Filed 9/9/19 Soto v. Superior Court CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

DAVID SOTO,

Plaintiff and Petitioner,

v.

THE SUPERIOR COURT OF SAN BERNARDINO COUNTY,

Defendant and Respondent;

ENVISION FOODS, LLC et al.,

Real Parties in Interest.

E071920

(Super.Ct.No. CIVDS1414104)

OPINION

ORIGINAL PROCEEDING; petition for writ of mandate. David Cohn, Judge. Petition granted.

Matern Law Group, Matthew J. Matern, Mikael Stahle, Irina Kirnosova, and Debra J. Tauger for Plaintiff and Petitioner.

Raines Feldman, Lauren J. Katunich, Robert M. Shore, and David H. Jones for Real Parties in Interest.

Petitioner David Soto filed a class action complaint against his former employers, asserting violations of Labor Code laws governing overtime pay, rest breaks, meal breaks, and minimum wage, as well as a claim alleging those violations constitute unlawful business practices under California’s Unfair Competition Law (UCL). (Bus. & Prof. Code, § 17200 et seq.) After certifying the case as a class action, the trial court ruled the statute of limitations for the UCL claim was three years because the claim was predicated on Labor Code violations.

Soto filed this petition for writ of mandate, arguing the statute of limitations for any UCL claim is always four years, regardless of the limitations period of the predicate statute. We agree. Under established precedent, all UCL claims are subject to a four-year statute of limitations, even when the limitations period for the predicate violation is shorter. (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 179 (Cortez); Bus. & Prof. Code, § 17208.) We will therefore grant Soto’s petition and direct the court to vacate its order and issue a new order declaring the statute of limitations for the UCL claim is four years.

I

FACTS

On June 25, 2015, Soto filed a complaint in Riverside County Superior Court against real parties in interest Envision Foods, LLC (dba Jack in the Box); JIB Holdings I, LLC; and Desert Jack, LLC (collectively, defendants) on behalf of himself and all of defendants’ similarly-situated current and former employees. The complaint asserts nine causes of action based on alleged Labor Code violations—failure to (1) provide required meal periods (§ 226.7); (2) provide required rest periods (§ 226.7); (3) pay overtime wages (§ 510); (4) pay minimum wages (§ 1194); (5) pay all timely wages (§ 204); (6) pay all wages owed to discharged or resigned employees (§§ 201, 202); (7) maintain required records (§ 226); (8) furnish accurate itemized statements (§ 226); and (9) indemnify employees for necessary expenditures incurred in the discharge of duties (§ 2802). The complaint also asserts a tenth cause of action under the UCL, alleging each of the nine Labor Code violations “constitutes an unfair and unlawful business practice under [the UCL].” The complaint alleges the class period begins “four years prior to the filing of this action.”

Soto’s lawsuit was transferred to San Bernardino County Superior Court (respondent) and consolidated with an earlier related lawsuit against JIB Holding, LLC (the Robles lawsuit). Soto subsequently moved to certify the case as a class action and sought certification of eight subclasses— (1) the “Meal Period Subclass,” made up of those who “worked one or more shifts longer than five hours” during the class period; (2) the “Second Meal Period Subclass,” those who “worked one or more shifts longer than ten hours”; (3) the “Third Meal Period Subclass,” those who “worked one or more ‘graveyard’ shifts, working at some point during the hours of 10 p.m. to 6 a.m., and working between 1 a.m. to 4 a.m.”; (4) the “Rest Break Subclass,” those who “worked one or more shifts longer than three and one-half hours”; (5) the “Off-the-Clock Subclass A,” those who were “required to perform work before clocking in and/or after clocking out and/or were not paid for their time traveling from one of Defendants’ locations to another”; (6) the “Off-the-Clock Subclass B,” those who “worked one or more shifts of longer than 8 hours and/or worked one or more weeks of longer than 40 hours, and were required to perform work before clocking in and/or after clocking out and/or were not paid for their time traveling from one of Defendants’ locations to another”; (7) the “Reimbursement Subclass,” those who were not “reimbursed for the costs of required uniforms or mileage”; and (8) the “Failure to Pay Timely Wages Subclass,” those who were “not paid their final check within 72 hours or who were terminated and not paid their final check on their last date of employment.”

In his motion, Soto argued that common issues of law and fact predominated each subclass and that the alleged misconduct that formed the basis of each subclass was part of a “common practice” or “policy” on defendants’ part. Soto also argued that the UCL claim was “derivative of [his] claims for meal period, rest break, shaved time, and off-the-clock subclasses,” and that—if the court found the subclasses amenable to class treatment—it should also find “common issues necessarily predominate with respect to [the] derivative [UCL claim].” At the hearing on class certification, Soto reiterated the argument that the UCL claim is derivative of, and therefore a part of, the subclasses.

On June 4, 2018, the trial court (Judge Donna Garza) issued an order certifying the case as a class action—with the class period dating back four years from the filing of the complaint—and granting Soto’s request to certify the first six of the eight proposed subclasses. Judge Garza denied certification of the Reimbursement and Failure to Pay Timely Wages subclasses. After issuing this order, Judge Garza transferred the case to Judge David Cohn for all purposes.

In August 2018, defendants filed a motion to clarify the class certification order, arguing the subclasses were unclear and improper and, as relevant here, the class period should date back three years, not four, because Soto “did not move to certify a subclass under Business & Professions Code § 17200.” Soto responded that he had sought and obtained certification as to all causes of action. He argued it was apparent the trial court had certified the UCL claim because the court had used the UCL’s statute of limitations when setting the class start date at four years before the filing of the complaint.

At the hearing on defendants’ motion for clarification, the trial court (Judge David Cohn) ordered supplemental briefing on the statute of limitations issue, but otherwise denied defendants’ motion, refusing to revisit Judge Garza’s class certification order. Soto argued he was not required to certify a separate UCL subclass in order for the UCL claim to be part of the class action, because the subclasses were based on alleged unlawful conduct, not particular causes of action. He argued the conduct forming the basis of the subclasses violated both the Labor Code and the UCL. The court indicated that it agreed with Soto on this issue. “I don’t think [the UCL claim] needs to be certified as a subclass. The class is based upon the alleged conduct of the defendant, which may have violated more than one statute . . . Rest breaks, you know, did you get them during this time period? Which statute that violates doesn’t define the class, except insofar as it may define the limitations period.” The court, did, however, find “logically appealing” defendants’ argument that the predicate claim cannot itself be time-barred in order for the associated UCL claim to be timely.

After the parties filed supplemental briefs, the court held a hearing on the statute of limitations issue. The court indicated it had changed its mind on certification, explaining it thought the three-year statute of limitations for section 226.7 violations applies because Soto had not certified a separate UCL subclass. In reaching this conclusion, the court relied on Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244 (Kirby), where the California Supreme Court held that a section 226.7 claim for failure to provide meal and rest breaks is not a claim “brought for the nonpayment of wages” under the Labor Code’s two-way attorney fee-shifting provision (§ 218.5). The court stated its tentative ruling was that “the three-year statute [of limitations] applies” to the UCL claim. “And the reason is simply the Supreme Court decision in the Kirby case where the Court held that nonpayment of wages is not the gravamen of a cause of action under Labor Code section 226.7. That is the remedy for the violation of that statute, but the gravamen of the cause of action is the failure to provide the meal and rest breaks . . . This is not a case for the nonpayment of the premium wages, even though that’s the remedy for the violation of the failure to provide the meal and rest breaks. There is no UCL subclass. So I think the shorter statute of limitations of three years governs.” (Italics added.) Counsel for Soto argued that the conduct, not the underlying causes of action, defines the subclasses, and thus the meal and rest break subclasses encompass the Labor Code and UCL claims.

On November 7, 2018, the court issued its final ruling, concluding “the 3 year statute of limitations for claims under the [B]usiness and [P]rofessions [C]ode section 17200 applies.” Soto timely filed a petition for writ of mandate, arguing the court’s ruling is incorrect and the four-year statute of limitations in Business and Professions Code section 17208 applies to the UCL claim. Defendants filed a preliminary opposition and later elected to stand on that brief rather than file a return.

II

ANALYSIS

The determination of the applicable statute of limitations “is a purely legal issue, which we review de novo.” (People v. Overstock.com, Inc. (2017) 12 Cal.App.5th 1064, 1074, citing Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1191.)

By imposing liability for engaging in “any unlawful, unfair or fraudulent business act” (Bus. & Prof. Code, § 17200), “[t]he UCL sets out three different kinds of business acts or practices that may constitute unfair competition: the unlawful, the unfair, and the fraudulent.” (Rose v. Bank of America, N.A. (2013) 57 Cal.4th 390, 394 (Rose).) Violations of California and federal statutes can serve as the “predicate” for a UCL cause of action. (Rose, at p. 394.) As such, “a UCL action does not ‘enforce’ the law on which a claim of unlawful business practice is based,” rather, “‘section 17200 ‘borrows’ violations of other laws and treats them as unlawful practices’ that the [UCL] makes independently actionable.” (Id. at p. 396.) “‘[A]s we have long recognized, it is in enacting the UCL itself, and not by virtue of particular predicate statutes, that the Legislature has conferred upon private plaintiffs ‘specific power’ [citation] to prosecute unfair competition claims.’” (Ibid.)

Business and Professions Code section 17208 establishes a four-year statute of limitations for “any” UCL claim. (Bus. & Prof. Code, § 17208.) Because the UCL furnishes an “independent” cause of action (Rose, supra, 57 Cal.4th at p. 396), that limitations period “applies even if the borrowed statute has a shorter limitations statute.” (Blanks v. Seyfarth Shaw LLP (2009) 171 Cal.App.4th 336, 364 (Blanks), italics added.)

In Cortez, our Supreme Court rejected the defendant’s argument that UCL claims predicated on violations of statutes with shorter limitations periods are governed by those shorter limitations periods. (Cortez, supra, 23 Cal.4th at p. 179.) “Section 17208 is clear. It provides that ‘[a]ny action to enforce any cause of action under this chapter shall be commenced within four years after the cause of action accrued.’ (Italics added.) . . . [T]he language of section 17208 admits of no exceptions. Any action on any UCL cause of action is subject to the four-year period of limitations created by that section.” (Id. at pp. 178-179 [thus “an action to recover wages that might be barred if brought pursuant to Labor Code section 1194 still may be pursued as a UCL action seeking restitution pursuant to section 17203 if the failure to pay constitutes a business practice”].) “[T]he general rule,” then “is that a UCL cause of action borrows the substantive portion of the borrowed statute to prove the ‘unlawful’ prong of that statute, but not the limitations procedural part of the borrowed statute.” (Blanks, supra, 171 Cal.App.4th at p. 364.)

Applying this rule here, we conclude the statute of limitations for the UCL claim is four years. In other words, although the UCL claim is predicated on various Labor Code violations, such as failure to provide meal and rest breaks, failure to pay overtime wages, and failure to pay minimum wage, those predicate statutes do not supply the statute of limitations, Business and Professions Code section 17208 does.

The trial court relied on Kirby to conclude a three-year statute of limitations applies, but that case does not provide a reason to stray from the clear outcome mandated by the UCL and Cortez. Kirby involved the interpretation of section 218.5, “a two-way fee-shifting provision” that “requires the awarding of attorney’s fees to the prevailing party ‘[i]n any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions.’” (Kirby, supra, 53 Cal.4th at p. 1248.) The question before the Court was whether a section 226.7 claim for failure to provide meal and rest breaks was an “action brought for the nonpayment of wages,” such that the prevailing employer was entitled to attorney’s fees under section 218.5. (Kirby, at p. 1248, italics added.) Recognizing that the remedy under section 226.7 for failure to provide meal and rest breaks is a wage (i.e., “additional hour of pay”), the Court determined the phrase “nonpayment of wages” in section 218.5 refers to the employer’s alleged violation not the employee’s desired remedy, as it would be absurd to bring an action to obtain the nonpayment of wages. (Kirby, at p. 1256.) In other words, the word “for” in section 218.5’s phrase “action brought for” means “to obtain,” not “on account of.” Thus, the Court concluded that—for purposes of the availability of attorney’s fees—“a section 226.7 claim is not an action brought for the nonpayment of wages; it is an action brought for nonprovision of meal or rest breaks.” (Kirby, at pp. 1256-1257.) While the UCL claim in this case is predicated, in part, on defendants’ alleged nonprovision of meal or rest breaks in violation of section 226.7, Kirby’s holding does not speak to the statute of limitations issue we face here. And, even if it did, its holding would not affect our analysis because the UCL furnishes an independent cause of action with its own statute of limitations. (Cortez, supra, 23 Cal.4th at pp. 178-179.)

As we interpret the transcript of the hearing, the trial court believed Kirby was dispositive because Judge Garza had not certified a separate “UCL” subclass. Defendants take this idea a step further, arguing the UCL claim is not part of the case because there is no separate UCL subclass. Not so. Soto sought certification of the UCL claim, arguing the claim was derivative of Labor Code violations encompassed in each subclass. Judge Garza granted Soto’s certification motion almost in its entirety; she refused to certify two of the six proposed subclasses. In order for the UCL claim to be out of the case, Soto would have to voluntarily dismiss it, or defendants would have to successfully seek its dismissal. Neither has happened.

The reason there is no separate subclass with “UCL” in the title is because Soto sought, and Judge Garza granted, certification based on defendants’ alleged misconduct, not the individual causes of action asserted in the complaint. For example, the subclass composed of employees and former employees who “worked one or more shifts longer than ten hours” during the class period is called the “Second Meal Period Subclass,” not the “Labor Code section 226.7 Subclass” or “Labor Code section 226.7 and UCL Subclass.” This manner of defining subclasses is common and appropriate because class certification is based on the ascertainability of the class and the community of interest among the members. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.) Class members share a community of interest if, among other things, their claims against the defendant share common questions of law and fact. (Ibid.) Thus, a class can encompass multiple statutory violations based on a common form of misconduct or theory of liability (e.g., failure to pay overtime). (See, e.g., Faulkinbury v. Boyd & Associates, Inc. (2013) 216 Cal.App.4th 220, 225, 241 [the three subclasses (“Meal Break Class,” “Rest Break Class,” and “Overtime Class”) encompassed violations of the Labor Code and the UCL].) The trial court correctly observed this fact during the hearing on defendants’ motion for clarification, stating the subclasses are “based upon the alleged conduct of the defendant[s], which may have violated more than one statute.”

Defendants’ reliance on Safeway, Inc. v. Superior Court (2015) 238 Cal.App.4th 1138 (Safeway) is unavailing. They misread the case as standing for the proposition that a UCL claim must be separately certified as its own subclass. In fact, Safeway held that a UCL claim based on the defendants’ alleged failure to provide meal breaks was amenable to class treatment because the plaintiffs’ theory of liability was based on a system-wide failure to provide meal breaks, which did not “require individual issues sufficient to preclude class treatment.” (Safeway, at p. 1161, italics added.) The trial court had certified a general “meal break” subclass and, as the appellate court noted, in so doing “did not expressly refer to [plaintiffs specific] claims under the Labor Code, the UCL, or PAGA.” (Id. at p. 1145, fn. 1.) Safeway does not establish a requirement that a UCL claim must be separately certified as its own subclass; the opinion simply concludes the plaintiffs’ pled their UCL claim in such a way as to be amenable to class treatment. If anything, Safeway hurts, not helps defendants’ argument. Like the plaintiffs did there, Soto sought certification on a theory that defendants’ violations of the Labor Code were a system-wide practice or policy.

Finally, defendants argue the “additional hour of pay” remedy for the nonprovision of meal or rest breaks in violation of section 226.7 constitutes damages, not restitution, and therefore is not recoverable under the UCL, making the three-year statute of limitations correct. (See Clark v. Superior Court (2010) 50 Cal.4th 605, 610 [UCL’s remedies are limited to restitution and injunctive relief, damages are not recoverable].) We are unpersuaded. First of all, defendants’ premise is flawed. The California Supreme Court has held that the additional hour of pay under section 226.7 is a “wage,” the employee’s right to which vests upon violation, making it a proper subject of restitution under the UCL. (Safeway, supra, 238 Cal.App.4th at pp. 1155-1156 [“a UCL claim may be predicated on a practice of not paying premium wages for missed, shortened, or delayed meal breaks”], citing Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1108 [additional hour of pay constitutes a wage] & Cortez, supra, 23 Cal.4th at pp. 168, 178 [“unlawfully withheld wages are property of the employee within the contemplation of the UCL” because “[o]nce earned, [they] became property to which the employees were entitled”].) More importantly, however, defendants argument deals with the merits of the UCL claim, which is not before us. The only question we must answer in this writ proceeding is which statute of limitations applies. Cortez and Business and Professions Code section 17208 answer that question.

III

DISPOSITION

Let a peremptory writ of mandate issue directing the respondent superior court to (1) vacate its order ruling the UCL claim (the tenth cause of action) is governed by the three-year statute of limitations in Code of Civil Procedure section 338 and (2) issue a new order ruling the claim is governed by the four-year statute of limitations set forth in Business and Professions Code section 17208. The stay we ordered on May 1, 2019 shall expire when our remittitur issues.

Petitioner shall prepare the writ of mandate and have it issued, copies served, and the original filed with the clerk of this court, together with proofs of service on all parties. Defendants (real parties in interest) shall bear Petitioner’s costs.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

SLOUGH

J.

We concur:

McKINSTER

Acting P. J.

CODRINGTON

J.