We hold that an employee who, on behalf of himself and other employees, sues an employer under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.) for Labor Code violations must satisfy class action requirements, but that those requirements need not be met when an employee's representative action against an employer is seeking civil penalties under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.).
Jose A. Arias sued his former employer, Angelo Dairy, and others. In the first through sixth causes of action of the first amended complaint, plaintiff on behalf of himself alleged violations of the Labor Code, labor regulations, and an Industrial Welfare Commission wage order.
The seventh and eighth causes of action alleged breach of contract and breach of the warranty of habitability on the ground that defendants provided residential units in a defective and dangerous condition.
The ninth cause of action alleged violations of the unfair competition law (Bus. & Prof. Code, § 17200 et seq.), based on defendants' failures to credit plaintiff for all hours worked, to pay overtime wages, to pay wages when due, to pay wages due upon termination, to provide rest and meal periods, and to obtain written authorization for deducting or offsetting wages.
The tenth cause of action sought enforcement under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.)
The eleventh cause of action alleged, under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.), that defendants had violated the Labor Code, labor regulations, and an Industrial Welfare Commission wage order by failing to pay all wages due, to provide itemized wage statements, to maintain adequate payroll records, to pay all wages due upon termination, to provide rest and meal periods, to offset proper amounts for employer-provided housing, and to provide necessary tools and equipment.
The trial court granted defendants' motion to strike the seventh through eleventh causes of action (brought on behalf of plaintiff and other employees) on the ground that plaintiff failed to comply with the pleading requirements for class actions. Plaintiff petitioned the Court of Appeal for a writ of mandate. That court held that the causes of action brought in a representative capacity alleging violations of the unfair competition law, but not the representative claims under the Labor Code Private Attorneys General Act of 2004, were subject to class action requirements. It issued a peremptory writ of mandate directing the trial court to issue a new order striking the representative claims alleged in the seventh through tenth causes of action, but not the eleventh cause of action. We granted plaintiff's petition for review.
Plaintiff contends the Court of Appeal erred in holding that to bring representative claims (that is, claims on behalf of others as well as himself) under the unfair competition law, he must comply with class action requirements.
In 2004, however, the electorate passed Proposition 64, an initiative measure. Proposition 64 amended the unfair competition law to provide that a private plaintiff may bring a representative action under this law only if the plaintiff has "suffered injury in fact and has lost money or property as a result of such unfair competition" and "complies with Section 382 of the Code of Civil Procedure . . . ."
Plaintiff contends that because Proposition 64's amendment of the unfair competition law requires compliance only with "[s]ection 382 of the Code of Civil Procedure" (§ 17203; see fn. 3, ante), and because that statute makes no mention of the words "class action," his representative lawsuit brought under the unfair competition law need not comply with the requirements governing a class action.
At issue is whether, as amended by the voters' passage of Proposition 64, section 17203's language stating that to bring a representative action under the unfair competition law a private plaintiff must "compl[y] with Section 382 of the Code of Civil Procedure," imposes a requirement that the action be brought as a class action. To resolve the issue, we examine the statutory language to determine the intent of those who enacted it.
We look first to the words of the initiative measure, as they generally provide the most reliable indicator of the voters' intent. (Bernard v. Foley (2006) 39 Cal.4th 794, 804 [47 Cal.Rptr.3d 248, 139 P.3d 1196]; Hsu v. Abbara (1995) 9 Cal.4th 863, 871 [39 Cal.Rptr.2d 824, 891 P.2d 804].) Usually, there is no need to construe a provision's words when they are clear and unambiguous and thus not reasonably susceptible of more than one meaning. (People v. Leal (2004) 33 Cal.4th 999, 1007 [16 Cal.Rptr.3d 869, 94 P.3d 1071]; People v. Gardeley (1996) 14 Cal.4th 605, 621 [59 Cal.Rptr.2d 356, 927 P.2d 713].) That, according to plaintiff, is true here.
A literal construction of an enactment, however, will not control when such a construction would frustrate the manifest purpose of the enactment as a whole. (People v. Gonzalez (2008) 43 Cal.4th 1118, 1126 [77 Cal.Rptr.3d 569, 184 P.3d 702]; Horwich v. Superior Court (1999) 21 Cal.4th 272, 276 [87 Cal.Rptr.2d 222, 980 P.2d 927]; Faria v. San Jacinto Unified School Dist. (1996) 50 Cal.App.4th 1939, 1945 [59 Cal.Rptr.2d 72].) "The intent prevails over the letter, and the letter will, if possible, be so read as to conform to the spirit of the act." (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735 [248 Cal.Rptr. 115, 755 P.2d 299].) In determining the purpose of an initiative measure, we consider the analysis and arguments contained in the official election materials submitted to the voters. (E.g., Professional Engineers in California Government v. Kempton, supra, 40 Cal.4th at p. 1050; Robert L. v. Superior Court, supra, 30 Cal.4th at p. 901.)
A thorough review of the Voter Information Guide prepared by the Secretary of State for the November 2, 2004, election at which the voters enacted Proposition 64 leaves no doubt that, as discussed below, one purpose of Proposition 64 was to impose class action requirements on private plaintiffs' representative actions brought under the unfair competition law.
The official title and summary of Proposition 64, prepared by the state Attorney General, told the voters that the initiative measure "[r]equires private representative claims to comply with procedural requirements applicable to class action lawsuits." (Voter Information Guide, Gen. Elec. (Nov. 2, 2004) official title and summary of Prop. 64, p. 38.) And the ballot measure summary, prepared by the Secretary of State, informed the voters that a "yes" vote meant that a "person pursuing [unfair competition law] claims on behalf of others would have to meet the additional requirements of class action lawsuits," while a "no" vote meant that a "person could bring such a lawsuit
We turn now to the next issue—whether class action requirements must also be satisfied when an aggrieved employee seeks civil penalties for himself and other employees under the Labor Code Private Attorneys General Act of 2004 for an employer's alleged Labor Code violations.
In September 2003, the Legislature enacted the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.; Stats. 2003, ch. 906, § 2, eff. Jan. 1, 2004). The Legislature declared that adequate financing of labor law enforcement was necessary to achieve maximum compliance with state labor laws, that staffing levels for labor law enforcement agencies had declined and were unlikely to keep pace with the future growth of the labor market, and that it was therefore in the public interest to allow aggrieved employees, acting as private attorneys general, to recover civil penalties for Labor Code violations, with the understanding that labor law enforcement agencies were to retain primacy over private enforcement efforts. (Stats. 2003, ch. 906, § 1.)
Before bringing a civil action for statutory penalties, an employee must comply with Labor Code section 2699.3. (Lab. Code, § 2699, subd. (a).) That statute requires the employee to give written notice of the alleged Labor Code violation to both the employer and the Labor and Workforce Development Agency, and the notice must describe facts and theories supporting the violation. (Id., § 2699.3, subd. (a).) If the agency notifies the employee and the employer that it does not intend to investigate (as occurred here), or if the agency fails to respond within 33 days, the employee may then bring a civil action against the employer. (Id., § 2699.3, subd. (a)(2)(A).) If the agency decides to investigate, it then has 120 days to do so. If the agency decides not to issue a citation, or does not issue a citation within 158 days after the postmark date of the employee's notice, the employee may commence a civil action. (Id., § 2699.3, subd. (a)(2)(B).)
Here, plaintiff's eleventh cause of action seeks civil penalties under the Labor Code Private Attorneys General Act of 2004 for himself and other employees of defendants for alleged violations of various Labor Code provisions, several labor regulations, and an Industrial Wage Commission wage order. Defendants challenge the Court of Appeal's holding here that to bring this cause of action, plaintiff need not satisfy class action requirements.
Defendants and their amicus curiae, the National Chamber Litigation Center, Inc., contend that the Court of Appeal's statutory construction leads to "absurd" results, is not supported by the statute's legislative history, and
A. "Absurd Results" Claim
Defendants criticize the Court of Appeal's holding that a representative action seeking civil penalties under subdivision (a) of Labor Code section 2699, which is part of the Labor Code Private Attorneys General Act of 2004, need not satisfy class action requirements. According to defendants, that holding leads to absurd results. In support of their argument, defendants point to a difference in language between subdivision (a) and subdivision (g) of Labor Code section 2699.
Defendants read the Court of Appeal's decision as holding that class action requirements do not apply to actions under Labor Code section 2699, subdivision (a) only because class action requirements are "provisions of law" and subdivision (a) says that it applies regardless of, or notwithstanding, "any other provision of law." Defendants then argue that because Labor Code section 2699, subdivision (g) does not contain subdivision (a)'s "[n]otwithstanding any other provision of law" language, it follows that actions under that subdivision must comply with class action requirements. According to defendants, to conclude that subdivision (g) actions must satisfy class action requirements but subdivision (a) actions need not is "absurd" and therefore the Court of Appeal's statutory construction must be wrong. We disagree.
Defendants' argument assumes that class action requirements apply generally to any form of representative action unless the Legislature affirmatively precludes their application by inserting "notwithstanding any other provision of law," or words to that effect, in the statute authorizing the representative action. This assumption is incorrect. For example, this court construed the unfair competition law, before its amendment in 2004, as authorizing representative actions that were not class actions (see, e.g., Kraus v. Trinity Management Services, Inc., supra, 23 Cal.4th at p. 126, fn. 10; Stop Youth Addiction, Inc. v. Lucky Stores, Inc., supra, 17 Cal.4th at p. 561) even though
Moreover, there is a more reasonable and persuasive explanation for the Legislature's failure to include the words "notwithstanding any other provision of law," or similar language, in subdivision (g) of Labor Code section 2699. That subdivision says that no action may be brought for any violation of the Labor Code's posting, notice, filing, and reporting requirements, but the subdivision contains an exception for such requirements when they involve statutorily mandated payroll or workplace injury reporting. Given that structure—a general prohibition subject to a specific exception that in turn was tied to specific statutory requirements—the addition of the words "notwithstanding any other provision of law" would have made the entire provision ambiguous and confusing because those additional words could be read as being inconsistent with, and therefore nullifying, the express exception incorporating other provisions of law. An intent to avoid this potential confusion and possible misinterpretation, rather than an intent to impose class action requirements, is the likely explanation for the absence of the words "notwithstanding any other provision of law" in subdivision (g) of Labor Code section 2699.
Defendants also argue that if the "[n]otwithstanding any other provision of law" language in Labor Code section 2699, subdivision (a) exempts representative actions brought under the Labor Code Private Attorneys General Act of 2004 from class action requirements, it must also exempt those actions from all other provisions of law, including statutes of limitation and pleading requirements set forth in the Code of Civil Procedure. Not so. "The statutory phrase `notwithstanding any other provision of law' has been called a `"term of art"' [citation] that declares the legislative intent to override all contrary law." (Klajic v. Castaic Lake Water Agency (2004) 121 Cal.App.4th 5, 13 [16 Cal.Rptr.3d 746], italics added.) Thus, by virtue of subdivision (a)'s "notwithstanding" clause, only those provisions of law that conflict with the act's provisions—not, as defendants contend, every provision of law—are inapplicable to actions brought under the act.
B. Legislative History Claim
Defendants argue that the legislative history of the Labor Code Private Attorneys General Act of 2004 reveals a legislative intent that any lawsuit under the act be brought as a class action. Defendants point to statements in certain committee reports that an employer need not be concerned about future lawsuits that assert the same issues because "[a]n action on behalf of other aggrieved employees would be final as to those plaintiffs . . . ." (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 796 (2003-2004 Reg. Sess.) as
The above quoted comments from the committee reports were simply responses to a concern expressed by those opposing the proposed legislation that the proposed legislation would allow employees to sue as a class without satisfying class action requirements. Because the committee report comments do not refer to class actions, they are insufficient to support the conclusion that the Legislature intended to impose class action requirements on representative actions brought under the Labor Code Private Attorneys General Act of 2004.
C. Due Process Claim
Citing the principle of statutory construction that when possible a statute must be construed to avoid constitutional infirmity (Berglund v. Arthroscopic & Laser Surgery Center of San Diego, L.P. (2008) 44 Cal.4th 528, 538 [79 Cal.Rptr.3d 370, 187 P.3d 86]; Myers v. Philip Morris Companies, Inc. (2002) 28 Cal.4th 828, 846-847 [123 Cal.Rptr.2d 40, 50 P.3d 751]), defendants urge us to construe the Labor Code Private Attorneys General Act of 2004 as requiring that all actions under that act be brought as class actions. Not to do so, defendants argue, would render the act unconstitutional as violating the due process rights not only of defendant employers but also of nonparty aggrieved employees who are not given notice of, and an opportunity to be heard in, a representative action that is not brought as a class action.
Unfairness may result from application of collateral estoppel when, for example, various plaintiffs in separate lawsuits against the same defendant assert claims presenting common issues. Because collateral estoppel may be invoked only against a party to the prior lawsuit in which the issue was determined, and because in our example the defendant would be a party to every lawsuit while each of the various plaintiffs would be a party in only one lawsuit, the defendant would in later lawsuits be bound by any adverse determination of the common issues, while none of the plaintiffs would be similarly bound by prior determinations in the defendant's favor. Thus, "`[o]ne plaintiff could sue and lose; another could sue and lose; and another and another until one finally prevailed; then everyone else would ride on that single success.'" (Fireside Bank v. Superior Court, supra, 40 Cal.4th at p. 1078, quoting Premier Elec. Constr. Co. v. N.E.C.A., Inc. (7th Cir. 1987) 814 F.2d 358, 362.) This process, which is now commonly referred to as "one-way intervention," is potentially unfair to the defendant, who could face the "`terrors of an open-ended lawsuit that cannot be defeated, cannot be settled, and cannot be adjudicated.'" (Fireside Bank v. Superior Court, supra, at p. 1080.) Because of this potential for injustice, "in dicta we have gone so far as to attribute to defendants a due process right to avoid one-way intervention." (Id. at p. 1083.)
Defendants here assert that unless the Labor Code Private Attorneys General Act of 2004 is construed as requiring representative actions under the act to be brought as class actions, defendants in those actions will be subjected to the unfairness flowing from one-way intervention, thereby violating their constitutional right to due process of law. We disagree.
The potential for nonparty aggrieved employees to benefit from a favorable judgment under the act without being bound by an adverse judgment, however, is not unique to the Labor Code Private Attorneys General Act of 2004. It also exists when an action seeking civil penalties for Labor Code violations is brought by a government agency rather than by an aggrieved employee suing under the Labor Code Private Attorneys General Act of 2004. Because an action under the act is designed to protect the public, and the potential impact on remedies other than civil penalties is ancillary to the action's primary objective, the one-way operation of collateral estoppel in this limited situation does not violate the employer's right to due process of law. (See People v. Pacific Land Research Co., supra, 20 Cal.3d at pp. 18-20.)
The judgment of the Court of Appeal is affirmed.
George, C. J., Baxter, J., Chin, J., Moreno, J., and Corrigan, J., concurred.
I concur in the judgment. I write separately because I disagree with the majority's nonliteral interpretation of Proposition 64 (Gen. Elec. (Nov. 2, 2004)), which forecloses a variety of representative actions the measure clearly permits. Unlike the majority, I do not believe we would frustrate the voters' intent by enforcing the measure according to its plain language.
The unfair competition law (Bus. & Prof. Code, § 17200 et seq.) (UCL), as amended by Proposition 64, requires persons who wish to pursue claims on others' behalf to "compl[y] with Section 382 of the Code of Civil Procedure. . . ." (Bus. & Prof. Code, § 17203, italics added.) The majority construes the italicized language "to mean that such an action must meet the requirements for a class action." (Maj. opn., ante, at p. 980.) The problem with this conclusion is that the UCL, even as amended by Proposition 64, does not refer to class actions. Instead, it refers to Code of Civil Procedure section 382 (section 382). Section 382, which also does not refer to class actions, long predates that modern procedural device. Borrowed from New York's 1848-1849 Field Code (see Comrs. on Practice and Pleadings, Code of Civ. Proc. of the State of N.Y. (1850) § 610, p. 249), the language of section 382 entered California law in 1850 with California's first civil practice act (Stats. 1850, ch. 142, § 14, p. 429) and was reenacted in 1872 with its current designation as part of our original Code of Civil Procedure. Since then, section 382 has been amended only once, in 1971 (Stats. 1971, ch. 244, § 12, p. 375), to delete a reference to compulsory joinder. The statute remains ancient in language and intent, without significant intervening legislative attention.
Section 382 actually codifies not class action procedure but the common law doctrine of virtual representation. (Weaver v. Pasadena Tournament of Roses (1948) 32 Cal.2d 833, 837 [198 P.2d 514].) Under the doctrine, a person who was not a party to an action was deemed to have been virtually represented, and thus bound by the judgment, if his or her interests had received adequate representation by a party.
What remains of section 382 is best understood by reference to Taylor v. Sturgell (2008) 553 U.S. ___ [171 L.Ed.2d 155, 128 S.Ct. 2161] (Taylor), in which the United States Supreme Court comprehensively examined the federal courts' use of virtual representation, the common law doctrine section
The propriety of any given representative action obviously depends on whether the nonparties assumed to be represented will in fact be bound by the judgment. Of the six categories of exceptions to the rule against nonparty preclusion identified in Taylor, supra, 553 U.S. ___, ___ - ___ [128 S.Ct. 2161, 2172-2173], three might well, but for today's decision, support non-class representative actions under the UCL: (1) preclusion because a person has agreed to be bound by the determination of issues in an action between others; (2) preclusion based on a variety of pre-existing substantive legal relationships arising from the needs of property law, such as the relationships between preceding and succeeding owners of property, bailee and bailor, and assignee and assignor; and (3) preclusion because a nonparty was adequately represented by someone with the same interests who was a party, as in properly conducted class actions and in suits brought by trustees, guardians, and other fiduciaries. (Taylor, at pp. ___ - ___ [128 S.Ct. at pp. 2172-2173].)
Taylor's third exception to the rule of nonparty preclusion—cases in which a nonparty was adequately represented, as in "properly conducted class actions" (Taylor, supra, 553 U.S. ___, ___ [171 L.Ed.2d 155, 128 S.Ct. 2161, 2172], italics added)—will undoubtedly comprise the vast majority of multiparty actions brought under the UCL. The consumers on whose behalf UCL actions are brought typically have no relationship with the representative plaintiff other than the fact that they purchased the same product or service from the defendant. Still, actions brought under the first (consent) and second (relationships based on property law) exceptions to the general rule of nonparty preclusion, and actions brought under the third exception by "trustees, guardians, and other fiduciaries" (Taylor, supra, at p. ___ [128 S.Ct. at p. 2173]), fall squarely within the language and intent of section 382, remain valid under federal law (see Taylor, at pp. ___ - ___ [128 S.Ct. at
The majority, by simplistically construing Proposition 64's reference to "Section 382" (Bus. & Prof. Code, § 17203, as amended by Prop. 64) as requiring class certification in every instance, forecloses these other possibilities. I acknowledge that the practical difference between the majority's construction of Proposition 64 and my literal one is small. As I have explained, the vast majority of representative plaintiffs in UCL actions cannot hope to comply with section 382 except through class certification. Thus, my disagreement with the majority affects very few cases.
Nevertheless, strict fidelity to the language of voter initiatives is important. The specific language of an initiative measure typically represents "`a delicate tightrope walk designed to induce voter approval . . .'" (Ross v. RagingWire Telecommunications, Inc. (2008) 42 Cal.4th 920, 930 [70 Cal.Rptr.3d 382, 174 P.3d 200], quoting People v. Galambos (2002) 104 Cal.App.4th 1147, 1152 [128 Cal.Rptr.2d 844])—a balance that judges too easily upset by reading their own policy preferences into a measure's language. Thus, "the initiative power is strongest when courts give effect to the voters' formally expressed intent . . . ." (Ross, supra, at p. 930.) The majority's only justification for giving Proposition 64 a nonliteral interpretation is that the voters were told—albeit not in the text of the statute on which they were asked to vote—that the measure would compel representative plaintiffs to meet the requirements of class actions. (See maj. opn., ante, at pp. 979-980, citing Voter Information Guide, supra, official title and summary of Prop. 64, p. 38; id., ballot measure summary, Prop. 64, p. 6; id., analysis by the Legislative Analyst of Prop. 64, pp. 38-39.) The majority reasons that "[a] literal construction of an enactment . . . will not control when such a construction would frustrate the manifest purpose of the enactment as a whole." (Maj. opn., ante, at p. 979.) I agree with the principle but not its application. In this case, to interpret Proposition 64 literally would not frustrate the voters' intent, given the expected rarity in UCL cases of constitutionally permissible representative actions other than class actions. To prefer language in ballot pamphlets to the formal, operative text of an initiative renders the initiative process susceptible to bait-and-switch tactics. To do so even once without the plainest compulsion sets a potentially dangerous precedent.
"17203. Injunctive Relief—Court Orders
"Any person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any court of competent jurisdiction. The court may make such orders or judgments, including the appointment of a receiver, as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition, as defined in this chapter, or as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition. Any person may pursue representative claims or relief on behalf of others only if the claimant meets the standing requirements of Section 17204 and complies with Section 382 of the Code of Civil Procedure, but these limitations do not apply to claims brought under this chapter by the Attorney General, or any district attorney, county counsel, city attorney, or city prosecutor in this state."
"17204. Actions for Injunctions by Attorney General, District Attorney, County Counsel, and City Attorneys
"Actions for relief pursuant to this chapter shall be prosecuted exclusively in a court of competent jurisdiction by the Attorney General or a district attorney or by a county counsel authorized by agreement with the district attorney in actions involving violation of a county ordinance, or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association, or by a person
acting for the interests of itself, its members or the general public who has suffered injury in fact and has lost money or property as a result of such unfair competition."