Stone v. Alameda Health SystemStone v. Alameda Health System
Observing that respondent conspicuously lacks many of the hallmarks of sovereignty, we hold that the sovereign powers doctrine applies. For similar reasons, we are guided by precedent to conclude that respondent is not a “municipal corporation.” (
In their first amended complaint against respondent Alameda Health System, appellants Tamelin Stone and Amanda Kunwar alleged seven class action claims related to wages and hours, and six individual claims for race and sex discrimination.2 When respondent demurred, the trial court sustained the demurrer as to all seven class action claims. With respect to the first six, the trial court reasoned that respondent was a “statutorily created public agency” beyond the reach of the Labor Code3 sections and Industrial Welfare Commission (IWC) Wage Order invoked in the complaint. As to the seventh, a PAGA claim (PAGA,
We disagree with that reasoning and therefore reverse the order as to the first, second, third, fifth, sixth, and seventh causes of action. For the reasons given below, we affirm the order sustaining the demurrer as to appellant‘s fourth claim.
I. BACKGROUND
In response to “the challenges facing the Alameda County Medical Center arising from changes in the public and private health industries,” the Legislature in 1997 enacted
Appellants Stone and Kunwar worked for respondent as a medical assistant and a licensed vocational nurse, respectively. Their first amended complaint alleged that respondent “automatically deducted 1/2 hour from each workday” as if to account for a meal period, when in fact, employees “were not allowed or discouraged from clocking out for meal periods.” This alleged conduct formed the basis of seven class action claims: (1) failure to provide off-duty meal periods (
Respondent demurred, arguing that the first six claims were “not authorized against public entities under any of the cited Labor Code sections.” As to the seventh claim, respondent contended that it was not a “person” capable of being sued under PAGA, that the “PAGA claim [was] derivative of the
This appeal followed.
II. DISCUSSION
A. Appealability
Under the “death knell” doctrine, “an order is appealable when ‘it effectively terminates the entire action as to [a] class, in legal effect being “tantamount to a dismissal of the action as to all members of the class other than plaintiff.“‘” (Williams v. Impax Laboratories, Inc. (2019) 41 Cal.App.5th 1060, 1066.) Here, although appellants’ individual claims for race and sex discrimination survive, the trial court‘s order sustaining respondent‘s demurrer as to all seven class action claims under the Labor Code terminated the action as to all members of the class, rendering the order directly appealable.
In support of its argument against applying the death knell doctrine, respondent cites Young v. RemX, Inc. (2016) 2 Cal.App.5th 630, Munoz v. Chipotle Mexican Grill, Inc. (2015) 238 Cal.App.4th 291, and Haro v. City of Rosemead (2009) 174 Cal.App.4th 1067, all of which are distinguishable. In those cases, specific causes of action that appeared in the complaint as class action claims survived to be litigated as individual claims. Here, no cause of action that was pleaded as a class action claim remains in any form. Thus, if appellants had “fail[ed] to appeal from” this order sustaining the demurrer to their Labor Code claims, they would have “los[t] forever the right to attack it.” (Stephen v. Enterprise Rent-A-Car (1991) 235 Cal.App.3d 806, 811.)
In sum, the death knell doctrine applies.
B. Merits
1. Standard of Review
“In determining whether plaintiffs properly stated a claim for relief, our standard of review is clear: ‘We treat the demurrer as admitting all
“We apply the usual rules of statutory interpretation to the Labor Code, beginning with and focusing on the text as the best indicator of legislative purpose. [Citation.] ‘[I]n light of the remedial nature of the legislative enactments authorizing the regulation of wages, hours and working conditions for the protection and benefit of employees, the statutory provisions are to be liberally construed with an eye to promoting such protection.‘” (McLean v. State of California (2016) 1 Cal.5th 615, 622, quoting Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1026-1027.)
2. First, Second, and Third Causes of Action
Appellants argue that the court erred by sustaining the demurrer as to the first, second, and third causes of action because respondent is not a sovereign governmental entity falling within an exception to “the general rule of statutory construction [whereby] governmental agencies are not liable unless [that is] expressly stated.” We agree.
“[T]raditionally, ‘absent express words to the contrary, governmental agencies are not included within the general words of a statute.‘” (Johnson v. Arvin-Edison Water Storage Dist. (2009) 174 Cal.App.4th 729, 736 (Johnson), quoting Wells v. One2One Learning Foundation (2006) 39 Cal.4th 1164, 1192 (Wells).) “However, under the ‘sovereign powers’ maxim, government agencies are excluded only if their inclusion would result in an infringement upon sovereign governmental powers.” (Johnson, at p. 738.) “‘Where ... no impairment of sovereign powers would result, the reason underlying this rule of construction ceases to exist and the Legislature may properly be held to have intended that the statute apply to governmental bodies even though it
Following Johnson, we conduct a three-part inquiry. First, we look for “express words” that include governmental agencies “within the general words of the relevant statutes. (Wells, supra, 39 Cal.4th at p. 1193.) If not, we look for “positive indicia” of a legislative intent to exempt such agencies from those statutes. (Ibid.) Then, if no such indicia appear, we ask whether applying the statutes to respondent “would result in an infringement upon sovereign governmental powers.” (Id. at p. 1192.) Accordingly, because the statutes underlying the first, second, and third causes of action6 do not expressly include governmental agencies, we proceed to the second part of the Johnson inquiry: asking whether there are “positive indicia” of legislative intent to exempt respondent.
a. Positive Indicia of Contrary Legislative Intent
Respondent discerns such indicia in subdivisions (a)(2)(C) and (m) of the enabling statute: The former defines “[h]ospital authority” as a “public agency,” and the latter provides that “a transfer of control or ownership of the medical center shall confer onto the hospital authority all the rights and duties set forth in state law with respect to hospitals owned or operated by a county.”
However, subdivision (j) of the enabling statute designates respondent as “a government entity separate and apart from the county, . . . not [to] be considered to be an agency, division, or department of the county.” (
As for the Wage Order, it provides an exemption for “employees directly employed by the State or any political subdivision thereof, including any city, county, or special district.” (Cal. Code Regs., tit. 8, § 11050, subd. (1)(C).) But respondent‘s employees are not employed directly by the state or the county; they are employed by “a hospital authority” created by the county under authorization from the state. (
Thus, because there are no “positive indicia of a contrary legislative intent” in either the statutes or the Wage Order, we turn to the task of applying the sovereign powers doctrine to respondent. (Wells, supra, 39 Cal.4th at p. 1193.)
b. Infringement Upon Sovereign Governmental Powers
Finally, there is the matter of whether any “infringement of sovereign governmental powers” would result from subjecting respondent to the Wage Order or sections 226.7, 512, 1174, 1174.5, or 1175. (Wells, supra, 39 Cal.4th at p. 1192.) Citing its enabling statute, respondent argues that doing so would infringe upon the county‘s ability to “fulfill its commitment to the medically indigent, special needs, and general populations of Alameda County,” “in a manner consistent with the county‘s obligations under Section 17000 of the Welfare and Institutions Code.” (
As our colleagues in the Third District recently observed, however, “[p]overty alleviation” under
In sum, subjecting respondent to liability for the first, second, and third causes of action would not infringe upon any sovereign governmental powers. Thus, the trial court erred by finding that respondent was not included within the statutes underlying those causes of action and in sustaining the demurrer as to those claims.7
3. The Fifth and Sixth Causes of Action
Appellants argue that the trial court erred in sustaining the demurrer as to their fifth and sixth causes of action because respondent is not an exempt “municipal corporation” for the purposes of
In Gateway Community Charters v. Spiess (2017) 9 Cal.App.5th 499, 506, the Third District set forth “multiple crucial characteristics that are common to municipal and quasi-municipal corporations.” These include “the power to acquire property through eminent
In sum, the trial court erred in sustaining the demurrer as to the fifth and sixth causes of action.8
4. Fourth Cause of Action
Appellants argue that the trial court erred in sustaining the demurrer as to the fourth cause of action because respondent is not an “other governmental entity” within the meaning of
“‘Under settled canons of statutory construction, in construing a statute we ascertain the Legislature‘s intent in order to effectuate the law‘s purpose. [Citation.] We must look to the statute‘s words and give them “their usual and ordinary meaning.” [Citation.] “The statute‘s plain meaning controls the court‘s interpretation unless its words are ambiguous.” [Citations.]‘” (Reid v. Google, Inc. (2010) 50 Cal.4th 512, 527.)
The plain meaning of “other governmental entity” is expansive: An entity is anything “that has a real existence,” while “governmental” means “[o]f or relating to (a) government.” (Oxford English Dict. (2d ed. 1989).) Here, there is little doubt as to respondent‘s existence. As for its relationship to the government, respondent was established by the government of Alameda County, an act which required special authorization from the state Legislature. (
Appellants urge us to read the term “other governmental entity” to “include only sovereign governing entities,” but cites no authority that would justify this departure from applying the broader plain meaning. As appellants acknowledge, Gateway, supra, 9 Cal.App.5th at page 502, was concerned with the meaning of “other municipal corporation” under
In sum, the demurrer was properly sustained as to the fourth cause of action.
5. Seventh Cause of Action (PAGA)
Respondent‘s demurrer as to the PAGA claim was sustained by the trial court on three grounds: (1) “PAGA applies to claims against a ‘person,‘” a category from which section 18 excludes respondent; (2) “a PAGA claim is derivative of the underlying statutory violation,” but respondent‘s “public agency” status exempts it from the relevant statutes; and (3) “as a public agency,” respondent is “not liable for damages imposed by way of punishing the defendant, such as PAGA civil penalties. (See
a. Section 18
“In 2003, citing inadequate funding for enforcement of labor laws, the Legislature enacted PAGA to ‘authorize[] an employee to bring an action for civil penalties on behalf of the state against his or her employer for Labor Code violations committed against the employee and fellow employees, with most of the proceeds of that litigation going to the state.’ (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 360 [abrogated on another ground by Viking River Cruises, Inc. v. Moriana (2022) 142 S. Ct. 1906, 1924].) The statute was intended “to punish and deter employer practices that violate the rights of numerous employees under the Labor Code.“‘... ([Iskanian, at p. 360].)” (Wesson v. Staples the Office Superstore, LLC (2021) 68 Cal.App.5th 746, 759-760.)
To that
Under
Here, a civil penalty is specifically provided for by at least two of the statutes underlying appellants’ class action claims.
b. Government Code Section 818
Finally, there is the trial court‘s citation of
Consequently, because PAGA penalties are not punitive damages,
III. DISPOSITION
We affirm the order as to the fourth cause of action and reverse it as to the first, second, third, fifth, sixth, and seventh. On remand, the trial court shall enter a new order overruling the demurrer as to the first, second, third, fifth, sixth, and seventh causes of action in the first amended complaint.
Wiseman, J.*
We concur:
Jackson, P.J.
Burns, J.
Stone v. Alameda Health System (A164021)
* Retired Associate Justice of the Court of Appeal, Fifth Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Tamelin Stone et al. v. Alameda Health System (A164021)
Trial Court: Alameda County
Trial Judge: Hon. Noel Wise
Attorneys:
Law Offices of David Y. Imai and David Y. Imai for Plaintiffs and Appellants.
Renne Public Law Group, Ryan P. McGinley-Stempel, Geoffrey Spellberg and Anastasia Bondarchuk for Defendant and Respondent.