In this case, a card dealer brought a class action against his casino employer based on its mandatory tip pooling policy. The casino's policy required dealers to contribute 15 to 20 percent of their tips to a tip pool to be shared among other designated employees who provided service to casino patrons. The dealer alleged that this policy constituted a conversion of his tips and violated, among other provisions, section 351.
As a threshold issue, the trial court concluded that section 351 does not provide a private cause of action for employees to recover any misappropriated tips from employers. The Court of Appeal agreed that section 351 does not itself contain a private right to sue. Less than two months later, another Court of Appeal expressly disagreed with the holding on section 351 of the appellate court below. (See Grodensky v. Artichoke Joe's Casino (2009) 171 Cal.App.4th 1399 [91 Cal.Rptr.3d 732], review granted June 24, 2009, S172237.) We granted review to resolve the conflict on this narrow issue.
For reasons that follow, we conclude that section 351 does not contain a private right to sue.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Louie Hung Kwei Lu (plaintiff) was employed as a card dealer at defendant Hawaiian Gardens Casino, Inc. (the Casino), from 1997 to 2003. The Casino had a written tip pooling policy that required dealers to set aside 15 to 20 percent of the tips they received on each shift. The dealers kept the remaining 80 to 85 percent of the tips received; the Casino did not deduct these sums from the minimum hourly wages the dealers earned. The Casino deposited the pooled tips into a "tip pool bank account" and later distributed the money to designated employees who provided service to casino customers. These employees included chip service people, poker tournament coordinators, poker rotation coordinators, hosts, customer service representatives or "floormen," and concierges. The tip pool policy specifically prohibited employers, managers, and supervisors from receiving any money from the tip pool. Plaintiff brought a class action against the Casino and its general manager. His complaint alleged that the Casino's tip pooling policy amounted to a conversion of his tips, and violated the employee protections under sections 221 (prohibiting wage kickbacks by employer), 351 (prohibiting employer from taking, collecting, or receiving employees' gratuities), 450 (prohibiting employer from compelling employees to patronize employer), 1197 (prohibiting payment of less than minimum wage), and 2802 (indemnifying employee for necessary expenditures). The complaint also alleged that
The trial court granted the Casino's motion for judgment on the pleadings on the causes of action based on sections 351 and 450. It agreed with the Casino that neither section contained a private right to sue. The court also granted the Casino's successive motions for summary adjudication on the remaining causes of action. Plaintiff appealed.
The Court of Appeal held, "pursuant to the analysis in Leighton, that tip pooling in the casino industry is not prohibited by Labor Code section 351." However, it reversed the trial court's order granting summary adjudication of the UCL cause of action based on section 351. While section 351 itself contains no private right to sue, the Court of Appeal concluded this provision may nonetheless serve as a predicate for a UCL claim because plaintiff presented triable issues of fact as to whether section 351 prohibited certain employees who participated in the tip pool from doing so because they were "agents" of the Casino. In all other respects, the Court of Appeal affirmed the judgment.
We granted review limited to the sole issue of whether section 351 gives employees a private right of action.
A. General Principles
B. Statutory Language
As part of article 1 (§ 350 et seq.) covering "Gratuities" in division 2, part 1, chapter 3 ("Privileges and Perquisites") of the Labor Code, section 351 provides in pertinent part: "No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as part of the wages due the employee from
This italicized language suggests that employees may bring an action to recover any misappropriated tips to which they are entitled, just as with other property rights. (See Code Civ. Proc., § 28 ["An injury to property consists in depriving its owner of the benefit of it ...."]; id., § 30 ["A civil action is prosecuted by one party against another for the declaration, enforcement or protection of a right, or the redress or prevention of a wrong."].) However, we conclude that the statutory language does not "`unmistakabl[y]'" reveal a legislative intent to provide wronged employees a private right to sue. (Moradi-Shalal, supra, 46 Cal.3d at p. 295.)
For instance, section 351 does not expressly state that there is a cause of action for any violation; nor does it refer to an employee's right to bring an action to recover any misappropriated gratuities. Rather, if an employer violates section 351 or any other provision in division 2, part 1, chapter 3, article 1, that employer is guilty of a misdemeanor and is subject to a fine and/or imprisonment. (§ 354 [maximum 60 days imprisonment and/or $1,000 fine].) Moreover, the Department of Industrial Relations is specifically charged with "enforc[ing] the provisions of this article." (§ 355 [all collected fines paid into state treasury and credited to general fund]; see § 356 ["purpose of this article is to prevent fraud upon the public in connection with the practice of tipping"].) Because section 351 does not include explicit language regarding a private cause of action, and related provisions create some ambiguity, we look to section 351's legislative history for greater insight. (See Moradi-Shalal, supra, 46 Cal.3d at pp. 300-301.)
C. Legislative History
Over 20 years ago, we extensively examined, in another context, the legislative history of section 351 and related provisions. (Henning v. Industrial Welfare Com. (1988) 46 Cal.3d 1262, 1270-1275 [252 Cal.Rptr. 278, 762 P.2d 442] (Henning) [holding no legislative intent to create "two-tier" minimum wage system in § 351 by permitting lower minimum wage for tipped employees].) Section 351, which can be traced back to 1917, has been amended a number of times. (Stats. 1917, ch. 172, § 1, p. 257; Stats. 1929, ch. 891, § 2, p. 1972 [predecessor statute to § 351 enacted as part of uncodified act]; Stats. 1937, ch. 90, § 351, p. 203 [§ 351 enacted and codified
From 1929 to 1973, former section 351 (along with former § 352)
In general, Assembly Bill No. 78 "was introduced by the author [Assemblyman Leroy F. Greene] when he learned that all tips did not necessarily accrue to the employee who received the gratuity. [¶] Section 351 of the Labor Code is amended to spell out that gratuities are the sole property of the employee or employees in receipt of same, and the employer would be prohibited from taking any such gratuities or crediting them as part of any wages that might be due to his employees." (Sen. Com. on Industrial Relations, Analysis of Assem. Bill No. 78 (1972 Reg. Sess.) as amended June 5, 1972, p. 1; see
Just a year later, the Legislature passed Assembly Bill No. 10 (1973-1974 Reg. Sess.), which was nearly identical in relevant part to Assembly Bill No. 78, except, significantly, it allowed an employer to take, deduct, or credit an employee's gratuity if "permitted by a valid regulation of the California Division of Industrial Welfare," and if notice to patrons was posted. (Stats. 1973, ch. 879, § 1, pp. 1610-1611, enacting Assem. Bill No. 10 (1973-1974 Reg. Sess.); see Henning, supra, 46 Cal.3d at p. 1273.) In 1975, the Legislature deleted this exception in section 351, which remains in substantially the same form today. (Stats. 1975, ch. 324, § 1, p. 771; see Stats. 2000, ch. 876, § 9 [deleting exception for situation "in which no charge is made to a patron for services rendered" and adding provision governing tips paid by credit card].)
Based on our review of section 351's legislative history, we conclude that there is no clear indication that the Legislature intended to create a private cause of action under the statute. The pertinent legislative history reveals that the "sole property" language was included in section 351 to prevent employers from "obtain[ing] the benefit (as, in effect, the payment of wages) of tips and other gratuities received by their employees ...." (Ops. Cal. Legis. Counsel, No. 3740 (Feb. 29, 1972) Tips: A.B. 78, p. 1; see Henning, supra, 46 Cal.3d at p. 1278 ["Our reading of the legislative intent is grounded in the words of A.B. 78 ... and its legislative history."].) Specifically, Assembly Bill No. 78 would have invalidated an Industrial Welfare Commission (IWC) regulation "authorizing the crediting of tips or gratuities against the minimum wage ...." (Ops. Cal. Legis. Counsel on Assem. Bill No. 78, supra, at p. 3.) The subsequent successful amendments in 1973 and 1975 confirm that the Legislature's ultimate goal was to prevent an employer from taking any part of an employee's gratuity by crediting an employee's tips against any wages earned. (See Assem. Com. on Labor Relations, Rep. on Assem. Bill No. 10 (1973-1974 Reg. Sess.) for hearing on Apr. 4, 1973, p. 1 [as introduced, "AB 10 prohibits an employer from taking any tip given by a patron to his employee and prohibits an employer from requiring that such tip be credited against wages"]; Sen. Com. on Industrial Relations, analysis of Assem. Bill No. 232 (1975-1976 Reg. Sess.) May 19, 1975, p. 1 [Assem. Bill No. 232's purpose is "[t]o eliminate the authority of the [IWC] to permit employers to credit tips against the wages of employees"]; Henning, supra, 46 Cal.3d at p. 1274 [Assem. Bill No. 232 introduced "to reflect the policy [Assemblyman Greene] previously urged"].) And, in Henning, based on our review of the legislative history, we concluded that section 351 barred an IWC wage order that had permitted a lower minimum wage for tipped employees. (Henning,
D. Plaintiff's Arguments
In Katzberg, we considered whether an individual may bring a damages action based on an alleged violation of the due process clause of the state Constitution (Cal. Const., art. I, § 7, subd. (a)), "in the absence of a statutory provision or an established common law tort authorizing such a damage remedy for the constitutional violation." (Katzberg, supra, 29 Cal.4th at p. 303.) After an exhaustive analysis, we determined there was nothing in the language of article I, section 7, subdivision (a), nor was there any evidence in that section's legislative history, "from which we [might] find, within that provision, an implied right to seek damages for a violation of the due process liberty interest." (Id. at p. 324.) Only then did we apply the Restatement test (Rest.2d Torts, § 874A). (Katzberg, supra, 29 Cal.4th at pp. 324-325.) While ultimately concluding that there was no constitutional tort action for monetary damages, we did not end our inquiry with the section's language or legislative history because we noted "we also have not discovered any basis for concluding that a damages remedy was intended to be foreclosed." (Id. at p. 324; cf. id. at p. 330 (conc. & dis. opn. of Brown, J.) [concluding majority's extended analysis unnecessary].) Based on these statements, plaintiff asserts that Katzberg should inform our decision here. We conclude that Katzberg is distinguishable.
In Katzberg, we limited our endorsement of the Restatement test to determining whether to "recognize a tort action for damages to remedy a constitutional violation." (Katzberg, supra, 29 Cal.4th at p. 325, italics
Plaintiff nonetheless maintains that the only way an employee may recover any misappropriated gratuities would be through a civil action. In support of this argument, plaintiff contends that the Department of Industrial Relations, which is charged with enforcing section 351, may only prosecute employers for misdemeanor violations and does not have the authority to bring an action to recover any misappropriated gratuities. (See §§ 354, 355.) In that regard, plaintiff argues that there is no comprehensive scheme for enforcing section 351 because, while section 351 has been amended numerous times since its official codification in 1937, sections 354 and 355 have remained virtually unchanged since 1937. (Stats. 1937, ch. 90, §§ 354, 355, p. 203; cf. Stats. 1983, ch. 1092, § 190, p. 4011 [amending § 354 to double the fine].)
Contrary to plaintiff's suggestion, our holding that section 351 does not provide a private cause of action does not necessarily foreclose the availability of other remedies. To the extent that an employee may be entitled to certain misappropriated gratuities, we see no apparent reason why other
Based on the above, we affirm the Court of Appeal's judgment and remand the matter for further proceedings consistent with this opinion.
George, C. J., Kennard, J., Baxter, J., Werdegar, J., Moreno, J., and Corrigan, J., concurred.