Filed 9/6/18 Kane v. Schear, Inc. CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from a judgment and order of the Superior Court of Orange County, Gregory H. Lewis, Judge. Reversed and remanded.

Odenbreit Law and Katherine Jean Odenbreit; and Briana Kim and Briana M. Kim for Plaintiffs and Appellants.

No appearance for Defendant and Respondent.

* * *

Appellants Jason Kane and Christopher Simrak (collectively, plaintiffs) sued their former employer respondent Schear, Inc. (Schear), alleging various employment-related causes of action. Following trial, a jury rendered special verdicts in plaintiffs’ favor on most of their claims. Over plaintiffs’ objections, the trial court entered Schear’s proposed judgment as the final judgment and denied their motion to set aside and vacate the judgment, and enter an amended judgment consistent with the jury’s special verdicts. For the reasons set forth below, we agree with plaintiffs the judgment was not supported by the jury’s special verdicts or the uncontroverted facts. Accordingly, we reverse and remand for further proceedings.

I.

Factual Background & Procedural History

On March 8, 2017, plaintiffs filed a Second Amended Complaint (SAC) against Schear.[1] The SAC alleged that plaintiffs were former employees who were wrongfully terminated after complaining about Schear’s failure to comply with California’s wage and hour laws. The SAC alleged causes of action for: (1) failure to pay overtime compensation in violation of Labor Code sections 510, 558 and 1194; (2) failure to provide mandated meal breaks in violation of Labor Code sections 226.7 and 512; (3) failure to provide mandated rest breaks in violation of Labor Code sections 226.7 and 512; (4) waiting time penalties pursuant to Labor Code sections 201 through 203; (5) intentional failure to provide accurate itemized wage statements in violation of Labor Code section 226, subdivision (a); (6) wrongful termination in violation of public policy; (7) retaliation in violation of Labor Code sections 1102.5 et seq.; (8) unfair business practices in violation of Business and Professions Code sections 17200 et seq.; and (9) violation of Labor Code sections 2699 et seq. [California Private Attorney General Act (PAGA)].[2] With respect to the first cause of action for failure to pay overtime compensation, the SAC alleged that plaintiffs “were not paid for time worked during meal periods . . . nor was such time used to calculate overtime due to Plaintiffs.”

Plaintiffs argued in their trial brief that since they worked during their meal breaks, “they should have been paid minimum and/or overtime wages for this time.” They further contended: “[Schear] knew that Employees were working on its behalf but chose not to compensate them for this off-the-clock time, in violation of Labor Code section 1194.”[3]

A few days later, the parties agreed to the following joint stipulation: “Plaintiffs contend they reasonably believed they were terminated for complaints to employer Schear, Inc. about not being properly paid overtime, minimum wages, and not provided meal and rest breaks. [¶] The parties have stipulated and agreed that employer Schear, Inc. was not obligated to pay them overtime.”

A jury trial on the SAC began on March 16, 2017. Following presentation of evidence, Schear moved for nonsuit. In response, the court asked plaintiffs’ counsel whether there was substantial evidence supporting plaintiffs’ claims in the nine causes of action. Counsel replied that causes of action four, five, and eight were derivative. “So if we prove the meal or the underlying Labor Code violations those causes of action would stem from those same facts and findings” in the first three causes of action. Asked about the ninth cause of action, counsel stated: “At the conclusion, if there is a verdict in our favor, we would be asking the court to award those penalties of which 75 percent goes to the Labor Commissioner, 25 percent goes to the employees; but that is an equitable remedy.”

Plaintiffs asserted a claim for unpaid wages at trial. In her opening statement, plaintiffs’ attorney argued that in addition to Schear’s failure to pay a rest period premium wage, plaintiffs “were not even paid minimum wage for the 30-minute period that was being automatically deducted from their time records every day, because you will hear testimony from them that they were actually working through this 30-minute period that was being deducted.” During closing argument, plaintiffs’ attorney discussed the minimum wage claim and provided guidance on calculating the amount recoverable under that claim. Following closing arguments, the trial court jury instructed the jury with CACI No. 2701, “Nonpayment of Minimum Wage – Essential Factual Elements.” The instruction provided that plaintiffs claimed that Schear owed them wages at the legal minimum wage rate for some or all hours worked.

The jury returned its findings on separate special verdict forms for Kane and Simrak. As to Kane, the jury found in his favor on his claims for “unpaid wages for time worked during meal breaks,” “failure to provide meal and rest breaks,” failure to provide accurate, itemized wage statements, wrongful termination in violation of public policy, and retaliation. It found Kane suffered $900 in damages on his claim for unpaid wages, and $1,800 on his claim for failure to provide meal and rest breaks. As to Simrak, the jury found in his favor on his claims for “unpaid wages for time worked during meal breaks,” “failure to provide meal and rest breaks,” failure to provide accurate, itemized wage statements, and retaliation. It found Simrak suffered $383 in damages on his claim for unpaid wages, and $766 on his claim for failure to provide meal and rest breaks. It found in favor of Schear on the remaining claims (plaintiffs’ waiting time penalties claim and Simrak’s constructive termination claim).

Following the jury’s verdict, the jury was polled and discharged. The court directed Schear’s counsel to prepare the judgment.

On April 3, 2017, Schear submitted a proposed judgment which stated, among other things, the following:

“2. Prior to the commencement of trial, by stipulation between Plaintiffs and Defendants, Plaintiffs’ first cause of action against Defendants for failure to pay overtime was dismissed with prejudice.”

“4. As to Plaintiff Kane’s second amended complaint against Defendant Schear Inc.;

“A. As to Plaintiff Kane’s second cause of action for failure to allow meal and rest breaks, the Jury finds for Plaintiff Kane and against Defendant Schear Inc. The Jury awards Plaintiff Kane $900.00.

“B. As to Plaintiff Kane’s third cause of action for failure to provide meal and rest breaks, the Jury finds for Plaintiff Kane and against Defendant Schear Inc. The Jury awards Plaintiff Kane 1,800.00. . . . [¶] . . . [¶]

“G. As to Plaintiff Kane’s eighth cause of action for unfair competition, the Court rules for Defendant Schear Inc. and against Plaintiff Kane.

“H. As to Plaintiff Kane’s ninth cause of action for violation of [L]abor [C]ode section 2699 et seq., the Court rules for Defendant Schear Inc. and against Plaintiff Kane.”

“5. As to Plaintiff Simrak’s second amended complaint against Defendant Schear Inc.;

“A. As to Plaintiff Simrak’s second cause of action for failure to allow meal and rest breaks, the Jury finds for Plaintiff Simrak and against Defendant Schear Inc. The Jury awards Plaintiff Simrak $383.00.

“B. As to Plaintiff Simrak’s third cause of action for failure to provide meal and rest breaks, the Jury finds for Plaintiff Simrak and against Defendant Schear Inc. The Jury awards Plaintiff Simrak $766.00. . . . [¶] . . .[¶]

“G. As to Plaintiff Simrak’s eighth cause of action for unfair competition, the Court rules for Defendant Schear Inc. and against Plaintiff Simrak.

“H. As to Plaintiff Simrak’s ninth cause of action for violation of [L]abor [C]ode section 2699 et seq., the Court rules for Defendant Schear Inc. and against Plaintiff Simrak.” (Bold and underscoring removed.)

Over plaintiffs’ objections, the trial entered the proposed judgment as the final judgment on April 20, 2017. On May 15, 2017, plaintiffs’ filed a motion to amend the judgment under Code of Civil Procedure section 663.^[4] Plaintiffs contended the judgment erroneously stated the entire first cause of action had been dismissed before trial. Rather, plaintiffs argued, the record established only overtime pay allegations were stricken, leaving a cause of action for unpaid minimum wage. Moreover, the jury found that plaintiffs were entitled to recover damages on that minimum wage claim. Plaintiffs also argued the judgment incorrectly stated that the trial court had ruled on their equitable claims (the eighth and ninth causes of action in the SAC), contending that “[a]t no time following the jury trial did the Court or the parties address Plaintiffs’ equitable claims.”

The trial court denied plaintiffs’ motion to amend the judgment. In its minute order, the court concluded: “The Judgment is consistent with the two Special Verdicts rendered in this case. There was no clerical mistake. [¶] Plaintiffs dismissed the First Cause of Action for overtime. [¶] After the trial, Plaintiffs are contending that there was a portion of the First Cause of Action concerning minimum wage that was still pending. Plaintiffs waived any claim for minimum wage by failing to object to the Special Verdicts.” The court also concluded plaintiffs failed to prosecute the eighth and ninth causes of action claims.

Plaintiffs timely appealed. (Ryan v. Rosenfeld (2017) 3 Cal.5th 124, 127

[§ 663 denials separately appealable under § 904.1, subd. (a)(2)].)

II.

Discussion

Section 663 authorizes a trial court to vacate a judgment and enter a new judgment under the following circumstances: “A judgment or decree, when based upon a decision by the court . . . may, upon motion of the party aggrieved, be set aside and vacated by the same court, and another and different judgment entered, for either of the following causes, materially affecting the substantial rights of the party and entitling the party to a different judgment: [¶] 1. Incorrect or erroneous legal basis for the decision, not consistent with or not supported by the facts; and in such case when the judgment is set aside, the statement of decision shall be amended and corrected. [¶] 2. A judgment or decree not consistent with or not supported by the special verdict.” “It is designed to enable speedy rectification of a judgment rendered upon erroneous application of the law to facts which have been found by the court or jury or which are otherwise uncontroverted.” (Forman v. Knapp Press (1985) 173 Cal.App.3d 200, 203.)

Here, the judgment was inconsistent with the uncontroverted facts and the jury’s special verdicts. As noted above, the jury found that Kane suffered $900 in damages on his claim for unpaid wages and $1,800 on his claim for failure to provide meal and rest breaks, and that Simrak suffered $383 in damages on his claim for unpaid wages, and $766 on his claim for failure to provide meal and rest breaks. Based on the jury’s special verdicts, the judgment should have stated that Kane was awarded $900 on his claim under the first cause of action for failure to pay minimum wage under Labor Code section 1994; and awarded $1,800 on his claim under the second cause of action for failure to provide mandated meal breaks and the third cause of action for failure to provide mandated rest breaks. Similarly, the judgment should have stated that Simrak was awarded $383 under the first cause of action and $766 under the second and third causes of action. The judgment erroneously states the jury awarded Kane $1,800 and Simrak $766 under the “third cause of action for failure to provide meal and rest breaks.” There is no such cause of action in the SAC. Rather, the third cause of action in the SAC is a claim for “failure to provide mandated rest breaks.” The judgment also incorrectly stated the jury awarded Kane $900 and Simrak $383 for unpaid wages under “second cause of action for failure to allow meal and rest breaks.” The second cause of action was a claim for “failure to provide mandated meal breaks,” not a claim for failure to allow meal and rest breaks. In sum, the judgment was not supported by and inconsistent with the jury’s special verdicts.

In denying plaintiffs’ section 633 motion to amend the judgment, the trial court concluded that plaintiffs were not entitled to any recovery under their first cause of action. The court noted that plaintiffs had dismissed the “First Cause of Action for overtime,” and it concluded they had waived “any claim for minimum wage by failing to object to the Special Verdicts.” We conclude plaintiffs had a viable claim for unpaid minimum wage under the first cause of action and that the jury found damages were recoverable on those claims in their special verdicts. The dismissal of the overtime allegations in the first cause of action left a claim for unpaid minimum wage claims, and the jury was presented with and instructed on plaintiffs’ minimum wage claim. The jury’s findings on plaintiffs’ claim for “unpaid wages” were findings on the minimum wage claims. In short, plaintiffs were entitled to recover $900 (Kane) and $363 (Simrak) on their claims for unpaid minimum wages under the first cause of action in the SAC.

The judgment also states the trial court had ruled against plaintiffs on their eighth cause of action for unfair competition and their ninth cause of action for violation of Labor Code section 2699 et seq. But nothing in the record shows the court ruled on those causes of action. The judgment therefore must be amended to strike these statements.

The trial court also held that plaintiffs could no longer move for a directed verdict on their eighth and ninth causes of action because they failed to prosecute them at trial. Under section 583.410, subdivision (a), a court may in its discretion “dismiss an action for delay in prosecution pursuant to this article on its own motion or on motion of the defendant if to do so appears to the court appropriate under the circumstances of the case.” A review of the record shows Schear did not move to dismiss for delay in prosecution. To the extent the court dismissed those causes of action on its own motion, it failed to provide plaintiffs with proper notice. Section 583.410, subdivision (b), provides that a discretionary dismissal for delay “shall be pursuant to the procedure and in accordance with the criteria prescribed by rules adopted by the Judicial Council.” California Rules of Court, rule 3.1340(b) states: “If the court intends to dismiss an action on its own motion, the clerk must set a hearing on the dismissal and send notice to all parties at least 20 days before the hearing date.” (Accord, Roman v. Usary Tire & Service Center (1994) 29 Cal.App.4th 1422, 1428.) In addition, “[d]ue process demands notice to the plaintiff adequate to defend against the charge of procrastination.” (Cohen v. Hughes Markets, Inc. (1995) 36 Cal.App.4th 1693, 1698.) Nothing in the record shows the court provided plaintiffs with the requisite notice.

Moreover, even had the court provided proper notice, we would conclude the trial court abused its discretion in ordering dismissal. The record does not support a finding that plaintiffs were dilatory in prosecuting the eighth and ninth causes of action. As to the eighth cause of action for unfair business practices, the court and the parties appeared to believe that it was presented to the jury. (But see Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173 (Cortez) [UCL action is an equitable claim for court to decide].) With respect to the ninth cause of action seeking relief under PAGA, plaintiffs expressly informed the court and Schear that if plaintiffs prevailed on their legal claims, they intended to seek their “equitable remedy” in the form of civil penalties. As the trial court correctly noted, the jury’s findings on plaintiffs’ other Labor Code claims would result in directed verdicts against Schear on the eighth and ninth causes of action. An employer engages in unfair business practices if the employer violates California’s wage and hour laws. (See, e.g., Cortez, supra, at p. 177 [under UCL, employer’s failure to pay earned wages was an unlawful business practice]; Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191, 1206-1207 [under UCL, California employer’s failure to pay overtime wages to out-of-state employees was an unlawful business practice]; Tomlinson v. Indymac Bank, F.S.B. (C.D.Cal. 2005) 359 F.Supp.2d 891, 895-897 [employer’s failure to pay meal break premium wages was an unlawful business practice under the UCL].) Likewise, under PAGA, once a jury determines that an employer has violated certain Labor Code provisions, the trial court must assess civil penalties. (Lab. Code, § 2699, subd. (f).) In sum, we conclude the trial court erred by issuing a judgment stating the court had ruled against plaintiffs on the eighth and ninth causes of action.

III.

Disposition

The order denying plaintiffs’ section 663 motion to vacate and amend the judgment is reversed. The matter is remanded for further proceedings on the section 663 motion consistent with this opinion. Plaintiffs and appellants are awarded their costs on appeal.

ARONSON, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

GOETHALS, J.