Opinion
A149475
05-30-2018
IGNACIO BECCERA et al., Plaintiffs and Respondents, v. ROGER HUGHES, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Sonoma County Super. Ct. No. SCV256354)
Appeal from a judgment enforcing a settlement.
Ignacio and Martin Becerra were employed by R. D. Hughes Drywall, owned and operated by Roger Hughes. Believing they had been improperly terminated, they sued Hughes on a variety of causes of action. In May 2016, each side being represented by counsel, the parties advised Judge Allan Hardcastle that they had reached a settlement. Counsel for the Becerras stated the terms:
In their complaint, the Becerras alleged that for more than 10 years they were full-time employees for Hughes until they were fired when they refused to continue working on Saturdays and Sundays. They alleged 10 causes of action, which were styled: (1) "failure to pay all due and owing wages each pay period including overtime"; (2) "failure to provide rest periods"; (3) "failure to provide accurate itemized statements of total hours"; (4) "waiting time penalties"; (5) "employment discrimination—wrongful termination"; (6) "wrongful termination in violation of public policy"; (7) "harassment based on race, national origin & ancestry in violation of FEHA"; (8) "intentional infliction of emotional distress"; (9) "unfair competition," and (10) "violations of California Civil Code 51.7 (Ralph Act)." The fifth and sixth causes of action were based on the Fair Employment and Housing Act (Gov. Code, § 12940).
"[Y]our Honor, . . . the total amount is $70,000. It's going to be broken up in the following amounts. 28,000 will be paid within 60 days to the Li & Lozada Law Group [counsel for plaintiffs]. . . . [¶] 11,000 will be paid to Martin Becerra and 11,000 will be paid to Ignacio Becerra, with—inclusive of—I'm sorry, and it will be taxed accordingly as—as required by California State law and the federal government.
"Then, within six months after that has been paid, 5,000 will be paid to Martin and 5,000 will be paid to Ignacio, with the same tax conditions; and within one year of the initial payment, an additional 5,000 will be paid to Ignacio and 5,000 to Martin Becerra.
"Each party to bear its own costs and fees. [¶] There will be a confidentiality agreement in the provisions wherein the Becerra brothers may not relate any contents of the resolution of the case. They're only to state the case has been resolved, with the exception to attorneys and tax advisors and pursuant to court order."
In response to a question from Judge Hardcastle, both sides agreed that "the terms would be enforceable pursuant to CCP section 664.6."
Barely two months later, the Becerras moved to enforce the settlement "pursuant to section 664.6 of the Code of Civil Procedure." Hughes opposed the motion on the ground that "the terms of the settlement contain unlawful provisions that cannot be enforced as a matter of law."
Hughes explained: "In this case, the settlement agreement is illegal: it provides the funds payable to Plaintiffs 'will be taxed accordingly as—required by California State law and the federal government.' Defendant is unable to do this as the social security numbers for which he must pay the taxes under belong to individuals other than Plaintiffs.
"Using another individual's social security number has criminal consequences and is punished under 18 USC [section] 1546(b) for false attestation on an employment verification form, or 42 USC [section] 408(a)(7)(A) for misusing a social security number obtained by fraud, or 42 USC [section] 408(a)(7)(B) for falsely representing a social security number. Defendant Roger Hughes cannot comply with the terms of the settlement as he could be criminally prosecuted for social security fraud. Also Plaintiffs could likewise be prosecuted for knowingly accepting payments through false social security numbers.
"Therefore, the Court cannot enter judgment pursuant to Code of Civil Procedure Section 664.6 as the terms of the settlement are unlawful."
The Becerras' response made a number of points: Initially, "Hughes has failed to introduce foundational facts," namely, "the falsity of Plaintiffs' social security numbers," with evidence. Next, "Hughes' allegations of lack of documentation, even if they were true and proven—do not release him from his obligations [under state law] to pay his employees," citing Reyes v. Van Elk, Ltd. (2008) 148 Cal.App.4th 604 (Reyes). Finally, "the objection by Hughes is a complete red herring. Plaintiffs have offered to have the entire settlement amount paid to the Li and Lozada Law Group, Plaintiffs' attorneys. From there, Plaintiffs' counsel would make the distributions accordingly. Plaintiffs have informed Hughes, through counsel, multiple times of this. In addition, Plaintiffs have acknowledged that they are responsible for any applicable taxes (and that Defendant Hughes is as well)."
Judge Hardcastle's tentative ruling was to deny the Becerras' motion to enforce the settlement. However, he continued the matter to give the parties the opportunity to "work it out."
When the parties came before Judge Hardcastle to inform him that they had been unable to do so, counsel for the Becerras stated:
" . . . I sent a revised settlement agreement to reflect that the amount of money could be paid directly to my law firm and we would disburse accordingly.
"I put in that settlement agreement language to the fact that there was no assertions made by R.D. Hughes related to any taxes, that they've received no tax device [sic: advice], that neither the company or their attorneys have made any representation concerning tax consequences, if any, of the settled amount in the settlement agreement.
"Employees agree that they're solely responsible for employee tax consequences of this settlement agreement . . . . [¶] The employees further agree that they will hold the company harmless for the taxes that are the employees' responsibility." There was no answer from Hughes.
After hearing brief argument, Judge Hardcastle granted the motion to enforce: "Plaintiffs shall have judgment against defendant in the amount of $70,000. . . . [¶] Plaintiffs are entitled to reasonable attorney fees to enforce the settlement and they're awarded to plaintiffs' counsel in an amount according to proof." Judgment for $73,506.20 ($70,000, $3,000 attorney fees, $356.20 prejudgment interest) and costs of $150 was duly entered against Hughes. Hughes then filed a timely notice of appeal.
Hughes's primary contention is a reiteration of its argument to Judge Hardcastle that is based on the Immigration Reform and Control Act enacted by Congress in 1986 (IRCA), as interpreted by the United States Supreme Court in Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 137. On review of a Code of Civil Procedure section 664.6 motion we apply the substantial evidence standard to factual findings and review legal issues de novo. (J.B.B. Investment Partners, Ltd. v. Fair (2014) 232 Cal.App.4th 974, 984.) Neither IRCA nor Hoffman, nor both together, constitute the monolith Hughes imagines them to be.
In Reyes, supra, 148 Cal.App.4th at pages 613 to 614—which, we note is not mentioned in either of Hughes's briefs—the Court of Appeal noted a body of federal courts decisions that go against Hughes's position:
"In Patel v. Quality Inn South (11th Cir. 1988) 846 F.2d 700, 704, the court held the IRCA did not purport to limit remedies (for unpaid wages) available to undocumented aliens under the Fair Labor Standards Act ('FLSA') reasoning that if the FLSA did not cover undocumented aliens, employers would have an incentive to hire them. The court concluded the legislative history of the IRCA 'strongly suggest[ed]' Congress believed undocumented workers would continue to be protected by state and federal wage laws. (Ibid.) The court also noted the appropriation of additional funds in the IRCA for the increased FLSA enforcement on behalf of undocumented workers supported that supposition. (Patel, at p. 704) The court reasoned that minimum wage laws supported the IRCA policy of reducing illegal immigration because such laws offset the most 'attractive feature' of such workers—their willingness to work for less than the minimum wage. (Ibid.) The court opined claims for wages for work already performed did not conflict with federal immigration policy. (Id. at pp. 705-706.) Other courts agree that the IRCA did not foreclose all remedies for undocumented workers under FLSA, NLRA or other federal labor statutes. (See, e.g., cases cited in Patel, supra, 846 F.2d at p. 703 & p. 703, fn. 4; Mester Mfg. Co. v. I.N.S. (9th Cir. 1989) 879 F.2d 561, 567; Contreras v. Corinthian Vigor Ins. Brokerage, Inc. (N.D. Cal. 1998) 25 F.Supp.2d 1053, 1056.)"
Hughes's briefs are also mute on our Supreme Court's decision in Salas v. Sierra Chemical Co. (2014) 59 Cal.4th 407, 414 (Salas), where the court concluded: "Senate Bill No. 1818, which extends state law employee protections and remedies to all workers 'regardless of immigration status,' is not preempted by federal immigration law except to the extent it authorizes an award of lost pay damages for any period after the employer's discovery of an employee's ineligibility to work in the United States . . . ."
Our Supreme Court explained, in language that sometimes echoed that used in Reyes:
"We first consider the post-discovery period. Because under federal immigration law an employer may not continue to employ a worker known to be ineligible (8 U.S.C. § 1324a(a)(2)), any state law award that compensates an unauthorized alien worker for loss of employment during the post-discovery period directly conflicts with the federal immigration law prohibition against continuing to employ workers whom the employer knows are unauthorized aliens. Such an award would impose liability on the employer for not performing an act (continuing to employ a worker known to be an unauthorized alien) expressly prohibited by federal law. Thus, federal law preempts state Senate Bill No. 1818 to the extent that it makes a California FEHA lost pay award available to an unauthorized alien worker for the post-discovery period.
"We now turn to the prediscovery period. In allowing lost wages for that period, our state labor laws do not directly conflict with the federal Immigration Reform and Control Act of 1986, because compliance with both federal and state laws is not impossible, as we now explain. Although federal immigration law prohibits an unauthorized alien's use of any false document to get a job (8 U.S.C. § 1324c(a)(1)-(3)), that law does not prohibit an employer from paying, or an employee from receiving, wages earned during employment wrongfully obtained by false documents, so long as the employer remains unaware of the employee's unauthorized status. Thus, allowing recovery of lost wages for the prediscovery period does not produce an 'inevitable collision between the two schemes of regulation.' " (Salas, supra, 59 Cal.4th at pp. 424-425, fns. omitted.)
"Furthermore, not allowing unauthorized workers to obtain state remedies for unlawful discharge, including prediscovery period lost wages, would effectively immunize employers that, in violation of fundamental state policy, discriminate against their workers on grounds such as disability or race, retaliate against workers who seek compensation for disabling workplace injuries, or fail to pay the wages that state law requires. The resulting lower employment costs would encourage employers to hire workers known or suspected to be unauthorized aliens, contrary to the federal law's purpose of eliminating employers' economic incentives to hire such workers by subjecting employers to civil as well as criminal penalties. (See Sure-Tan, Inc. v. NLRB (1984) 467 U.S. 883, 893-894 [recognizing that enforcing labor laws on behalf of undocumented aliens reduces an employer's incentive to unlawfully hire them]; Reyes v. Van Elk, Ltd. (2007) 148 Cal.App.4th 604, 617 ['Allowing employers to hire undocumented workers and pay them less than the wage mandated by statute is a strong incentive for the employers to do so, which in turn encourages illegal immigration']; Farmer Brothers Coffee v. Workers' Comp. Appeals Bd. (2005) 133 Cal.App.4th 533, 540 [if unauthorized aliens were to be denied state labor law protections, 'unscrupulous employers would be encouraged to hire aliens unauthorized to work in the United States, by taking the chance that the federal authorities would accept their claims of good faith reliance upon immigration and work authorization documents that appear to be genuine'].) It would frustrate rather than advance the policies underlying federal immigration law to leave unauthorized alien workers so bereft of state labor law protections that employers have a strong incentive to 'look the other way' and exploit a black market for illegal labor. Accordingly, after comparing the likely effects of applying and not applying state labor and employment law protection to unauthorized alien workers, we conclude that Senate Bill No. 1818, insofar as it makes available to such workers the remedy of prediscovery period lost wages for unlawful termination in violation of the FEHA, does not frustrate the purpose of the federal Immigration Reform and Control Act of 1986, and thus is not preempted." (Salas, supra, 59 Cal.4th at pp. 426-427.)
Hughes states in his brief it was only after the settlement was announced that he discovered the Becerras were allegedly using phony Social Security numbers. Whether or not this is plausible, we accept it, for it demonstrates that the Becerras were seeking recovery for wages earned during what our Supreme Court termed the "prediscovery" period, and for wage and FEHA claims that are not displaced by IRCA. As such, under Salas, allowing recovery of such wages does not pose a conflict between state and federal law. In short, Hughes has failed to establish the settlement agreement is illegal.
"Under the IRCA, it is impossible for an undocumented alien to obtain employment in the United States without some party directly contravening explicit congressional policies." (Hoffman Plastic Compounds, Inc. v. N.L.R.B., supra, 535 U.S. at p. 148.) "The IRCA requires employers to verify that each new hire is authorized to work in the United States. The employee must present documents establishing his or her identity and employment authorization." (Reyes, supra, 148 Cal.App.4th at p. 610, fn. 4.) " 'Form I-9, Employment Eligibility Verification Form' is a document in which an employer hiring an individual for employment in the United States attests under penalty of perjury that he has verified, by examining certain documents, that the employee is not an unauthorized alien. 8 U.S.C. § 1324a(b)(1); 8 C.F.R. § 274a.2. The employer is required to retain the I-9 for the later of three years after the employee's hire date or one year after his termination date. 8 U.S.C. § 1324a(b)(3)." (United States v. Ye (7th Cir. 2009) 588 F.3d 411, 413, fn. 1.) --------
Hughes's remaining contention is stated as follows: "The trial court's consideration of new factual arguments not in the [Becerras'] moving papers was improper." What follows this is a congeries of arguments we have already addressed and oral arguments to Judge Hardcastle that drew no objection from Hughes and so were forfeited. (E.g., Children's Hospital & Medical Center v. Bontá (2002) 97 Cal.App.4th 740, 776-777.)
DISPOSITION
The judgment is affirmed.
/s/_________
STEWART, J. We concur. /s/_________
KLINE, P.J. /s/_________
MILLER, J.