” (Columbo, supra, 3 Cal. App.4° 594, 598-99.) Ina Labor Code prompt paymentcase, however,there is no risk of double recovery if the plaintiff is allowed to pursue a claim only against his or her appointing entity. Moreover, each state entity has its own independent obligation to makefinal wage paymentstoits particular departing employees, and each will have its own individual factual defenses to any assertion of a willful failure to pay the final wage to any given employee based on individual circumstances. The Court of Appeal’s treatment of the State Controller’s Office demonstrates the inconsistencies in finding that suit against the “State”is appropriate in a section 203 case. Citing Bacich v. Board ofControl (1943) 23 Cal.2d 343, 346, the Court of Appeal! affirmed the dismissal of the 1] Controller’s Office as a defendant on the grounds that an action against a state entity is in effect a suit against the state and that it was “not necessary” to namethe State Controller’s Office as a defendant, becauseit was “sufficient” to name only the State of California. (Opn.at p. 15.) However, this case is unlike Bacich, a takings case, in which Plaintiff namedthestate entities responsible for the taking.” In contrast, in the FAC, McLean did not identify any other agency’s conductas the basis for her suit, nor did she specifically identify any other department or agency whose employeesshe is purporting to represent. It is one thing to hold, as the Bacich court held, that suit against identified state agenciesare,in effect, suit against the “State” insofar as those state agencies may be exercising state power. It is quite anotherthing to holdthatsuit againstthe “State” is sufficient as a proxy for suit against each and every state entity that exercises any state power throughoutall of state government. Moreover, the Court of Appeal held that wrongful conduct had been pled, in McLean’ssection 203 suit, as against the Controller (Opn.at p. 15), even though McLeandid not allege — and could not allege — that the Controller employed her. (AA000002.) Thus,the opinion affirmed the dismissal of the Controller while apparently holding, at the same time,that ° The Bacich court held that suit against the State in lieu of those identified agencies was proper, but nevertheless affirmed the demurrer of the Board of Control, which had nothing to do with the construction that diminished the value of Plaintiff’s property. Since McLean’s naming ofthe controller is akin to the naming of the Board of Control in Bacich, and since McLean named noother responsible entity, the Court of Appeals should have affirmed the dismissal of the entire complaint underthat authority. 12 wrongful conduct of the Controller justified suit against the “State of California” as an “employer” under section 203. The reasoning behindthis holding is unclear: While McLean mentioned her work as a Deputy Attorney General, the only identified wrongdoer McLean namedinthe FACis the Controller’s Office, which, however, clearly did not employ McLean andthus could not have engaged in wrongful conduct as her “employer.”"” A construction of section 203 that equates a public plaintiffs employer with the entire State of California, moreover, would lead to absurd results. Underthis view ofthe statute, a plaintiff with a Labor Code dispute stemming from the actions or practices of a single state agency employer could initiate potentially sweeping litigation againstall state agencies in all branches of government without naming the agencies involved or serving them with process. Without such notice, agencies would facesignificant difficulties in assessing potential conflicts, engaging appropriate counsel, determining their defenses, and, if necessarily, marshaling evidence to counter the claims. At the sametime,trial courts would face the difficult task of managing the discovery andclass- certification issues that would arise when hundredsof entities—all unnamed—potentially are involved. By authorizing suit against a former employee’s “employer”only, the Legislature did not intend for these results. 10 Even if the appointing powers may have delegated certain final payment distribution responsibilities under sections 201-203 to another entity, such as the state controller or the treasurer, that delegation does not make those entities McLean’s “employer” for purposes of the Labor Code. (Reynolds v. Bement (2005), 36 Cal. 4th 1075, 1086-89, abrogated on other grounds by Martinez v. Combs, supra, 49 Cal.4"" 35, 66.) 13 In short, review by this Court is needed to clarify, in the context of a Labor Code section 203 class action, whether only the plaintiff's appointing authority should be considered the “employer”or, alternatively, whether the employer is the “State of California,”andto clarify the nature of such an action with respect to separate state entities, particularly when they are not — named and nofactual allegations are asserted against them. Il. REVIEW IS NEEDED TO SETTLE AN IMPORTANT QUESTION OF LAW REGARDING THE APPLICABILITY OF SECTION 203’S PENALTY PROVISIONS TO RETIREES The Court of Appeal’s decision blurs the distinction between “quit” and “retirement” and will lead to confusion in the lower courts. It also leads to significant additional liability for California employers. Review is necessary to settle this important questionof law. A. The Court of Appeal’s Decision Will Lead to Confusion Regarding Distinct Forms of Separation From Service and Risks the Imposition of Significant and Unwarranted Liability on State Agencies The opinion of the Court of Appeal adds a new class of employees (retirees) to the protections of Labor Code section 203, by finding that a employee whoretires is an employee whohas“quit.” In comingto this conclusion, the Court of Appeal’s decision departs from statutory and decisional law of this state, which had previously distinguished between a “quit” and a “retirement” as separate concepts, and instead merges those separate concepts into one. Thestatutory law on this point in California is clear: State civil service employmentlike McLean’s, which is held according to statute, may be terminatedin three distinct ways — by termination, resignation, or retirement. (See, e.g., Gov. Code, § 19140(a) [expressly distinguishing between separation by resignation, separation by 14 retirement, and separation by removalfor cause (termination)]; Gov. Code, § 19996 [tenure of public employmentis during good behavior, and may be terminated through resignation, retirement, or removal for cause.].) This distinction is not limited to the public sector.” Until the Court of Appeal’s decision in this case, case law has been in accord. For instance, in one well-reasoned decision out of the Fourth District Court of Appeal, the Court of Appeal extensively analyzed California’s civil service statutory scheme and concludedthata retirement did not constitute a resignation for purposes of civil service. (Lucas v. State ofCalifornia (1997) 58 Cal.App.4th 744, 750-51.) The Third District Court of Appeal hadalso previously concluded that civil service separations may beeither discharges, quits, or retirements, each of whichis a separate and different type of event. (Gore v. Yolo County D.A.’s Office (2013) 213 Cal.App.4th 1487 [“Atthe point in time that an employee leaves employment,heorshefalls into one of three categories — a resigned employee, a terminated employee, or a retired employee’’].) The Court of Appeal’s conclusion that McLean “quit” when she “retired” because she “quit to retire,” blurs the line betweena retirement and a quit and conflicts with the statutory and decisional law in California set forth above. In so doing, it casts uncertainty into the highly regulated and often-litigated subject of separations from civil service. " Certainly, private sector employees “quit” regularly, and, of course, private employees mayalso “retire.” (Jn re Marriage ofLehman (1998) 18 Cal.4th 169, 175 [marital dispute over division of husband’s enhanced retirement program from PG&E]; In re Marriage ofBowen (2001) 91 Cal.App.4th 1291, 1294 [marital dispute over Federal Expressretirement].) 15 Moreover, the Court of Appeal decision burdens employers with a heavy penalty obligation. The decision’s impact upon the public treasury alone, however, may well be substantial in light of the fact that hundreds of thousands of workers are currently employed by state appointing authorities (and are accordingly potential retirees), with double that numberalready on the state retirement rolls. While individuals whoretire from state service are, as a matter ofstate policy, paid within the timeframesset forth by section 201 and 202, this decision now provides them with theability to sue for penalty wages on top of the monies they already receive asretirement wages. The expansion ofliability to the state aloneresulting from the Court of Appeal’s opinion in this case may unnecessarily put substantial amounts of public moneyatrisk. B. The Term “Quit,” as Used in Section 203, Does Not Include a “Retirement” 1. The Usual and Ordinary Meaningof “Quit”is Different From the Meaningof “Retire” Principlesof statutory interpretation start with the concept that words in a statute should be given their usual and ordinary meaning. (Com. of Seven Thousand v. Superior Court (1988) 45 Cal.3d 491, 501.) Here, the usual and ordinary meaning of the word “quit”is distinct from the usual and ordinary meaning of the word “retire.” An employee who“retires” would not ordinarily say that he or she “quit” his or her job, and an employee who “quits” would not ordinarily say that he or she “retired.” The commonly understood meaning of these two terms demonstrate their differences, not their similarities, A “quit” is unconditional and unilateral, and effects an immediate severance of the employmentrelationship, whereas a retirement, even a 16 voluntary one, must be applied for and accepted by the retirement administrator, and may occuronly if the underlying conditions to the retirement have been met. (See, e.g., Gov. Code §§ 21060-21120). Anyone(unless bound by a written contract) can quit a job at any time and at any age, but no one can retire until having reached retirement age and satisfying specified conditions. Even then, a quit relinquishesan office and seversties to the employer, whereas a retirement represents an entitlement to continued salary in the form of deferred income payments. A retirement and a quit are different things, and the terms should not be interpreted to mean the same thing. 2. The Legislature Itself Distinguished Between a Quit and a Retirementin the Statute The Legislature itself expressly distinguished, in the statutory scheme under which McLean sued, between a quit and a retirement. (Lab. Code § 202(c) [“whena state employee quits, retires, or disability retires” an election to defer may be submitted to his or her appointing power].) When the Legislature uses a term in one place and excludesit in another, it should not be implied where excluded. (Johnson v. Arvin-Edison Water Storage Dist. (2009) 174 Cal.App. 4" 729, 737; see also Sutherland, Statutes and Statutory Construction, 7th Ed. (2007), § 46:6). The construction of the Court of Appeal, however, implies the term “retire,” a term that the Legislature included in section 202(c), into the term “quit” in section 202(a) — and 203, places where the term “retire” was excluded. | The Court of Appeal reasonedthat if sections 202 and 203, by using the term quit, did not already apply to an employee who retires, “it would clearly be unnecessary for section 202(c) to discuss employees whoretire.” 17 (Opn., at 12.) '2 However, the oppositeis true: If the Legislature understood the word “quit” to includea retirement, then the use ofthe phrase, “quits, retires or disability retires” in section 202(c) would be unnecessary,as the use of the term “quit” would suffice and would already necessarily include the concept of retirement. Construing thestatutes in pari materia, McLean’s interpretation, as adopted by the Court of Appeal, renders the term “retires”in section 202(c) into surplusage. As this Court has held: “As we havestressed in the past, interpretations that render statutory terms meaningless as surplusageare to be avoided.” (Peoplev. Hudson (2006) 38 Cal.4th 1002, 1010.) Statutes should be interpreted so as to give meaningto all of their parts. In this regard,all parts of a statute should be read together and construed in a mannerthat gives effect to each, yet does not lead to disharmony with the others.” (City ofHuntington Beach v. Bd. ofAdmin. (1992) 4 Cal.4th 462, 468 [“[L]egislation must be construed as a whole while avoiding an interpretation which renders any ofits language surplusage.”].) Defendant’s interpretation satisfies these requirements, and gives effect to all parts of the statute. As discussed below, whensection 202(c) was addedto section 202, it was intended to codify the past practice of permitting the tax deferral of lump sum leave cash out upona state agency attorney or judge’s separation from state service. (AA0000059.) Since the intent of AB 1684 was to codify and authorize the practice for all state employees, and notjust those who quit or were discharged, the new 12 Although the Court of Appeal criticized Defendant for “not discussing”this fact in its briefing, (Opn., at 12), Defendant did discuss the issue in detail. (Responding Brief, 16-20, 27-29.) 18 law would haveto both: 1) exempt the deferred distributions from the “discharge” and “quit” requirements in section 201 and 202, and 2) ensure that the new provision was understood to authorize the deferral for all types of service separations, including retirements. In other words,it is because a retirement was understoodto be different from a “quit” and a “discharge” that the Legislature neededto addtheretirement terminology and scenarios within subsections (b) and (c), so that it was clear that the past practice was now again authorized notjust for those who were discharged and whoquit, but for all state employees who separated by discharge, quit, or retirement. Otherstatutes in this same statutory scheme makeclearthat the Legislature knows how to add, define, and choose classes of employees to whom it will permit prompt payment penalties, and, in fact, has defined other groups of employees to whom the prompt-paymentobligations apply more broadly where it choosesto do so. (See, e.g., Lab. Code § 201.5(d) [setting deadline for final paymentto broadcast and production employees whoare “terminated,” and specifically defining termination to include “any end[ing]” of the employmentrelationship “whether by discharge,layoff, resignation, completion of employmentfora specified term, or otherwise.”].) Clearly,if the Legislature intended section 203 penalties to encompassall employee “separations,” whether by “discharge, resignation, or retirement,” it could easily have said so. It did not. 3. The Legislature Knew That a Quit Was Different From a Retirement at the Time it Amended the Statutory Scheme Under Which McLean Sued, and Did Not Add Retirees to the Penalty and Prompt Payment Provisions The Legislature madecertain of the prompt-paymentprovisions (including section 202 and 203) first applicable to state employers and 19 employees by the enactment of Assembly Bill 2410 in the year 2000." (See Labor Code § 220(a)) (exempting state employees from certain Labor Codesections, but not from section 201, 202 or 203.) When the Legislature extended the requirements of sections 201 and 202 to the State in the year 2000,it had the unintended consequence of making unlawfula past practice in which state employees who quit or were discharged were allowed to defer payment of accrued leave balances into a supplementalretirement plan." This required corrective legislation (Stats.2002, c.40 (AB 1684) § 6-7, eff. May 16, 2002), which added subsections (b) and (c) to sections 201 and 202, in order to codify the past practice of supplemental deferrals and make them lawful notwithstanding section 201 and 202.'° Since the past practice permitted any separating employee to defer, and notjust those whoquit or were discharged,the legislation, in codifying the past practice, 8 Assembly Bill (AB) 2410 amended section 220, which had previously excluded State employees from the protections of sections 200 to 211, and 215 through 219. (Stats. 2000, c. 885 [AB 2410].) 4 Faced with an immediate payment obligation to employees who were discharged or who quit undersections 201 and 202, state agencies could no longer process and tender accrued leave balances to supplemental plans without running afoul of the prompt paymentobligations, and employees who were discharged or who quit were thus forcedto takeall accrued leave in a lump-sum final payment, often incurring a heavy tax liability. ° Subsection (b) providesthat state agency employers are deemed to have made immediate payment of wagesif the employeeelects, prior to his or her discharge or quit, to contribute unpaid leave into his or her supplemental retirement plansin the current calendar year, in which case the contribution is to be tendered nolater than 45 days following the final day of employment. Subsection (c) similarly permits a discharged or quitting state agency employee to defer payment of the sametypes of leave into his or her supplementalplan in the next calendar year, in which case the payments shall be tendered nolater than February 1. 20 madeclear that the deferral could be made by any employee who“quits, retires, or disability retires.” (Lab. Code § 202(c).) At the time of these amendmentsto this statutory schemein the year 2000 and 2002, the Legislature was certainly aware of the existing body of statutory and decisional law discussed above regarding the distinct nature of retirements, quits, and discharges in the civil service andin the private sector. Nevertheless, when it amended the prompt-paymentstatutory schemein the years 2000 and 2002,it did not amend section 202(a) and 203 to add those who“retire” to the prompt-payment and penalty obligations, which continued to apply to only those who “quit” or were “discharged.” This can only be interpreted to mean that the Legislature intendedfor sections 202(a) and 203 to apply only to quits and discharges, and notto retirements.'° (See, e.g., People v. Scott (2014) 58 Cal.4th 1415, 1424 [“It is a settled principle of statutory construction that the Legislature is deemed to be awareofstatutes and judicial decisions already in existence, and to have enacted or amendeda statute in light thereof. Courts may assume, under such circumstances, that the Legislature intended to maintain a consistent body of rules and to adopt the meaningofstatutory terms already construed.”].) 16 To be sure, the amendment would have been clearer if subsections (b) and (c) had instead been added to the Labor Code by separate provision. Butthe language in section 202 (b) and (c) does notstate that these subsections modify only the “quit” circumstancesin (a). Rather, they apply “(njotwithstanding any other provision of law[.]” 2] 4. Defendant’s Interpretation of the Statute is Not Inconsistent With the Legislative Purpose Behind the Prompt Payment Laws Importantly, this expansion ofthe statute by the Court of Appeal burdens employers in California with additional “penalty” wageliability, but without any compelling reason: Retirees who leave their workplace in due course after processing their retirement paperwork havealready secured a stream of continuing incomeatthe time theyretire. Thus, the logic behind the enactmentofthe penalty provisions — to ensure that a laborer whois discharged or who quits is not made penurious by an employer’s failure to make a timely final payment of wages — does not apply in the case ofretirees. (Smith v. Superior Court (2006) 39 Cal.4th 77, 82 [purpose of the prompt paymentlegislation is to ensure that a wage earner does not becomea “charge upon the public”or suffer “deprivation of the necessities of life”].) While this rationale certainly applies in the event of a “discharge” or a “quit,” which by definition are often unplanned or sudden, it is not the case with retirees, who haveretired with their financial interests already secured. Thus, the Legislature may reasonably have determined that the extraordinary remedy of waiting time penalty wages should be imposedin the cases of discharges and quits (to avoid them from becoming public charges due to non-payment) but not in the case of retirees, who have already secured continuing wages in the form of retirement pay. The Court should grantreview to settle these important issues. 22 CONCLUSION The Petition for Review should be granted. Dated: September 27, 2014 OK2014902695 904395 19.doc Respectfully submitted, KAMALA D. HARRIS Attorney General of California ALICIA FOWLER Senior Assistant Attorney General FIEL D. TIGNO Supervising Deputy Attorney General WupeDal WILLIAM T, DARDEN Deputy Attorney General Attorneysfor Petitioner State ofCalifornia 23 CERTIFICATE OF COMPLIANCE I certify that the attached PETITION FOR REVIEWuses a 13 point Times New Roman font and contains 5591 words. Dated: September 25, 2014 KAMALA D. HARRIS Attorney General of California WwDyad WILLIAM T. DARDEN_ Deputy Attorney General Attorneysfor Petitioner State of California CERTIFIED FOR PUBLICATION COPY IN THE COURT OF APPEAL OF THE STATE OF CALIFORNAY THIRD APPELLATE DISTRICT LED (Sacramento) AUG 1 9 2014 Court of Appeal, Third Appellate District Deena C. Famest. Clerk By rennerDUTY JANIS S. McLEAN, C074515 Plaintiff and Appellant, | (Super. Ct. No. 34-2012- , 00119161-CU-OE-GDS) Vv. STATE OF CALIFORNIA et al., Defendants and Respondents. APPEALfrom a judgmentofthe Superior Court of Sacramento County, Raymond M.Cadei, Judge. Affirmed in part and reversedin part. Kershaw, Cutter & Ratinoff, William A. Kershaw, Lyle W. Cook, and Stuart C. Talley for Plaintiff and Appellant. The Law Offices of Brooks Ellison and Patrick J. Whalen for California Attorneys, Administrative Law Judges and Hearing Officers in State Employmentas Amicus Curiae for Plaintiffs and Appellants. . Kamala D. Harris, Attorney General, Fiel D. Tigno, Supervising Deputy Attorney General, and William T. Darden, Deputy Attorney General, for Defendants and Appellants. Plaintiff Janis McLean, a retired deputy attorney general, appeals from a judgment of dismissal after the trial court sustained the demurrer of defendants the State of California and the California State Controller’ Officeto herclass action seeking waiting time penalties under Labor Code section 203! forthefailureto comply with the prompt payment requirements of section 202. She contends the trial court erred in rulingthat the term “quits” in sections 202 and 203 does not apply to employees who quitto retire. As wewill explain, in the context of sections 202 and 203, we agree with McLean that requirements applying to employees who quit also apply to employees who quit to retire. We therefore reverse the judgment as to the State of California. However, because we hold that it was unnecessary to name the California State Controller’s Office as a defendant, we affirm the judgment of dismissal as to the controller’s office. BACKGROUND The Complaint | The operative pleadingis the first amended complaint (FAC).It alleges that McLean worked for the State of California until she retired from the Attorney General’s | office on November 16, 2010. She separated from service the same day she retired. She _ did not receive her final wageson herlast day of employment or within 72 hours of that date. The correct amount of her wages for unused leave and vacation time were not transferred into her supplemental retirement plan within 45 days ofthe last day of her employment, as she requested. She did not receive wagesthat she had elected to deferto 2011 by February 1, 2011. The FAC alleged, on information and belief, that defendants failed to make prompt payments required by section 202 to the Plaintiff Class. The Plaintiff Class was defined as all employees employed by the state who resignedor retired from their 1 Further undesignatedstatutory references are to the Labor Code. employment November 2010 through March 2011, whodid not receive prompt payment of wages as required by section 202.? The FAC alleged that on June 14, 2011, McLean filed.a claim with the California Victim Compensation and Government Claims Board on behalf of herself and the Plaintiff Class. The Board rejected the claim. The FAC contained one cause ofaction titled “For Violations of California Labor Code Section 202 and Relief under California Labor Code Section 203.” It alleged that section 202 required defendants to do the following for employees who resigned or retired: (1) pay final wages within 72 hours, or immediately at the time of resignationif given 72 hoursnotice of the employee’s intent to resign; (2) transfer wages for unused leave and vacation time to a state sponsored supplementalretirement plan within 45 days of the employee’s last day of employment, if the employee so requested; and (3) transfer any wagesthat the employeeelects to defer to the following calendar year by February 1 of that next year. The FAC alleged defendant did not promptly pay McLean herfull wages when sheretired and that defendants did not timely pay final wages to the Plaintiff Class. The FAC sought penalties, costs of suit and expenses, and reasonable attorney fees. Defendants’ Demurrer Defendants demurred on the ground that the FAC failed to state facts sufficient to constitute a cause of action. Specifically, defendants contended that since McLean retired, rather than “quit,” which is the relevant descriptive word actually used in the statute, there was no basis for her claim for penalties under section 203 and she had not stated a claim for a violation of section 202. Defendants argued that section 202 applied 2 Wedetail section 202 post in part III. only to an employee whoquits, and, by retiring, McLean did not quit. Further, defendants claimed that neither the State of California nor the California State Controller’s Office was McLean’s employer; rather, she was employed by the Departmentof Justice. Defendants movedto strike considerable portions of the FAC. Defendants requested judicial notice of two documents: (1) the legislative history of Assembly Bill No. 1684, which approved a memorandum of understanding between the state and State Bargaining Unit 2, the Association of California State Attorneys and Administrative Law Judges, and amended section 202; and (2) provisions of the State Administrative Manualregarding payrolls upon employee separations. McLean requested judicial notice of the Legislative Counsel’s Digest of Assembly Bill No. 2410, which amendedsection 220 to make sections 202 and 203 applicable to the state. She also requested judicial notice of a different provision of the State Administrative Manual concerning the controller’s payroll functions. Ruling and Judgment Atthe hearing on the demurrer, McLean indicatedthatif the trial court were to affirm its tentative ruling sustaining the demurrer, she would prefer that the demurrer be sustained without leave to amend, so she could immediately seek appellate review. Thetrial court granted the requests for judicial notice. It sustained the demurrer without leave to amend, finding that section 203 does not authorize penalties for employees who have retired, The motionto strike was dropped as moot. The court entered judgment in favor of defendants. McLean appealed. DISCUSSION I Standard ofReview “Because the function of a demurreris to test the sufficiency of a pleading as a matter of law, we apply the de novo standard of review in an appeal following the sustaining of a demurrer without leave to amend. [Citation.] We assumethe truth of the 4 allegations in the complaint, but do not assumethe truth of contentions, deductions, or conclusions of law. [Citation.] It is error for the trial court to sustain a demurrerif the plaintiff has stated a cause of action under any possible legal theory, and it is an abuse of discretion for the court to sustain a demurrer without leave to amendifthe plaintiff has shownthere is a reasonable possibility a defect can be cured by amendment. [Citation.]” (California Logistics, Inc. v. State ofCalifornia (2008) 161 Cal.App.4th 242, 247.) We will affirm thetrial court’s decision to sustain the demurrer if it was correct on any theory. (Stonehouse Homes LLC vy. City ofSierra Madre (2008) 167 Cal.App.4th 531, $39.) “When considering an appeal from a judgmententered after thetrial court sustained a demurrer without leave to amend, we ‘accept as true all well-pleaded facts in the complaint and give a reasonable construction to the complaint as a whole.’ [Citations.] In addition, we may consider matters that are properly the subject ofjudicial notice, and were considered by the trial court. [Citation.]” (La Serena Properties, LLC y. Weisbach(2010) 186 Cal.App.4th 893, 897.) I Statutory Interpretation Resolution of this case requires interpretation of various provisions of the Labor. Code. Our fundamental task in construing a statute is to ascertain the Legislature’s intent so as to effectuate the purpose of the law. (Hassan v. Mercy American River Hospital (2003) 31 Cal.4th 709, 715.) Thefirst step in the interpretative process is to examinethe wordsofthe statute, because “statutory language is generally the most reliable indicator of legislative intent.” (Ibid.) Wegive the wordsofa statute their ordinary and usual meaning and construe them in the context of the statute as a whole. (/bid.) “Courts should give meaning to every word ofa statute if possible, and should avoid a construction making any word surplusage. [Citation.]” (Arnett v. Dal Cielo (1996) 14 Cal.4th 4, 22.) “Ordinarily, if the statutory languageis clear and unambiguous,there is no need for judicial construction. [Citation.] Nonetheless, a court may determine whetherthe literal meaning of a statute comports with itspurpose. [Citation.] We need not follow the plain meaning ofa statute when to do so would ‘frustrate[] the manifest purposes of the legislation as a whole or [lead] to absurd results.’ [Citations.]” (California School Employees Assn. v. Governing Board (1994) 8 Cal.4th 333, 340.) Whenthe plain meaning of the statutory languageis insufficient to resolve the question of interpretation, we proceed to the secondstep of statutory construction. In this step, ““we may consider various extrinsic aids to help us ascertain the lawmakers’ intent, includinglegislative history, public policy, settled rules of statutory construction, and an examination ofthe evils to be remedied andthelegislative scheme encompassing the statute in question. [Citation.]” (McAllister v. California Coastal Com (2008) 169 Cal.App.4th 912,928.) “Both the legislative history of the statute and the wider historical circumstances of its enactment may be considered in ascertaining the legislative intent. [Citations.]” (Dyna—Med, Inc. v. Fair Employment & Housing Com.(1987) 43 Cal.3d 1379, 1387; accord, Mejia v. Reed (2003) 31 Cal.4th 657, 663.) “Finally, the court may consider the impact of an interpretation on public policy, for ‘[w]Jhere uncertainty exists consideration should be given to the consequencesthat will flow from a particular interpretation.’ [Citation.]” (Mejia, at p. 663.) Labor Code provisions governing an employee’s wages are liberally construedto effect their remedial purpose. (Brinker RestaurantCorp. v. Superior Court (2012) 53 Cal.4th 1004, 1027.) Such laws “reflect the strong public policy favoring protection of workers’ general welfare and ‘society’s interest in a stable job market.’ [Citations.]” (United Parcel Service Wage and Hour Cases (2010) 190 Cal.App.4th 1001, 1009.) “ “TTJn light of the remedial nature of the legislative enactments authorizing the regulation of wages, hours and working conditions for the protection and benefit of employees, the statutory provisionsare to be liberally construed with an eye to promoting such protection.’ [Citations.]” (Brinker, at pp. 1026-1027; see also Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103 (Murphy)[given the Legislature's remedial purpose,“statutes governing conditions of employment are to be construed broadly in favor of protecting employees”J.) Ii] Prompt Payment Laws The prompt payment of wages due an employeeis a fundamental public policy of California. (Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1147.) “Public policy has long favored the ‘full and prompt paymentof wages due an employee.’ [Citation.] ‘[Wages] are not ordinary debts .... [Because] of the economic position of the average worker and, in particular, his dependence on wagesfor the | necessities of life for himself and his family, it is essential to the public welfare that he receive his pay’ promptly. [Citation.]” (Pressler v. Donald L. Bren Co. (1982) 32 Cal.3d 831, 837.) The Labor Code contains several provisions governing the payment of wagesto an employee whoterminates service with his employer. Section 201 requires immediate payment of earned and unpaid wages to an employee whois discharged. There are special rules for temporary service employees (§ 201.3), employees engaged in the production or broadcasting of motionpictures (§ 201.5), employees engaged in the business ofdrilling oil (§ 201.7), and employees employed at venuesthat hostlive theatrical or concert events (§ 201.9). Section 202, one of the sections at issue here, provides in relevant part as follows: “(a) If an employee not having a written contract for a definite period quits his or her employment, his or her wages shall become due and payable notlater than 72 hours thereafter, unless the employee has given 72 hours previous notice ofhis or her intention to quit, in which case the employeeis entitled to his or her wages at the time of quitting. “(b) Notwithstanding any other provision of law, the state employer shall be deemed to have made an immediate payment of wages underthis section for any unused ~ or accumulated vacation, annual leave, holiday leave, sick leave... . or time off..., providedat least five workdayspriorto his or her final day of employment, the employee submits a written election to his or her appointing power authorizing the state employer to tender payment for any orall leave to be contributed on a pretax basis to the employee’s accountin a state-sponsored supplemental retirement plan . . . provided the plan allows those contributions. The contribution shall be tendered for paymentto the employee’s 401(k), 403(b), or 457 plan account no later than 45 days after the employee's last day of employment. ... “(c) Notwithstanding any other provision of law, when a state employee quits, retires, or disability retiresfrom his or her employmentwith thestate, the employee may, at least five workdays prior to his or her final day of employment, submit a written election to his or her appointing power authorizing the state employer to defer into the next calendar year paymentofanyorall ofthe employee's unused or accumulated vacation, annual leave, holiday leave, sick leave to which the employeeis otherwise entitled due to a disability, retirement, or time off to which the employeeis entitled by reason ofprevious overtime work where compensating time off was given by the appointing power. ... . [T] .--[ “Payments shall be tendered under this section no later than February 1 in the year following the employee’s last day of employment... .” (Emphasis added.) Section 203, subdivision (a) provides: “If an employer willfully fails to pay, without abatementor reduction, in accordance with Sections 201, 201.3, 201.5, 202, and 205.5, any wages of an employee whois discharged or who quits, the wages ofthe employeeshall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continuefor more than 30 days.” (Emphasis added.) Sections 202 and 203 apply to the state as an employer. (§ 220, subd. (a).) . | IV “Quits” as used in Sections 202 and 203 A. Plain Meaning McLean contends the plain meaning of the term “quits,” as used in the phrase an employee who quits in sections 202 and 203, includes an employee who“retires.” McLean reasonsthat the terms “quits” and “retires” both refer to a voluntary separation from service and an employee must quit before she can retire. She contends the “undeniable overlap” of the two terms requires that “quits” includes “retires.” She argues the penalties provided in section 203 apply to the failure to pay wages timely to employees who terminate their service with the employer, whether the terminationis initiated by the employer(a discharge), or by the employee (a quit). She posits there is no reason to believe the Legislature intended to treat employees who plannedto retire upon separation of service differently than those who were discharged or who quit for other employment. The parties andthe trial court offer a variety of dictionary definitions to support their positions. Relying on the 1985 edition ofNew Webster’s Dictionary, the trial court defined “retire” as “to go from a companyor a public place into privacy”or “to withdraw from businessor active life,” while “quit” in the employment context means “‘to resign,” which means“to give up,as an office or post.” McLean relied on the Merriam-Webster online dictionary, which defined “quit” as “to leave a job” or “to stop working” (http://merriam-webster.com/dictionary/quit [as of 3/12/14] ), and “retire” as “to stop a job or career because you have reached the age when youare not allowed to work anymore or do not need or want to work anymore.” (http://merriam- webster.com/dictionary/retire [as of 3/12/14]) Defendants contend dictionary definitions are oflittle aid, but note that Black’s Law Dictionary defines “retire” as “to terminate employmentor service upon reaching retirement age.” (Black’s Law Dict. (5th ed. 1979) p. 1183, col. 2.) A later edition, however, defines “retirement” more broadly as “termination of one’s employmentor career, esp. upon reaching a certain age or for health reasons.” (Black’s Law Dict. (10th ed. 2014) p. 1510, col. 1.) Like defendants, we find these dictionary definitions are not dispositive. However, wenotethatall of the definitions of the term “quit” seem to encompassthe definitions describing retirement, as all the definitions speak to leaving a job. Defendants contendthe issue in this case must be understood in the context of civil service employment as McLean and the membersofthe class she purports to represent are civil service employees. They assert we need not determine how section 203 applies to any separation from service other than a civil service retirement. Defendants argue that in the civil service contextit is well recognizedthat a “quit”is different from a “retirement.” (See Gore v. Reisig (2013) 213 Cal.App.4th 1487, 1493 [“At the point in time that an employee leaves employment, heorshefalls into one of three categories—a resigned employee, a terminated employee, or a retired employee.”); Lucas v. State ofCalifornia (1997) 58 Cal.App.4th 744, 750 [civil service statutes expressly distinguish separation from a civil service position by resignation and separation by service retirement].) Defendants contend that in the civil service, a quit is clearly distinguishable from retirement, and this distinction is reflected in the language of subdivision (c) of section 202 (section 202(c)): “when a state employee quits, retires, or disability retires from his or her employment with the state.” According to defendants, this language distinguishes between a quit and a retirement, and addsa third category, a disability retirement. While the instant case involves civil service employees, section 202, subdivision (a) (section 202(a)) and section 203 are not so limited. These statutes apply to all employers and employees not otherwise excluded (such as city and county employees, who are excluded undersubdivision (b) of section 220), including thosein the private sector. (§ 220.) Nothing in the languageofeither statute permits an interpretation where the word “quits” has one meaning for the state employer and its employees, and another meaning where the employers and employees are in the private sector. We decline to adoptan interpretation of a statute which addsa distinction between types of employers and employees “whichis neither expressly included in nor suggested byits plain language.” (Panos v. Superior Court (1984) 156 Cal.App.3d 626, 630.) “Doing so would violate the cardinalrule that a statute ‘ . . . is to be interpreted by the language in whichit is written, and courts are no moreat liberty to add provisions to whatis therein declared in definite language than they are to disregard any of its express provisions.’ [Citation.]” (Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1097.) 10 B. Legislative History Since the plain language ofthe statutes does not definitively establish whether an © employee who “quits” includes an employee who“retires,” we turn to the second step of statutory construction and consider extrinsic sources. Defendants rely on the legislative history of Assembly Bill No. 1684, which added subdivisions (b) and (c) to section 202 in 2002. The purposeofthe bill was to approve a memorandum of understanding entered into by the state employer and State Bargaining Unit 2, the Association of State Attorneys and Administrative Law Judges. (Stats. 2002, ch. 40, §§ 1-2, p. 458.) Asthe enrolled bill report explains, “This bill also corrects an unintended result that occurred with the enactment ofAB 2410. AB 2410 amendedsection 220 of the Labor Code thereby making sections 201, 202, and 206.5 applicable to the State as an employer. As a result, the State employer is now required to tender the ‘prompt payment of wages’ due and owing to an employee upon separation from State employment. In the case of an employee terminated (discharged) by the employer, all wages must be tendered on his/her last day of employment. Inthe case of an employee who quits without giving the employer 72 hours’ notice, the employer must tender payment within 72 hours of the employee’s last day of employment. Because payments must be made within these time frames, the State can no longer allow employeesto rollover into a subsequent tax year lump sum payments for accrued leave due the employee upon separation. Similarly, these shortened time framesplace the State at risk to be assessed penalties in the event the lump sum contribution cannot be tendered to the employee’s supplemental retirement plan (plan administrator or recordkeeper) within the time frame specified for payment under the Labor Code. Section 206.5 prohibits employers from entering into private agreements with employees to waive their right to prompt payment of wages. [{] The intent in this bill is to restore a benefit State employees previously enjoyed which allows them to contribute the cash value oftheir accrued leave . . . to an employer sponsored 401(k), 403b, and/or 457 Plan on a pre-tax basis and/or defer receipt of payment for such 1] leave into the next tax year, subject to the payroll procedures of the State Controller’s Office.” Defendants contend the newly created section 202(c) had to specify it applied to “an employee whoquits, retires, or disability retires from his or her employment with the state,” because undercivil service a “quit” and a “retirement” were understood to be different things. They further contend the new law “ensure[d]” that a retirement was not included in the penalty provisions of section 203 (presumably by not amending §§ 202(a) and 203 to include the wordretire, see part C, post). | Defendants’ argument presupposesthat the term “quits” in sections 202 and 203 mayhave a different meaning depending on whether state employmentorprivate employmentis at issue. We haverejected that interpretation of the statutes, as discussed ante, To the contrary, it appears that the Legislature specified “quits, retires, or disability retires” in section 202(c) becausethat subdivision, unlike section 202(a) or section 203, - applies only to state employeesby its express terms, and in that context, the terms have different meanings. Further, if the general rule of section 202(a) and the penalty provisions of section 203 did not apply to an employee whoretires, it would clearly be unnecessary for section 202(c) to discuss employees whoretire. Defendants do not discuss this fact, despite McLean’s lengthy discussion ofit in her briefing. Thelegislative history offered by defendants does not show that in using the term “quits” in section 202(a) and section 203, the Legislature intended to exclude employees whoseparate from employment to retire. C. Rules ofStatutory Construction Defendants contend that under well-settled rules of statutory construction, the terms “quits” and “retires” cannot have the same meaning because the Legislature used only the term “quits” in sections 202(a) and 203, while it used both “quits” and “retires” in section 202(c). They argue that “retires” cannot be implied in section 202(a) and section 203, and if “quits” includes “retires,” then the use of“retires” in section 202(c) is surplusage. Although possessing some surface appeal, defendants’ argumentfails to persuade. 12 “When the Legislature ‘has employed a term or phrase in one place and excluded it in another, it should not be implied where excluded.’ [Citation.]” (Pasadena Police Officers Assn. v. City ofPasadena (1990) 51 Cal.3d 564, 576.) “When twostatutes touch upon a commonsubject, they are to be construed in reference to each other, so as to ‘harmonize the two in such a waythat no part of either becomes surplusage.’ [Citations.] Two codes ‘ “must be read together and so construedas to give effect, when possible, to all the provisions thereof.” ’ [Citation.]” (DeVita v. County ofNapa (1995) 9 Cal.4th 763, 778-779.) Weagreethat: “Where different words or phrases are used in the same connection in different parts of a statute, it is presumed the Legislature intended a different meaning.” (Briggs v. Eden Councilfor Hope & Opportunity (1999) 19 Cal.4th 1106, 1117.) The inference, of course, is stronger when the different parts of the statute are enacted at the same time. (See People v. Jones (1988) 46 Cal.3d 585, 596 [“when different words are used in contemporaneously enacted, adjoining subdivisions of a statute, the inference is compelling that a difference in meaning wasintended”], italics _ omitted.) That is not the case here as section 202(b) and (c) were added in 2002. (Stats. 2002, ch. 40, § 7, pp. 461-462.) | Asdiscussed at length ante, section 202(c) refers to an employee who “quits, retires, or disability retires.” A disability retirement is a particular type of retirement and therefore a subset of “retires.” Thus, the phrase “quits, retires, or disability retires” can be understoodaslisting the types of separation from employment from the most general, “quits,’’ to the most specific, “disability retires,” rather than as listing three entirely distinct occurrences. The reasonfor the different language is explained by thedifferent contexts. In enacting subdivisions (b) and (c) of section 202, the Legislature was 39 66 concerned with only state employees, and understoodthat “quits,” “retires,” and “disability retires” have particular meaningsinthat context. This distinction is not generally madein private sector employment and so it was unnecessary to makeit in the more general provisions of section 202(a) and section 203, which originally applied only to private employees and employers, and now applyto the State as well. 13 Finally, the rules of statutory construction must yield to the purpose andintent of a statute. (See Costco Wholesale Corp. v. Workers’ Comp. Appeals Bd. (2007) 151 Cal.App.4th 148, 154-155 [the “last antecedent rule does not trump”considerations of “the spirit of the statute ...as a whole”].) Statutes governing conditions of | employment, such as the payment of wages,are to be liberally construed “in favor of protecting employees.” (Murphy, supra, 40 Cal.4th at p. 1103.) This policy and purpose is not furthered by excludingretirees from the full protections of section 202, enforced by the penalty provisions of section 203. Weinterpret an employee who “quits” in section 202(a) and section 203 to include an employee whoquitsto retire.3 Vv Proper Defendants Defendants contend that even if McLean hasa viable claim under section 203, the demurrer was properly sustained because she sued the wrong defendants. Since section 203 imposes penalties upon an employer, the proper defendant is her employer and defendants argue McLean’s employeris the Department of Justice, which contains the Attorney General’s office. | | While the trial court did not reach this argument, we must addressit. “A judgment of dismissal after a demurrer has been sustained without leave to amend will be affirmed if proper on any groundsstated in the demurrer, whether or not the court acted on that ground. [Citations.]” (Carman v, Alvord (1982) 31 Cal.3d 318, 324.) The State of California clearly was McLean’s employer and defendants’ argument to the contrary borders on frivolous. Defendants concede that McLean was a civil service employee. “The civil service includesevery officer and employeeofthe State except as otherwise provided in this Constitution.” (Cal. Const., art. VII, § 1, subd.(a); see 3 Amicus California Attorneys, Administrative Law Judges and Hearing Officers in State Employment requests that we take judicial notice of the original and amendedversions of Assembly Bill No. 1684 and a CalPers publication relating to retirement. Because we find these documents are not necessary to our decision, we deny the request. (Aguiarv. Cintas Corp. No. 2 (2006) 144 Cal.App.4th 121, 128, fn. 2.) 14 Colombov. State ofCalifornia (1991) 3 Cal.App.4th 594, 598 [“‘As a CHPtraffic officer, Russell Colombo is a civil service employee ofthe State of California, paid by thestate, not the CHP.”].) Sections 202 and 203 apply “to the payment of wages of employees directly employed by theState of California.” (§ 220, subd. (a).) Indeed, subdivision (b) of section 202 refers to “the state employer” and subdivision (c) of that section refers to “a state employee.””4 | Defendants contend the controller’s office is not a proper party defendant because it is not McLean’s employer. The FAC alleges that the controller’s office “is responsible for disbursing any and all wages owedto”state employees uponresignation or retirement. It further alleges that the State of California and the controller’s office failed to make these payments on a timely basis. Thus, the FAC alleges wrongful conduct by the controller’s office. It is not necessary, however, to name the controller’s office as a party defendant. An action against state agencies in their capacity as suchis, in effect, an action against the state. Thusit is sufficient to name only the state as party defendant. (Bacich v. Board of Control (1943) 23 Cal.2d 343, 346 [approving substituting the state as party defendantin place ofthe defendants Board of Control, California Toll-Bridge Authority, and Department of Public Works].) Accordingly,the trial court did not err in sustaining the demurrer of the controller’s office. . . VI Class Allegations Forthe first time on appeal, defendants contend the demurrer was properly sustained because McLean does not have standing to represent the Plaintiff Class as defined in the complaint. The FAC defines the Plaintiff Class as employees employed by the state who resignedorretired during a certain time period. Defendants contend that 4 Defendants argue, unconvincingly,that these statutory terms are merely “helpful shorthand.” To accept this argument is to find the words do not mean whatthey say, which would underminethe basic rule of statutory construction to give the words of a statute “their usual and ordinary meaning.” (DaFonte v. Up-Right, Inc. (1992) 2 Cal.4th 593, 601.) 15 since McLeanretired instead of resigning, she cannot represent those who resigned and since the Departmentof Justice is her employer, she can represent only those employed by that agency. Although defendants did not raise any challenge to the class allegations in the demurrer, “an appellate court may consider new theories on appeal from the sustaining of a demurrer to challengeor justify the ruling.” (Ortega v. Topa Ins. Co. (2012) 206 Cal.App.4th 463, 472.) Wecan easily dispose of these contentions. We have already explained that “quits” in sections 202 and 203 includes all employees who quit, whetherto retire or for a different reason, and these employees constitute a single group underthe statutory scheme. Wehave also explained that McLean’s employeris the State of California. We do not opine on the issue ofclass certification or reach any other issue regarding McLean’sclass allegations. DISPOSITION Asto defendant controller’s office, the judgmentis affirmed. As to defendant State of California, the yadgmentis reversed and the matter remanded for further proceedings. McLean shall recover costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3).) | DUARTE J. Weconcur: BUTZ , Acting P. I. HOCH J. 16 DECLARATION OF SERVICE BY OVERNIGHT COURIER Case Name: Janis McLeanv.State ofCalifornia,etal. No.: County of Sacramento Superior Court, Case No. 34-2012-00119161-CU-OE-GDS Court of Appeal, Third Appellate District, Case No. C074515 Supreme Court of the State of California, Case No. TBD 1 declare: I am employed in the Office of the Attorney General, which is the office of a memberofthe California State Bar, at which member’s direction this service is made. I am 18 years of age or older and not a party to this matter; my business addressis: 1515 Clay Street, 20th Floor, Oakland, CA” 94612-0550. On September 29, 2014, I served the attached PETITION FOR REVIEW byplacing a true copy thereof enclosedin a sealed envelope with GOLDEN STATE OVERNIGHT,addressed as follows: William A. Kershaw The Honorable Raymond M.Cadei Kershaw, Cutter & Ratinoff LLP - Superior Court of California 401 Watt Avenue County of Sacramento Sacramento, CA 95864 720 Ninth Street Counselfor Plaintiff . Sacramento, CA 95814 Clerk California Court of Appeal Third Appellate District 914 Capital Mall Sacramento, CA 95814 I declare under penalty of perjury under the lawsofthe State of California the foregoingis true and correct and that this declaration was executed on September 29, 2014, at Oakland, California: Denise A. Geare Dy wheX . ‘LAALS §Declarant ignature OK2014902695 90438866.doc90438866.DOC