IN THE SUPREME COURT OF CALIFORNIA
JORGE A. PINEDA,
Plaintiff and Appellant,
S170758
v.
Ct.App. 1/3 A122022
BANK OF AMERICA, N.A.,
City & County of San Francisco
Defendant and Respondent.
Super. Ct. No. 468417
When an employee is terminated or resigns from his or her employment,
final wages are generally due and payable immediately. (Lab. Code, §§ 201,
202.)1 Section 203 provides that, if an employer willfully fails to timely pay final
wages, “the wages of the employee shall 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 continue for more than 30 days.” (§ 203, subd. (a) (hereafter
section 203(a)), italics added.) A one-year statute of limitations typically governs
actions to recover penalties (Code Civ. Proc., § 340, subd. (a)), but section 203
further provides that an employee may sue for “these penalties at any time before
the expiration of the statute of limitations on an action for the wages from which
the penalties arise.” (§ 203, subd. (b) (hereafter section 203(b)); Murphy v.
1
All subsequent unlabeled statutory references are to the Labor Code unless
otherwise indicated.
1
Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1109 (Murphy) [“[T]he
Legislature expressly provided that a suit seeking to enforce the section 203
penalty would be subject to the same . . . statute of limitations as an action to
recover wages.”].)
This case asks us to resolve two issues: First, does a different statute of
limitations apply when an employee seeks to recover only section 203 penalties
(because, as in this case, final wages were paid — albeit belatedly — prior to the
filing of the action), as opposed to when an employee seeks both final wages and
penalties? Second, are section 203 penalties recoverable as restitution under
California‟s unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.)?
Our answer to both questions is “no.” Section 203(b) sets forth a single
limitations period governing all actions to recover section 203 penalties regardless
of whether an employee seeks both unpaid wages and penalties or penalties alone.
Further, section 203 penalties are not recoverable as restitution under the UCL
because employees have no ownership interest in the funds. We accordingly
reverse the Court of Appeal‟s contrary judgment and remand for further
proceedings.
FACTS AND BACKGROUND
Plaintiff Jorge A. Pineda was employed by defendant Bank of America.2
He gave two weeks‟ notice of his resignation, which occurred on May 11, 2006.
Defendant did not pay plaintiff his final wages on his last day, as required under
section 202, but instead paid him on May 15, four days late.
Plaintiff filed this action on October 22, 2007, seeking to represent a class
of former Bank of America employees whose final wages were untimely paid.
2
The factual and procedural history is largely taken from the Court of
Appeal opinion.
2
The complaint asserts two causes of action. The first alleges defendant failed to
timely pay plaintiff and class members final wages as required by section 201
(applying to employees who are terminated) or section 202 (applying to employees
who quit) and seeks penalties pursuant to section 203. Plaintiff‟s second cause of
action alleges defendant‟s failure to timely pay final wages violates the UCL, and
seeks restitution of unpaid section 203 penalties.
The trial court granted defendant‟s motion for judgment on the pleadings.
It concluded that a one-year statute of limitations (Code Civ. Proc., § 340,
subd. (a)) applies when, as in this case, an employee files an action seeking only
section 203 penalties (as opposed to an action seeking unpaid wages and section
203 penalties); thus, the trial court concluded, the time for plaintiff to file his
action had expired. The trial court also concluded that section 203 penalties are
not recoverable as restitution under the UCL. The trial court denied plaintiff leave
to amend to substitute a new plaintiff in the first cause of action. The Court of
Appeal affirmed in all respects. We granted plaintiff‟s petition for review.3
DISCUSSION
I. Section 203(b) Governs All Actions for Section 203 Penalties
We first independently review the Court of Appeal‟s construction of section
203. (Imperial Merchant Services, Inc. v. Hunt (2009) 47 Cal.4th 381, 387.) In
doing so, “it is well settled that we must look first to the words of the statute,
„because they generally provide the most reliable indicator of legislative intent.‟
[Citation.] If the statutory language is clear and unambiguous our inquiry ends.
„If there is no ambiguity in the language, we presume the Legislature meant what
it said and the plain meaning of the statute governs.‟ [Citations.] In reading
3
Plaintiff does not seek review of the court‟s denial of leave to amend.
3
statutes, we are mindful that words are to be given their plain and commonsense
meaning. [Citation.]” (Murphy, supra, 40 Cal.4th at p. 1103.) Thus, we “avoid a
construction that would produce absurd consequences, which we presume the
Legislature did not intend. [Citations.]” (People v. Mendoza (2000) 23 Cal.4th
896, 908.) “We have also recognized that statutes governing conditions of
employment are to be construed broadly in favor of protecting employees.
[Citations.]” (Murphy, at p. 1103; cf. Smith v. Superior Court (2005) 39 Cal.4th
77, 82 (Smith) [purpose of § 203 is to compel prompt wage payment upon
separation from employment].) We therefore begin our inquiry by reviewing the
pertinent statutory language. While section 203 is obviously our primary focus,
resolving this issue requires that we also be mindful of the statute‟s interplay with
several relevant provisions located in the Code of Civil Procedure.
Section 203(a) provides: “If an employer willfully fails to pay, without
abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 202, and
205.5, any wages of an employee who is discharged or who quits, the wages of the
employee shall 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
continue for more than 30 days.” (Italics added.) Code of Civil Procedure section
340, subdivision (a) provides that a one-year statute of limitations applies to “[a]n
action upon a statute for a penalty or forfeiture . . . .” (Italics added.) Thus, if
section 203(a) comprised the entire statute, a suit to recover its provided-for
penalties would undoubtedly have to be filed within one year of the accrual of the
cause of action.
However, Code of Civil Procedure section 312 acknowledges the
Legislature can, if it so chooses, prescribe a different statute of limitations to
4
govern specific civil actions.4 To that end, section 203(b) provides, “Suit may be
filed for these penalties at any time before the expiration of the statute of
limitations on an action for the wages from which the penalties arise.” Actions for
final wages not paid as required by sections 201 and 202 are governed by Code of
Civil Procedure section 338, subdivision (a), which provides that a three-year
statute of limitations applies to “[a]n action upon a liability created by statute,
other than a penalty or forfeiture.”
As we noted in Murphy, supra, 40 Cal.4th at page 1109, in enacting section
203(b) the Legislature obviously intended to alter the statute of limitations that
would otherwise have applied to actions to recover section 203 penalties. Indeed,
no one disputes that when an employee sues to recover both unpaid final wages
and the resulting section 203 penalties, the suit is governed by the same three-year
limitations period that would apply had the employee sued to recover only the
unpaid wages. The disputed issue in this case is whether a different statute of
limitations applies to an action to recover section 203 penalties when, as here, an
employee sues to recover only section 203 penalties.
Plaintiff urges us to conclude the Legislature intended for a single statute of
limitations — the one set forth in section 203(b) — to govern the filing of any and
all suits for section 203 penalties, regardless of whether a claim for unpaid final
wages accompanies the claim for penalties. He contends this is the only plausible
construction of section 203, and his contention has merit. Absent explicit statutory
language to the contrary, common sense would suggest that, where the Legislature
has set forth a statute of limitations in one part of a statute, the prescribed
4
Additionally, Code of Civil Procedure section 340, subdivision (a), itself
provides that its one-year limitations period does not apply to an action for a
penalty “if the statute imposing it prescribes a different limitation.”
5
limitations period governs the filing of actions provided for in another part of the
same statute. In providing when “[s]uit may be filed for [section 203] penalties”
(§ 203(b)), the Legislature could have employed language unambiguously limiting
the application of section 203(b)‟s limitations period to those suits that seek both
unpaid wages and penalties. For example, it could have provided that “[s]uit for
unpaid final wages and these penalties may be filed at any time before . . . .” It did
not.
Urging this court to adopt a contrary interpretation, defendant contends the
Legislature did explicitly provide that an action to recover only section 203
penalties is not governed by section 203(b). Defendant relies on the phrase
“action for the wages from which the penalties arise,” arguing this language
demonstrates the Legislature intended for section 203(b) to apply only when a
claim for penalties is accompanied by a claim for unpaid final wages. Defendant
reasons that when an employee sues for section 203 penalties alone because his or
her final wages have been paid, albeit late, there is no “action for the wages from
which the penalties arise” and section 203(b) is thus inapplicable. Accordingly,
defendant concludes, the one-year limitations period that generally applies to
actions for penalties controls. The Court of Appeal, relying on McCoy v. Superior
Court (2007) 157 Cal.App.4th 225, 229-230 (McCoy), adopted this reasoning. We
conclude, however, that this is an unreasonable reading of the statutory language.
Defendant‟s interpretation misapprehends the purpose of the provision‟s
reference to “the statute of limitations on an action for the wages from which the
penalties arise.” The only plausible inference to be drawn is that the Legislature
intended to ensure that the statute of limitations on an action for section 203
penalties tracks the statute of limitations governing actions for unpaid final wages.
In so doing, the Legislature wanted to make certain employees would not face
different limitations periods for claims that arise out of the same underlying facts,
6
i.e., nonpayment of final wages, and that would usually, but not always, be
asserted in the same suit. The language offers the additional benefit of
maintaining consistency in the event of future statutory alteration. By generally
referencing the statute of limitations for unpaid final wages, rather than
specifically providing that section 203 penalties are governed by a three-year
statute of limitations, the statute ensures that any changes by a future Legislature
to the limitations period governing unpaid final wages would automatically change
the limitations period governing section 203 penalties without any need to amend
the statute.
Moreover, defendant‟s interpretation ignores the Legislature‟s grammatical
choices — specifically, its use of definite and indefinite articles — in section
203(b). Use of the indefinite articles “a” or “an” signals a general reference, while
use of the definite article “the” (or “these” in the instance of plural nouns) refers to
a specific person, place, or thing. (Garner, The Redbook: A Manual on Legal
Style (2d ed. 2002) § 10.38, p. 173.) In section 203(b), the use of the definite
article “the” before “statute of limitations” and the indefinite article “an” before
“action for the wages” supports plaintiff‟s, rather than defendant‟s, construction.
Section 203(b) reads: “Suit may be filed for these penalties at any time before the
expiration of the statute of limitations on an action for the wages from which the
penalties arise.” (Italics added.) The italicized language suggests the Legislature
was referring to the specific limitations period governing any and all suits for
unpaid final wages, not a particular suit filed by an employee for unpaid final
wages.5 By contrast, had the Legislature used the definite article “the” before
5
The use of both indefinite and definite articles in section 203 underscores
that the Legislature‟s choice to use one as opposed to the other was deliberate and
should be accorded significance.
7
“actions for the wages,” as in “suit may be filed for these penalties at any time
before the expiration of the statute of limitations on the action for the wages from
which the penalties arise,” it would suggest the Legislature was referring to a
specific suit for unpaid final wages filed by an employee who seeks section 203
penalties as well.6
Finally, adopting defendant‟s interpretation would undermine the purposes
of limitations periods. As we have recently explained, statutes of limitations serve
a number of functions including “to prevent stale claims, give stability to
transactions, protect settled expectations, promote diligence, encourage the prompt
enforcement of substantive law, and reduce the volume of litigation. [Citations.]”
(Stockton Citizens for Sensible Planning v. City of Stockton (2010) 48 Cal.4th 481,
499.) To that end, a limitations period “ „necessarily fix[es]‟ a „definite period[] of
time‟ [citation]” (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 410) and begins to
run when a cause of action has accrued, that is, when the cause “ „is complete with
all of its elements.‟ [Citations.]” (Fox v. Ethicon Endo-Surgery (2005) 35 Cal.4th
797, 806-807; see Black‟s Law Dict. (7th ed. 1999) p. 21, col. 1.)
Under defendant‟s construction, it is unclear what limitations period begins
to run when a section 203 claim accrues, nor is it clear how fixed and definite the
period is. An illustration reveals the problems with defendant‟s interpretation.
Assume three employees: A, B, and C. All three leave their jobs on the same day
and their employers fail to pay them their final wages as required by sections 201
and 202. A‟s employer never pays the owed wages and so A can, any time before
6
At oral argument, defense counsel noted a definite article precedes the word
“wages” in section 203(b). This is true, but irrelevant. In determining the
controlling limitations period, we are concerned with whether the Legislature was
referring to a specific action for wages or to any and all actions for wages. Thus,
it is the article preceding the word “action” in section 203(b) that is relevant.
8
three years have expired, timely file suit for both unpaid final wages and the 30
days of accumulated section 203 penalties. By contrast, B‟s employer pays the
owed final wages, albeit six months late. As a result, no claim for unpaid wages
remains and, under defendant‟s construction, the three-year limitations period that
once would have governed B‟s available section 203 claim is now, six months
after the statute of limitations began to run, a one-year limitations period. Finally,
C‟s employer pays the final wages over a year after they were due. No claim
remains for the now paid final wages and, as defense counsel acknowledged at
oral argument, C would no longer have a claim for section 203 penalties, as more
than a year has passed since the claim initially accrued.7 Defendant‟s
interpretation would, at best, lead to unwieldy and inconsistent results eroding the
stability that statutes of limitation are intended to afford.8 At worst, defendant‟s
construction would risk permitting employers to “game the system” and control
what limitations period governs their employees‟ section 203 claims. Absent
explicit evidence to the contrary, we presume the Legislature did not intend such
an absurd result. (See Smith, supra, 39 Cal.4th at p. 83.)
7
In McCoy, supra, 157 Cal.App.4th at page 230, the Court of Appeal
dismisses this possibility, stating without elaboration that an employer‟s payment
of final wages over a year late would “subject [the employer] to a longer statute of
limitations for the penalty . . . .” Not so. A cause of action for section 203
penalties accrues when an employer fails to pay wages on an employee‟s final
workday, not when the wages are actually, albeit belatedly, paid. (See Fox v.
Ethicon Endo-Surgery, supra, 35 Cal.4th at pp. 806-807.)
8
Indeed, consider a fourth instance in which D files suit for both unpaid final
wages and section 203 penalties over a year after the claims accrued and, in
response to being sued, D‟s employer pays the sought wages. As defense counsel
conceded at oral argument, D‟s employer is now free to move to dismiss the claim
for section 203 penalties because the action was filed after a year had passed and,
now that the final wages have been paid, section 203(b) no longer applies.
9
In light of the unambiguous statutory language, as well as the practical
difficulties that would arise under defendant‟s interpretation, we conclude there is
but one reasonable construction: section 203(b) contains a single, three-year
limitations period governing all actions for section 203 penalties irrespective of
whether an employee‟s claim for penalties is accompanied by a claim for unpaid
final wages. We accordingly disapprove McCoy, supra, 157 Cal.App.4th 225.
Even if defendant‟s interpretation constituted a plausible alternative reading
of the statutory language, requiring us to examine extrinsic evidence of the
Legislature‟s intent, such as legislative history, we would still conclude plaintiff‟s
construction is the correct one. The Legislature first enacted a civil penalty
provision similar to section 203 in 1915. (Stats. 1915, ch. 143, § 3, p. 299.) Like
section 203, the 1915 act provided that, when an employer failed to timely pay
final wages, the employee‟s wages would continue as a penalty until paid, up to 30
days. (Stats. 1915, ch. 143, § 3, p. 299.) In 1919, the Legislature repealed the
then existing law, but adopted essentially the same provisions in a new act. (Stats.
1919, ch. 202, § 5, p. 296; see Smith, supra, 39 Cal.4th at p. 87, fn. 4.) “At the
time, the Bureau of Labor Statistics (BLS) was the agency that recommended and
enforced such wage-related legislation. [Citation.]” (Smith, at p. 87.) For that
reason, we have previously consulted its biennial reports “for whatever light they
may shed regarding the purpose of the wage payment legislation. (See People ex
rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 309 [although not
necessarily controlling, the contemporaneous administrative construction of a
statute by those charged with its enforcement and interpretation is entitled to great
weight].)” (Smith, at p. 87.) The Bureau of Labor Statistics‟ (BLS) biennial
reports demonstrate the penalty provision was intended “ „to induce, if not to
compel, the employer to keep faith with his employee‟ ” and to rectify “ „a wrong
which not only injures the employee but is an injury to the public in its tendency to
10
deprive the public of an incidental benefit which comes from the employee‟s
labor.‟ [Citation.]” (BLS, 20th Biennial Rep.: 1921-1922 (1923) p. 36.) The
BLS‟s views confirm the penalty provision was seen as an important tool in
ensuring prompt wage payment.
Then, in 1937, as part of the act establishing the Labor Code, section 203
was enacted.9 (Stats. 1937, ch. 90, § 203, p. 197.) The first iteration of section
203 consisted of a single paragraph containing language virtually identical to that
present in the current section 203(a).10 In its original form, section 203 contained
no reference to a statute of limitations and, thus, actions for its authorized
penalties were governed by Code of Civil Procedure section 340, which then, as
now, set forth a one-year statute of limitations for actions seeking penalties (Stats.
1929, ch. 518, § 1, p. 896). Thus, if an employer failed to timely pay final wages
to an employee who quit or was fired,11 the employee would have had one year to
sue for the section 203 penalties but, under Code of Civil Procedure section 338,
subdivision (a) (Stats. 1935, ch. 581, § 1, p. 1673), three years to sue for the
unpaid final wages giving rise to the penalty.
The Legislature subsequently amended section 203 in 1939 (Stats. 1939,
ch. 1096, § 1, p. 3026), adding a second paragraph to the statute that, using
9
In 1927, the Legislature created the Department of Industrial Relations
(DIR), shifting several agencies (including the BLS) under the DIR‟s auspices.
(Stats. 1927, ch. 440; id., § 7, p. 736 as to the BLS.) The DIR was “invested with
the power and [was] charged with the duty of administering and enforcing all
laws” related to its divisions, including the BLS. (Id., § 9, p. 737.)
10
The differences, as relevant here, were minor, e.g., the original version used
“wilfully” rather than “willfully,” and spelled out “thirty.”
11
Like section 203, sections 201 and 202 were enacted in 1937 (Stats. 1937,
ch. 90, §§ 201 & 202, p. 197), imposing obligations on employers nearly identical
to those imposed by the current versions of sections 201 and 202.
11
language virtually identical to current section 203(b),12 set forth a specific
limitations period. It is reasonable to infer that the Legislature intended for the
new language to eliminate the prior anomaly of related claims being governed by
different limitations periods. While one could suppose, as the Court of Appeal did
in McCoy, supra, 157 Cal.App.4th at page 233, that the Legislature was moved to
act by instances of employees seeking penalties and unpaid final wages in the
same action, there is no evidence the Legislature intended for the newly enacted
limitations period to apply only in such an instance or that the Legislature intended
for section 203 actions to be governed by varying limitations periods depending on
what claims an employee brought.13
Finally, as we have acknowledged on multiple occasions, “[t]he public
policy in favor of full and prompt payment of an employee‟s earned wages is
fundamental and well established” and the failure to timely pay wages injures not
12
The 1939 version used “such penalties” rather than “these penalties” as
does the current version of section 203(b).
13
Plaintiff cites the DIR‟s 1938-1939 annual report, which states the 1939
amendment to section 203 “extends the time within which suit may be filed for the
collection of penalties imposed for non-payment of wages. In the past, a suit to
collect such penalty had to be commenced within one year . . . . The present bill
allows the same length of time for the collection of penalties for non-payment of
wages as has always been allowed for the collection of wages themselves.” (DIR,
Annual Rep.: 1938-1939 (1939) [discussing Assem. Bill No. 2538 (1939-1940
Reg. Sess.)].) In determining what weight to accord an agency‟s construction, we
consider “ „ “the thoroughness evident in its consideration, the validity of its
reasoning, its consistency with earlier and later pronouncements, and all those
factors which give it power to persuade, if lacking power to control.” ‟
[Citations.]” (Hoechst Celanese Corp. v. Franchise Tax Bd. (2001) 25 Cal.4th
508, 524, italics omitted.) We conclude the report is entitled to little weight. Its
discussion of the amendment is cursory and, more importantly, the report itself
admits that most of the DIR‟s suggestions were largely ignored by the Legislature,
casting doubt on the neutrality of the DIR‟s assertions regarding legislative intent.
12
only the employee, but the public at large as well. (Smith, supra, 39 Cal.4th at
p. 82.) We have also recognized that sections 201, 202, and 203 play an important
role in vindicating this public policy. (Smith, at p. 82; Smith v. Rae-Venter Law
Group (2002) 29 Cal.4th 345, 360.) To that end, the Legislature adopted the
penalty provision as a disincentive for employers to pay final wages late. (See
BLS, 20th Biennial Rep.: 1921-1922, supra, p. 36.) It goes without saying that a
longer statute of limitations for section 203 penalties provides additional incentive
to encourage employers to pay final wages in a prompt manner, thus furthering the
public policy.
In conclusion, in light of the statutory language, as well as extrinsic
evidence of the Legislature‟s intent, including the legislative history and
considerations of public policy, we hold that the limitations period prescribed in
section 203(b) governs all actions seeking section 203 penalties regardless of
whether the claim for penalties is accompanied by a claim for unpaid final wages.
II. Section 203 Penalties Are Not Recoverable Under the UCL
We next consider whether an employee may recover section 203 penalties
as restitution under the UCL. (Bus. & Prof. Code, § 17200 et seq.) Contrasting
section 203 penalties with the unpaid wages that give rise to the penalties, the
Court of Appeal concluded the answer is no. We agree.
The UCL prohibits “any unlawful, unfair or fraudulent business act or
practice . . . .” (Bus. & Prof. Code, § 17200.) While private individuals can sue
under the UCL (id., § 17204), courts can issue orders only to prevent unfair
competition practices and “to restore to any person in interest any money or
property . . . which may have been acquired by means of such unfair competition”
(id., § 17203). Thus, a private plaintiff‟s “remedies are „ “generally limited to
injunctive relief and restitution.” ‟ [Citations.]” (Clark v. Superior Court (2010)
13
50 Cal.4th 605, 610.) With regard to restitution, the goal is to restore plaintiff to
the status quo ante. (Cortez v. Purolator Air Filtration Products Co. (2000) 23
Cal.4th 163, 177 (Cortez).) In explaining why section 203 penalties are not
recoverable as restitution, it is first helpful to briefly discuss why unpaid wages
are recoverable.
In Cortez, we held the plaintiff could seek restitution of unpaid overtime
wages via the UCL. (Cortez, supra, 23 Cal.4th at p. 168.) We explained that,
“[o]nce earned, those unpaid wages became property to which the employees were
entitled.” (Ibid.) Thus, it was of no import that the overtime wages had never
been in the possession of the employees; “earned wages that are due and payable
pursuant to section 200 et seq. of the Labor Code are as much the property of the
employee who has given his or her labor to the employer in exchange for that
property as is property a person surrenders through an unfair business practice.”
(Id. at p. 178.) “An order that earned wages be paid is therefore a restitutionary
remedy authorized by the UCL.” (Ibid.)
By contrast, permitting recovery of section 203 penalties via the UCL
would not “restore the status quo by returning to the plaintiff funds in which he or
she has an ownership interest.” (Korea Supply Co. v. Lockheed Martin Corp.
(2003) 29 Cal.4th 1134, 1149.) Section 203 is not designed to compensate
employees for work performed. Instead, it is intended to encourage employers to
pay final wages on time, and to punish employers who fail to do so.14 In other
words, it is the employers‟ action (or inaction) that gives rise to section 203
14
Plaintiff suggests that, in addition to encouraging prompt payment of final
wages, section 203 penalties serve to compensate employees for the injury caused
by the late payment of final wages. Even if true, the penalties still could not be
recovered via the UCL, as compensatory damages are not recoverable as
restitution. (Cortez, supra, 23 Cal.4th at p. 173.)
14
penalties. The vested interest in unpaid wages, on the other hand, arises out of the
employees’ action, i.e., their labor. Until awarded by a relevant body, employees
have no comparable vested interest in section 203 penalties. We thus hold section
203 penalties cannot be recovered as restitution under the UCL.
DISPOSITION
The judgment of the Court of Appeal is reversed and the matter is
remanded for further proceedings consistent with our decision.
MORENO, J.
WE CONCUR:
GEORGE, C.J.
KENNARD, J.
BAXTER, J.
WERDEGAR, J.
CORRIGAN, J.
RICHLI, J.P.T.*
_____________________________
* Associate Justice of the Court of Appeal, Fourth Appellate District, Division
Two, assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
15
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Pineda v. Bank of America, N.A. __________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 170 Cal.App.4th 388
Rehearing Granted
__________________________________________________________________________________
Opinion No. S170758
Date Filed: November 18, 2010
__________________________________________________________________________________
Court: Superior
County: San Francisco
Judge: Harold E. Kahn
__________________________________________________________________________________
Counsel:
Spiro Moss Barness, Spiro Barness and Gregory N. Karasik for Plaintiff and Appellant.
Paul, Hastings, Janofsky & Walker, Paul W. Cane, Jr., Stephen P. Sonnenberg, Thomas E. Geidt, Maria A.
Audero, Heather N. Mitchell and Jeffrey P. Michalowski for Defendant and Respondent.
Orrick, Herrington & Sutcliffe, Gary S. Siniscalco, Patricia K. Gillette, Andrew R. Livingston and Greg J.
Richardson for California Employment Law Council as Amicus Curiae on behalf of Defendant and
Respondent.
Jones Day, Richard S. Ruben, Craig E. Stewart and Harry I. Johnson III for Ralphs Grocery Company as
Amicus Curiae on behalf of Defendant and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Gregory N. Karasik
Spiro Moss
11377 W. Olympic Blvd., 4th Floor
Los Angeles, CA 90064-1683
(310) 235-2468
Maria A. Audero
Paul, Hastings, Janofsky & Walker
55 Second Street, Twenty-Fourth Floor
San Francisco, CA 941505
9415) 856-7000
Petition for review after the Court of Appeal affirmed the judgment in a civil action. This case presents the following issues: (1) When a worker files an action to recover penalties for late payment of final wages under Labor Code section 203, but does not concurrently seek to recover any other unpaid wages, is the statute of limitations the one-year statute for penalties under Code of Civil Procedure section 340, subdivision (a), or the three-year statute for unpaid wages under Labor Code section 202? (2) Can penalties under Labor Code section 203 be recovered as restitution in an Unfair Competition Law action (Bus. & Prof. Code, section 17203)?
| Date: | Citation: | Docket Number: | Category: | Status: |
| Thu, 11/18/2010 | 50 Cal. 4th 1389, 241 P.3d 870, 117 Cal. Rptr. 3d 377 | S170758 | Review - Civil Appeal | submitted/opinion due |
| 1 | Pineda, Jorge A. (Plaintiff and Appellant) Represented by Gregory N. Karasik Spiro Moss, LLP 11377 W. Olympic Boulevard, 5th Floor Los Angeles, CA |
| 2 | Bank of America, N.A. (Defendant and Respondent) Represented by Maria Alicia Audero Paul Hastings Janofsky & Walker, LLP 515 S. Flower Street, Suite 2500 Los Angeles, CA |
| 3 | Bank of America, N.A. (Defendant and Respondent) Represented by Paul W. Cane Paul Hastings Janofsky & Walker, LLP 55 Second Street, 24th Floor San Francisco, CA |
| 4 | California Employment Law Council (Amicus curiae) Represented by Greg James Richardson Orrick Herrington & Sutcliffe, LLP 405 Howard Street San Francisco, CA |
| 5 | Ralphs Grocery Company (Amicus curiae) Represented by Richard Ruben Jones Day 555 S. Flower Street, 50th Floor Los Angeles, CA |
| Opinion Authors | |
| Opinion | Justice Carlos R. Moreno |
| Dockets | |
| Feb 25 2009 | Petition for review filed Jorge A. Pineda, plaintiff and appellant by Gregory N. Karasik, Spiro Moss & Barness LLP, counsel |
| Feb 25 2009 | Record requested |
| Mar 3 2009 | Received Court of Appeal record file jacket/briefs/accordian file |
| Mar 16 2009 | Answer to petition for review filed Respondent, Bank of America, NA. by counsel, Paul W. Cane, Jr. |
| Mar 25 2009 | Reply to answer to petition filed Jorge A. Pineda, appellant by Gregory N. Karasik, counsel |
| Mar 25 2009 | Received: Notice of Law Firm Name Change from Sprio Moss & Barness LLP to Sprio Moss LLP. by Gregory N. Karaski, counsel |
| Apr 22 2009 | Petition for review granted Chin, J., was recused and did not participate. Corrigan, J., was absent and did not participate. Votes: George, C.J., Kennard, Baxter, Werdegar, and Moreno, JJ. |
| Apr 30 2009 | Certification of interested entities or persons filed Jorge A. Pineda, appellant by Gregory N. Karasik, counsel |
| May 5 2009 | Certification of interested entities or persons filed Bank of America, respondent by Paul W. Cane, counsel |
| May 22 2009 | Request for judicial notice filed (Grant or AA case) |
| Jun 8 2009 | Opposition filed Defendant and Respondent: Bank of America, N.A.Attorney: Paul W. Cane |
| May 22 2009 | Opening brief on the merits filed Plaintiff and Appellant: Pineda, Jorge A.Attorney: Gregory N. Karasik |
| Jun 15 2009 | Request for extension of time filed Respondent - Bank of America requesting extension until July 7, 2009 to file answer to opening brief on the merits. by Paul W. Cane, counsel |
| Jun 16 2009 | Extension of time granted On application of respondent and good cause appearing, it is ordered that the time to serve and file the reply to the answer brief on the merits is extended to and including July 7, 2009. |
| Jun 17 2009 | Filed: Reply in support of motion for judicial notice. by Gregory N. Karasik, counsel for appellant. Filed with permission |
| Jul 7 2009 | Answer brief on the merits filed Defendant and Respondent: Bank of America, N.A.Attorney: Paul W. Cane Bank of America, respondent by Paul W. cane, Jr., counsel |
| Jul 20 2009 | Reply brief filed (case fully briefed) Plaintiff and Appellant: Pineda, Jorge A.Attorney: Gregory N. Karasik Jorge A. Pineda, petitioner by Gregory N. Karasik, counsel |
| Aug 19 2009 | Application to file amicus curiae brief filed Amicus Curiae - Ralphs Grocery Company requesting permisson to file amicus curiae brief in support of respondent. by Richard S. Ruben, counsel |
| Aug 24 2009 | Application for relief from default filed California Employment Law Council, amicus curiae by Greg J. Richardson, counsel |
| Aug 24 2009 | Application to file amicus curiae brief filed California Employment Law Council requesting permission to file amicus curiae brief in support of respondent by Greg J. Richardson, counsel |
| Aug 26 2009 | Permission to file amicus curiae brief granted Ralphs Grocery Company in support of resondent. by Richard S. Ruben, counsel |
| Aug 26 2009 | Amicus curiae brief filed Amicus curiae: Ralphs Grocery CompanyAttorney: Richard Ruben The application of Ralphs Grocery Company for permission to file an amicus curiae brief in support of respondent is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief. |
| Aug 26 2009 | Permission to file amicus curiae brief granted California Employment Law Council in support of respondent. by Greg Richardson, counsel |
| Aug 26 2009 | Permission to file amicus curiae brief granted The application of California Employment Law Council for permission to file an amicus curiae brief in support of respondent is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief. |
| Sep 14 2009 | Response to amicus curiae brief filed Plaintiff and Appellant: Pineda, Jorge A.Attorney: Gregory N. Karasik Petitioner, Jorge A. Pineda, to Amicus Curiae Brief of Ralphs Grocery Company |
| Sep 14 2009 | Response to amicus curiae brief filed Plaintiff and Appellant: Pineda, Jorge A.Attorney: Gregory N. Karasik Petitioner, Jorge A. Pineda, to Amicus Curiae Brief of California Employment Law Council. |
| Jul 23 2010 | Justice pro tempore assigned Hon. Betty Ann Richli Fourth Appellate District, Div. Two (Chin, J., recused) |
| Sep 7 2010 | Case ordered on calendar to be argued Tuesday, October 5, 2010, at 1:30 p.m., in Fresno (at Court of Appeal, Fifth Appellate District, 2424 Ventura Street) |
| Sep 21 2010 | Request for judicial notice granted Appellant's request for judicial notice, filed on May 22, 2009, is granted. |
| Sep 23 2010 | Filed: letter dated September 23, 2010 regarding case to be argued October 5, 2010. by Maria A. Audero, counsel for respondent. |
| Sep 28 2010 | Filed: letter dated September 27, 2010 regarding letter brief filed by respondent on September 23, 2010. by Gregory Kurasik, counsel for appellant. |
| Oct 5 2010 | Cause argued and submitted |
| Nov 17 2010 | Notice of forthcoming opinion posted To be filed on Thursday, November 18, 2010 @ 10 a.m. |
| Briefs | |
| May 22 2009 | Opening brief on the merits filed Plaintiff and Appellant: Pineda, Jorge A.Attorney: Gregory N. Karasik |
| Jul 7 2009 | Answer brief on the merits filed Defendant and Respondent: Bank of America, N.A.Attorney: Paul W. Cane |
| Jul 20 2009 | Reply brief filed (case fully briefed) Plaintiff and Appellant: Pineda, Jorge A.Attorney: Gregory N. Karasik |
| Aug 26 2009 | Amicus curiae brief filed Amicus curiae: Ralphs Grocery CompanyAttorney: Richard Ruben |
| Sep 14 2009 | Response to amicus curiae brief filed Plaintiff and Appellant: Pineda, Jorge A.Attorney: Gregory N. Karasik |
| Sep 14 2009 | Response to amicus curiae brief filed Plaintiff and Appellant: Pineda, Jorge A.Attorney: Gregory N. Karasik |
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| Dec 29, 2010 Annotated by jgreenberger | FACTS: Pineda filed suit against Bank of America on October 22, 2007, approximately a year-and-a-half after leaving the corporation. In the suit, Pineda – who sought to represent a class of former Bank of America employees whose final wages were similarly delayed – attempted to recover penalties he claimed were due to him as a result of the delayed paycheck, under Section 203 of the California Labor Code. Pineda also sought to recover the Section 203 penalties by alleging that those penalties were due to him under the California Unfair Competition Law (UCL). PROCEDURAL HISTORY: The Court of Appeal affirmed both findings of the Trial Court. ISSUES: 2) Are Section 203 penalties recoverable under the Unfair Competition Law? HOLDING: 2) Section 203 penalties are not recoverable under the UCL, as the lower courts held. ANALYSIS: Yet as the Court also noted, the legislature may alter the default statute of limitations at its will. And, in fact, the legislature did precisely that in Section 203(b) of the Labor Code. That section provides that suits for Section 203 penalties are governed by the same statute of limitations as suits for “the wages from which the penalties arise” (that is, for unpaid final wages), which have a three-year statute of limitations under California Code of Civil Procedure Section 338. However, Bank of America claimed that Section 203(b) does not extend the statute of limitations for suits for only penalties (like Pineda made), and instead only extends the statute of limitations for claims for both unpaid final wages and penalties. The Court rejected this contention. First, as the Court wrote, the employment statutes are generally to be construed in favor of protecting employees. Based on this fact alone, and considering that Section 203(b) does not explicitly restrict the three-year statute of limitations only to suits for both unpaid wages and penalties, the Court found that Section 203(b)’s statute of limitations should also apply to suits for penalties only. Moreover, the Court looked to the language of Section 203(b) and noted that it says the statute of limitations for Section 203 penalties is identical to the statute of limitations for “an action for the wages from which the penalties arise” (emphasis added). By using the indefinite article “an,” the legislature indicated that the three-year statute of limitations for a penalties suit is not reliant on also having an unpaid final wages claim, according to the Court. In addition, the Court looked to the legislative history of Section 203(b) to find support for the notion that the three-year statute of limitations applies to a suit for penalties only. Specifically, the Court noted that a precursor to Section 203 originally had no explicit statute of limitations, so the defaults from the Code of Civil Procedure governed: that is, there was a three-year period for wage claims, but only a one-year period for penalty claims. Yet 10 years after that law was passed, the legislature amended it with language nearly identical to Section 203(b). In the Court’s opinion, the only explanation for this amendment was to indicate that penalty claims should be governed by the same three-year statute of limitations as wage claims. Finally, the Court found that the legislature intended for Section 203 penalties to act as an incentive for employers to pay final wages promptly. Allowing the three-year statute of limitations for penalty claims makes employee penalty claims easier to pursue, and thus, as the Court wrote, “provides additional incentive to encourage employers” to pay final wages expeditiously. On the second question – whether a Section 203 penalty can be recovered as restitution under the California Unfair Competition Law (UCL) – the Court upheld the rulings of the lower courts that the UCL does not apply to Section 203 penalties. The Court noted the UCL does apply to unpaid wages, since wages have been earned by an employee and thus are akin to property in which an employee has an ownership interest; the UCL allows courts to intervene and restore such property. However, the Court said that Section 203 penalties are not the property of the former employee, since they are “not designed to compensate employees for work performed” and instead are intended “to punish employers who fail” to pay final wages promptly. Thus, the Court held, Section 203 wages are not recoverable under the UCL. DISSENT: RELATED CASES: McCoy v. Superior Court, 68 Cal. Rptr. 3d 483 (2007) Smith v. Superior Court, 137 P. 3d 218 (2006) Cortez v. Purolator Air Filtration Products, 999 P. 2d 706 (2000) Korea Supply Co. v. Lockheed Martin Corp., 63 P. 3d 937 (2003) RELATED STATUTES: California Code of Civil Procedure Section 338 California Code of Civil Procedure Section 340 California Business and Professional Code Section 17203 (Unfair Competition Law) RELATED CONSTITUTIONAL PROVISIONS: TAGS: Annotation by: Jonathan Greenberger |
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