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3. SCV-264433, Windsor Hospitality Group, LLC v. Turnkey Hospitality Solutions, Inc.
This matter is on calendar for the petition of Plaintiff Windsor Hospitality Group, LLC, (“Plaintiff”) for an order confirming the contractual arbitration award. The motion is GRANTED.
A Petition to Confirm Contractual Arbitration Award (“Petition”) and a Notice of Hearing on Petition for Order Confirming Arbitration Award were filed on June 8, 2021. The Petition indicates that Michael Timpane, Esq., conducted arbitration between Plaintiff and Defendant Turnkey Hospitality Solutions, Inc. (“Defendant”) on January 6, 2021, through January 11, 2021. An award was made on June 1, 2021, which requires Defendant to pay Plaintiff $425,456.21 (“the Award”).
The Award is the result of a contractual dispute between the parties. Plaintiff was building and furnishing a new Holiday Inn in Windsor, California (“the Project”). In connection with the Project, Plaintiff hired Defendant to provide materials, equipment, and installation services pursuant to fourteen separate contracts, including one contract with Plaintiff for “Furnishings, Fixtures and Equipment” (the FF&E Contract), six contracts for materials, and seven contracts for the installation of materials (the latter thirteen being referred to as the Material & Install Contracts). The parties agreed that Plaintiff paid a total of $2,181,167.40 to Defendant based upon Defendant’s invoices. A balance of $10,000 remained due.
When disputes arose between the parties, Plaintiff filed this action and the parties proceeded to arbitration pursuant to the arbitration clause in the subject contracts. After the hearing and considering all of the evidence, the arbitrator determined, in part, that all involved knew that Defendant did not have, but was required to have, a license for most, if not all, of the work called for under the subject installation contracts. Therefore, the arbitrator determined that the subject materials and installation contracts were illegal from their inception and thus they no longer legally existed. The arbitrator found that the license law violations were particularly egregious in this case as the personnel and principals of Defendant clearly knew that the installation of tile, cabinetry, and other materials was covered by California Contractor’s Licensure laws. The arbitrator also found that there were 65 items that Defendant failed to deliver, were not fully delivered, or that were delivered in a defective condition.
After a thorough review of the evidence, the arbitrator awarded Plaintiff $61,283.61 for claims on the FF&E contract; $18,942.78 on claims from the materials spreadsheet; half of the inventory costs in the amount of $10,800; return of excessive installation charges of $24,249.50; and, disgorgement in the amount of $111,308 for sums paid to Defendant for illegal installation work as the result of failing to be properly licensed.
In his final award, the arbitrator mentioned that Defendant, for the first time in post-hearing briefing, raised a statute of limitations defense to Plaintiff’s disgorgement claim. Based upon the parties’ additional briefing, the arbitrator found that Defendant’s citation to Eisenberg Village v. Suffolk Construction Co, Inc. (2020) 53 Cal. App. 5th 1201 did not controvert the specific statutes and cases establishing the necessity of pleading a statute of limitations defense in a party’s answer. Accordingly, the arbitrator found that Defendant waived this defense.
The arbitrator did not find any evidence to support Defendant’s claim of $103,700 for “excess tile.” He awarded Defendant $10,000 on its freight, travel, storage and retention claim. The arbitrator did not find any evidence to support Defendant’s defamation claim.
After offsetting the amount awarded to Defendant, the arbitrator determined Plaintiff was entitled to an award of $216,358.89. Plaintiff was awarded $138,690.88 in attorney fees and $48,504.95 in costs as the prevailing party, and $21,901.49 in pre-judgment interest. The total award amounts to $425,456.21.
In Defendant’s response, it asserts that the arbitrator exceeded his authority and violated provisions of the Code of Civil Procedure when he found Defendant had waived the statute of limitations defense. Defendant also argues that the arbitrator exceeded his powers when he found that Plaintiff was the prevailing party because, while Plaintiff sought $1,505,000.00 in damages, it only recovered $226,358.89.
Confirmation of Arbitration Award
Code of Civil Procedure (“CCP”) section 1285 provides: “Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award. The petition shall name as respondents all parties to the arbitration and may name as respondents any other persons bound by the arbitration award.”
Arbitration pursuant to the rules of the American Arbitration Association (“AAA”)
Defendant argues that the AAA rules do not require that it provide an answer raising the statute of limitations defense. Rather, it argues that the rules required the arbitrator to consider all of Defendant’s arguments on their merits. Defendant argues that the arbitrator exceeded his power when he failed to follow the procedural rules of the AAA when he determined that Defendant’s statute of limitations defense was waived. Defendant has not met its burden to establish that the arbitrator did not have the power to make a determination that Defendant waived the statute of limitations defense. The ruling was a legal one and the parties agreed to resolve all legal disputes in final and binding arbitration. Additionally, there is no evidence of “misconduct” or refusal by the arbitrator to hear “evidence.” (See CCP section 1286.2(a)(3),(5).)
As in Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8, the parties in this case submitted their dispute to an arbitrator pursuant to their written agreement. This case thus involves private, or nonjudicial, arbitration. Private contractual arbitration is final and binding. (Id. at 9-10.) Arbitrators, unless specifically required to act in conformity with rules of law, may base their decision upon broad principles of justice, equity, and good conscience. (Id. at 10-11.) As a consequence, arbitration awards are generally immune from judicial review. (Ibid.) Courts will not review the validity of the arbitrator's reasoning nor the sufficiency of the evidence. (Ibid.) There are only narrow exceptions to the general rule that arbitrator's decision cannot be reviewed for errors of fact or law. (Id. at 11-12.)
Private arbitration proceedings are governed by title 9 of the CCP, sections 1280–1294.2. Section 1286.2 sets forth the grounds for vacation of an arbitrator's award. It states in pertinent part: “[T]he court shall vacate the award if the court determines that: [¶] (a)(3)The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator. [¶] (a)(4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.; or [¶] (a)(5) The rights of the party were substantially prejudiced by … the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title.”
Defendant argues that nothing in the governing AAA rules permitted the arbitrator to find a waiver of a defense. However, even where application of a particular law or body of law is required by the parties' arbitration agreement, an arbitrator's failure to apply such a law is not in excess of an arbitrator's powers within the meaning of section 1286.2. (Hoso Foods, Inc. v. Columbus Club, Inc. (2010) 190 Cal.App.4th 881, 890, citing Marsch v. Williams (1994) 23 Cal.App.4th 238, 244.) The mode of decision and its reviewability are separate questions. (Marsch v. Williams (1994) 23 Cal.App.4th 238, 244.) In considering application of section 1286.2, courts are not concerned about what law the parties have chosen. (Ibid.) Rather courts are required to determine whether the parties have agreed that an arbitrator's mistake in either determining the appropriate law or applying it are reviewable in a court of law. (Id. at 244-245.) If an arbitrator exceeds the scope of what is allowed by the parties’ agreement to arbitrate, a party may successfully challenge an arbitration award if the relief granted was in violation of “specific restrictions” (1) “in the arbitration agreement”; (2) “the submission” of the claim to the arbitrator; or (3) “the rules of arbitration.” (Emerald Aero, LLC v. Kaplan (2017) 9 Cal.App.5th 1125, 1140.)
It is presumed that all issues submitted for decision have been passed on and resolved, and the burden of proving otherwise is upon the party challenging the award. (Rodrigues v. Keller (1980) 113 Cal.App.3d 838, 842.) To discharge that burden, the party attacking the award must demonstrate that a particular claim was expressly raised at some time before the award and that the arbitrator failed to consider it. (Ibid.) Even so, the failure of an arbitrator to make a finding on even an express claim does not invalidate the award, so long as the award “serves to settle the entire controversy.” (Id. at 843.) Moreover, a decision simply that one of the parties should pay the other a sum of money is sufficiently determinative of all items embraced in the submission. (Ibid.)
Here, the parties’ arbitration agreement required arbitration of “[a]ny controversy or claim between or among the parties… [i]n accordance with the Rules of the American Arbitration Association.” Defendants do not cite any specific AAA rule that prohibits consideration of the doctrine of waiver. Rather, they argue that the absence of a rule requiring a party to assert a defense within a specific timeframe allows them to raise any defense at any time. Defendant only asserts general principles in support of its position; i.e., the focus on achieving a fair, efficient, and economical resolution of the case and that the arbitrator is required to safeguard “each party’s opportunity to fairly present its claims and defenses.” These principles support the arbitrator’s decision as it would be unfair, inefficient, and uneconomical to allow parties to raise last minute defenses. Defendant has not shown the parties agreed to any broadened scope of judicial review which would allow this Court to consider whether the arbitrator misapplied applicable law. The arbitrator did review Eisenberg and found it was not a “new theory”—another legal determination.
Rule-24(a) is applicable to the pre-hearing exchange and production of information. It lays out the authority of the arbitrator as: “The arbitrator shall manage any necessary exchange of information among the parties with a view to achieving an efficient and economical resolution of the dispute, while at the same time promoting equality of treatment and safeguarding each party’s opportunity to fairly present its claims and defenses.” Accordingly, it is within the arbitrator’s discretion to determine what constitutes the fair presentation of defenses, including the timeliness of those defenses. Defendant does not cite any authority that the arbitrator had to consider any and all defenses at any time absent prejudice to Plaintiff.
This is not a case such as in Hoso Foods, Inc. v. Columbus Club, Inc. (2010) 190 Cal.App.4th 881 in which the arbitrator, contrary to rule 23 which was incorporated into the parties’ agreement, excluded one parties’ representative from the proceedings. Here, Defendant has not pointed to any authority that the arbitrator was required to consider every defense, even a belatedly argued one. As discussed above, it was his discretion to make that determination. A finding that Defendant waived a defense is a general principle of justice and equity. Thus, without any agreement between the parties to the contrary, the arbitrator was free to consider this general principle. However, even if his implementation of the waiver doctrine was legally infirm, the parties agreed that, despite any legal or factual errors, the arbitrator’s decision was final and binding.
This case is also not like Luster v. Collins (1993) 15 Cal.App.4th 1338. Defendant’s response ignores key facts in that case which are not applicable here. In Luster, the parties specifically agreed they would arbitrate issues relating to the administration of certain gates and the use and improvement of an easement. (Id. at 1346.) Thus, the parties contemplated the arbitrator would have the power to decide whether certain trees affecting the use and improvement of the easement should be removed and to determine the party responsible for ensuring the gates were kept locked at night. (Ibid.) However, the per diem award ordered by the arbitrator reflected his attempt to enforce his orders by imposing a sanction for future violations of the orders. (Id. at 1348.) The arbitrator should have kept his decision to the issues relating to the administration of the gates and the use and improvement of the easement unless there was some statutory authority or party agreement that gave him broader powers. (Ibid.) The appellate court found that section 1280 did not authorize economic sanctions without party agreement to do so. (Id. at 1348-1350.)
That subsection provides: “The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title.” The arbitrator did not totally fail to consider an issue. He considered Defendant’s position that the statute of limitations applied to bar Plaintiff’s claims for disgorgement and found the defense waived. Substantively, he considered all the issues before him and made an overall determination regarding all of the parties’ disputes.
Defendant argues that the arbitrator failed to “recognize” that Defendant was the prevailing party because it “defeated” over 96% of the damages sought by Plaintiff. No authority has been provided to support Defendant’s theory regarding the determination of the prevailing party. “The party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.” (Civ. Code, § 1717.) Here, Plaintiff recovered greater relief.
De Novo Review
Defendant has not provided authority to support a de novo review by this Court.
Plaintiff’s request for sanctions
Plaintiff seeks $4,000 in attorney fees as sanctions pursuant to CCP section 128.7 for having to defend against Defendant’s request to vacate the arbitration order. Plaintiff argues that Defendant’s arguments were made without citations to authority and, with respect to its argument regarding determination of a prevailing party, was “so baseless as to be misleading to the Court.” (Reply, 15:17.) Plaintiff has not discussed the application of CCP section 128.7 to the facts of this case and has therefore not established that sanctions are proper.
Conclusion and order
The motion is GRANTED. Plaintiff’s counsel shall submit a written order to the court consistent with this ruling and in compliance with California Rules of Court, Rule 3.1312.
4. SCV-265679, Tourady v. Kemerait
5. SCV-266163, Malnerich v. Sebour
This matter is on calendar for the motion of specially appearing defendant, Michael Sebour (“Defendant”), for an order quashing the service of summons and complaint in this action. The motion is GRANTED.
Defendant’s request for judicial notice of the proof of service of summons is granted.
Proof of service of summons was most recently filed on April 1, 2021 (“April POS”). The April POS states that Andy Lonergan (“Lonergan”) of Arden Process Services, LLC, out of Eagan Minnesota served Defendant at 18138 Lake Forrest Circle, Lakeville, MN 55045 by substituted service on March 14, 2021, at 6:10 p.m. The April POS states that he thereafter mailed the documents on March 17, 2021. The April POS also states that Lonergan mailed the documents listed in the April POS by mail and acknowledgment of receipt of service on March 17, 2021.
The declaration of diligence attached to the April POS states that Lonergan made his first attempt to serve Defendant on March 12, 2021 at 10:15 a.m. The notes associated with that attempt state: “Tried Residence rather nice house near culdesac – Large Dumpster in driveway – No furniture in house. Could hear someone walking around no one would come to door. Waited 10 minutes will try tomorrow.”
Lonergan states that he attempted to serve Defendant again on March 13, 2021 at 4:42 p.m. The notes associated with that attempt state: “lights on- but no one will come to door. Waited for a few minutes. No cars in driveway.”
The declaration states that a successful attempt was made on March 14, 2021 at 6:10 p.m. The notes state: “Parked in driveway went up to front steps could see lights on. A Brown Haired Woman about 55 years old or so came to door. I asked for Michael she said he couldn't come to the door. She said who are you I said ‘Andy with Arden Courier Service.’ I tried to leave papers with her as she did say ‘I am his Wife.’ She ended up shutting door on me, and would not take the papers. I said, ‘Mrs. Sebour You are Served’ and left the papers at her feet right before she shut the door.”
A prior proof of service of process filed on February 23, 2021 (“Feb. POS”) states that Michael Sebour was served by substituted service on February 18, 2021 at 5:25 p.m. by Dan Witt (“Witt”). Witt thereafter mailed summons and complaint to Defendant on February 22, 2021, from Newark, NJ. The attached declaration shows one attempt was made to serve Defendant. Witt noted that on February 18, 2021, at 5:25 p.m., the following occurred: “I arrived at the subject's address and began walking up the driveway to the front door, as I did so a white SUV pulled in the driveway behind me - driven by Jane Doe. She rolled down the window to speak with me and I explained I was just going to knock on her front door and that I was there to see Michael Sebour. Jane Doe informed me Michael Sebour was not home. I explained the reason I was here was to deliver the papers I was holding from California to Michael Sebour, and that I could leave them with a resident here if Michael Sebour was not home. I then presented the papers to her, but she hesitated briefly and said I could wait here until Michael Sebour came home. I explained I would not wait here until that time and that I would have to leave the papers here even if she refused them. Jane Doe asked me for my name and I told her ‘Dan Witt’ and that I was not related to the case in any way, I was just the person delivering the papers. A child about 8 accompanied Jane Doe, the child had left the SUV during my conversation with Jane Doe and went to the house briefly and had just returned to the SUV. Jane Doe announced she was leaving, so I dropped the papers where we were in the driveway. Jane Doe backed out of the driveway in the white SUV, MN license plate AXE488, logo at top of windshield ‘SEBOUR', and drove away. I immediately returned to my vehicle, took a time/GPS stamped photo of the property, and then left.”
The time-stamped photo is not attached to the Feb. POS.
Service of Summons
Summons may be served to a place outside California but within the U.S. by any of the four methods for serving persons within California (e.g., personal delivery; substitute service; service by mail coupled with acknowledgment of receipt; or by publication [see Shapiro v. Clark (2008) 164 Cal. App. 4th 1128, 1133]) or by sending a copy of the summons and of the complaint to the person to be served by first-class mail, postage prepaid, requiring a return receipt. (CCP section 415.40). Service of a summons by this form of mail is deemed complete on the 10th day after such mailing. (Ibid.) To prove service by mail on a nonresident pursuant to CCP § 415.40, there must be hard evidence of actual delivery—either a signed receipt or other proof that the defendant (or someone authorized by defendant) actually received the mail. (CCP § 417.20(a).)
For substituted service on an individual, a good faith effort at personal service must first be attempted; there must be a showing that summons “cannot with reasonable diligence be personally delivered” to the individual defendant. (Code of Civil Procedure [“CCP”] section 415.20(b).) If defendant challenges this method of service, the burden is on plaintiff to show that reasonable attempts were made to serve defendant personally before resorting to substitute service. If defendant establishes that he or she was available for personal service, plaintiff will have to show why such personal service could not be effected. (Evartt v. Sup.Ct. (Kellett) (1979) 89 Cal. App. 3d 795, 801.)
The Feb. POS only lists substituted service. Yet, no attempt was made to first serve Defendant. Thus, the Feb. POS did not effectuate service.
The April POS lists service both by substituted service and by mail and acknowledgment of receipt with return receipt requested pursuant to CCP section 415.40. The April POS lists two prior attempts before proceeding with substituted service. The April POS does not attach evidence that the envelope containing the summons and complaint was received at 18138 Lake Forrest Circle, Lakeville, MN 55045.
In Defendant’s motion, Defendant argues that he could not have personally received the summons and complaint on March 14, 2021, because he was in Sacramento at the time. However, the April POS does not state that Defendant was personally served. It clearly states service by substituted service. In context, the notation “received by Michael Sebour” only appears to indicate that the process server believed substituted service was completed.
As for the statement that Defendant was served by substituted service on his wife, Kerry Sebour, Ms. Sebour has filed a declaration stating that she was not served with a copy of the summons and complaint at her residence on March 14, 2021, at 6:10 p.m. (Sebour decl., ¶3.) She states she does not answer the door to strangers when Defendant is out of town. (Ibid.) She also states that while her residence is equipped with a video recording camera, there is no footage on March 14, 2021, at or around 6:10 p.m., “that reflects the Summons and Complaint was ‘left at my feet’” or any of the events identified in the April POS. (Id. at ¶4.) She also states she did not receive a copy of the summons and complaint by mail—ever. (Id. at ¶5.) Defendant also states that he has never received a copy of the summons and complaint at his residence. (Michael Sebour decl., ¶5.)
As of the time the Court reviewed this matter, Plaintiff had not filed opposition to the motion. Accordingly, based upon the defects in service as discussed herein, the motion is GRANTED.
Defendant’s counsel shall submit a written order to the court consistent with this ruling and in compliance with California Rules of Court, Rule 3.1312.
6. SCV-267189, Doe v. County of Sonoma
This matter is on calendar for the motion of Petitioner Jane Doe for leave to appear remotely at trial. This motion is based upon Petitioner’s understanding that the September 10, 2021 law and motion hearing on her petition for a writ of mandate was a bench trial. The September 10 hearing already occurred and Petitioner appeared remotely. The next hearing is scheduled for October 13, 2021. That is also a law and motion hearing for which Petitioner does not need to seek leave of court to appear remotely. The Court anticipates that an evidentiary hearing will not be necessary in this case. If one is later determined to be necessary, the Court will address Petitioner’s request for a remote appearance at that time. The motion is DROPPED as partially moot and partially premature.
7. SCV-267534, Garcia v. Rustic Bakery, Inc.
This matter is on calendar for the motion of Defendants Rustic Bakery, Inc. and Rustic Café, Inc. (“Defendants”) for a protective order limiting interrogatories, requests for production of documents, and requests for admissions served on Defendants on February 17, 2021, and for an order to determine the sequence and timing of Plaintiffs’ written discovery and responses thereto. The motion is GRANTED to the extent that Plaintiffs’ request is hereby limited to obtaining the names and contact information for Defendants’ employees during the relevant time period; but, only after issuance of a Belaire-West notice.
Plaintiffs Jeferson Garcia (“Jeferson”) and Wilson Garcia (“Wilson”)(together “Plaintiffs”) filed their Class and Representative Action Complaint for Damages, Injunctive Relief, and Civil Penalties alleging that Defendants systematically failed to comply with the California Labor Code and applicable Industrial Welfare Commission Wage Orders. The allegations include the failure to pay minimum wages; failure to pay overtime wages; failure to pay meal period premiums; failure to pay rest period premiums; failure to pay reporting time pay; failure to provide accurate itemized wage statements; failure to pay all wages due at separation; failure to reimburse necessary business expenses; and, engaging in unfair competition.
Plaintiff Jeferson worked as a food preparer and in other non-exempt bakery-related occupations for Defendants from July 2017 through March 2020. (Complaint, ¶14.) Plaintiff Wilson worked as a food preparer and in other non-exempt bakery-related occupations for Defendants from February 2019 to March 2020. (Id. at ¶15.)
Defendant Rustic Bakery, Inc. (“Bakery”) is a manufacturer, producer, and distributor of baked goods. (Id. at ¶16.) Defendant Rustic Café, Inc. (“Café”) operates as a restaurant selling its own baked goods. (Id. at ¶17.)
On February 17, 2021, Plaintiffs served Bakery and Café with Requests for Production of Documents which contain 125 separate requests for production. (Barnum decl., Exhibit A; Adams decl., ¶3.) Plaintiff’s Request for Admissions to Bakery contain six requests. (Id., Exhibit B.) Plaintiff’s Special Interrogatories to Bakery contain 81 interrogatories. (Id., Exhibit C.)
Discovery pertaining to Café has not been provided.
Defendants argue that the discovery requests as a whole are unduly burdensome, overbroad, oppressive, and intrusive. Defendants argue that Plaintiffs have only worked in specific positions for one of Bakery’s four cafes. They argue that discovery should be limited to other kitchen workers employed by Novato Rustic Café where the two representative Plaintiffs worked during the time period requested. They also argue the Court should not permit Plaintiffs to obtain copies or the content of employees’ personnel files and confidential wage payment financial information which are protected by the right of privacy.
A party responding to discovery demands may move for a protective order. (Code of Civil Procedure [“CCP”] sections 2030.090 [interrogatories], 2031.060 [inspection demands], 2033.080 [requests for admissions].) The court, for good cause shown, may make any order that justice requires to protect any party or other natural person or organization from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense. (Ibid.) Additionally, CCP section 2017.020 requires courts to limit the scope of discovery if it determines that the burden, expense, or intrusiveness of that discovery clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence.
Plaintiffs’ discovery seeks documents, including confidential documents relating to all potential class members. This includes payroll data, wage records, wage statements, paycheck stubs, timesheets, timecards, work schedules, termination information, and personally identifying information such as names, addresses, telephone numbers, and email addresses.
Defendants argue that Plaintiffs’ requests are overbroad and unduly burdensome. Bakery’s Controller, Karla Guzman, states that Defendants Bakery and Café are two separate and distinct businesses; Café is a subsidiary of Bakery. (Guzman decl., ¶¶1- 3.) Bakery operates Rustic Bakery International, Inc., which is a wholesale production business of various baked goods sold to retail establishments. (Ibid.) Café operates four retail cafes in Marin County. (Ibid.) Ms. Guzman states that Plaintiffs worked at the Rustic Café in Novato. (Id. at ¶5.) Except that Wilson (when he was known as Estid Mazariegos) worked for one month at the Larkspur Landing Rustic Café. (Ibid.)
The discovery requested covers approximately 562 hourly employees who worked at Bakery’s facility in Petaluma and 625 hourly employees who worked at the four Rustic Cafes. (Id. at ¶6.) The Novato Rustic Café where both Plaintiffs worked currently employs approximately 35 employees although in previous years the number employed there was upwards of 70 employees. (Ibid.) Ms. Guzman estimates that it would take “well more than a hundred hours of staff time to research and provide the information and documents requested as to 1,200 employees.” (Id. at ¶7.) She states this would impose an “extreme burden on the company which has limited administrative resources to perform this function.” (Ibid.)
“When employment records are sought from an employer, the employees must be given notice. If, as described in Section 1985.6, the person to whom the deposition subpoena is directed is a witness and the business records described in the deposition subpoena are employment records pertaining to an employee, the service of the deposition subpoena shall be accompanied either by a copy of the proof of service of the notice to the employee described in subdivision (e) of Section 1985.6, or by the employee's written authorization to release personal records described in paragraph (2) of subdivision (c) of Section 1985.6.” (CCP § 2020.510(d).)
Here, Plaintiffs indicate that they are, and have been, willing to provide a Belaire-West notice at their own expense.
“In the absence of privilege, the right to discovery in this state is a broad one, to be construed liberally so that parties may ascertain the strength of their case and at trial the truth may be determined. [The orders of the Supreme Court of California] and Courts of Appeal firmly establish that in non-PAGA class actions, the contact information of those a plaintiff purports to represent is routinely discoverable as an essential prerequisite to effectively seeking group relief, without any requirement that the plaintiff first show good cause. Nothing in the characteristics of a PAGA suit, essentially a qui tam action filed on behalf of the state to assist it with labor law enforcement, affords a basis for restricting discovery more narrowly.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 538, fn. 8, disapproving Harding Lawson Associates v. Superior Court (1992) 10 Cal.App.4th 7; El Dorado Savings & Loan Assn. v. Superior Court (1987) 190 Cal.App.3d 342.) Trial courts are required to be mindful of the Legislature's preference for discovery over trial by surprise, must construe the facts before it liberally in favor of discovery, may not use its discretion to extend the limits on discovery beyond those authorized by the Legislature, and should prefer partial to outright denials of discovery. (Id. at 540.)
PAGA authorizes an employee who has been the subject of particular Labor Code violations to file a representative action on behalf of himself or herself and other aggrieved employees. (Williams, supra, at 538-539, citing Lab. Code, § 2699.) The default position regarding obtaining contact information for those sought to be represented in a PAGA action is that such information is within the proper scope of discovery. (Williams, supra, at 544.) That the eventual proper scope of a putative representative action is as yet uncertain is no obstacle to discovery; a party may proceed with interrogatories and other discovery methods precisely in order to ascertain that scope. (Id. at 551.) “Doubts as to whether particular matters will aid in a party's preparation for trial should generally be resolved in favor of permitting discovery; this is especially true when the precise issues of the litigation or the governing legal standards are not clearly established.” (Ibid. citing case.) Moreover, mere contact information is not particularly sensitive so as to defeat a discovery request based upon an allegation of privacy. (Id. at 553.)
The Court in Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554 ordered disclosure of contact information, subject to employees being given notice of the action, assurance they were under no obligation to talk to the plaintiffs’ counsel, and an opportunity to opt out of disclosure by returning an enclosed postcard. Courts subsequent to Belaire-West have uniformly applied the same analysis to reach the same conclusion: In wage and hour collective actions, fellow employees would not be expected to want to conceal their contact information from plaintiffs asserting employment law violations, the state policies in favor of effective enforcement of these laws weigh on the side of disclosure, and any residual privacy concerns can be protected by issuing so-called Belaire-West notices affording notice and an opportunity to opt out from disclosure. (Williams, supra, at 553.)
Plaintiffs argue that as to Café, this motion is premature because this Court preliminarily denied Café’s request for relief from waiver of objections; however, the matter was taken under submission and the Court has yet to issue its order. Regardless of the timeliness of Café’s objections, Plaintiffs must provide notice to non-parties whose employment records are sought. And, it is clear that Plaintiffs do not oppose such notice.
In their declarations, Plaintiffs state that they received wage statements from both Bakery and Café. Defendants have not provided evidence to the contrary. Plaintiffs also state that they worked at all of Defendants’ production and café locations. Regardless, even if they did not work at all of Defendants’ facilities, merely because they received wage statements from both Defendants, disclosure of the identity of workers at all of Defendants’ facilities may lead to the discovery of admissible evidence. (See Williams v. Superior Court, supra, 3 Cal.5th at 541, 542.)
Defendants have not provided authority that supports finding that a lengthy response to discovery creates an undue burden. Nor have they established that the burden imposed outweighs the value of the information.
In Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, the discovery requests did not describe the documents to be produced with reasonable particularity. “Generalized demands, insupportable by evidence showing at least the potential evidentiary value of the information sought, are not permitted.” (Id. at 218.) The discovery requests also sought documents that lacked relevancy. (Id. at 221.) The appellate court also found the six pages of “definitions” and “instructions” to be particularly obnoxious as they turned each of the 32 requests into a complicated “category” described in more than six pages. (Id. at 223.) Defendants do not make any of these arguments with respect to Plaintiffs’ discovery requests.
Additionally, the propriety of the order restricting discovery to “class issues” made in Carabini v. Sup.Ct. (King) (1994) 26 Cal. App. 4th 239, 241, was not raised. Restricting discovery issues to “class issues” can generate needless disputes regarding whether particular discovery relates to the class issues or the merits, and sometimes discovery relates to both; and, many cases settle as the certification motion is being prepared, and some merits discovery may be necessary to meet plaintiff's burden to show the settlement is fair and reasonable. (Weil and Brown, Cal. Practice Guide: Civil Procedure Before Trial, section 14:135.16, citing Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal. App. 4th 116, 130.)
At the present stage of litigation, it is appropriate for Plaintiffs to obtain names and contact information for Defendants’ employees during the subject time frame. However, full discovery of all of Defendants’ employees’ employment records is not.
Conclusion and order
The motion is GRANTED to the extent that Plaintiffs’ request is hereby limited to obtaining the names and contact information for Defendants’ employees during the relevant time period; but, only after issuance of a Belaire-West notice.
Defendants’ counsel shall submit a written order to the court consistent with this ruling and in compliance with California Rules of Court, Rule 3.1312.
8. SCV-267999, Love v. Redwood Empire Food Bank
This matter is on calendar for the demurrer of REFB Redwood Empire Food Bank (“REFB”) pursuant to Code of Civil Procedure (“CC”) section 430.10 to each cause of action set out in the complaint: (1) unpaid wages in Violation of Labor Code §§ 510 and 1198; (2) Unpaid Meal Period Premiums in Violation of Labor Code §§ 226.7 and 512(a); (3) Unpaid Rest Period Premiums in Violation of Labor Code § 226.7; (4) Unpaid Minimum Wages in Violation of Labor Code §§ 1194, 1197 and 1197. 1; (5) Failure to Timely Pay Final Wages in Violation of Labor Code §§ 201 and 202; (6) Failure to Timely Pay Wages During Employment in Violation of Labor Code § 204; (7) Failure to Provide Itemized Accurate Wage Statements in Violation of Labor Code § 226(a); (8) ) Failure to Maintain Accurate Payroll Statements in Violation of Labor Code § 1174(d); (9) Failure to Provide Reimbursement for Necessary Business-Related Expenses in Violation of Labor Code §§ 2800 and 2802; (10) Unfair Business Practices in Violation of Business and Professions Code §§ 17200 et seq. The general demurrers to each cause of action are SUSTAINED with leave to amend. While the causes of action for the majority of Labor Code Violations and Business & Professions Code violation contain minimally sufficient factual allegations, the complaint as a whole does not as it does not allege facts to support Plaintiff’s conclusion that he was employed with REFB. Additionally, the ninth cause of action for Violation of Labor Code sections 2800 and 2802 does not allege facts to support Plaintiff incurred business expenses. Plaintiff has 10 days from this order to file an amended complaint.
Plaintiff Dashawn Love (“Plaintiff”) filed a complaint against REFB which alleges various Labor Code violations on behalf of himself and all others similarly situated. The proposed class is defined as all current and former hourly-paid or non-exempt employees who worked for any of the REFB within the State of California at any time during the four years preceding the filing of the complaint and who reside in California. (Complaint, ¶13.) The Complaint lists four subclasses. Subclass A pertains to those proposed class members who were subjected to REFB’s alleged practice of rounding time recorded for meal breaks and/or for compensation of regular/overtime wages. (Ibid.) Subclass B pertains to those proposed class members who were required to stay on REFB’s premises for rest breaks. (Ibid.) Subclass C pertains to those proposed class members who received overtime compensation at a rate lower than their respective regular rate of pay because REFB failed to include all non-discretionary bonuses or other incentive-based compensation in the calculation of the regular rate of pay for overtime pay. (Ibid.) Subclass D pertains to those proposed class members who received meal or rest break penalties at a rate that was lower than their regular rate of pay because REFB failed to include all non-discretionary bonuses or other incentive-based compensation in the calculation of the regular rate of pay for payment of meal or rest break [premiums]. (Ibid.)
The general allegations in the Complaint state that Plaintiff was employed as an hourly-paid, non-exempt employee from approximately May 2020 to approximately October 2020. (Complaint, ¶18.) He alleges that REFB failed to pay him and other proposed class members for all hours worked, for overtime, and for missed meal periods and/or rest breaks. (Id. at ¶¶19, 25.) Plaintiff alleges he and the other class members worked over eight (8) hours in a day, and/or forty (40) hours in a week during their employment with REFBs without overtime pay. (Id. at ¶¶24, 37.) Plaintiff alleges that REFB failed to provide Plaintiff and other class members the required rest and meal periods. (Id. at ¶27.) He also alleges that Plaintiff and class members did not receive the minimum wage, did not receive all wages owed to them at the time of their discharge or resignation, did not receive meal and rest period premiums, did not receive complete and accurate wage statements, that REFB did not keep complete and accurate payroll records, did not reimburse for necessary business-related expenses, and that REFB falsely represented that Plaintiff and other class members were properly denied wages. (Id. at ¶¶28-45.)
General allegations as to all causes of action
REFB first argues that the complaint fails to identify an ascertainable class. Class members are “ascertainable” where they may be readily identified without unreasonable expense or time by reference to official records. (Aguiar v. Cintas Corp. No. 2 (2006) 144 Cal.App.4th 121, 135.) The overall class is readily identified. Class members are defined as all nonexempt employees who worked for the REFB during a specific time period.
However, as for the subclasses, they cannot be determined until after an evidentiary hearing. For example, for Subclass D (“class members who received meal or rest break penalties at a rate that was lower than their regular rate of pay because REFB failed to include all non-discretionary bonuses or other incentive-based compensation in the calculation of the regular rate of pay for payment of meal or rest break [premiums]”), a member cannot be identified until the trier of fact determines that s/he was entitled to non-discretionary bonuses or other incentive-based compensation, worked during meal or break times, and was not paid for that work at the higher rate. The subclasses require a determination of liability prior to ascertaining the members. The complaint identifies a community of interest: all current and former hourly-paid or non-exempt employees who worked for any of the REFB within the State of California at any time during the four years preceding the filing of the complaint and who reside in California. (Complaint, ¶13.) The alleged common experience of the class members is that none of them were paid for all hours worked, were not paid overtime pay, were not given rest breaks, and were not given meal and rest period premiums. It is not reasonable to believe that REFB cannot discern from the complaint what it is accused of doing because Plaintiff has not alleged specific facts, for example, regarding how REFB allegedly failed to pay wages. Failing to pay wages, in any manner, is a violation of the Labor Code. The complaint informs REFB of the violations alleged against it.
While REFB argues that this Court can decide at the pleading stage whether this action is suitable for class action treatment; generally, suitability for class action treatment should not be determined at pleading stage, particularly in actions involving wage and hour claims. (Prince v. CLS Transportation, Inc. (2004) 118 Cal.App.4th 1320, 1325.) There is also authority suggesting that Plaintiff should be given the opportunity to take discovery to assist in stating a class action. (See Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, 373.) These policies mandate that a candidate complaint for class action consideration, if at all possible, be allowed to survive the pleading stages of litigation. (Tarkington v. California Unemployment Ins. Appeals Bd. (2009) 172 Cal.App.4th 1494. 1510.) As explained in Prince and reiterated in Tarkington, such wage and hour cases “ ‘routinely proceed as class actions' because they usually involve ‘ “a single set of facts applicable to all members,” ’ and ‘ “one question of law common to class members.” ’ ” (Tarkington, supra, 172 Cal.App.4th at 1511, quoting Prince, supra, 118 Cal.App.4th at 1327–1328.) As long as the lead plaintiff “ ‘alleges institutional practices ... that affected all of the members of the potential class in the same manner, and it appears from the complaint that all liability issues can be determined on a class-wide basis,’ ” no more is required at the pleading stage. (Tarkington at 1511.)
However, Plaintiff’s allegation that he was a non-exempt employee of REFB is conclusory. Plaintiff has not provided any facts to support his allegation that he was employed on an hourly basis with REFB. Nor has he alleged facts establishing his ability to represent the proposed class. While Plaintiff alleges he was an hourly employee who worked in excess of 40 hours a week and in excess of 8 hours a day, the allegation that he was an hourly employee is conclusory as there are no facts alleged that he was paid a certain amount per hour. However, as to the allegation that Plaintiff worked in excess of 40 hours a week and in excess of 8 hours a day, there is no more Plaintiff could allege without getting into the evidence which supports the claim. As to these later allegations, the Court must accept these allegations as true at this stage of the proceedings. Similarly, additional facts supporting Plaintiff’s allegations that REFB failed to pay wages, reimbursements, and penalties according to the mandates of the Labor Code would require alleging the evidence in support of these claims. While much of Plaintiff’s complaint is sufficiently minimal to defeat a demurrer (see Gutierrez v. California Commerce Club, Inc. (2010) 187 Cal.App.4th 969, 978-979), Plaintiff’s complaint is insufficient. This complaint could have been filed by anybody. Plaintiff must allege sufficient facts to establish his employment relationship with REFB and his status as an hourly employee.
First Cause of Action - Violation of Labor Code sections 510 and 1198
REFB alleges that the first cause of action for Violation of Labor Code sections 510 and 1198, for failure to pay overtime, fails to state facts sufficient to constitute a cause of action against REFB, both on an individual basis and on a class basis.
REFB argues that the complaint does not allege any ultimate facts. It does. Alleging the failure to pay overtime is the ultimate fact. “[T]he complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff's proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal. 4th 861, 872.) Plaintiff need not allege every detail that would support this cause of action such as, as REFB argues, the specific days Plaintiff worked overtime for which he was not paid. The statement that REFB has not provided its employees with proper rest periods states both the facts and the theory. There will be ample time later to determine whether there is a single class or several classes, and whether this plaintiff can represent some or all of the classes. (Gutierrez v. California Commerce Club, Inc., supra, 187 Cal.App.4th at 979, fn. 5.)
Second Cause of Action - Violation of Labor Code sections 226.7 and 512(a); Third Cause of Action - Violation of Labor Code section 226.7; Fourth Cause of Action - Violation of Labor Code sections 1194, 1197, and 1197.1
REFB alleges that the second cause of action for Violation of Labor Code sections 226.7 and 512(a), for failure to pay meal period premiums, third cause of action for Violation of Labor Code section 226.7, for failure to pay rest period premiums, and fourth cause of action for Violation of Labor Code sections 1194, 1197 and 1197.1, for failure to pay minimum wages, fail to state facts sufficient to constitute a cause of action against REFB, both on an individual basis and on a class basis.
REFB repeats its argument that Plaintiff must allege additional facts to support these causes of action. However, in the context of these Labor Code violations, the ultimate facts are the same as the statutory elements. The specific dates which REFB failed to pay Plaintiff meal period premiums are the evidentiary facts that would allow a trier of fact to find for the Plaintiff. Evidentiary facts do not need to be alleged in a complaint. (See C.A. v. William S. Hart Union High School Dist., supra, 53 Cal. 4th at 872.)
Ninth Cause of Action - Violation of Labor Code sections 2800 and 2802
REFB alleges that the ninth cause of action for Violation of Labor Code sections 2800 and 2802, for failure to reimburse business expenses, fails to state facts sufficient to constitute a cause of action against REFB, both on an individual basis and on a class basis.
This cause of action alleges “Plaintiff and the other Class members incurred necessary business-related expenses and costs that were not fully reimbursed by Defendants.” (Complaint, 108.) While with some Labor Code section violations, the facts and the theory are the same, such is not the case for Labor Code sections 2800 and 2802. Plaintiff’s reference to “business expenses” is a legal conclusion. A factual description must be alleged to establish that what Plaintiff refers to as “business expenses” are actually business expenses for the purposes of Labor Code sections 2800 and 2802.
Fifth Cause of Action - Violation of Labor Code sections 201 and 202; Sixth Cause of Action - Violation of Labor Code section 204; Seventh Cause of Action - Violation of Labor Code section 226(a); Eighth Cause of Action - Violation of Labor Code section 1174(d); Tenth Cause of Action - Violation of Business and Professions Code section 17200
REFB alleges that the fifth cause of action for Violation of Labor Code sections 201 and 202, for failure to pay final wages in a timely manner, sixth cause of action for Violation of Labor Code section 204, for failure to timely pay wages during employment, seventh cause of action for Violation of Labor Code section, eighth cause of action for Violation of Labor Code section 1174(d), for failure to keep requisite payroll records, 226(a), for failure to provide statutorily-compliant wage statements, and tenth cause of action for Violation of Business and Professions Code section 17200 et seq., for failure to keep requisite payroll records, fail to state facts sufficient to constitute a cause of action against REFB, both on an individual basis and on a class basis.
REFB alleges that these causes of action are derivative of the prior causes of action and thus also fail to allege sufficient facts to constitute a cause of action. However, these Labor and Business Code violations consist of elements which, when plead, constitute the fact and the theory. The fifth cause of action alleges that REFB intentionally failed to pay wages within seventy-two hours of when class members left their employment with REFB. (Complaint, 84.) The sixth cause of action alleges that REFB failed to pay wages due within the timeframe required of Labor Code section 204. (Id. at 92.) The seventh cause of action alleges that REFB intentionally and willfully failed to provide Plaintiff/class members accurate itemized wage statements that included the gross wages earned; total hours worked; the number of piece-rate units earned; deductions; net wages earned; dates covering wages paid; the employee’s name and social security number; the name and address of the employer; and the applicable hourly rates and each hour worked at that rate. (Id. at 95.) The eighth cause of action alleges REFB intentionally and willfully failed to keep accurate and complete payroll records showing the hours worked daily and the wages paid. (Id. at 103.) The tenth cause of action alleges that REFB’s Labor Code violations amount to unfair and unlawful business practices pursuant to Business and Professions Code section 17200, et seq. (Id. at 112-114.) These causes of action are minimally sufficient as they allege both the facts and the theory.
REFB argues that the lack of specificity in Plaintiff’s complaint causes it to be uncertain. As discussed above, the complaint gives REFB notice why Plaintiff is suing it. Whether or not any of the causes of action have merit will be fleshed out through discovery.
Conclusion and Order
For the reasons stated above, the demurrers to each cause of action are SUSTAINED with leave to amend. While the causes of action for Labor Code Violations and Business & Professions Code violations contain minimally sufficient factual allegations, the complaint as a whole does not as it does not allege facts to support Plaintiff’s conclusion that he was employed as an hourly employee by REFB. Additionally, the ninth cause of action for Violation of Labor Code sections 2800 and 2802 does not allege facts to support Plaintiff incurred business expenses.
REFB’s counsel shall submit a written order to the court consistent with this ruling and in compliance with California Rules of Court, Rule 3.1312.