Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. No. BC343749 Gregory Alarcon, Judge.
Harris & Ruble, Alan Harris, Jonathan Ricasa and David Zelenski for Plaintiffs and Appellants.
No appearance for Defendants and Respondents.
ARMSTRONG, Acting P. J.
Terry Hoffman and Mary Jo Devenney appeal the judgment entered in their lawsuit seeking wages, expenses and penalties due from defendant Uncle P Productions, LLC ("Uncle P"). We agree with appellants' contention that the trial court applied the wrong statute of limitations to their continuing wages claim, and so reverse the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs were employed by Uncle P in the production of a motion picture. Hoffman was employed as a production coordinator from February 15, 2003 until March 26, 2003, at a daily rate of pay of $225, plus expenses for the use of her cell phone. She was terminated on March 26, 2003, and was neither paid for her last eight days of work nor reimbursed her expenses. Devenney was employed as a production sound mixer from March 2, 2003 to March 7, 2003, at a daily rate of pay of $250. She was given a check dated March 14, 2003, but the check was returned for insufficient funds. On June 28, 2003, she was finally paid for the work she performed.
On November 30, 2005, plaintiffs filed their complaint, seeking damages and penalties under various employment statutes, as follows:
The complaint also named Percy Miller, the manager of Uncle P and the executive producer of the film, as a defendant. The proceedings in the trial court did not include Percy Miller, and the judgment entered specifically stated, "A separate action is reserved by Plaintiffs against Defendant Percy Miller pursuant to CCP § 579."
1. The first cause of action was for violation of Labor Code section 203, which penalizes employers for willfully failing to pay wages promptly after an employee's discharge.
Unless otherwise indicated, further statutory references are to this code.
2. The second cause of action was for failing to pay the minimum wage in violation of section 1194.
3. The third cause of action was for failing to pay overtime, also in violation of section 1194.
4. The fourth cause of action alleged violations of the Fair Labor Standards Act, 29 United States Code section 206, the federal law equivalent of section 1194 as alleged in the second cause of action.
5. The fifth cause of action alleged violations of 29 United States Code section 207, the federal law equivalent of section 1194 as alleged in the third cause of action.
6. The sixth cause of action was for failure to provide pay stubs and/or itemized statements as required by section 226.
7. The seventh cause of action was for recovery of a penalty under section 225.5 for violation of section 212, which penalizes an employer for paying wages with a check drawn on an account with insufficient funds.
8. The eighth cause of action, for violation of section 2802, sought reimbursement of expenditures necessary for job performance.
9. Plaintiffs also sought restitution and an injunction under section 17200 et seq. of the Business and Professions Code.
The complaint also contained class allegations, but those were not pursued.
Uncle P did not answer, and default was entered. On November 13, 2006, plaintiffs submitted their "default judgment package," which included, among other things, a Memorandum of Points and Authorities, the declaration of each plaintiff, Plaintiffs' Interest Calculation, a Memorandum of Costs, and a Request for Attorney's Fees.
Prior to the default prove-up hearing, the trial court issued its Tentative Decision on Request for Default Judgment. The tentative decision indicated that the trial court intended to enter judgment as follows:
1. An award to Hoffman of $6,750 and to Devenney of $7,500 (in each case, their daily wage multiplied by 30 days) as a penalty pursuant to section 203.
2. Judgment for defendant on the state minimum wage claim.
3. An award to Hoffman of $176.77 in overtime wages.
4. Judgment for defendant for the claims based on federal statutes regarding minimum wage and overtime compensation.
5. An award to Hoffman of $150 and to Devenney of $50 as a penalty for failing to provide an itemized wage statement.
6. Judgment for defendant on Devenney's claim for penalties based on the bounced check, because this injury was remedied by the award of a penalty under section 203 (the first cause of action).
7. An award to Hoffman of $187.75 in job-related expenses.
In addition, the court proposed to award interest of $364.52 to Hoffman, based on that portion of the damages not in the nature of penalties (i.e., overtime compensation and expense reimbursement), together with reasonable attorney's fees of $3,000 and costs of $299.50.
A minute order dated December 12, 2006 states: "The Court, having taken the matter under submission on 12/11/06, [here]by makes its ruling as follows." The ruling which followed differed from the tentative ruling in the following respects:
1. The plaintiffs were denied an award of continuing wages under section 203. The court reasoned: "Section 203 penalizes an employer for failing to pay wages promptly upon an employee's discharge by continuing the employee's wages until paid, but not more than 30 days. [Citation.] Under CCP § 340(a), an action under a statute for a penalty must be brought within one year of occurrence. Here the complaint was filed two years and eight months later, far exceeding the one year statute of limitations. Accordingly, Hoffman's request for $6,750.00 in penalties is DENIED." Likewise, "Devenney was discharged on March 7, 2003, and filed her complaint on November 30, 2005. For the reasons aforementioned, Devenney's request for $7,500.00 in penalties is DENIED."
2. The court entered judgment for defendant on plaintiffs' claims for penalties under section 203.1 on account of defendant's failure to provide itemized wage statements, as well as on Devenney's claim for a penalty for being paid with a dishonored check, again citing Code of Civil Procedure section 340, subdivision (a)'s one year statute of limitations.
3. Reasonable attorney fees were set at $3,354.25, approximately 10 percent more than the tentative award.
Plaintiffs did not move for a new trial or otherwise advise the trial court of any error in applying the statute of limitations to plaintiffs' claims. Neither did plaintiffs argue in their briefs on appeal that the trial court was without authority to determine whether the statute of limitations barred their claims.
CONTENTIONS
Plaintiffs make the following assignments of error: (1) the trial court erred in applying a one-year statute of limitations to the section 203 continuing wages claims; (2) the court erred in denying Devenney recovery for being paid with a check that bounced; (3) the court erred in denying relief under the two "minimum wage" counts; (4) the court erred in concluding that the cause of action for failure to provide an itemized wage statement pursuant to section 226 was time-barred; and (5) plaintiffs seek reversal of the attorney fee award.
DISCUSSION
1. Statute of limitations on section 203 continuing wage claims
Plaintiffs contend that the trial court erred in concluding that their section 203 claims for "waiting time penalties" were time-barred. We agree.
When the relevant facts are undisputed, as is the case here, "the application of the statute of limitations may be decided as a matter of law." (International Engine Parts, Inc. v. Feddersen & Co. (1995) 9 Cal.4th 606, 611; see also McKeown v. First Interstate Bank (1987) 194 Cal.App.3d 1225, 1228.) Thus, the trial court was right to apply the statute of limitations to the facts alleged in the complaint and admitted by the defendant's failure to answer; as we explain, however, it erred in determining which limitations statute applied to the facts before it.
Code of Civil Procedure section 340, subdivision (a) sets forth a one year statute of limitations for "[a]n action upon a statute for a penalty or forfeiture, if the action is given to an individual, or to an individual and the state, except if the statute imposing it prescribes a different limitation." Labor Code section 203 is unequivocally "a statute for a penalty" within the meaning of Code of Civil Procedure section 340, subdivision (a). Consequently, appellants' causes of action for waiting time penalties are subject to a one-year statute of limitation unless section 203 "prescribes a different limitation."
Section 203 provides in pertinent part: "If an employer willfully fails to pay . . . 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; the wages shall not continue for more than 30 days. . . . [¶] 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." A claim for wages is subject to the three-year statute of limitations contained in Code of Civil Procedure section 338, subdivision (a). (Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1102.) Thus, section 203 provides a three-year statute of limitations for a cause of action for waiting time penalties.
Our Supreme Court came to this same conclusion when it recently explained: "When an employer fails to pay an employee who has quit or been discharged, section 203 establishes that the unpaid wages continue to accrue as a 'penalty' for up to 30 days. Knowing that remedies constituting penalties are typically governed by a one-year statute of limitations, the Legislature expressly provided that a suit seeking to enforce the section 203 penalty would be subject to the same three-year statute of limitations as an action to recover wages. (§ 203.)" (Murphy v. Kenneth Cole Productions, Inc., supra, 40 Cal.4th at pp. 1108-1109.)
The trial court did not explain in its statement of decision why it concluded that the three-year statute of limitations contained in section 203 did not apply to this lawsuit. Interestingly, however, subsequent to the trial court's ruling in this case, the Fourth District Court of Appeal in McCoy v. Superior Court (2007) 157 Cal.App.4th 225, came to a similar conclusion. In McCoy, the plaintiff in a putative class action suit was seeking waiting time penalties under section 203. His complaint alleged that the defendant, a "temp" agency, instead of paying its employees upon discharge or within 72 hours of resignation, paid them on the next scheduled pay day. The Court of Appeal affirmed the trial court's ruling that the waiting time penalties were subject to a one-year statute of limitations under Code of Civil Procedure section 340, subdivision (a).
The McCoy Court determined that the statute of limitations language contained in section 203 was ambiguous, and so resorted to extrinsic aids to discern its meaning. It then concluded that the Legislature meant for the three-year limitations period specified in section 203 for continuing wage claims to apply when such claims are brought with the underlying wage claim, but not when they are not accompanied by a wage claim. We cannot concur in this analysis.
Section 203 specifically states: "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." There is nothing the slightest bit ambiguous or uncertain about those words. The McCoy Court acknowledged the Supreme Court's statement in Murphy v. Kenneth Cole Production, Inc. that "'. . . the Legislature expressly provided that a suit seeking to enforce the section 203 penalty would be subject to the same three-year statute of limitations as an action to recover wages. [Citation.]' (Murphy v. Kenneth Cole Productions, Inc., supra, 40 Cal.4th at pp. 1108-1109)." (McCoy, supra, at p. 233.) The Court of Appeal declared, however, that the statement was dicta, since the Court was not interpreting section 203, and that it provided no authority for a three-year limitations period for penalty-only claims, because the Murphy Court "does not purport to distinguish between an action where both wages and a waiting time penalty are sought as opposed to one for penalties only, as is the case here." (McCoy, supra, 157 Cal.App.4th at p. 233.) However, the statute of limitations for an action does not customarily change depending upon whether or not additional claims are included in the complaint. Indeed, McCoy cites no authority at all for its application of a different statute of limitations based on its distinction between penalty-only claims and penalty-plus-wage claims, an interpretation of section 203 which disregards the express words contained in the statute and infers the Legislature's true meaning.
In sum, we find persuasive the Supreme Court's pronouncement of the statute of limitations for waiting time penalties in Murphy, notwithstanding the fact that the Court was not directly considering section 203, but analogizing to it in order to resolve the issue before it involving the statute of limitations for section 226.7 claims ["hour of pay" remedy for meal and rest period violations]. We conclude that, under the clear and unambiguous terms of the statute, a three-year limitations period applies to section 203 claims for waiting time penalties. Plaintiffs' causes of action for those penalties were therefore timely.
2. Devenney's section 225.5 claim for being paid with a check drawn on an account with insufficient funds
Devenney brought a cause of action to recover a penalty pursuant to Labor Code section 225.5 for defendant's payment of Devenney's wages by a check drawn on a bank account with insufficient funds to pay the check, a violation of section 212. Devenney acknowledges that section 225.5 authorizes recovery of penalties by the Labor Commissioner only. She seeks to recover the penalty provided under section 203.1 which, although not pled in the complaint, "actually does apply to the facts alleged in the Complaint."
This was a default proceeding. Defendant was entitled to rely on the fact that Devenney's purported seventh cause of action under Labor Code sections 212 and 225.5 did not state a claim entitling her to relief. Consequently, the trial court did not err in denying Devenney a recovery based on the bounced check.
3. The minimum wage claims
Both Hoffman and Devenney claimed that defendant violated the minimum wage provisions of state and federal law. The trial court ruled that, because "Hoffman was to be paid $225 per day, far more than the minimum wage" and Devenney "was to be paid $250 per day, far more than the minimum wage," the minimum wage provisions of federal and state law did not apply to them. In this the court was mistaken.
Labor Code section 1194 provides in part: "Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the minimum wage . . . is entitled to recover in a civil action the unpaid balance of the full amount of his minimum wage, including interest thereon, reasonable attorney's fees, and costs of suit."
Devenney's minimum wage claim lacks merit: she was actually paid more than the minimum wage, albeit two months late. Hoffman, however, has not been paid for 99.3 hours of work. Moreover, her complaint includes no cause of action for wages under section 201, so there is no issue of double payment. Consequently, the trial court erred in rejecting Hoffman's minimum wage claims.
4. Statute of limitations on section 226 itemized wage statement claims
The trial court ruled that these damages ($150 for Hoffman and $50 for Devenney) were in the nature of a penalty, and thus subject to the one year statute of limitations of Code of Civil Procedure section 340, subdivision (a). Plaintiffs argue that the statutory language does not support that finding: "An employee suffering injury as a result of a knowing and intentional failure by an employer to comply with subdivision (a) is entitled to recover the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period, not exceeding an aggregate penalty of four thousand dollars ($4,000)."
The Legislature used the word "penalty" to describe the monies recoverable under section 226. As our Supreme Court noted, the Legislature is well aware of the one-year statute of limitations for the recovery of a statutory penalty, such that it will specifically include a different limitations period if it does not wish the one-year period to apply. (Murphy v. Kenneth Cole Productions, Inc., supra, 40 Cal.4th at pp. 1108-1109.) No different limitations period appears in the statute. Consequently, the trial court did not err in concluding that the wage statement claims were in the nature of a penalty subject to the one year statute of limitations of Code of Civil Procedure section 340, subdivision (a).
5. Reversal of attorney fee award
Plaintiffs state that "Reversal of the judgment insofar as it denies relief on any of Appellants' causes of action would necessitate reversal of the fee award. This is so because a significant increase in the damages awarded would have an impact on the issue of what constitutes a reasonable fee." The argument is not well-taken.
The trial court tentatively awarded Hoffman $7,400.12 in damages, interest and penalties, Devenney $8,000 in penalties, and the two plaintiffs together $3,000 in attorney fees. Although the trial court ultimately entered judgment for Hoffman in the amount of $500.12 in damages and interest, and denied Devenney any monetary recovery at all, it nevertheless awarded plaintiffs attorney fees of $3,354.25. Under these facts, we fail to see how a reversal of the judgment would necessitate a reversal of the fee award.
DISPOSITION
The judgment with respect to Devenney's minimum wage claims and sections 212/225.5 claim is affirmed, as is the judgment on appellants' causes of action under section 226 and the award of attorney fees. The judgment with respect to appellants' section 203 continuing wages claims as well as Hoffman's minimum wage claims is reversed. The matter is remanded to the trial court for further proceedings consistent with this opinion. Costs are awarded to appellants.
I concur: KRIEGLER, J.
MOSK, J., Concurring and Dissenting
INTRODUCTION
Plaintiffs asserted claims against defendant under the Labor Code. Because defendants did not respond, plaintiffs obtained a default. Plaintiffs’ complaint shows that a statute of limitations would apply to some of those claims. Nevertheless, in determining whether to enter a default judgment in favor of plaintiffs, the trial court may not bar claims based on the statute of limitations because the statute of limitations is an affirmative defense that is forfeited unless invoked by a defendant in an answer or by demurrer. This issue comes to us on undisputed facts, and is one that has not been directly addressed by any case. Because defendant did not appear, it was unaffected by any failure of plaintiffs to raise the issue. To affirm the judgment would be to approve an unauthorized ruling by the trial court and a ruling that is contrary to law.
STATEMENT OF FACTS AND PROCEEDINGS
Plaintiffs Terry Hoffman and Mary Jo Devenney filed a complaint on November 30, 2005 against Uncle P Productions and Percy Miller alleging that defendants had failed to pay plaintiffs certain wages and expenses owing in 2003. Plaintiffs alleged nine causes of action. The causes of action included claims based on violations of the Labor Code (Lab. Code, §§ 203, 226, 225.5, 1194, 2802), certain federal statutes (29 U.S.C. §§ 206, 207), and the Unfair Practices Act (Bus. & Prof. Code, § 17200, et seq.) Defendants defaulted. Plaintiffs filed a “default-judgment package,” pursuant to Code of Civil Procedure section 579, against defendant Uncle P Productions, LLC and included requests for judgments, declarations and points and authorities in support of judgments, a memorandum of costs and request for attorney fees. The trial court denied claims under Labor Code section 203 and 226 on the basis that they were fines barred by the one year statute of limitations applicable to penalties. (Code Civ. Proc., § 340, subd. (a).) The trial court also denied plaintiffs relief under the minimum wage provisions of Labor Code section 1194 on the ground that delinquent or non payment did not violate the minimum wage provisions. The trial court did not consider the federal minimum wage provisions on the ground they were duplicative of the state law claims. The default judgment awarded plaintiffs some damages and attorney fees. There remains a separate action against defendant Percy Miller.
A. Waiver
Plaintiffs did not raise in the trial court whether the trial court had the authority to apply the statute of limitations in connection with a default. The rule that an issue not raised in the trial court may not be raised for the first time on appeal is often “relaxed” by appellate courts allowing “a party to raise belatedly ‘a pure question of law which is presented on undisputed facts.’ [Citation.] This forgiving approach has been most frequently invoked when ‘important issues of public policy are at issue.’” (Sea & Sage Audobon Society, Inc. v. Planning Com. (1983) 34 Cal.3d 412, 417; see Ford v. Gouin (1992) 3 Cal.4th 339, 346, fn. 2; Adams v. Murakami (1991) 54 Cal.3d 105, 115, fn. 5.) Plaintiff addressed the issue on oral argument. That plaintiffs did not raise the issue in their brief does not automatically foreclose consideration of that issue. The court has discretion to consider or disregard issues not properly raised. (See Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2007) ¶ 9:21, p. 9-6.) Defendants, having been defaulted, did not appear and thus could not have argued the issue at the trial court or on this appeal. Thus, there was no reliance by defendant on plaintiffs’ omission. As this is an issue that has not been specifically addressed before, it is of public importance because valid default judgments will not be entered on the erroneous assumption that a statute of limitations bars a claim.
B. Default
“Generally speaking, the party who makes default thereby confesses the material allegations of the complaint. (Csordas v. United Slate Tile etc. Roofers, 177 Cal.App.2d 184, 186 [2 Cal.Rptr. 133].) It is also true that where a cause of action is stated in the complaint and evidence is introduced to establish a prima facie case the trial court may not disregard the same, but must hear the evidence offered by plaintiff and must render judgment in his favor for such sum, not exceeding the amount stated in the complaint, or for such relief, not exceeding that demanded in the complaint, as appears from the evidence to be just. (Csordas v. United Slate Tile etc. Roofers, supra, p. 186; 28 Cal.Jur.2d, § 31, p. 653; Code Civ. Proc., §§ 580, 585, subd. 2.) It is established law, however, that where a complaint does not state a cause of action or where it shows no grounds for relief, the default of the defendant does not improve it, because, as stated in Williams v. Foss, 69 Cal.App. 705 [231 P. 766]: ‘The default admitted nothing more than was alleged in the complaint. Under such circumstances, the fact that before entering the judgment the court received some evidence does not put the case on the basis of an action tried upon complaint and answer, wherein, as sometimes happens, the court hears evidence relating to an essential fact which had been omitted from the complaint.’ (Pp. 707-708; see Taliaferro v. Taliaferro, supra, 171 Cal.App.2d 1, 9; 28 Cal.Jur.2d, § 36, p. 660.)” (Taliaferro v. Davis (1963) 216 Cal.App.2d 398, 408-409.)
That the complaint failed to state facts sufficient to constitute a cause of action “may be considered” in determining whether a default judgment was proper. (Bristol Convalescent Hosp. v. Stone (1968) 258 Cal.App.2d 848, 859.) “The rule is clearly stated in 2 Witkin, California Procedure, page 1701, as follows: ‘The defendant who fails to answer admits only facts which are well pleaded. If the complaint fails to state a cause of action or the allegations do not support the demand for relief, the plaintiff is no more entitled to that relief by default judgment than he would be if the defendant had expressly admitted all of the allegations. Such a default judgment is erroneous, and will be reversed on appeal.’” (Rose v. Lawton (1963) 215 Cal.App.2d 18, 20.)
C. Statute of Limitations
That the complaint may state facts showing that claims are barred by the statute of limitations does not mean that the complaint does not state facts sufficient to constitute a cause of action. The defendant may choose to attack the complaint by demurrer (see Barton v. New United Motor Manufacturing, Inc. (1996) 43 Cal.App.4th 1200, 1210), but if the defendant does not do so, it forfeits the right to invoke the statute of limitations. As stated in Miller v. Parker (1933) 128 Cal.App. 775, 776, “[i]t is . . . clearly established in California that even if it appears upon the face of a complaint that the cause of action therein alleged is barred by the statute of limitations, the defense is nevertheless not available unless it is pleaded and that it may not be raised by a general demurrer but must be specifically stated as a ground of demurrer.” (See Minton v. Cavaney (1961) 56 Cal.2d 576, 581 [statute of limitations defense waived if not raised by defendant]; Berendsen v. McIver (1954) 126 Cal.App.2d 347, 351 [defendant must raise statute of limitations by demurrer or answer or it is waived]; 3 Witkin, Cal. Procedure (4th ed. 1996) Actions, §§ 413, 414, pp. 521-523.)
The California Supreme Court has stated, “The bar of the statute of limitations . . . affects the remedy only and does not impair the obligation.” (Mitchell v. Auto. Etc. Underwriters (1941) 19 Cal.2d 1, 4.) The court of appeal has reiterated this principle by stating that “a statute of limitations is procedural; it affects the remedy only, not the substantive right or obligation. [Citation.] (Nelson v. Flintkote Co. (1985) 172 Cal.App.3d 727, 733.) Accordingly, plaintiffs’ complaint states a cause of action. That a statute of limitations may, if invoked, bar the claims, does not mean that plaintiffs do not have valid legal claims. If defendant timely raised the statute of limitations defense, the claims could be defeated. But if defendant fails to do so, either by failing to raise the defense by answer or demurrer, or by defaulting, plaintiff is entitled to enforce defendant’s obligation to plaintiffs. (See Travelers Indemnity Co. v. Bell (1963) 213 Cal.App.2d 541, 547 [default caused waiver of statute of limitations defense].)
It would be anomalous if a defendant, having failed to assert the defense of the statute of limitations by way of answer or demurrer, has forfeited the right to invoke it in the litigation in which it appears thereafter, but would be entitled to have the court apply the defense when the defendant has defaulted.
For the foregoing reasons, I would reverse the default judgment and order the trial court to enter judgment in favor of plaintiffs without regard to any possible applicable statute of limitations. I would also reverse as to the attorney fee award to allow the trial court to evaluate the amount in view of the revised award and the appellate proceeding. Otherwise, I concur in the majority’s decision.