Case Number: 19LBCP00074 Hearing Date: September 19, 2019 Dept: S27

TENTATIVE RULING

The motion to strike portions of Plaintiff-Respondent Adelso Herrera’s Notice of Claims at De Novo Trial of Wage Claim – (Appeal from Labor Commissioner Ruling) is DENIED.

Defendant-Appellants’ request to file an answer to the newly asserted claims is GRANTED.

DISCUSSION

Overview of Relevant Law

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436(a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436(b).) The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. (Id. § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id. § 437.)

Analysis

Defendant-Appellants move to strike the first cause of action for untimely and/or inaccurate paystubs, sixth cause of action for failure to provide payroll and personnel records, and seventh cause of action for unlawful business practices from Plaintiff-Respondent’s Notice of Claims at De Novo Trial of Wage Claim – (Appeal from Labor Commissioner Ruling).

In Murphy v. Kenneth Cole Prods., Inc. (2007) 40 Cal.4th 1094, the California Supreme Court found that trial courts have discretion to consider additional related wage claims in a de novo proceeding. (Murphy, supra, 40 Cal.4th at 1116-20.) In so holding, the California Supreme Court reasoned that prior court decisions finding that the section 98.2 proceeding is a de novo trial of the wage dispute such that a trial court is a court of original jurisdiction with respect to the disputes with full power to hear and determine the dispute as if it had never been before the labor commissioner and that an employee need not administratively exhaust his claim before filing a civil action suggest that “a trial court’s power to hear a wage dispute extends to the consideration of related issues not reached by the Labor Commissioner.” (Id. at 1116-17.) The Murphy Court found that “[p]ermitting trial courts to exercise jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner, is consistent with trial courts’ broad discretion in adjudicating claims at trial.” (Id. at 1117.)

The Murphy Court further found that preventing a trial court from considering additional wage claims undermines the legislative policy of encouraging employees to use the Berman process. This is because certain claims, such as a claim for itemized pay statements under Labor Code section 226 are not processed by the Labor Commissioner and thus could not be raised in the Berman process, meaning the employee would need to (1) forego the Berman process in favor of civil litigation, (2) file a separate civil complaint for the claim while bringing a wage claim before the Labor Commissioner for other claims, or (3) forego the right to the claim. (Id. at 1118-19.)

The Murphy Court also found that “allowing trial courts to exercise their discretion in deciding whether to permit employees to raise additional related wage claims is consistent with the Legislature’s intent ‘to discourage frivolous and unmeritorious appeals from the commissioner’s awards.’” (Id. at 1119 (quoting Smith v. Rae-Venter Law Group (2002) 29 Cal.4th 345, 361 (superseded by statute on other grounds)).) “A party who appeals a Labor Commissioner award does so at tis own peril.” (Id.) “Just as an employer is not bound by the defenses it raised in the Berman process, but rather is entitled to abandon, change, or add defenses not brought before the Labor Commissioner [citation], so may an employee raise additional wage-related claims in the de novo trial.” (Id.)

The Court thus finds that, under Murphy, it has discretion to permit Plaintiff-Respondent to assert additional related wage claims in this action.

Defendant-Appellants argue that Murphy does not apply because Murphy’s primary rationale for permitting a trial court to exercise discretion in allowing new wage claims was based on the claimant being unrepresented in the Labor Commissioner hearing and not having the benefit of counsel to assist in bringing the Labor Commissioner complaint. The Court is unpersuaded by this argument. While the Murphy Court discussed the likelihood of an employee’s attorneys uncovering additional, related facts and claims not thoroughly examined at the administrative level when the claimant was unrepresented, this was discussed with respect to the court’s final point regarding discouragement of frivolous and unmeritorious appeals from the commissioner’s awards. As discussed, the Murphy Court made several findings with respect to finding that the trial court had discretion to consider additional wage claims in a de novo appeal. The fact that the claimant in Murphy had been unrepresented during the Berman hearing was thus not the primary rationale for allowing such discretion. The Court further notes that Plaintiff-Respondent obtained different counsel for this de novo appeal. That new counsel has uncovered additional claims was a risk Defendant-Appellants undertook in appealing the Labor Commissioner’s order. Therefore, Murphy applies in this case and the Court has discretion to permit Plaintiff-Respondent to assert additional related wage claims in this action.

With respect to whether the trial court should permit an employee to raise additional claims in the de novo proceeding, the Murphy Court set forth various considerations for the trial court to consider, such as “whether the claims are sufficiently related, whether the interests of judicial economy will be served, and whether the employer will be prejudiced.” (Murphy, supra, 40 Cal.4th at 1118.)

Here, Plaintiff-Respondent is asserting additional claims for untimely and/or inaccurate paystubs pursuant to Labor Code section 226, a failure to provide payroll and personnel records under Labor Code section 226, and unfair business practices under Business and Professions Code section 17200. With respect to the Labor Code section 226 claims, the Court notes that the Murphy Court had explicitly noted that these claims could not have been raised in the Berman process. However, given that the plaintiff in Murphy submitted a declaration from the Senior Deputy Labor Commissioner from the San Francisco DLSE District Office specifically stating that the Labor Commissioner does not process such claims and that an individual pursuing such claims would have to be asserted in a separate civil action, it appears that the Court cannot find that these claims are explicitly permissible under Murphy, given Plaintiff-Respondent has submitted no such evidence. Nonetheless, the Court finds that Plaintiff-Respondent’s Labor Code section 226 claims are sufficiently related to the wage claims asserted with the Labor Commissioner to the extent that the claims arise from Plaintiff-Respondent’s employment with Defendant-Appellants in the same position and for the same period of time. Despite Defendant-Appellants’ assertion, the Court finds they will not be prejudiced by the allowance of these claims, given that Defendant-Appellants are not bound by the defenses raised in the Berman process and are entitled to abandon, change, or add defenses not brought before the Labor Commissioner. (See Murphy, supra, 40 Cal.4th at 1119 (citing Jones v. Basich (1986) 176 Cal.App.3d 513, 518-19).) The Court will thus permit the assertion of the Labor Code section 226 claims.

As for the unfair business practices claim, Defendant-Appellants argue that Murphy does not authorize the addition of such a claim because it is not a wage claim. While the unfair business practices claim is not per se a wage claim, the Court finds that, to the extent the claim is premised on and thus derivative of Plaintiff-Respondent’s wage claims, it is sufficiently related. The Court will thus allow the unfair business practices claim to be brought.

Accordingly, the motion to strike is denied.

Defendant-Appellants request an opportunity to file an answer to any newly asserted claims that are allowed to proceed in the event this motion is denied. Defendant-Appellants’ request is granted.

Conclusion

Based on the foregoing, Defendant-Appellants’ motion to strike portions of Plaintiff-Respondent’s Notice of Claims at De Novo Trial of Wage Claim – (Appeal from Labor Commissioner Ruling)is DENIED.

Defendant-Appellants’ request to file an answer to the newly asserted claims is GRANTED. Defendant-Appellants are to file any answer by October 11, 2019.