Banda v. Bagdasarian

Filed 4/3/08 Banda v. Bagdasarian CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115..

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

APPEAL from the Superior Court of Riverside County. Christopher J. Sheldon, Judge. Reversed.

California Rural Legal Assistance, Inc., Arturo Rodriguez, Cristina Guerrero and Cynthia L. Rice, for Plaintiffs and Appellants, Maria L. Banda, Cecilio Banda and Mercedes R. Moreno.

Talamantes, Villegas and Carrera and Mark Talamantes for Plaintiffs and Appellants.

Law Office of Joseph E. Herman, Joseph E. Herman and Bruce Carroll; Swajian & Swajian, Dawn Swajian and Gregory A. Swagian; and Law Offices of Joseph C. Markowitz and Joseph C. Markowitz for Defendant and Respondent.

Law Offices of Steven Drapkin and Steven Drapkin for the Employers Group, the California Chamber of Commerce, the California Employment Law Counsel, the California Restaurant Association, and the Alliance of Motion Picture & Television Producers as Amici Curiae on behalf of Defendant and Respondent

Western Growers Law Group and Jason E. Resnick for Western Growers, California Grape and Tree Fruit League, California Citrus Mutual, and Nisei Farmers League as Amici Curiae on behalf of Defendant and Respondent.

This opinion approves and orders a reversal with directions of the judgment appealed pursuant to a stipulation by the parties. (Code Civ. Proc., 128, subd. (a)(8).)^[1]

BACKGROUND

We start with a description of the proceedings to understand (1) the issues involved in approving the stipulated reversal and (2) the necessity of the directions to the superior court.

Plaintiffs are farm workers who filed a first amended complaint against their employer, defendant, stating four causes of action relating to the taste-testing of grapes they were picking and the provision of rest and meal breaks. The events giving rise to the

action occurred throughout the four years preceding the filing of the first amended complaint in July 2002. The general allegations described (1) defendants requiring plaintiffs to taste grapes for ripeness without any provision for plaintiffs to first wash their hands or the grapes and (2) defendants requiring plaintiffs not to take a meal break and one of two rest breaks in exchange for going home that much earlier. The first two causes of action were brought under the Unfair Competition Law (UCL). (Bus. & Prof. Code, 17200 et seq.) The first cause of action sought (1) preliminary and permanent injunctions against the grape testing and the omission of meal and rest breaks and (2) the restitution of one additional hour of pay for each day when breaks were omitted (Lab. Code, 226.7). The second cause of action alleged that defendant willfully failed to pay the wages for the omitted breaks when plaintiffs were discharged or quit entitling them to waiting time penalties of 30 full days of wages (Lab. Code, 203) enforceable as a penalty under the UCL (Bus. & Prof. Code, 17202.) The third and fourth causes of action mirrored the first and second causes of action, respectively, but did not seek injunctive relief and sought wages for the omitted breaks and waiting time penalties solely under the applicable Labor Code provisions.

Defendant successfully demurred to the second and fourth causes of action for waiting time penalties on the ground that the pay for the omitted breaks (Lab. Code,

226.7) was not wages that had to be paid when plaintiffs were discharged or quit (Lab. Code, 203.) Defendant then won an order essentially granting summary adjudication (although called an order granting summary judgment) against the first and third causes of action. The first cause of action was barred on the grounds (1) that the pay for omitted breaks (Lab. Code, 226.7) was a penalty and not wages and (2) while a right to wages could be the subject of restitution under the UCL, a right to a penalty could not. Furthermore, the requested injunctive relief against grape tasting was the exclusive province of the California Division of Occupational Safety and Health as to work practices and the workers compensation system as to work injuries. The third cause of action was barred because no private right of action exists for the omitted break pay. Based on the elimination of the four causes of action by the orders sustaining the demurrer and granting summary adjudication, a summary judgment was filed in February 2004 ruling that plaintiffs take nothing.

Plaintiffs appealed, and we filed an opinion on June 8, 2006, reversing the summary judgment as to the first and third causes of action, directing summary adjudication in favor of defendant as to the restitution requested in the first cause of action, and affirming the summary judgment against the second and fourth causes of action for waiting time penalties. Our decision would have left for resolution by the trial court in further proceedings on remand the third cause of action for pay for omitted breaks and the portion of the first cause of action for injunctive relief respecting the grape tasting. However, the Supreme Court granted review and then transferred the case back to us with the direction to vacate our decision and reconsider the case in light of Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094 (Murphy), in which the court held that pay for omitted breaks (Lab. Code, 226.7) is not a penalty subject to a one-year statute of limitations, but a wage or premium pay subject to a three-year statute of limitations. Arguably, this holding would have had significant effects on the superior court judgment. It would have required a holding that pay for omitted breaks is wages that must be paid when the employee is discharged or quits; this holding would require a reversal of the superior courts summary judgment and sustaining of the demurrer against plaintiffs second and fourth causes of action for waiting penalties (Lab. Code, 203). Also, if pay for omitted breaks is wages, then pay for omitted breaks could support a UCL claim for restitution, and reversal would be required of the summary judgment against the portion of the first cause of action claiming restitution. Thus, the ultimate effect of reconsidering this case in light of Murphy might well have been the reversal of the superior court judgment as to all four causes of action in their entirety.

In view of the possibility of these extended trial court proceedings, the parties have reached a settlement via this courts settlement program.^[2] The parties filed on March 3, 2008, a joint letter memorandum and accompanying copy of the fully executed settlement agreement. The parties stipulate to the reversal of the summary judgment in its entirety with directions to the superior court to conduct further proceedings consistent with the terms of the settlement agreement. Specifically, the superior court is to approve the settlement agreement, enter a judgment ordering the agreed permanent injunction and ordering the parties to abide by the terms of the settlement agreement, and to retain jurisdiction for four years to take any actions necessary to implement and enforce the judgment and settlement agreement. In sum, the injunction is against tasting unwashed grapes and requires the provision of rest and meal breaks. The main provisions of the settlement agreement create a settlement fund to be distributed by a settlement administrator (1) to pay specified fees, costs, and expenses and (2) to make specified payments in compensation for omitted breaks (Lab. Code, 226.7) to plaintiffs and other persons employed by defendant during the 2001 and 2002 harvests who show their entitlement under the settlement agreement by timely submitting a settlement claim form. No provision is made for payment of wait time penalties. (Lab. Code, 203.) Claimants must execute a release of any and all claims resulting from or occurring in connection with [the claimants] employment by [defendant]. The settlement agreement includes a procedure to notify potentially eligible claimants.

We now proceed to an evaluation of the stipulation to reverse under section 128, subdivision (a)(8).

APPROVAL OF STIPULATED REVERSAL

The proposed settlement calls for the reversal of the judgment appealed. Section 128(a)(8) provides in relevant part: An appellate court shall not reverse or vacate a duly entered judgment upon an agreement or stipulation of the parties unless the court finds both of the following: [] (A) There is no reasonable possibility that the interests of nonparties or the public will be adversely affected by the reversal. [] (B) The reasons of the parties for requesting reversal outweigh the erosion of public trust that may result from the nullification of a judgment and the risk that the availability of stipulated reversal will reduce the incentive for pretrial settlement.

1. Effect on Nonparties and Public

Regarding the first finding, we must consider how the interests of nonparties or the public might be affected by the stipulation. ( 128, subd. (a)(8)(A).) Specifically, we must inquire whether there is a reasonable possibility that the interests of a nonparty would be adversely affected by the reversal. (Ibid.)

In this case, interested nonparties include farm workers who worked for defendant during the 2001 and 2002 harvests, who are eligible to receive payments under the settlement agreement, and farm workers who did not work for defendant during these harvests, but who now work or worked at other times for defendant, or who have worked for any farmer in California. Interested nonparties also include California farmers who hire farm workers.

As to all these nonparties and the public in general, the stipulated reversal and settlement agreement do not adversely affect any of their rights. In the first place, the Supreme Courts order vacates our decision and mandates a reconsideration that appears to require a reversal of the superior court judgment in its entirety. Thus, the stipulation to reverse has no more effect than the Supreme Courts order likely would have had.

Any effect of the stipulated reversal cannot be considered adverse. That effect, as to farm workers who worked for defendant, is to directly enforce farm workers rights to safe and healthy work practices and to compensation for omitted breaks, but not to wait time penalties for that compensation, and to waive any claims they might have arising out of their employment by defendant. These provisions reasonably compromise the claims of both sides. That effect, as to farm workers who now work for defendant, is to directly enforce their rights to safe and healthy work practices pursuant to the injunction. That effect, as to other farm workers and California farmers other than defendant, is as an informal precedent enforcing in a non-punitive fashion farm workers rights to safe and healthy work practices without payment of waiting penalties (Lab. Code, 203).

We also note that copies of briefs in the appeal were provided to the Attorney General because this case involved the UCL. (See Bus. & Prof. Code, 17209.)

We find no reasonable possibility exists that the proposed stipulated reversal would adversely affect the interests of nonparties or the public. ( 128, subd. (a)(8)(A).)

2. Reasons for Stipulated Reversal

Regarding the second, two-pronged finding weighing the reasons for reversal against the effect on public trust and pretrial settlement ( 128, subd. (a)(8)(B)), we must first identify the parties reasons for preferring stipulated reversal over dismissal.

We observe that the reversal contemplated by the parties is not on the merits, but rather on the ground of the mootness resulting from the settlement and the lack of a dispute requiring a judicial decision. (See, e.g., Lundquist v. Reusser (1994) 7 Cal.4th 1193, 1202, fn. 8 [parties settlement pending appeal rendered case moot, but Supreme Court did not dismiss so it could reach issues of continuing public importance]; County of Fresno v. Shelton (1998) 66 Cal.App.4th 996, 1005 [settlement commonly results in mootness]; see 9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, 644, p. 673.) Additionally, in this case, the reversal is solely for the purposes of (1) avoiding any implication that the judgment appealed remains in effect and (2) restoring the case to the superior courts jurisdiction so that it may enforce the settlement agreement. (Compare Paul v. Milk Depots, Inc., (1964) 62 Cal.2d 129, 134-135 [reversal with direction to dismiss moot superior court action].)

3. Erosion of Public Trust

Taking first the issue of the erosion of public trust and postponing consideration of the effect on pretrial settlement incentives, public trust is eroded by a stipulated reversal when it appears that through settlement one party has paid off the other to obtain the particular result from the appellate court that the payor desiredthe condemnation of the trial courts judgment implied by the reversal. This reflects poorly on both courts implying that the trial court erred and that the appellate courts reversal was groundless. (See Neary v. Regents of University of California (1992) 3 Cal.4th 273, 287, 293-294 (dis. opn. of Kennard, J.).)

However, as just explained, this stipulated reversal is not on the merits and does not reflect poorly on either the trial or appellate court, because the ground of the reversal is actually mootnessthe absence of a justiciable dispute because of the settlement. Furthermore, the trial court judgment was already the subject of a partially adverse decision by this court and a Supreme Court direction to this court that could possibly result in a complete reversal of the superior court judgment on the merits. Therefore, no additional condemnation of the judgment on the merits is implied by this stipulated reversal, which, therefore, does not erode public trust in the integrity of the judicial system. (Compare Union Bank of California v. Braille Inst. of America, Inc. (2001) 92 Cal.App.4th 1324, 1331 [public trust . . . also enhanced by settlements of pending appeals and related litigation].)

We find the significant reasons for the stipulated reversal outweigh the negligible possibility of the erosion of the publics trust.

4. Disincentive for Pretrial Settlement

As the final task required by section 128, subdivision (a)(8), and subdivision (B) in particular, we must weigh the reasons for stipulating to reverse against the risk that the availability of stipulated reversal will reduce the incentive for pretrial settlement. The concern is that parties will avoid settling a case before the trial court decides it because the parties know they can appeal and then settle for a stipulated reversal of the disliked ruling. Pretrial settlement is, of course, more economical than settlement on appeal. (See Neary v. Regents of University of California, supra, 3 Cal.4th at pp. 288-291 (dis. opn. of Kennard, J.).)

This risk is not applicable here because the parties had not yet gone to trial. The important, undecided issues raised in this case required some judicial resolution, as evidenced by the Supreme Courts granting of the petition for review and subsequent order transferring this case back to this court.

Therefore, we find that the parties reasons for stipulating to this reversal outweigh the nonexistent disincentive of the stipulated reversal in this case to pretrial settlement. ( 128, subd. (a)(8)(B).)

We have completed the task set by section 128(a)(8), and find that stipulated reversal is appropriate in this case.

DISPOSITION

Pursuant to the Supreme Courts transfer order, the opinion previously filed June 8, 2006, is vacated. Pursuant to the stipulation of the parties, the judgment is reversed. This reversal of the judgment does not indicate a ruling on the merits of the judgment, but serves only to vacate the judgment and restore jurisdiction to the trial court so that it may carry out the following directions implementing and enforcing the parties settlement agreement.

The clerk of this court is directed to send, with the copy of this opinion sent to the superior court, a copy of the recitals re: stipulation to reverse, with the attached settlement agreement, filed in this court April 2, 2008. The trial court is directed: (1) to approve the settlement agreement, and to approve the form and content of the settlement notice and claim form attached to the settlement agreement; (2) to enter a judgment ordering the agreed permanent injunction, which shall terminate at the conclusion of the 2012 grape harvest, and ordering the parties to abide by the terms of the settlement agreement; and (3) to retain jurisdiction until the permanent injunction is terminated to take any actions necessary to implement and enforce the injunction, the judgment, and the settlement agreement.

In the interests of justice and pursuant to paragraph 2.20 of the settlement

agreement (pages 13-14) and subject to the terms of that paragraph, costs on appeal are

awarded to plaintiffs. (Cal. Rules of Court, rule 8.278(a)(5).)

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

/s/ McKinster

Acting P.J.

We concur:

/s/ Richli

J.

/s/ Gaut

J.

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^[1]All further statutory references are to the Code of Civil Procedure unless otherwise indicated.

^[2]The parties, counsel, and the volunteer mediator, Justice James D. Ward (Ret.), are to be commended in reaching a statesmanlike resolution of the dispute between the parties.