Case Name: Jesus Chavez v. Guess? Retail, Inc., et al.
Case No.: 16-CV-300341

This is an action under the Private Attorneys General Act (“PAGA”) by an employee of defendant Guess? Retail, Inc. Before the Court is defendant’s motion to strike allegations regarding the recovery of unpaid wages and asserting a three-year recovery period for such wages, along with other allegations. Plaintiff opposes defendant’s motion.

I. Factual and Procedural Background

According to the first amended complaint (“FAC”), plaintiff was a non-exempt employee at defendant’s Gilroy store until December of 2015. (FAC, ¶ 7.) He alleges that defendant failed to pay minimum and overtime wages for time employees spent undergoing security checks and also failed to provide required meal and rest breaks, as well as accurate itemized wage statements, in light of the security checks. (Id. at ¶¶ 19-20.)

On September 26, 2016, plaintiff filed his complaint, asserting five causes of action for Labor Code violations, a claim under PAGA, and a claim for violation of Business & Professions Code section 17200. After the Court granted defendant’s petition to compel arbitration of the other causes of action, plaintiff filed the FAC alleging a PAGA claim only.

II. Legal Standard

A motion to strike may be employed to remove “irrelevant, false or improper” matters from a complaint. (See Code Civ. Proc, § 436, subd. (a).) Irrelevant matter includes (1) an allegation that is not essential to the statement of a claim or defense, (2) an allegation that is neither pertinent to nor supported by an otherwise sufficient claim or defense, and (3) a demand for judgment requesting relief not supported by the allegations of the complaint or cross-complaint. (See id., § 431.10, subds. (b), (c).)

As with a demurrer, the policy of the law is to construe the pleadings liberally with a view to substantial justice. (See Code Civ. Proc, § 452.) The allegations in the complaint are considered in context and presumed to be true. (See Clauson v. Superior Court (Pedus Service, Inc., et al.) (1998) 67 Cal.App.4th 1253, 1255.)

III. Allegations Regarding Unpaid Wages and Three-Year Recovery Period

While somewhat obfuscated by the structure of defendant’s memorandum of points and authorities, the parties essentially agree that unpaid (or “underpaid”) wages are recoverable under PAGA. PAGA provides that an aggrieved employee may bring a civil action to recover penalties under any provision of the Labor Code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency (“LWDA”). (Lab. Code, § 2699, subd. (a).) Labor Code section 558 provides in relevant part:

(a) Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter or any provision regulating hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty as follows:

(1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.

(2) For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.

(3) Wages recovered pursuant to this section shall be paid to the affected employee.

(Lab. Code, § 558, italics added.)

Thurman v. Bayshore Transit Management, Inc. (2012) 203 Cal.App.4th 1112, cited by both parties, confirms that “section 558, subdivision (a) … provid[es] a civil penalty that consists of both the $50 or $100 penalty amount and any underpaid wages, with the underpaid wages going entirely to the affected employee or employees as an express exception to the general rule that civil penalties recovered in a PAGA action are distributed 75 percent to the [LWDA] and 25 percent to the aggrieved employees.” (At p. 1145.) Thurman also confirms that the terms “unpaid” and “underpaid” are interchangeable in this context. (Id. at p. 1145, fn. 30.)

The crux of the parties’ dispute is whether this penalty of underpaid wages is available for one year of wages or three years of wages, given the different statutes of limitations that apply to actions for penalties and direct actions for unpaid wages, respectively. While plaintiff contends that the three-year statute for unpaid wages should apply, courts have consistently characterized underpaid wages recovered under PAGA as “penalties,” which would be subject to the one-year statute. (See Reynolds v. Bement (2005) 36 Cal.4th 1075, 1089 [characterizing underpaid wages recovered under PAGA as penalties], abrogated on another point by Martinez v. Combs (2010) 49 Cal.4th 35; Thurman v. Bayshore Transit Management, Inc., supra, 203 Cal.App.4th 1112 [same]; Thomas v. Home Depot USA Inc. (N.D. Cal. 2007) 527 F.Supp.2d 1003, 1008 [“[d]espite the three-year statute of limitations that applies to some of the Labor Code violations listed in § 2699.5, a PAGA claim is, by definition, a claim for civil penalties” to which a one-year statute applies]; Yadira v. Fernandez (N.D. Cal., Sept. 8, 2011, No. C-08-05721 RMW) 2011 WL 4101266, at *3 [“the only way to reasonably reconcile the language of § 558, Reynolds and PAGA is to consider the unpaid wages of § 558 as a penalty subject to a one-year statute of limitations”].)
While plaintiff suggests that Thurman supports the recovery of three years’ wages, that opinion does not address the temporal scope of a PAGA claim for unpaid wages. Guzman v. Healthcare Services Group, Inc. (C.D. Cal., Sept. 15, 2016, No. CV1604690SJOSKX) 2016 WL 4950783 does suggest that three years’ wages may be recovered, even while confirming that a one-year statute governs the commencement of a PAGA claim. However, Guzman is an unpublished federal opinion addressing the issue in dicta, and the Court finds it unpersuasive in light of the authorities cited above. Finally, Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, which held that the remedy provided for missed meal and rest breaks by Labor Code section 226.7 is a wage, is inapposite since plaintiff no longer brings any direct claims under the Labor Code.
The Court accordingly finds that a one-year statute applies to the entirety of plaintiff’s PAGA claim, and that only unpaid wages incurred during the statutory period may be recovered. It will therefore strike allegations seeking three years of unpaid wages. However, since unpaid wages within the statutory period are recoverable, the Court will not strike all references to unpaid wages as defendant requests.
IV. Allegations Regarding the Date That the One-Year Recovery Period Commences
In addition to their dispute over whether a one-year or three-year statute governs plaintiff’s claim for unpaid wages, the parties disagree about when the recovery period began for purposes of all the penalties sought by plaintiff. Defendant maintains that plaintiff can claim penalties for the period beginning one year plus up to 33 days before the filing of his initial complaint, or August 24, 2015 (33 days being the length of the LWDA’s deliberative period at the time plaintiff gave notice of his claims to that body, during which period the statute is tolled). (See former Lab. Code, § 2699.3, eff. Oct. 2, 2015 to June 26, 2016.) Plaintiff argues that he can recover penalties dating back to a year before he sent his notice to the LWDA, or June 14, 2015.
Plaintiff contends that an unpublished order by the Court of Appeal for the Second Appellate District supports his position, but the order does not include enough reasoning for the Court to confirm this characterization. Plaintiff’s request for judicial notice of this order—which also may not be relied on because it is unpublished—is DENIED. (See Cal. Rules of Court, rule 8.1115(a) [unpublished California opinions “must not be cited or relied on by a court or a party in any other action”].) Defendant’s request for judicial notice of the complaint in the action in which the order was issued is similarly DENIED.

The Court is unaware of any California authority addressing how the PAGA recovery period is calculated. Federal cases have adopted both parties’ views, mostly with little to no reasoning. (Compare Taylor v. Interstate Group, LLC (N.D. Cal., Mar. 7, 2016, No. 15-CV-05462-YGR) 2016 WL 861020, at *3-5 [parties and the court agreed that PAGA penalty period begins with the date notice was provided to the LWDA] and Culley v. Lincare Inc. (E.D. Cal., Feb. 21, 2017, No. 215CV00081MCECMK), — F.Supp.3d —-, 2017 WL 698273, at *6 [calculating penalties from “the time notice is provided to the LWDA harmonizes the statutory scheme and allows California’s one-year statute of limitations on PAGA claims to be applied consistently”] with Moua v. International Business Machines Corp. (N.D. Cal., Oct. 30, 2012, No. 5:10-CV-01070 EJD) 2012 WL 5373401, at *7 [statutory period is one year plus 33 days from the filing of the complaint]; see also Bato v. Laboratory Corporation of America Holdings (C.D. Cal., Feb. 8, 2010, No. 09-04671 MMM (EX)) 2010 WL 11459908, at *5 [indicating that PAGA plaintiffs can “sue for violations that occurred within one year of exhaustion,” without specifying whether “exhaustion” is the date of notice to the LWDA or the date on which plaintiff may subsequently file suit].)

Particularly in the absence of helpful authority, the Court is guided by the language of Labor Code section 2699.3, which tolls the statute during “[t]he periods specified in this section”—33 days at the time plaintiff submitted his notice—and no longer. (Lab. Code, § 2699.3, subd. (d).) Accordingly, the Court finds that the recovery period is one year plus 33 days from the filing of the complaint, and will strike plaintiff’s allegations seeking penalties dating from a year before his notice to the LWDA.

V. Other Challenged Allegations

Defendant moves to strike as irrelevant lingering references to Labor Code section 1194 (which provides a direct right of action for unpaid wages) and to “Class Members,” now that plaintiff’s class claims have been dismissed. Plaintiff does not address these allegations in his opposition papers, and the Court will accordingly strike them.

Finally, without explanation, defendant moves to strike plaintiff’s prayer for costs and attorney fees. As defendant provides no support for this request, the Court will not strike this language.

VI. Conclusion and Order

The motion to strike is GRANTED as to the following language in the FAC:
-“June 14, 2015” (FAC, ¶ 17, p. 4, l. 20);
-paragraph 18 in its entirety;
-“June 14, 2015” (FAC, ¶ 19, p. 4, l. 25);
-“on behalf of all Aggrieved Employees from June 14, 2013, through the present” (FAC, ¶ 19, p. 4, ll. 26-27);
-“1194” (FAC, ¶ 19, p. 4, l. 28, p. 5, ll. 2, 4; ¶ 21, p. 5, l. 23; ¶ 22, p. 5, l. 27 ); and
-“and Class Members” (FAC, ¶ 20, l. 18).
Plaintiff is granted 20 days’ leave to file an amended complaint reflecting the correct recovery period as stated herein; the motion to strike is otherwise granted without leave to amend the language specified above.

In all other respects, the motion to strike is DENIED.

The Court will prepare the order.