Elder v. Schwan Food
Filed 2/27/13 Elder v. Schwan Food CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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
SECOND APPELLATE
DISTRICT
DIVISION THREE
FRED ELDER,
Plaintiff
and Respondent,
v.
THE SCHWAN FOOD COMPANY et al.,
Defendants
and Appellants.
B238876
(Los
Angeles County
Super. Ct.
No. BC390535)
APPEAL
from a judgment of the Superior Court
of
County, John P. Shook and Steven J. Kleifield,
Judges. Affirmed.
Kutak Rock,
Stephanie A. Hingle, Michael S. Kim and Alan L. Rupe for Defendants and
Appellants.
Righetti
Glugoski, Matthew Righetti, John Glugoski and Mike Righetti for Plaintiff and
Respondent.
_________________________
In
opn.]) (Elder I), the jury concluded
by special verdict that plaintiff Fred Elder was misclassified as an exempt
employee and worked nine hours a day, and 45 hours per week. Elder was awarded $9,944.42, in unpaid
overtime wages, which was limited to the three-year period preceding the filing
of his complaint. The trial court did
not award restitution for a violation of California’s
unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.)
and denied Elder’s request for civil penalties under The Labor Code Private
Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.). (Elder
I, at [pp. 3-4].) We remanded the
matter to the trial court to reconsider awarding restitution under the UCL
because the court could not disregard the jury verdict that the Schwan Food
Company (Schwan) violated the Labor Code.
at [pp. 5 -7].) We also concluded in
discretion to reduce the maximum amount of civil penalties awarded under PAGA,
but it had no discretion to outright deny civil
penalties. (Id. at [pp. 9-12]. )
Following remand,
the trial court awarded Elder a fourth year of unpaid overtime wages as
restitution under the UCL and also awarded civil penalties. Schwan appeals, contending reversal is
mandated because the company was deprived of its right to request and obtain a
statement of decision as the trial court never announced a tentative decision
before ruling on the matter. Schwan also
contends the trial court disregarded the company’s equitable defense under the
erroneous belief that it was bound by the law of the case doctrine to accept
the procedural recitation in Elder I,
in which we stated that the jury had rejected the company’s defense to the
overtime claim that Elder was properly classified as an exempt employee. We affirm.
FACTUAL AND
PROCEDURAL BACKGROUND
1.
Schwan
Misclassified Elder as an Exempt Employee
In
special verdict that Elder was not exempt from overtime wages under the outside
salesperson exemption to the overtime laws, despite testimony from Schwan representatives
that they believed Elder was exempt.
person “who customarily and regularly works more than half the working time
away from the employer’s place of business selling tangible or intangible items
or obtaining orders or contracts for products, services or use of
facilities.†(Cal. Code Regs., tit. 8, §
11070, subd. (2)(J).)
a.
Elder’s
Job Duties
Elder was a
customer sales representative for Schwan, supplying frozen Red Baron pizzas to
local grocery stores. He testified
regarding his job duties: “We presold
orders within the 48-hour period. So you
would go into a store and you would write an order and then transmit it – But
when you first went into the grocery store, you would work the product. You didn’t know if you needed a case of pizza
or not on the shelf. So you work it,
push it back. And if you needed it, you
would go into the back room. If you had
that item, you would bring it back in and merchandise it on the shelf. [¶]
And then when everything was done, you could write an accurate order and
then communicate that to the freezer person what you were bringing in in [
going to come. [¶] If we had sales promotions, if we were going
to be on the display planner, so there was a planner set forth by the
company. So, for instance, March food
madness would be potentially the first week in March. We may have Red Baron on sale at Albertsons. So we would have a planner set up where we
should have door number 1 or door number 2 for our space. So we would bring in the product and fill the
shelf and for that space.â€
Schwan also
employed “merchandisers,†whose job duties were to put the product on the
shelf. Elder testified that he had
merchandiser support, depending upon his assigned route.
Schwan’s regional
sales manager, Daniel Rowell, testified that he did not believe “merchandising
product per se†is a sales task. He
explained: “[W]hile you are
merchandising product, you can perform sales tasks. [¶]
You talk to the frozen food person while you are putting up
product. You look to the left and to the
right to see if there is opportunity to gain an incremental facing. So there is opportunity even while
merchandising. [¶] Rotating product, certainly that would not be
a sales task. [¶] Managing damaged product wouldn’t be a sales
task.â€
As Rowell further
explained, stocking shelves could involve making a sales presentation. “You are presenting a billboard effect. You’re merchandising so that when you are
done, you step back and you look at it and there are six Red Baron faceup, and
it looks like a billboard to the consumer as they walk by. So that is what I mean.â€
Rowell believed
that based upon Elder’s job description, Elder spent the majority of his time
engaged in sales. Rowell also testified
that he met with an attorney to ensure that Elder and similarly situated California
employees were properly classified as exempt employees.
b.
Jury
Rejects Outside Salesperson Exemption
By special
verdict, the jury answered “no†to the following three questions:
“1. Did Plaintiff Elder spend more than 50% of
his time engaged in outside sales?
“2. If you find Plaintiff Elder did not spend
more than 50% of his time engaged in outside sales, do you find that Plaintiff
Elder was involved principally in the sale of a product or service?
“3. Was more than 50% of Plaintiff Elder’s
compensation comprised of commission wages?â€
The jury also made
a finding that Elder worked nine hours a day and 45 hours per week. Based upon these findings, the trial court
calculated the amount of overtime pay owed to Elder on his legal claims. Elder received $9,944.42 in overtime pay,
plus prejudgment interest in the amount of $3,286.60, and post-judgment
interest.
Schwan persuaded
the trial court that Elder was not entitled to restitution or civil
penalties. Elder appealed.
2.
In Elder
I, we remanded the matter to the trial court to reconsider the equitable
remedy under the UCL, and to determine the appropriate civil penalties under
PAGA. We concluded the trial court was
bound by the jury’s findings that Elder had been misclassified as an exempt
employee in violation of California’s overtime laws, and Elder had established
that he had worked overtime for which he had not received overtime wages. (Elder
I, supra, B223911, at [p.
5].) We quoted Cortez v. Puralator Air Filtration Products Co.,
Supreme Court stated, “ ‘while we cannot foresee how any equitable
consideration could defeat a claim for unpaid wages, we cannot foreclose the
possibility that defendant has evidence that the trial court might consider
relevant when, on remand, it fashions a remedy for plaintiff’s unfair business
practice.’ †(Elder I, at [p. 6].)
We also concluded the trial court did not
have discretion to forgo imposing any civil penalties under PAGA, but the court
could exercise its discretion to impose less than the maximum amount. (Elder
I, supra, B223911, at [pp.
9-12].)
Although Schwan did not raise the issue in a
petition for rehearing, the company points out what it perceives as procedural
error in Elder I, that is, our
statement that the jury considered and rejected the company’s equitable defense
by finding that Elder was nonexempt. (
Schwan relied on evidence presented to the jury to persuade the court
not to award restitution under the UCL.
Nevertheless, our decision in Elder I
specifically directed the trial court to reconsider the company’s evidence and
to balance the equities when fashioning a remedy for Schwan’s violation of the
UCL. There is no indication in the
record that the trial court did not follow this directive.
3.
On remand, Schwan again asked the trial court not to
award restitution for a fourth year of overtime compensation. Relying on the evidence presented to the
jury, Schwan contended it had a good faith belief that Elder was exempt from
overtime. Schwan also presented argument
that while it would be unjust to retain a benefit (overtime wages) rightfully
belonging to Elder, this case presented a number of unique circumstances that
required the court to balance the equities in the company’s favor. First, Schwan argued that it “has for years
attempted to give Plaintiff his benefit back,†but Elder opted out of a class
action in which Schwan paid employees more than five hours per week in unpaid
overtime compensation. Second, Elder
pursued numerous claims against Schwan, and the jury rejected most of them,
including Elder’s claim that he was entitled to 15 hours of unpaid overtime
wages per week. Third, only Elder’s
counsel would benefit because “the fourth year of overtime compensation†would
exceed the offer to compromise made pursuant to Code of Civil Procedure section
998,
entitling Elder’s attorneys to hundreds of thousands of dollars in attorney
fees. Fourth, Elder never asked for
overtime wages while employed by Schwan and waited nearly five years to put the
company on notice that he should have been paid overtime.
In sum, Schwan argued that “[b]ut for
Plaintiff’s delay in asserting his rights to overtime and his unreasonable
expectations about the value of his claim which caused him to opt out of
matter never would have lingered in Court for over three years. Plaintiff is not entitled to a fourth year of
overtime wages, particularly to the extent the pre-judgment interest on those
wages bolster Plaintiff’s claim to exceed Schwan’s offer to compromise.â€
While presenting argument to the trial
court, Schwan’s counsel argued that in Elder
I we held the court erred because it could not award “nothing for that
year,†and the Court of Appeal “remanded it to you to determine what amount
should be entered.†Continuing, counsel
read into our opinion in Elder I that
“if the Court of Appeals [sic] had
wanted a full year, they would have entered judgment for that year. Instead, they returned it to you to balance
the equities.â€
title="">[5]
With respect to the civil penalties, Elder sought
the maximum amount. Schwan countered
that the company’s good faith designation of Elder as an exempt employee was
not a serious transgression of the Labor Code.
4.
On October 24, 2011, after taking the matter
under submission, the trial court issued a ruling on the submitted matter,
which was entered in the court’s minutes and mailed to the parties (October
order). The trial court awarded Elder an
additional $3,878.62 as restitution for the UCL violation, bringing the total
awarded for unpaid overtime wages to $13,823.04. The court also awarded $2,500 in civil
penalties. The October order
stated: “Plaintiff to file and serve a
proposed judgment.â€
On December 6, 2011, the trial court signed
the judgment that incorporated the language from the October order. Schwan timely appealed.
On appeal, Schwan contends the judgment must
be reversed because the trial court (1) deprived the company of its right to
request a statement of decision by not issuing a tentative decision, (2)
improperly relied on the law of the case doctrine by accepting as true an
erroneous recitation of the procedural history in Elder I, and (3) abused its discretion by awarding restitution and
civil penalties and ignoring the “abundance of evidence,†showing the company’s
good faith belief that Elder was an exempt employee. We discuss each contention in turn.
DISCUSSION
1.
The
Failure to Prepare a Statement of Decision Is Not Reversible Error
Schwan contends it was
deprived of its right to a statement of decision because the trial court did
not issue a tentative decision that triggered the company’s statutory
obligation to request a statement of decision.
(§ 632.) Section 632 states: “In superior courts, upon the trial of a question of fact by
the court, written findings of fact and conclusions of law shall not be
required. The court shall issue a
statement of decision explaining the factual and legal basis for its decision
as to each of the principal controverted issues at trial upon the request of
any party appearing at trial.†When a
party “requests a statement of decision, it must be prepared, and the failure
to do so is reversible error.
[Citations.]†(
Cal.App.3d 123, 127.)
Section 632 must be read in
conjunction with California Rules of Court, rule 3.1590, which governs the
procedure for issuance of a statement of decision. “On the trial of a question of fact by the
court, the court must announce its tentative decision by an oral statement,
entered in the minutes, or by a written statement filed with the clerk.†(Cal. Rules of Court, rule 3.1590(a).) The rules require that the trial court
announce an intended decision rather than making a final order or judgment to
give a party an opportunity to request a statement of decision to address the
principal controverted issues. (
Assuming the trial court’s
resolution of whether to award restitution for a violation of the UCL
constituted “disputed issues of fact,†the trial court had to issue a tentative
decision. (Cal. Rules of Court, rule
3.1590(a).) The October order filed with
the court clerk satisfies the requirements in the rules, and Schwan should have
requested a statement of decision within the statutory time frame. Contrary to Schwan’s contention, rule
3.1590(a) of the California Rules of Court does not require that the court
label its written order a “tentative decision,†or require that the tentative
decision contain the provisions set forth in California Rules of Court, rule
3.1590(c). These provisions are not
mandatory.
California Rules of Court nor section 632 require that a party
announces its tentative decision to request a statement of decision.
Citing Sweat v. Hollister (1995) 37 Cal.App.4th 603, 614, disapproved on
other grounds in Santisas v. Goodin
(1998) 17 Cal.4th 599, 609, footnote 5, Schwan contends that the phraseology of
the October order, including the use of the present tense instead of the
conditional tense, indicates the trial court’s order was determinative and
final. Sweat v. Hollister is inapposite.
In Sweat v. Hollister, the plaintiffs challenged the trial court’s
order awarding attorney fees to the prevailing defendants because the
plaintiffs dismissed the action after the court issued a telephonic ruling
granting summary judgment but before oral argument. (Sweat
v. Hollister, supra, 37
Cal.App.4th at pp. 610-612.) The
question of whether the defendants were entitled to attorney fees turned on
determining if the telephonic ruling was final when the plaintiffs filed their
dismissal. (Id. at p. 613.) Reviewing
the order, the appellate court determined the phraseology of the ruling as set
forth in the minute order was final and nothing in that order contemplated the
preparation of a subsequent judgment.
The Sweat court also noted
that the trial court was “familiar with the difference between tentative and
final decisions,†“its telephonic order was intended to be final,†and oral
argument “was simply to stay the imposition of the order pending oral
argument.†(Id. at p. 614.) Thus, the
cancellation of the oral argument by virtue of the dismissal, vacated the stay,
not the trial court’s decision. (
Unlike the
telephonic order in Sweat v. Hollister,
supra, 37 Cal.App.4th 603, the
October order was not a final judgment.
The October order indicated which party should prevail, setting out the
court’s opinion about how the judgment eventually should be entered, and
requested that Elder prepare a proposed judgment. Until judgment was entered, the October order
was not binding on the court. (Cal.
Rules of Court, rule 3.1590(b) [“The tentative decision does not constitute a
judgment and is not binding on the court.â€].)
While Schwan
maintains the October order was not a tentative decision, the company failed to
bring to the trial court’s attention that under rule 3.1590(a) of the
California Rules of Court, the court had to announce its tentative decision. If Schwan did not consider the October order
a tentative decision, it could have asked the trial court to cure what it now
perceives as a reversible procedural error before the court signed the
judgment. Schwan made no attempt to do
so after receiving the October order or during the six-week period before the
court signed the judgment. Schwan also
made no request for a statement of decision at any time during the trial court
proceedings and raised this issue for the first time on appeal. Under these circumstances, there is no
reversible error.
2.
The Trial
Court Did Not Erroneously Apply the Law of the Case Doctrine
Schwan contends
the trial court erred because the decision to award restitution is based upon
the erroneous belief that our procedural recitation in Elder I was “law of the case.â€
Thus, according to Schwan, the trial court did not consider the
company’s equitable defense or balance the equities before awarding Elder
restitution for the company’s UCL violation.
The record and law does not support this argument.
Law of the case
only applies to questions of law not the procedural history of a case. “ ‘The law of the case doctrine states that
when, in deciding an appeal, an appellate court “states in its opinion a
principle or rule of law necessary to the decision, that principle or rule
becomes the law of the case and must be adhered to throughout its subsequent
progress, both in the lower court and upon subsequent
appeal.†’ †(
Co. (2005) 126 Cal.App.4th 204, 212.)
In
trial court to balance the equities before deciding a remedy for the company’s
UCL violation. As Schwan’s counsel
argued in the trial court following remand, we did not direct the trial court
to award a fourth year of unpaid overtime wages to Elder, nor did we suggest to
the trial court that it should disregard any equitable defenses. Because the jury rendered its verdict before
the trial court considered the UCL claim, we noted in Elder I that the jury rejected the company’s defense that Elder was
properly classified as an exempt employee.
(Elder I, supra, B223911, at [p. 7].)
Our decision in Elder I,
however, was clear that the trial
court had to balance the equities before awarding an equitable remedy.
On remand,
Schwan’s counsel argued that the balance of equities favored the company. Schwan relied on, and cited to, evidence
presented during trial, including Rowell’s testimony, which the jury rejected. In addition, Schwan presented several arguments
that it would be unjust to permit Elder to recover a fourth year of unpaid
overtime wages.
The record
indicates that the trial court considered the briefs (which included citation
to the evidence presented at trial) and Schwan’s arguments. There is no indication that the trial court
disregarded our directions in Elder I. During oral argument, the trial court read
the following from Elder I: “We remand for the trial court to reconsider
the remedy and balance the equities. . . . [¶] In doing so, the trial court must not
overlook the jury’s verdict. The strong
public policy directed at the enforcement of California’s overtime laws and for
purposes of the U.C.L., as between the person enriched and the person harmed,
it would be unjust for the company to retain the benefit.†Schwan has made no affirmative showing of
error.
3.
Schwan Has
Failed to Meet Its Burden to Demonstrate Prejudicial Error
Schwan contends
that the trial court disregarded its equitable defense, ignoring evidence
supporting a reduction of both restitution and the civil penalties awarded to
Elder. Schwan overlooks that the trial
court exercised its discretion to reduce the amount of civil penalties
requested.
Schwan’s
contention is really an argument about the sufficiency of the evidence to
support its equitable defense, and the insufficiency of the evidence to support
the judgment. We begin with the
presumption that the record contains evidence to support the judgment. (Grassilli
v. Barr (2006) 142 Cal.App.4th 1260, 1278.)
On appeal, we do not weigh conflicts and disputes in the evidence. Our review begins and ends with a
determination as to whether there is any substantial evidence contradicted or
not, in support of the judgment. (
Other than asking
this court to substitute its discretion for that of the trial court, Schwan has
failed to show the evidence does not support the judgment. There was sufficient evidence in the record
to award restitution and to assess civil
penalties for a violation of California’s overtime laws. Thus, there was no prejudicial error.
DISPOSITION
The
judgment is affirmed. Elder is entitled
to costs on appeal.
ALDRICH,
J.
We concur:
KLEIN,
P. J.
KITCHING,
J.
and Professions Code section 17208 provides that “[a]ny action to enforce any
cause of action pursuant to this chapter shall be commenced within four years
after the cause of action accrued.â€
name="_ftn2" title="">[2]
business act or practice that violates the Labor Code through failure to pay
wages is an unfair business practice. (
Co. (2000) 23 Cal.4th 163, 178-179.)
