Opinion
NOT TO BE PUBLISHED
Superior Court County No. SC050002 of Ventura William Q. Liebmann, Judge.
Littler Mendelson, Barrett K. Green, Daniel J. Cravens, for Defendants and Appellants, Assisted Home Hospice Foundation and Assisted Home Care, Inc.
Ferguson Case Orr Paterson, James Q. McDermott, Sandra M. Robertson, Leslie A. McAdam for Plaintiff and Respondent, Susanna J. Wood.
COFFEE, J.
Assisted Home Hospice Foundation and Assisted Home Care, Inc. (Assisted) appeal the judgment awarding respondent Susanna J. Wood unpaid vacation in the amount of $341,750 and unpaid overtime in the amount of $19,750. The court ordered Assisted to pay prejudgment interest on the unpaid vacation award in the sum of $50,995.62 and prejudgment interest on the unpaid overtime award in the sum of $3,186.49. Susanna was awarded attorney's fees in the amount of $232,101.75.
We intend no disrespect, but refer to Susanna Wood by first name because she and the former hospice administrator, Patricia Wood, share the same surname. They are unrelated.
Assisted specifically appeals the judgment entered in favor of Susanna on May 28, 2008; an award of prejudgment interest and costs; the trial court's denial of its motion for judgment notwithstanding the verdict (JNOV); and denial of its motion for new trial. Assisted alleges instructional error regarding the judgment for unpaid vacation time, challenges the sufficiency of the evidence supporting the judgment for unpaid overtime, and claims error in the award of fees. We reverse and remand for retrial on the issue of vacation pay and vacate the award of attorney's fees. The judgment is otherwise affirmed.
FACTS
In 2003, Susanna was employed as a social worker for the County of Ventura Medical Center. At the suggestion of her supervisor, she also began working per diem for Assisted's home care division, earning $65 per patient visit. She made an additional $500 per week.
The home care division serves patients who are coming out of the hospital, while hospice serves patients in the final stage of life. As a home health social worker, Susanna's responsibility was to assess patients recently released from the hospital for both physical safety and psychological functioning. She would arrange for medical transport to take them to their doctor appointments, and connect them with community resources.
Assisted Home Hospice and Affiliates
Elaine Donley is the owner and administrator of Assisted Home Hospice Foundation, Assisted Home Care, Inc., and Assisted Health Care Services. The latter provides private duty care for chronically ill patients. Assisted has seven locations. Home care is performed out of all seven, hospice is performed out of three and private duty is performed out of five. Assisted has approximately 1,000 employees.
Offer Letter
On June 12, 2003, the administrator for Assisted's hospice division, Patricia Wood, prepared an "offer letter" which both she and Susanna signed. The letter began "It is my pleasure to offer you the position of full time Medical Social Worker for Assisted Home Hospice, Oxnard location." (The Oxnard location is in Ventura.) The letter indicated that Susanna would be paid $56 per patient visit, would have health and life insurance benefits and could participate in the 401(k) plan. As for vacation, the letter provided Susanna with "2 weeks vacation accrued each week and available after completion of 90 days of continued employment" and "[h]olidays and personal days in accordance with policy." The letter indicated Susanna would be expected to work an 8-hour day, 5 days a week. It added that "[t]he position also requires the Social Worker [to] be available for patient family crisis 7 days a week 24 hours a day."
At trial, Assisted argued that the operative document was a second letter, also dated June 12, 2003, which provided Susanna with "A maximum of 2 weeks vacation." The second letter was unsigned. After her deposition, Donley searched Patricia's computer and located the unsigned offer letter.
Computer-generated records indicated that original letter was modified on June 20, 2003, to create the second letter.
Testimony of Susanna Wood
Assisted approached Susanna several times about joining the company full-time as a social worker in the hospice division. Susanna testified that, after an interdisciplinary group meeting in 2003, Patricia asked Susanna to come into her office to look at a contract. She handed her the offer letter and said, "'I've got a fabulous vacation package for you.'"
Susanna responded that she needed to make a phone call and discuss the offer with her "other half." She went into an empty office, closed the door and called her partner. They discussed the 24-hour on call requirement. Susanna considered it to be short-term, and that she would be compensated by her vacation package. She did not intend to use the vacation hours to take time off. Instead, she would eventually cash-out her vacation hours and use the funds as a "nest-egg" towards buying a house. Susanna returned to Patricia's office and accepted the offer. Patricia had two copies of the letter. They signed both copies. Susanna sent a letter of resignation to the Ventura County Medical Center, stating that another agency had "'made [me] an offer too good to refuse.'" At trial she testified that "the offer" was the vacation package.
Susanna worked for Assisted from June 2003 until September 2006 and was paid $56 per patient visit and $25 per hour for all other work. The visits were expected to take up to two hours and occurred in private homes and in assisted living and skilled nursing facilities.
Susanna testified that she would be out after 6:00 p.m. approximately two nights a week. These were scheduled visits, not on call visits. The situation usually arose when there was an emergency during the week, so she had to schedule her visits on the weekends or evenings, because the patients still had to be seen. Susanna saw scheduled patients three weekends out of the month, either Saturday or Sunday. She estimated that she worked 60-65 hours per week. She was not paid for on call visits made after hours. Only the on call nurses were paid to take calls after hours and on weekends.
Assisted gave Susanna a work cell phone with a $50 per month allotment. Although she was told not to use her personal cell phone, she gave that number to patients and their families because she had unlimited minutes and would not exceed her $50 allotment.
For two years, beginning in 2003, Assisted employed one other social worker, Jennifer Bowles. Susanna had twice the number of patients as Jennifer (the record does not specify the patient census for each social worker). In 2003 and 2004, Jennifer worked per diem for Assisted's hospice division. Susanna was on call every night and weekend.
Susanna's pay stubs reflected that she was accruing vacation at the customary rate of 1.5385 hours per week. She used her vacation time, sick leave and personal days as they accrued. Susanna was not alarmed that her vacation package was not reflected on her pay stubs because payroll was done outside the office, and her vacation package was a "separate deal." She knew that she could not take the time off, because the hospice was so busy. Her vacation was specifically to be "banked," until she left her employment with Assisted. Although Susanna was required to record the time and nature of her patient visits on a "route sheet," she was careful not to report overtime, because Patricia had told Susanna she did not want her to report any time over 40 hours per week.
During the last month of Susanna's employment in 2006, she was in a car accident and was out for six weeks due to surgery. In September, Susanna delivered a letter to Assisted requesting her "vacation compensation" and attached a copy of her offer letter. At that time, Patricia was no longer employed by Assisted. Elaine Donley responded to Susanna by letter, denying that she was entitled to vacation pay, stating that "someone made an innocent mistake" in the offer letter. In 2007, Susanna filed a complaint against Assisted for unpaid vacation, unpaid overtime and waiting time penalties, pursuant to Labor Code section 203.
Labor Code section 203 provides that an employer's willful failure to pay wages will cause the employer to incur penalties, measured as the employee's wages until paid or for a period of up to 30 days from the time they were due, whichever period is shorter.
Testimony of Assisted Employees
Traci Carter is the office manager for Assisted Home Hospice. She testified that it was common knowledge that Susanna would take all patient calls. At one point, Traci became upset that Susanna was seeing so many patients and taking so many calls after hours and on weekends. Susanna told Traci not to worry because "she was being compensated." Traci testified that Patricia micro-managed the office and could be intimidating. She would not allow any of the employees to show overtime on their time sheets.
Jennifer Bowles was the only other social worker employed by Assisted. She worked there from September 2005 to October 2006, but never worked weekends and was never on call. After Susanna left, Assisted told Jennifer and Susanna's replacement that they were both to be on call five nights a week and every other weekend, or rotate a month of weekends. Bowles refused and quit.
Testimony of Patricia Wood
Patricia worked for Assisted from 1998 through 2005. She was no longer employed by Assisted at the time of trial. Patricia testified that she has a bachelor's degree in business, and has attended UCLA and Irvine. She has taken classes in labor law, personnel management, employment law, Medicare regulations, contract law, and classes in how to negotiate a contract. She has to performed union negotiations, has certification for senior hospice administration and, for over 15 years, served as vice-president of human resources for Maxim Healthcare.
In 2000, Elaine Donley told Patricia that she wanted to grow the hospice division. Patricia was familiar with Medicare regulations, which required that a medical social worker must be on call 24 hours a day, 7 days a week. At its inception in 2000, the Ventura office had approximately 10 patients. By 2004, the patient census had increased to approximately 60. The hospice division was very successful and Donley was pleased with its profitability.
When Patricia presented an offer letter, it was her practice to prepare the document on her computer and save it on her personal drive. She would sit down with the prospective employee and review the letter point by point and discuss the issues and offer. If the parties were in agreement, they would sign the letter. The original was given to the employee and a copy provided to the human resources department.
Patricia testified that there was an error in the benefits section of the signed offer letter, providing Susanna with two weeks vacation accrued each week. Patricia had intended to state that vacation was accrued each week to a maximum of 80 hours a year, but she mistakenly omitted that phrase from the letter. She did not know why the signed letter was provided to Susanna, and the unsigned version was not. Patricia could not recall another offer letter in which an employee was required to be available 24 hours a day, 7 days a week. She denied telling employees that they were not allowed to work overtime.
Jury Instructions and Special Verdict
The jury was instructed with CACI 200 (preponderance of the evidence burden of proof) and CACI 201 (clear and convincing evidence burden of proof). Defense counsel requested that the court instruct the jury with CACI 330 (Affirmative Defense--Unilateral Mistake of Fact). The court refused to give this instruction.
The proposed CACI 330 reads: "[Assisted] claims that there was no contract because there was a typographical error regarding the amount of vacation that [Susanna] would accrue while employed by [Assisted]. To succeed, [Assisted] must prove all of the following: [¶] 1. That [Assisted] overlooked a typographical error in the agreement presented to [Susanna] for signature. [¶] 2. That [Susanna] knew [Assisted] was mistaken and used that mistake to take advantage of it. [¶] 3. That [Assisted's] mistake was not caused by its excessive carelessness; and [¶] 4. That [Assisted] would not have agreed to enter into the contract if [Assisted] had known about the mistake. [¶] If you decide that [Assisted] has proved all of the above, then no contract was created."
During discussions about the special verdict forms, Susanna's counsel argued that the form should specify when the alleged mistake occurred. It was her counsel's position that the mistake was unilateral, and that Patricia knew of it at the time of signing. Assisted's counsel objected, arguing that mistake was not limited to the time of contract formation, but could have occurred after the contract had been signed. The court overruled defense counsel's objection, ruling that the relevant time frame for purposes of unilateral mistake is the knowledge at the time of contract execution.
The trial court provided two special verdict forms, one for vacation pay and a second for overtime pay. During trial, the parties had stipulated that, if the jury returned a verdict in favor of Susanna on either special verdict, judgment would be taken against Assisted and in favor of Susanna for waiting time penalties under Labor Code section 203 in the amount of $6,000.
The jury returned Special Verdict One, as follows:
Special Verdict One
"We, the jury, answer the questions submitted to us as follows:
"You must apply the 'clear and convincing' standard of proof to questions 1 through 4.
"1. At the time the offer letter was signed by both parties, was Patricia Wood mistaken regarding the provision in the agreement regarding plaintiff Susanna J. Wood's vacation pay? [¶] ___ Yes X No
"Yes" was checked and crossed out.
"... If you answered no, go to question 5.
"You must apply the 'more likely than not' standard of proof to questions 5 and 6.
"5. Does defendant Assisted Home Care, Inc., owe plaintiff Susanna J. Wood vacation pay under the terms of the agreement? [¶] X Yes ___ No
"If your answer to 5 is yes, then answer question 6....
"6. What is the amount of unpaid vacation pay? [¶] $ 316,000[.]"
Special Verdict Two
"We, the jury, answer the questions submitted to us as follows:
"You must apply the 'more likely than not' standard of proof to these questions.
"1. Did plaintiff Susanna J. Wood perform work for defendant Assisted Home Care, Inc.? [¶] X Yes ___ No
"If your answer to question 1 is yes, then answer question 2....
"2. Was plaintiff Susanna J. Wood paid at a lower rate than the legal overtime compensation rate for any overtime hours that she worked for defendant Assisted Home Care, Inc.? [¶] X Yes ___ No
"If your answer to question 2 is yes, then answer question 3....
"3. What is the amount of wages owed? [¶] $ 19,750[.]"
In closing argument, Susanna's counsel reiterated that Assisted must prove, by clear and convincing evidence, that any mistake of fact had to have been apparent at the time of execution of the contract.
Judgment in Favor of Susanna
A judgment on jury verdict was entered on May 28, 2008. The court awarded Susanna the sum of $341,750, representing unpaid vacation, overtime and $6,000 in waiting time penalties. The court denied Assisted's motion for JNOV and motion for new trial. It granted Susanna's motion for prejudgment interest on the unpaid vacation award in the sum of $50,995.62; prejudgment interest on the unpaid overtime award in the sum of $3,186.49; and attorney's fees of $232,101.75.
DISCUSSION
Affirmative Defense of Unilateral Mistake of Fact
On appeal, Assisted argues that the signed offer letter was not susceptible of the interpretation that Susanna was entitled to two weeks of vacation for every week worked, thus we should conclude "'the case is over,'" and reverse the judgment. Assisted claims it is "common sense" that no worker is entitled to 104 weeks of vacation for each 52 weeks worked. It further asserts the trial court erred in refusing its proposed jury instruction, CACI 330: Affirmative Defense – Unilateral Mistake of Fact.
"A unilateral mistake of fact may be the basis of relief. [Citation.] However, such a unilateral mistake may not invalidate a contract without a showing that the other party to the contract was aware of the mistaken belief and unfairly utilized that mistaken belief in a manner enabling him to take advantage of the other party." (Meyer v. Benko (1976) 55 Cal.App.3d 937, 944.)
Consent to a contract must be free, mutual, and communicated by the parties. (Civ. Code, § 1566.) "Consent is not mutual, unless the parties all agree upon the same thing in the same sense...." (§ 1580.) Mutual assent is determined objectively. "The test is whether a reasonable person would, from the conduct of the parties, conclude that there was mutual agreement." (Hilleary v. Garvin (1987) 193 Cal.App.3d 322, 327.)
The record suggests that the trial court adopted portions of CACI 330 in drafting Special Verdict One regarding vacation pay. The court erred in two respects. It limited Patricia's knowledge of the mistake to the time the letter was signed. This foreclosed the jury from considering all the elements of the defense of mistake. The court also required a heightened burden of proof--clear and convincing evidence.
In order to be entitled to the defense of unilateral mistake of fact (CACI 330), Assisted was required to prove that 1) Patricia (Assisted) was mistaken about the vacation provision in the offer letter; 2) Susanna knew Assisted was mistaken and used that mistake to take advantage of Assisted; 3) Assisted's mistake was not caused by its excessive carelessness; and 4) Assisted would not have agreed to enter into the contract if it had known about the mistake. CACI 330 concludes, "If you decide that [Assisted] has proved all of the above, then no contract was created."
The first inquiry in Special Verdict One was whether, at the time the offer letter was signed, Patricia was mistaken regarding the provision relating to Susanna's vacation pay. As noted, the jury first marked, "Yes." It crossed out that response and marked "No." It was then directed to calculate damages. However, the jury's response that Patricia was not mistaken was contradicted by evidence that she created two offer letters. The first letter referred to "2 weeks vacation accrued each week." The second, unsigned, letter referred to "A maximum of 2 weeks vacation." It could be inferred that Patricia created a second letter with different vacation terms because she discovered a mistake in the first letter.
By limiting the jury's consideration to the time at which the letter was signed, the court precluded it from considering the remaining issues recited in CACI 330. Had the jury been properly instructed, it would have been required to determine whether Patricia had knowledge of a mistake. If it had answered, "Yes," then it would also have been required to determine whether Susanna knew Patricia was mistaken, and used that mistake to take advantage of Assisted. Depending upon its answers to the foregoing questions, the jury could have reasonably concluded that no contract was created, and Susanna was not entitled to two weeks of vacation pay per one week of work. The language of Special Verdict One deprived Assisted of a potentially meritorious defense.
Susanna characterizes the issue as whether there was mutual assent to the contract, measured by the objective belief of a reasonable person. She cites Donovan v. RRL Corp. (2001) 26 Cal.4th 261, in which a car dealer intended to sell a used Jaguar for $37,995. Due to a typographical error, the car was advertised for $25,995. The dealer refused to sell the car at the lower price, and the prospective buyer sued for breach of contract. The matter reached the Supreme Court, which held that a contract was created, but the dealer's unilateral mistake of fact was a basis for rescission, because enforcement of the contract would be unconscionable. (Id. at pp. 293-294.)
Susanna's citation to Donovan is somewhat problematic because the result would appear to favor Assisted. Donovan does not advance Susanna's position because it concerns the remedy of rescission, which seeks to cancel a contract that has already been formed. Under CACI 330, if the elements of mistake are met, no contract is created. Even were Susanna's argument to merit consideration, she has failed to cite any authority that the "clear and convincing" evidence burden of proof applies to the affirmative defense of unilateral mistake. Her argument regarding rescission is irrelevant.
Assisted was prejudiced by the trial court's refusal to instruct with CACI 330 and its drafting of Special Verdict One. Reversal of the award of vacation pay is warranted because it is reasonably probable that a result more favorable to Assisted would have been reached in the absence of the error. (Red Mountain, LLC v. Fallbrook Public Utility Dist. (2006) 143 Cal.App.4th 333, 348.) In light of the foregoing, it is unnecessary to consider Assisted's arguments regarding the denial of its motion for JNOV and motion for new trial as they relate to the issue of vacation pay.
Overtime Compensation
In answering Special Verdict Two, the jury determined that Assisted owed Susanna overtime wages of $19,750.
The evidence before the jury consisted of Susanna's testimony, "route" sheets she filled out for each patient visit, and payroll and telephone records. The route sheets included the date, location and patient visited, the duration of each visit and its purpose. Susanna submitted the route sheets to Assisted each week, who issued a payroll record reflecting the hours worked. The funds were deposited directly into Susanna's account.
Susanna testified that she did not report more than 40 hours on her route sheets, because Patricia instructed the employees not to report overtime. She listed only her time spent visiting patients, but did not report time spent preparing for patient visits, making 30-40 telephone calls each week, and the drafting of patient care notes. She testified that she spent an average of two hours of actual labor for each patient visit.
An employee claiming unpaid overtime wages has the burden of proving he or she performed overtime work and was not compensated at the proper rate. (Eicher v. Advanced Business Integrators, Inc. (2007) 151 Cal.App.4th 1363, 1377.) The employee is not required to show the precise extent of uncompensated work. (McLaughlin v. Ho Fat Seto (9th Cir. 1988) 850 F.2d 586, 589.) Where the employer's records are inaccurate or inadequate, and the employee cannot offer "convincing substitutes," the employee satisfies his or her burden by producing evidence sufficient to permit a just and reasonable inference regarding the extent of the overtime work. (Anderson v. Mt. Clemens Pottery Co. (1946) 328 U.S. 680, 687; Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1189; Eicher, at p. 1377.) The burden of production then shifts to the employer to present evidence of the exact amount of work performed or evidence showing the inference is unreasonable. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the amount is approximate. (Eicher, at p. 1377.)
Assisted had no records of the precise amount of work performed. Its payroll records were based on Susanna's route sheets. Susanna produced sufficient evidence to permit a just and reasonable inference of her overtime hours worked. Assisted presented no evidence in response. Susanna is entitled to her award of unpaid overtime wages.
We have examined the entire record and are satisfied that the trial court did not abuse its discretion in denying Assisted's motion for a new trial on the issue of overtime pay. (ABF Capital Corp. v. Berglass (2005) 130 Cal.App.4th 825, 832.) There was likewise no error in its denial of Assisted's JNOV motion because Susanna presented substantial uncontradicted evidence to support the jury's conclusion. (Sweatman v. Department of Veterans Affairs (2001) 25 Cal.4th 62, 68.)
DISPOSITION
We reverse and remand for retrial on the issue of vacation pay. The award of attorney's fees is vacated, and the trial court is directed to calculate reasonable attorney's fees on the overtime claim. In all other respects, the judgment is affirmed. The parties are to bear their own costs on appeal.
We concur: GILBERT, P.J., YEGAN, J.