NOBLE v. DRAPER

Filed 1/31/08

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Placer)

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Story Continues from Part I .

Defendants rely on section 96, subdivision (d), (fn. 4, ante), which on its face does not give the Labor Commissioner authority to adjudicate misrepresentation claims but rather calls for the Labor Commissioner to take assignment of claims for misrepresentation of conditions of employment.

Even assuming for the sake of argument that plaintiffs claims for fraud in the inducement could be characterized as conditions of employment, section 96 does not confer jurisdiction on the Labor Commissioner to adjudicate claims arising outside the Labor Code but rather, as courts have described the statute, calls for the Labor Commissioner to take assignment of employee claims with the authority to resolve all matters within its jurisdiction. (Post v. Palo/Haklar & Associates (2000) 23 Cal.4th 942, 947.)

There is a difference between assignment and jurisdiction to adjudicate. An assignment is a transfer or setting over of

property, or of some right or interest therein, from one person to another . . . . (Ballentines Law Dictionary (3d ed. 1969) p. 100; see also, Blacks Law Dictionary (7th ed. 1999) p. 115 [assignment is a transfer of rights].)

Section 96 does not confer jurisdiction to adjudicate but rather authorizes the Labor Commission to assert assigned rights on employees behalf. This statute was discussed in Barbee v. Household Automotive Finance Corp. (2003) 113 Cal.App.4th 525, which affirmed summary judgment in favor of an employer in an employees civil lawsuit alleging wrongful termination in violation of public policy after the employee was fired for pursuing an intimate relationship with a subordinate. Barbee rejected the employees argument that section 96, subdivision (k), (fn. 4, ante), which authorized the Commissioner to take assignment of wage claims resulting from termination due to lawful conduct occurring during nonworking hours away from the employers premises, prohibited employers from taking adverse action against an employee for such conduct. (Barbee, supra, 113 Cal.App.4th at p. 533.) Barbee said section 96 did not set forth an independent public policy of substantive rights but merely established a procedure for the Commissioner to assert recognized rights on the employees behalf. (Id. at pp. 533-535.) While we agree with Barbee that section 96 establishes a procedure by which the Labor Commission may assert recognized rights on the employees behalf (id. at p. 535), we respectfully

disagree with Barbees comment that section 96 outlines the types of claims over which the Labor Commissioner shall exercise jurisdiction. (Ibid.; italics added.) The cited authorities did not go so far as to read section 96 itself as conferring jurisdiction. Rather, Barbee said: (See Resnik v. Anderson & Miles (1980) 109 Cal.App.3d 569, 572 [Labor Code sections 96 and 98, subdivision (a), expressly allow the Labor Commissioner to take assignment of employee claims with the authority to resolve all matters within its jurisdiction]; accord California Chamber of Commerce v. Simpson (C.D. Cal. 1985) 601 F.Supp. 104, 109 [Section 96, subdivision] (h) at least authorizes and may require the Labor Commissioner to accept assignments of severance benefit claims, for the purpose of prosecuting such claims on behalf of the assignor-employee]) . . . . (Barbee, supra, 113 Cal.App.4th at p. 535.)

Thus, the authority to take assignment is not necessarily coextensive with jurisdiction to adjudicate. Resnik (which held a real estate salesperson claiming an unpaid commission was an employee) was cited with approval by Post, supra, 23 Cal.4th 942, for its statement that sections 96 and 98 allow the commissioner to take assignment of employee claims with the authority to resolve all matters within its jurisdiction.^[1]

(Post, supra, 23 Cal.4th at p. 947 [commissioner in section 98 hearing must necessarily decide whether employment relationship exists].) Both Post and Resnik dealt with hearings on claims to recover wages/commissions. Thus, none of the cited cases held section 96 gave the Labor Commissioner jurisdiction to adjudicate the items listed in that statute that were outside the scope of a section 98 hearing for wage claims.

In determining whether section 96 confers jurisdiction on the Labor Commissioner to adjudicate the claims mentioned in the statute, we have in mind that, A court does not determine the meaning of a statute from a single word or sentence but in context; provisions relating to the same subject must be harmonized to the extent possible. [Citation.] (People v. Anderson (2002) 28 Cal.4th 767, 776.)

Section 95 broadly provides that the Division of Labor Standards Enforcement, of which the Labor Commissioner is chief ( 21, 79) may enforce the provisions of this code and all labor laws of the state the enforcement of which is not specifically vested in any other officer, board or commission.

The Labor Code contains various provisions, some which authorize the Labor Commissioner to represent employees in court actions against employers, and others which authorize the Labor Commissioner (or a designee) to adjudicate claims. Thus, for example, section 98.3^[2]provides the Labor Commissioner may prosecute actions, for employees unable to hire counsel, to collect wages, penalties, demands, return of workers tools, etc. In contrast, the Labor Commissioners jurisdiction to adjudicate the claims that were administratively adjudicated in this case is found in section 98 (fn. 8, ante), which states the Commissioner or a designee shall have the authority to investigate employee complaints and may provide for a hearing in any action to recover wages, penalties, and other demands for compensation properly before the division or the Labor Commissioner, including orders of the Industrial Welfare Commission, and shall determine all matters arising under his or her jurisdiction.

Sections 96 and 98 both appear in the same chapter of the Labor Code (Division 1, Chapter 4, Division of Labor Standards Enforcement, 79-107), which also includes section 98.8, authorizing the Labor Commissioner to promulgate regulations to carry out the chapters provisions. The regulations contain provisions specifically governing the conduct of hearings by the Labor Commissioner under section 98, with no mention of section 96. (Cal. Code Regs., tit. 8, 13501, 13502.) The section 98 administrative hearing procedure (commonly known as a Berman hearing after the name of its legislative sponsor) offers an administrative alternative for resolving wage claims. (Post, supra, 23 Cal.4th at pp. 946-947.)

That section 96 does not address administrative adjudication is apparent from some of the items listed in the statute. Thus, section 96, subdivision (i), refers to workers compensation awards which remain unpaid after they have become final. Such awards (which were under the exclusive jurisdiction of the Workers Compensation Appeals Board under section 3602) require no adjudication but only enforcement. Other items listed in section 96 (wage claims and bonds) have separate statutory sources for administrative hearings, such as section 98 (for wages, penalties, and other demands for compensation) and section 96.5 (which provides the Labor Commissioner shall conduct such hearings as may be necessary for the purpose of Section 7071.11 of the Business and Professions Code [actions against bonds]). Additionally, other provisions of the Labor Code authorize the Labor Commissioner to issue civil wage and penalty assessments subject to review by administrative hearing. (E.g., 1741 [public works projects].) Yet another provision of the Labor Code ( 96.7 [collection of wages without assignment]) was held to authorize the Labor Commissioner to collect unpaid wages against a contractors payment bond (which is used in public works projects as a practical substitute for a mechanics lien), even without an assignment of rights. (Dept. of Industrial Relations v. Fidelity Roof Co. (1997) 60 Cal.App.4th 411, 426-427; 1 Marsh, California Mechanics Lien Law (6th ed.) 6.17, pp. 6-24.12; 6-24.13.) It is not clear whether section 96.7 would also apply to mechanics liens, for which jurisdiction generally lies in the Superior Court. (Cal. Const., art. XIV, 3 [Legislature shall provide for speedy and efficient enforcement of mechanics liens]; Code Civ. Proc.,  392, subd. (a)(2) [superior court in county where property is located is the proper court for trial of actions for the foreclosure of liens]; Civ. Code, 3109-3154 [Mechanics Liens]; Civ. Code, 3152 [statutory provisions for enforcement of mechanics lien do not affect claimants right to maintain personal action to recover debt]; 44 Cal.Jur.3d Mechanics Liens, 136, p. 255, and 195, p. 327.)

In sum, we see nothing in section 98, or even section 96, giving the Labor Commissioner jurisdiction to adjudicate tort claims involving conduct that predated the employment relationship or unfair business practice claims under the Business and Professions Code.

Indeed, to conclude that the Legislature gave the Commissioner jurisdiction of such claims would be odd, given the informal nature of the section 98 proceeding. Thus, section 98, subdivision (a), states, It is the intent of the Legislature that hearings held pursuant to this section be conducted in an informal setting preserving the right of the parties. In a section 98 hearing, the pleadings are limited to a complaint and an answer; the answer may set forth the evidence that the defendant intends to rely on, and there is no discovery process . . . . ( 98.) The commissioner must decide the claim within 15 days after the hearing. ( 98.1.) (Cuadra v. Millan (1998) 17 Cal.4th 855, 858-859, disapproved on other grounds in Samuels v. Mix (1999) 22 Cal.4th 1, 16, fn. 4.) Moreover, section 98 hearings are often conducted not by the Labor Commissioner but by a hearing officer, as was the case here.

In our view, the informal section 98 hearing process, which lacks even the basic rudiments of pre-trial discovery, is not designed to adjudicate pre-employment claims for fraud and misrepresentation.

We conclude the Labor Commissioner did not have jurisdiction to decide the misrepresentation or unfair business practice claims alleged in plaintiffs complaint. Accordingly, the claim preclusion aspect of res judicata does not bar plaintiffs complaint.^[3] (People v. Damon, supra, 51 Cal.App.4th at pp. 974-975.)

Although the claim preclusion aspect of res judicata does not apply, we briefly consider whether the judgment can be affirmed on a ground not urged by defendants on appeal, i.e., collateral estoppel based on the Labor Commissioners findings that Noble and Hernandez quit. It does not appear that the findings they quit were essential to the Labor Commissioners decisions. The identity of issues requirement of collateral estoppel asks whether identical factual allegations are at stake in the two proceedings, not whether ultimate issues or dispositions are the same. (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341-342; County of Los Angeles v. Southern Cal. Edison Co. (2003) 112 Cal.App.4th 1108, 1120.) The only apparent relevance of the termination of employment in the administrative hearings was that section 203^[4]imposes a penalty on the employer if it fails to give the employee his last paycheck within a specified time after the employee quits or is discharged. Thus, it did not matter in the administrative forum whether Noble and Hernandez quit or were discharged. Accordingly, collateral estoppel does not apply to the administrative findings that Noble and Hernandez quit.

We conclude res judicata does not bar the fourth, fifth, six, and seventh counts for fraud, negligent misrepresentation, false advertising, and unfair business practices, with respect to Noble and Hernandez.

We stress our opinion does not suggest the complaint has any merit. We merely hold this was not the way to dispose of it.

B. Moreno

Plaintiffs contend the trial court erred in dismissing Morenos claims for misrepresentation and unfair business practices on the ground the administrative tribunal found he had no employment relationship with defendants.^[5] They do not dispute the finality of the administrative decision, and they do not dispute that the unchallenged administrative determination of no employment relationship precludes Moreno from relitigating the issue of employment. ( 98.2, fn. 6, ante [failure to seek trial de novo results in binding judgment]; see also generally, Johnson v. City of Loma Linda, supra, 24 Cal.4th at p. 65; Smith v. City of Napa (2004) 120 Cal.App.4th 194, 199 [failure of plaintiff to overturn administrative decision precludes plaintiff from relitigating any actual adverse determination in a subsequent action at law].) Instead, they argue that, although the complaint asserted these causes of action on behalf of employees (which the complaint defined to include Moreno), that designation should not be controlling. Plaintiffs contend that, even if Moreno never worked for defendants as an employee, he was still defrauded by them, in that they induced him to leave his home and job in Mexico and travel to the USA to assist in setting up defendants restaurant. However, the misrepresentation claims (fraud, negligent misrepresentation, and false advertising) and the derivative unfair business practice claim which was based on the misrepresentation claims, as alleged in the complaint, were based on claims of fraudulent inducement of an employment contract. Each count, either expressly or by incorporation of preceding allegations, alleged plaintiffs worked for defendants. The absence of an employment relationship is fatal to those claims as to Moreno.

Elsewhere in their brief, under the heading discussing the unfair business practices claim, plaintiffs cite Morenos allegation, in his claim for breach of the covenant of good faith and fair dealing, that defendants encourag[ed] MORENO to share trade secrets and recipes . . . . They say that, although Moreno dismissed his claim for breach of the covenant, the same allegations were incorporated by reference into the count alleging unfair business practices. However, in their reply brief, plaintiffs say the individual claims of Moreno are not at issue with respect to the unfair practices claim, because they are claims which appellant voluntarily dismissed at the hearing before the trial court and which are not at issue in this appeal.

Accordingly, we see no basis to reverse the judgment with respect to Moreno.

III. Intentional Infliction of Emotional Distress

Plaintiffs contend the trial court erred in granting judgment on the pleadings as to the eighth count for intentional infliction of emotional distress, even though plaintiffs on the date set for trial were unable to identify the person who allegedly placed a threatening phone call to deter Joaquin Noble from attending the Labor Commissioner hearing. We shall conclude the contention lacks merit.

A motion for judgment on the pleadings may be made at any time up to and including the time of trial, and may be made on the same grounds as a demurrer (Stoops v. Abbassi (2002) 100 Cal.App.4th 644, 650), e.g., that the complaint is uncertain and fails to state facts sufficient to constitute a cause of action. (Code Civ. Proc., 430.10, subds. (e)-(f).)

The eighth cause of action for intentional infliction of emotional distress alleged that on March 11, 2004, four days before the administrative hearing date before the Labor Commissioner, an individual associated with defendants called

Maria Noble by telephone and warned her that Joaquin Noble should not appear to testify against defendants. The caller allegedly revealed he knew the Nobles address and the name of their daughter and allegedly threatened that if Joaquin testified, Marias daughter would be injured.

The eighth count alleged the acts and omissions of each of the Defendants were intentional. However, the eighth count did not allege any acts or omissions by defendants. Instead, it alleged only acts by an individual associated with defendants.

When the case came on for trial, defendants moved for judgment on the pleadings, on the grounds the complaint was uncertain as to who was alleged to have made the alleged call and whether it took place in Mexico (raising jurisdictional issues).

As observed by the trial court in granting judgment on the pleadings, the complaint did not allege that defendants authorized or even knew about the alleged call. The Nobles counsel admitted to the trial court that the Nobles had no idea who made the alleged call. We reiterate this admission was made after the discovery stage of the case, when the case was called for trial. Thus, although the matter was raised in a motion styled as a motion for judgment on the pleadings, the Nobles wanted to go to trial with no evidence whatsoever as to who made the alleged call, or whether it was made with the knowledge or consent of defendants. The Nobles theory was that the only

persons who would benefit from the alleged threat were defendants and therefore they must be liable.

On appeal, the Nobles argue the trial court erred, because the pertinent question is whether [defendants] had sufficient notice to investigate the claim . . . . The Nobles claim it does not matter that they cannot identify the caller, because the circumstances suffice to identify the persons association with defendants. Borrowing from defamation law, the Nobles cite authority that if (defamatory) statements do not identify the defamed person by name, it is sufficient (and necessary) for the defamed person to allege in his or her defamation lawsuit that the words were spoken about him or her (colloquium).

In response, defendants correctly point out this is not a defamation case, and the defamation law principle of colloquium has no application to this case. Indeed, the Nobles admit this in their reply brief, by criticizing defendants for discussing defamation law in their respondents brief, even though it was the Nobles who tried to inject defamation law into this case in their opening brief.

The problem for the Nobles is that they think they have enough to go to a jury based on their assumption that defendants must have had something to do with the alleged phone call because the alleged phone call was intended to benefit defendants. However, the Nobles assumption is false. The fact that a person benefits from something does not mean he had

anything to do with it. A friend acting on his/her own may have done it in a misguided attempt to help the person. An enemy may have done it in an attempt to get the person in trouble. A friend or enemy of the recipient of the phone call may have done it as a misguided joke or for purposes of mischief.

This is why the complaint was uncertain, and the case does not present a jury question. It is not enough to allege that a person associated with defendants made a call without also alleging (and proving) that defendants knew about and authorized the call. Thus, contrary to the Nobles argument, they have not presented a question for the jury to decide.

We conclude the trial court correctly dismissed the eighth count for intentional infliction of emotional distress.

DISPOSITION

The judgment is affirmed in its entirety as against Manuel Moreno. The portion of the judgment entering judgment on the pleadings in favor of defendants on the eighth count (intentional infliction of emotional distress) is affirmed. The portion of the judgment dismissing the fourth, fifth, sixth, and seventh counts is reversed as to plaintiffs Joaquin Noble and Jose Antonio Hernandez.

Plaintiffs Joaquin Noble and Jose Antonio Hernandez shall recover their costs from defendants. (Cal. Rules of Court, rule 8.278(a)(1).) As to the other plaintiffs, they and defendants

shall bear their own costs. (Cal. Rules of Court, rule 8.278(a)(5).)

SIMS , Acting P.J.

We concur:

MORRISON , J.

CANTIL-SAKAUYE , J.

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^[1]Resniks holding about the real estate salesperson being an employee was questioned in Grubb & Ellis Co. v. Spengler (1983) 143 Cal.App.3d 890, 896.) That issue is not material to this appeal.

^[2]Section 98.3 states: (a) The Labor Commissioner may prosecute all actions for the collection of wages, penalties, and demands of persons who in the judgment of the Labor Commissioner are financially unable to employ counsel and the Labor Commissioner believes have claims which are valid and enforceable. [] The Labor Commissioner may also prosecute actions for the return of workers tools which are in the illegal possession of another person. [] (b) The Labor Commissioner may prosecute action for the collection of wages and other moneys payable to employees or to the state arising out of an employment relationship or order of the Industrial Welfare Commission. [] (c) The Labor Commissioner may also prosecute action for the collection of other monetary benefits that are due the Industrial Relations Unpaid Wage Fund.

^[3]We therefore need not resolve plaintiffs claim that res judicata is made inapplicable by section 98.7, subdivision (f), which states: The rights and remedies provided by this section do not preclude an employee from pursuing any other rights and remedies under any other law.

^[4]Section 203 provides: If an employer willfully fails to pay, without abatement or reduction, in accordance with [specified sections], any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days. An employee who secretes or absents himself or herself to avoid payment to him or her, or who refuses to receive the payment when fully tendered to him or her . . . is not entitled to any benefit . . . .

^[5]An obvious clerical error appears in the trial courts order, which states the Labor Commissioners decision that Moreno was in an employer-employee relationship with defendants precludes him from consideration in the misrepresentation and unfair business practices causes of action, which on their face are limited to employees. The Labor Commissioner found Moreno was not an employee, and the court order obviously meant to say that.