Case Name: Esmeralda Andrade v. Mish-ra, Inc.
Case No.: 2017-CV-319496

Motion to Strike the Cross-Complaint by Cross-Defendant Esmeralda Andrade

Factual and Procedural Background

This is an employment case. Cross-Defendant Esmeralda Andrade (“Andrade”) is a former employee and office manager of cross-complainant Mish-ra, Inc., dba Tri-Core Panels (“Mish-ra”). (Cross-Complaint at ¶ 2.) In the underlying action, Andrade sued Mish-ra before the California Labor Commissioner. (Id. at ¶ 3.) On September 21, 2017, the Labor Commissioner Hearing Officer rendered an Order, Decision or Award of the Labor Commissioner. (Id. at ¶ 4.) On November 22, 2017, Mish-ra filed and served its Notice of Appeal and Notice of Undertaking with Superior Court for Labor Commissioner Case No. 12-99669 CO. (Id. at ¶ 5.)

On December 19, 2017, Mish-ra filed the operative Cross-Complaint alleging causes of action for: (1) breach of contract; (2) negligence; (3) imposition of constructive trust; (4) common counts; (5) conversion; (6) theft and misappropriation; and (7) fraud. In summary, the Cross-Complaint alleges Andrade failed to repay payroll advances and loans provided to her by Mish-ra. (Cross-Complaint at ¶¶ 6, 10, 14, 17, 21, 22, 26, 29, 32.) In addition, Andrade allegedly fabricated her electronic timekeeping wage records, misappropriated checks from Mish-ra’s checkbook, and converted the funds from those checks for her own use and unjust benefit. (Id. at ¶¶ 7, 8, 10, 14, 17, 26, 29, 32.)

Motion to Strike the Cross-Complaint

Currently before the Court is cross-defendant Andrade’s motion to strike the Cross-Complaint as it is not filed in conformity with the laws of the State of California. Mish-ra filed written opposition. Andrade filed reply papers. No trial date has been set.

Meet and Confer Requirement

As a preliminary matter, the Court notes that Andrade did not meet and confer before filing the motion to strike.

Before filing a motion to strike, the moving party shall “meet and confer in person or by telephone” with the opposing party to determine “whether an agreement can be reached that resolves the objections to be raised in the motion to strike.” (Code Civ. Proc., § 435.5, subd. (a).) This conference should occur at least five days before the deadline to file the motion to strike. (Code Civ. Proc., § 435.5, subd. (a)(2).)

When filing the motion to strike, the moving party must include a declaration stating either “the means by which the moving party met and conferred with [the other party] and that the parties did not reach an agreement resolving the objections raised by the motion to strike” or [the other party] “failed to respond to the meet and confer request of the moving party or otherwise failed to meet and confer in good faith.” (Code Civ. Proc., § 435.5, subd. (a)(3).) “A determination by the court that the meet and confer process was insufficient is not grounds to grant or deny the motion to strike. (Code Civ. Proc., § 435.5, subd. (a)(4).)

Cross-Defendant Andrade failed to file a meet and confer declaration as required by Code of Civil Procedure section 435.5. Nor is there any indication in the moving papers that Andrade engaged in any meet and confer efforts before filing the motion to strike. In furtherance of judicial economy, the Court will overlook Andrade’s failure to comply with Code of Civil Procedure section 435.5 in this instance. The Court hereby admonishes cross-defendant Andrade and her counsel to comply with the Code of Civil Procedure with respect to future filings.

Legal Standard

A court may strike out any irrelevant, false, or improper matter asserted in a pleading. (Code Civ. Proc., § 436, subd. (a).) A court may also strike out all or any part of a pleading not filed in conformity with the laws of the State of California. (Code Civ. Proc., § 436, subd. (b).) The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437, subd. (a).)

Overview of Berman Hearing Process

The California Supreme Court has provided an extensive overview of the special statutory scheme to pursue a wage claim before the Commissioner, commonly referred to as the Berman hearing procedure (Labor Code section 98 et seq.). (See e.g., Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1114 (Murphy) and Post v. Palo/Haklar & Associates (2000) 23 Cal.4th 942, 946–948 (Post).) “An employee pursuing a wage-related claim ‘ “has two principal options. The employee may seek judicial relief by filing an ordinary civil action against the employer for breach of contract and/or for the wages prescribed by statute. [Citation.] Or the employee may seek administrative relief by filing a wage claim with the [commissioner] pursuant to a special statutory scheme codified in sections 98 to 98.8….” ’ [Citations.]” (Murphy, supra, 40 Cal.4th at p. 1115.)

The Labor Commissioner “ ‘has broad authority to investigate employee complaints and to conduct hearings in actions “to recover wages, penalties, and other demands for compensation ….” ’ [Citation.]” (Murphy, supra, 40 Cal.4th at p. 1115.) “Within 30 days of the filing of a complaint, the commissioner must notify parties as to whether he or she will take further action. [Citation.] The statute provides for three alternatives: the commissioner may either accept the matter and conduct an administrative hearing [citation], prosecute a civil action for the collection of wages and other money payable to employees arising out of an employment relationship [citation], or take no further action on the complaint. [Citation.]” (Post, supra, 23 Cal.4th at p. 946.) If the commissioner decides to accept the matter and conduct an administrative hearing, he or she must hold the hearing within 90 days. (Ibid.)

“Labor Code section 98, subdivision (a), expressly declares the legislative intent that hearings be conducted ‘in an informal setting preserving the right of the parties.’ The Berman hearing procedure is designed to provide a speedy, informal, and affordable method of resolving wage claims. [Citation.] … ‘[T]he purpose of the Berman hearing procedure is to avoid recourse to costly and time-consuming judicial proceedings in all but the most complex of wage claims.’ [Citation.] [¶] … [¶] Within 15 days after the Berman hearing is concluded, the commissioner must file a copy of his or her order, decision, or award and serve notice thereof on the parties. [Citation.] The order, decision, or award must include a summary of the hearing and the reasons for the decision, and must advise the parties of their right to appeal. [Citation.] Within 10 days after service of notice, the parties may seek review by filing an appeal to the municipal or superior court ‘in accordance with the appropriate rules of jurisdiction, where the appeal shall be heard de novo.’ [Citation.] The timely filing of a notice of appeal forestalls the commissioner’s decision, terminates his or her jurisdiction, and vests jurisdiction to conduct a hearing de novo in the appropriate court. [Citation.]” (Post, supra, 23 Cal.4th at p. 947.)

“Although denoted an ‘appeal,’ unlike a conventional appeal in a civil action, hearing under the Labor Code is de novo. [Citation.] ‘A hearing de novo [under Labor Code section 98.2] literally means a new hearing, that is, a new trial.’ [Citation.] The decision of the commissioner is ‘entitled to no weight whatsoever, and the proceedings are truly “a trial anew in the fullest sense.” ’ [Citation.]” (Post, supra, 23 Cal.4th at pp. 947–948.) “The trial court ‘hears the matter, not as an appellate court, but as a court of original jurisdiction, with full power to hear and determine it as if it had never been before the labor commissioner.’ ” (Murphy, supra, 40 Cal.4th at pp. 1116–17.) Consequently, “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 p. 1117.) An employee may raise additional wage-related claims in the de novo trial 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.” (Id. at p. 1119.) “Permitting 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 p. 1117.)

Notably, “while section 98.2 vests the superior court with jurisdiction to hear the appeal de novo, ‘no procedures for exercising that jurisdiction are specified.’ ” (Murphy, supra, 40 Cal.4th at p. 1118.) Therefore, many procedural issues—such as whether to allow discovery or the filing of additional claims—are properly left to the discretion of the trial court, an approach consistent with the power of the courts to adopt any suitable method of practice, both in ordinary actions and special proceedings, if the procedure is not specified by statute or by rules adopted by the Judicial Council. (See ibid.; see also Sales Dimensions v. Super. Ct. (1979) 90 Cal.App.3d 757, 759 and 763-64 (Sales).) This is because “[t]rial courts are equipped to weigh the various considerations, e.g., 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 p. 1118.) Furthermore, “where a trial de novo is authorized in the superior court, proceedings are subject to the rules usually applicable to superior court actions.” (Sales, supra, at p. 761.)

Analysis

Andrade makes the following arguments in support of her motion to strike the Cross-Complaint: (1) the Cross-Complaint was improperly filed without leave of court; (2) the appeal before the superior court prohibits the filing and pursuit of a cross-complaint; (3) Andrade’s statutory right of representation is limited to proceedings under Labor Code section 98.2; (4) the Cross-Complaint could nullify Labor Code section 98.2’s one-way fee shifting provision; and (5) the Cross-Complaint should be stricken as the underlying de novo appeal is in default.

Cross-Complaint Filed Without Leave of Court

Andrade argues the Cross-Complaint should be stricken as Mish-ra filed the pleading without first seeking leave of court. (See Loney v. Super. Ct. (1984) 160 Cal.App.3d 719, 724 [appellate court struck petitioners’ cross-complaint because leave of court was not obtained prior to its filing].)

The timing for filing a cross-complaint is set forth in Code of Civil Procedure section 428.50. Under subdivision (a), “[a] party shall file a cross-complaint against any of the parties who filed the complaint or cross-complaint against him or her before or at the same time as the answer to the complaint or cross-complaint.” (Code Civ. Proc., § 428.50, subd. (a).) “Any other cross-complaint may be filed at any time before the court has set a date for trial.” (Code Civ. Proc., § 428.50, subd. (b).) “A party shall obtain leave of court to file any cross-complaint except one filed within the time specified in subdivision (a) or (b). Leave may be granted in the interest of justice at any time during the course of the action.” (Code Civ. Proc., § 428.50, subd. (c).)

Andrade appears to be relying on subdivision (a) as she argues any cross-complaint must be filed concurrently with Mish-ra’s answer to the informal administrative complaint. Andrade served Mish-ra with the Notice of Hearing and Complaint for the administrative proceedings on August 14, 2017. Mish-ra thus had 10 days to file its answer to the administrative complaint. (See Lab. Code, § 98, subd. (c).) Since the Cross-Complaint was not filed until December 19, 2017, Andrade contends any such pleading is unauthorized unless given leave by the court. However, as the opposition points out, this argument completely ignores subdivision (b) which allows for the filing of a cross-complaint any time before the start of trial. (See OPP at p. 4.) As stated above, no trial date has been set and thus Mish-ra may file its Cross-Complaint without leave of court.

The Appeal to the Superior Court Does Not Prohibit the Filing of a Cross-Complaint

Andrade also argues that the special nature of the de novo appeal to the superior court prohibits the filing and pursuit of a cross-complaint. Andrade however does not cite any legal authority which specifically restricts an employer’s ability to file a cross-complaint in conjunction with a trial de novo in the superior court. In fact, as the specific procedure for the filing of a cross-complaint in a de novo trial is not specified by statute or by rules adopted by the Judicial Council, whether a cross-complaint may be filed is properly left to the discretion of the court. (See Murphy, supra, 40 Cal.4th at p. 1118; see also Sales, supra, 90 Cal.App.3d at pp. 759 and 763-64.) In addition, “[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.” (Murphy, supra, at p. 1117.) Finally, the interests of judicial economy are better served by litigating all of the wage related claims together rather than separately. This too is in line with the legislative purpose under Labor Code section 98 of providing an expeditious resolution of wage claims. (Id. at p. 1115; Lolley v. Campbell (2002) 28 Cal.4th 367, 376.) This argument therefore does not provide a basis for striking the Cross-Complaint, and the Court finds that the claims in the cross-complaint are sufficiently related to Andrade’s wage claims presented to the Labor Commissioner that it is appropriate for Appellant to bring those claims in a cross-complaint in this case.

Limited Statutory Right to Representation

Andrade contends she is represented in this appeal by the Labor Commissioner under Labor Code section 98.4. That provision states in part that “[t]he Labor Commissioner may, upon the request of a claimant financially unable to afford counsel, represent such claimant in the de novo proceedings provided in Section 98.2” (Lab. Code, § 98.2.) Relying on this section, Andrade argues the Labor Commissioner lacks authority to represent her in any other claims or proceedings except the trial de novo.

As a preliminary matter, section 98.2 does not address grounds for striking the Cross-Complaint. In addition, Andrade has not cited any legal authority demonstrating that a Labor Commissioner cannot represent her in a trial de novo which includes litigation of a cross-complaint. However, at least one California case has examined the extent of a Labor Commissioner’s authority to represent a claimant in the trial de novo.

In Gipe v. Superior Court (1981) 124 Cal.App.3d 617 (Gipe), the appellate court granted a peremptory writ of mandate commanding the appellate department of the superior court to vacate its order disqualifying the commissioner from representing a wage claimant on appeal following a trial de novo. The commissioner had represented the wage claimant in the de novo proceeding but the employer successfully contended that section 98.4 did not entitle the claimant to representation on appeal following the de novo proceeding. (Id. at p. 622.) The Gipe court vacated the appellate department’s order, pointing out that section 98.4 authorized representation in the “de novo proceedings provided for in Section 98.2.” (Id. at p. 625.) The appellate court construed “proceedings” to include an appeal following a trial de novo. (Id. at pp. 625-626.) In doing so, the court reasoned:

“The de novo proceedings referred to in section 98.2 and 98.4 obviously were intended to result in a judgment; a judgment imports a judgment correct under the law; and it will in some cases require an appeal to obtain a legally correct judgment. It is established that an appeal from the judgment entered in the de novo proceedings is appropriate … and there is nothing in either section 98.2 or 98.4 suggesting that an appeal from the judgment rendered in the de novo proceedings is not to be considered one stage of those proceedings. [Citations.]”

(Id. at p. 626.)

While this case does not address representation of a claimant on appeal from a judgment entered in the trial de novo, Gipe does provide some guidance on the authority vested in a Labor Commissioner representing a claimant. If a superior court, for example, were to conduct a trial de novo, then consideration of a cross-complaint could reasonably fall into the “de novo proceedings” referred to in Labor Code section 98.4. In any case, no authority has been cited to the contrary and Gipe has extended such representation beyond the trial de novo up through an appeal from the judgment.

Based on the foregoing, this argument is not persuasive nor does it provide any basis for striking down the Cross-Complaint.

One-Way Fee Shifting Provision

Andrade also asserts the Cross-Complaint should be stricken as it seeks to undo the one-way shifting attorney’s fee provision set forth in Labor Code section 98.2, subdivision (c). That section provides:

“If the party seeking review by filing an appeal to the superior court is unsuccessful in the appeal, the court shall determine the costs and reasonable attorney’s fees incurred by the other parties to the appeal, and assess that amount as a cost upon the party filing the appeal. An employee is successful if the court awards an amount greater than zero.”

(Lab. Code, § 98.2, subd. (c).)

“Section 98.2, subdivision (c) is the applicable fees and costs provision following an appeal from the commissioner’s decision. [Citation.] Section 98.2, subdivision (c) is not a prevailing party fee provision, instead it is a one-way fee shifting scheme that penalizes an unsuccessful party who appeals the commissioner’s decision. If an employer unsuccessfully appeals, that is, does not nullify the commissioner’s decision following a new trial in the superior court, the employee is entitled to recover attorney fees and costs. If an employee appeals, however, the employer is not entitled to attorney fees and costs if the employee receives an award greater than zero on the wage claim following a new trial in the superior court.” (Arias v. Kardoulias (2012) 207 Cal.App.4th 1429, 1435.)

As an initial matter, nothing in section 98.2, subdivision (c) addresses grounds for striking a cross-complaint under circumstances similar to this case. Nor does Andrade explain how the one-way shifting attorney’s fee provision bars Misha-ra from filing its Cross-Complaint in this action as a matter of law. This argument therefore does not provide a basis for striking the Cross-Complaint.

Default of Underlying De Novo Appeal

Finally, Andrade argues the underlying de novo appeal is in default and thus the Cross-Complaint must be stricken. Andrade however concedes in her reply papers that there is no default pending on this appeal. (See Reply at p. 1.)

Disposition

Based on the foregoing, the motion to strike the Cross-Complaint is DENIED. As the case is not at issue, the trial setting conference at 11:00 on July 31, 2018 is vacated, and a case management conference is set for November 6, 2018 at 10:00 a.m.

The Court shall prepare the Order.