Source: http://thecomplexlitigator.com/post-data/tag/Statutes+of+Limitation
Timestamp: 2019-04-18 13:32:44+00:00

Document:
In an interesting twist to class action equitable tolling, the Court of Appeal (Fourth Appellate District, Division One), in California Restaurant Management Systems v. The City of San Diego (June 1, 2011), examined "whether the 'equitable tolling' principles outlined in American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538 (American Pipe) and Crown, Cork & Seal Co., Inc. v. Parker (1983) 462 U.S. 345 (Crown Cork) apply to extend the period within which a claim must be filed under the Government Claims Act (Gov. Code, § 810 et seq.)." Slip op., at 2. The issue arose after it was learned that San Diego had overcharged several classes of customers using the City's wastewater system. A residential customer timely filed a governmental claim seeking a refund on behalf of residential customers who were overcharged and, after the claim was denied, filed a proposed class action lawsuit on behalf of that class of customers. After that action was settled and dismissed, California Restaurant Management Systems (CRMS) filed its own governmental claim and then filed a putative class action on behalf of restaurant owners. The City moved for summary judgment, contending CRMS's governmental claim was not timely filed, mandating dismissal of CRMS's proposed class action lawsuit. CRMS opposed the summary judgment motion, arguing the pendency of the first action tolled all limitations periods, including the period for filing a governmental claim. The trial court disagreed, and entered judgment in favor of City.
While the Court supplied an extensive background discussion of Government Claims Act requirements and equitable tolling, the ultimate basis for its decision was simply stated: "We conclude a prior class action does not equitably toll or satisfy the governmental claims requirement for claimants not within the class description contained in a timely-filed governmental claim on which the prior class action was predicated." Slip op., at 18. The first action described the claiming class as "residential" customers. This eliminated the possibility that commercial customers could claim to have placed the City on notice of their claims. The Court declined to extend the class claim filing exception recognized in City of San Jose v. Superior Court, 12 Cal. 3d 447 (1974).
California Labor Code § 203 provides that, if an employer willfully fails to timely pay final wages, “the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.” Lab. Code § 203(a). Usually, a one-year statute of limitation governs actions to recover penalties (Code Civ. Proc. § 340(a)), but section 203 states that an employee may sue for “these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise.” Lab. Code § 203(b). In Pineda v. Bank of America, N.A. (November 18, 2010), the California Supreme Court answered two questions related to section 203 claims: first, whether a different statute of limitation applies when an employee seeks to recover only section 203 penalties (in this case, final wages were paid late but before the filing of the action), as opposed to when an employee seeks both final wages and penalties; and, second, whether section 203 penalties recoverable as restitution under California's Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.). A unanimous Supreme Court answered both questions in the negative, holding that (1) the underlying wage claim statute of limitation is tied to the 203 cause of action, and (2) since employees have no ownership interest in section 203 penalties they cannot use the UCL to recover those penalties as a form of restitution.
Plaintiff urges us to conclude the Legislature intended for a single statute of limitations — the one set forth in section 203(b) — to govern the filing of any and all suits for section 203 penalties, regardless of whether a claim for unpaid final wages accompanies the claim for penalties. He contends this is the only plausible construction of section 203, and his contention has merit. Absent explicit statutory language to the contrary, common sense would suggest that, where the Legislature has set forth a statute of limitations in one part of a statute, the prescribed limitations period governs the filing of actions provided for in another part of the same statute. In providing when “[s]uit may be filed for [section 203] penalties” (§ 203(b)), the Legislature could have employed language unambiguously limiting the application of section 203(b)‟s limitations period to those suits that seek both unpaid wages and penalties. For example, it could have provided that “[s]uit for unpaid final wages and these penalties may be filed at any time before . . . .” It did not.
Slip op., at 5-6. The Court then spent several pages dismissing the defendant's strained construction of the Legislature's grammatical choices, concluding by remarking on the important public policy served by the prompt payment of final wages.
By contrast, permitting recovery of section 203 penalties via the UCL would not “restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1149.) Section 203 is not designed to compensate employees for work performed. Instead, it is intended to encourage employers to pay final wages on time, and to punish employers who fail to do so. In other words, it is the employers' action (or inaction) that gives rise to section 203 penalties. The vested interest in unpaid wages, on the other hand, arises out of the employees' action, i.e., their labor. Until awarded by a relevant body, employees have no comparable vested interest in section 203 penalties. We thus hold section 203 penalties cannot be recovered as restitution under the UCL.
Compared to many others from the Supreme Court, this was a short opinion. The direct language suggests that the Court found little over which to disagree as the opinion was prepared. Congratulations to my colleague, Mr. Greg Karasik, on obtaining this partial reversal.
If The UCL Practitioner wasn't on a blogging hiatus, it would be all over this one like attorneys on a mass tort. In Salenga v. Mitsubishi Motors Credit of America, Inc. (April 9, 2010), the Court of Appeal (Fourth Appellate District, Division One) reversed an Order dismissing a First Amended Cross-Complaint, after defendants demurred on the ground that cross-complainant did not file within the four-year limitations period applicable to the Unfair Competition Law ("UCL"). In the underlying complaint, Cavalry (as an assignee of MMCA) sued a consumer, seeking a deficiency judgment, after the consumer had defaulted on her MMCA auto loan in 2003 and the vehicle was repossessed. She was given a Notice of Intent to Dispose of Motor Vehicle ("NOI" or Notice) dated October 14, 2003, and the vehicle was sold at auction. About four years later, Cavalry filed its complaint seeking payment of a deficiency balance of $10,288.56, plus interest from May 2004.
After being sued, the consumer brought a cross-complaint, contending that the NOI was defective and could not support a deficiency judgment. See, Juarez v. Arcadia Financial, Ltd., 152 Cal. App. 4th 889 (2007). That's when thing get interesting. Okay, not really, but that's when things happen that are worth reporting.
Moreover, we think that the Supreme Court's analysis of standing of a class representative, to assert violations of the Act, in Fireside Bank, supra, 40 Cal.4th 1069, 1089-1090, goes beyond technical class certification questions. That plaintiff, Gonzalez, was claiming she was deprived of a fair opportunity to redeem the financed vehicle, "followed by an unlawful demand for payment. The record demonstrates Fireside Bank repossessed Gonzalez's vehicle and pursued a deficiency judgment against her. She thus has standing to seek a declaration that Fireside Bank is unlawfully asserting a debt against her, as well as an injunction against all further collection efforts. The record further shows Gonzalez (or someone on her behalf) made a postrepossession payment against the alleged deficiency; upon proof she made that payment, Gonzalez also has standing to seek restitution." (Id. at p. 1090, italics added.) From that analysis, we think the courts may be receptive to a properly pled allegation that postponed accrual of a statutory cause of action may exist, under circumstances in which a deficiency judgment is sought based upon a defective NOI.
Slip op., at 18-19. The unintended consequences of using the initiative process to tinker with laws are fascinating to behold. While the Court didn't declare that the consumer could successfully amend, it certainly gave a pretty clear roadmap about how go about crafting that amendment. The opinion all but states that the consumer wasn't injured, for UCL purposes, by the defective NOI until an attempt to secure a deficiency judgment based on it was attempted many years later. This was despite the consumer's failure to exercise the reinstatement right triggered by the NOI.

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