Lopez v. Friant & Assocs., LLC
15 Cal. App. 5th 773
| Cal. Ct. App. 5th | 2017Background
- Plaintiff Eduardo Lopez sued under the Labor Code Private Attorneys General Act (PAGA) alleging Friant & Associates omitted the last four digits of employees' Social Security numbers on itemized wage statements in violation of Labor Code §226(a)(7).
- Parties stipulated Friant issued 5,776 deficient wage statements; plaintiff sought PAGA civil penalties (§2699) only.
- Friant moved for summary judgment arguing Lopez could not recover because §226(e)(1) requires an employee to prove a "knowing and intentional" violation causing "injury," and that the omission was inadvertent.
- The trial court granted summary judgment for Friant, finding Lopez failed to raise a triable issue as to the "knowing and intentional" element under §226(e)(1).
- The Court of Appeal reversed, holding §226(e)(1)'s "injury" and "knowing and intentional" requirements apply to individual statutory penalties under §226(e), not to PAGA civil penalties for violations of §226(a).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a PAGA action for violation of §226(a) requires proof of "injury" and a "knowing and intentional" failure under §226(e)(1) | Lopez: No — PAGA civil penalties under §2699(f) require only proof of the underlying §226(a) violation | Friant: Yes — §226(e)(1) conditions apply and plaintiff must show injury and knowledge/intent | Court: No — §226(e)(1) governs private statutory damages under §226(e), not PAGA civil penalties under §2699 |
| Whether §226(e) statutory damages are the same as PAGA civil penalties | Lopez: Distinct — §226(e) creates individual statutory damages; PAGA creates civil penalties for the state | Friant: Treats §226(e) requirement as applicable to PAGA (leading to same practical effect) | Court: Distinct remedies; §226(e) statutory damages are separate from PAGA civil penalties |
| Whether prior case law requires a derivative PAGA claim to fail if individual §226(e) claim lacks merit | Lopez: PAGA claim stands on its own when based on §226(a) violation | Friant: PAGA is derivative and should fail if §226(e) individual claim fails | Court: Rejected broad "derivative" rule; cases Friant cites are distinguishable |
| Whether inadvertence and mitigation can be considered in awarding or reducing PAGA penalties | Lopez: Not applicable at summary judgment to dismiss PAGA claim | Friant: Inadvertent clerical error and prompt correction should bar or reduce penalties | Court: Such considerations are relevant to penalty assessment and judicial discretion at the penalty stage, not to defeat a PAGA claim on summary judgment |
Key Cases Cited
- Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (explaining purpose and framework of PAGA)
- Arias v. Superior Court, 46 Cal.4th 969 (discussing collateral estoppel and PAGA judgments)
- Villacres v. ABM Industries Inc., 189 Cal.App.4th 562 (distinguishing civil penalties and statutory penalties under Labor Code)
- McKenzie v. Federal Exp. Corp., 765 F.Supp.2d 1222 (holding proof of §226(a) violation alone can support PAGA penalties)
- Price v. Starbucks Corp., 192 Cal.App.4th 1136 (addressing §226(e) damages pleading deficiencies)
- Amaral v. Cintas Corp. No. 2, 163 Cal.App.4th 1157 (discussing trial court discretion to adjust penalties)