Court Opinion

ID: 4279244
Source: CourtListenerOpinion
Date Created: 2018-05-29 22:01:55.272211+00
Date Added: 2024-06-11T14:34:30.873452
License: Public Domain

Filed 5/29/18
                 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                          DIVISION FOUR

HARLEY SHINE,                              B277513

        Plaintiff and Appellant,           (Los Angeles County
        v.                                 Super. Ct. No. BC598805)

WILLIAMS-SONOMA, INC., et al.,

      Defendants and Respondents.

      APPEAL from a judgment of the Superior Court of Los
Angeles County, John Shepard Wiley, Jr., Judge. Affirmed.
      McNicholas & McNicholas, Patrick McNicholas and
Michael J. Kent; Bridgford, Gleason & Artinian and Michael H.
Artinian; Frank Sims & Stolper and Scott H. Sims; Esner, Chang
& Boyer and Holly N. Boyer for Plaintiff and Appellant.
      Orrick, Herrington & Sutcliffe, Melanie L. Bostwick,
Randall C. Smith, Jessica R. Perry, and Allison Riechert Giese for
Defendants and Respondents.
                        _____________________
      In this putative class action against defendants and
respondents Williams-Sonoma, Inc., and Williams-Sonoma
Stores, Inc. (jointly, Williams-Sonoma), plaintiff and appellant
Harley Shine appeals from an order of dismissal following the
sustaining of a demurrer without leave to amend. Concluding
the demurrer was properly sustained on res judicata grounds, we
affirm.

       FACTUAL AND PROCEDURAL BACKGROUND
      In a previous wage and hour class action lawsuit, Morales
v. Williams-Sonoma, Inc. et al. (Super. Ct. S.F. County, 2015,
No. CGC532344) (Morales), plaintiff Elizabeth Morales sued the
same defendants (Williams-Sonoma) on behalf of “all current and
former California-based hourly-paid or non-exempt individuals
employed by Williams-Sonoma Stores, Inc. at a Pottery Barn,
Pottery Barn Kids, Williams-Sonoma, or West Elm store in
California since June 24, 2009.” The operative first amended
complaint in Morales alleged causes of action for overtime pay
(Lab. Code, §§ 510, 1198),1 meal period premiums (§§ 226.7, 512,
subd. (a)), rest period premiums (§ 226.7), minimum wages
(§§ 1194, 1197, 1197.1), final wages (§§ 201, 202), payment of all
wages earned (§ 204), failure to provide proper wage statements
(§ 226, subd. (a)), failure to keep proper payroll records (§ 1174,
subd. (d)), failure to reimburse business expenses (§§ 2800, 2802),
relief under the Labor Code Private Attorneys General Act of
2004 (PAGA) (§ 2698 et seq.), and relief under the Unfair
Competition Law (Bus. & Prof. Code, § 17200 (UCL)).

      1 All
         further undesignated statutory references are to the
Labor Code.

                                 2
       The Morales class action was resolved by a settlement
agreement. The superior court approved the agreement and
entered a stipulated order of dismissal on September 23, 2015.
Mr. Shine, who worked at a Pottery Barn retail store in Beverly
Hills from January to March 2013, was a member of the Morales
settlement class and received a share of the settlement proceeds.
       A short while later, Mr. Shine filed the present putative
class action complaint against Williams-Sonoma. He brought
this action on behalf of himself and all “non-exempt employees of
Williams-Sonoma who worked at Williams-Sonoma, Pottery
Barn, Pottery Barn Kids, West Elm, and or/Rejuvenation retail
stores in California at any time from October 21, 2011 up to and
continuing until the time that judgment is entered in this
case . . . .”
       The allegations in this case are based on the purported
failure by Williams-Sonoma to pay the prospective class members
reporting-time pay as required under Wage Order 7-2001 of the
Industrial Welfare Commission (IWC) (Cal. Code Regs., tit. 8,
§ 11070). This wage order, which applies to mercantile
companies,2 provides that for “[e]ach workday an employee is
required to report for work and does report, but is not put to work
or is furnished less than half of said employee’s usual or
scheduled day’s work, the employee shall be paid for half the
usual or scheduled day’s work, but in no event less than two (2)

      2 It  is undisputed that Williams-Sonoma is a mercantile
company. The term refers to “any industry, business, or
establishment operated for the purpose of purchasing, selling, or
distributing goods or commodities at wholesale or retail; or for
the purpose of renting goods or commodities.” (Cal. Code Regs.,
tit. 8, § 11070, subd. (2)(H).)

                                3
hours nor more than four (4) hours, at the employee’s regular
rate of pay, which shall not be less than the minimum wage.”
(Cal. Code Regs., tit. 8, § 11070, subd. (5)(A).)
       Mr. Shine contends that reporting-time pay is required
when an employee’s on-call shift is canceled shortly before the
scheduled start time. The complaint alleges that Williams-
Sonoma required employees who “were scheduled for a regular
shift immediately followed by an on-call shift that same day” (or
vice-versa) to physically report or phone their employer shortly
before the scheduled start of the on-call shift, but did not pay
reporting-time pay for a canceled on-call shift. It alleges this is a
violation of Wage Order 7-2001.
       Based on this alleged violation, which was the first cause of
action in the complaint, Mr. Shine also alleged related claims for
failure to pay all wages earned at termination (§§ 200-203, second
cause of action), failure to provide accurate wage statements
(§§ 226, 226.3, third cause of action), and violation of the UCL
(Bus. & Prof. Code, § 17200, fourth cause of action).
       Williams-Sonoma demurred to the entire complaint,
arguing that all the claims were based on the same theory: that
Wage Order 7-2001 requires an employer in the mercantile
industry to provide “reporting-time pay, a type of wage, when it
asks an employee to remain available for a so-called ‘on-call’ shift,
but then ultimately tells the employee that [he or] she does not
need to work the shift.” It raised three independent grounds to
sustain the demurrer. First, by participating in the Morales
settlement agreement and receiving damages for failure to pay
wages due, Mr. Shine is barred under the doctrine of res judicata
from bringing a second suit against the same defendants for
failure to pay reporting-time pay, which also is a form of wages.

                                 4
Second, Williams-Sonoma requested that the court take judicial
notice of employment records, which allegedly showed that Mr.
Shine was not told that his on-call shift had been canceled, and
because he did not suffer the injury alleged in the complaint he
lacks standing to bring this action. Third, Williams-Sonoma
contended the plain language of Wage Order 7-2001 requires
reporting-time pay only where an employee physically reports to
the job site, ready to work. It claimed that Mr. Shine’s attempt to
extend reporting-time pay to situations where an employee does
not physically report to work exceeds what is required by law for
on-call shifts.
       The trial court sustained the demurrer solely on res
judicata grounds, and did not decide the other issues raised in
the demurrer. Based on the order sustaining the demurrer
without leave to amend, the court entered a judgment of
dismissal with prejudice. This timely appeal followed.

                          DISCUSSION
      In reviewing a dismissal based on an order sustaining a
demurrer, we apply the de novo standard. (Balikov v. Southern
Cal. Gas Co. (2001) 94 Cal. App. 4th 816, 819.) To determine
whether the complaint states a cause of action as a matter of law,
we give it a reasonable interpretation and accept the truth of all
properly pleaded material facts. (Ibid.)

                                  I
      “‘Under the doctrine of res judicata, a valid, final judgment
on the merits is a bar to a subsequent action by the parties or
their privies on the same cause of action.’” (Villacres v. ABM
Industries, Inc. (2010) 189 Cal. App. 4th 562, 575 (Villacres),

                                 5
quoting Amin v. Khazindar (2003) 112 Cal. App. 4th 582, 589–590
(Amin).) The doctrine is based on public policy, recognizing there
must ““‘be an end to litigation.’”” (Villacres, supra, 189
Cal.App.4th at p. 575, citing Citizens for Open Access etc. Tide,
Inc. v. Seadrift Assn. (1998) 60 Cal. App. 4th 1053, 1065.)
       A second aspect of the res judicata doctrine is issue
preclusion, also known as collateral estoppel. (Frommhagen v.
Board of Supervisors (1987) 197 Cal. App. 3d 1292, 1299
(Frommhagen).) Under this aspect of the doctrine, “‘“the prior
judgment is res judicata on matters which were raised or could
have been raised, on matters litigated or litigable. . . .”’”
(Villacres, supra, 189 Cal.App.4th at p. 576, quoting Amin, supra,
112 Cal.App.4th at pp. 589–590.) Collateral estoppel precludes
the litigation of a claim that was related to the subject matter of
the first action and could have been raised in that action, even
though it was not expressly pleaded. (Villacres, supra, 189
Cal.App.4th at p. 576, citing Interinsurance Exchange of the Auto.
Club v. Superior Court (1989) 209 Cal. App. 3d 177, 181–182.)
This preclusive effect applies where, as here, the previous action
was dismissed with prejudice based on a court-approved class
action settlement agreement. (Villacres, supra, 189 Cal.App.4th
at p. 577.)
       To analyze the collateral estoppel effect of the earlier
judgment in Morales, the trial court properly exercised discretion
to take judicial notice of the Morales pleading, settlement
agreement, and stipulated judgment of dismissal. (See
Frommhagen, supra, 197 Cal.App.3d at p. 1299 [when reviewing
demurrer based on res judicata, judicial notice may be taken of
official acts or records of any court in this state]; Evid. Code,
§ 452.) Where “all of the facts necessary to show that an action is

                                 6
barred by res judicata are within the complaint or subject to
judicial notice, a trial court may properly sustain a general
demurrer. [Citation.]” (Frommhagen, at p. 1299.) Upon
reviewing the Morales documents, the court found Mr. Shine was
collaterally estopped to maintain this action against the same
defendants on an issue that could have been raised in Morales.
(See Villacres, supra, 189 Cal.App.4th at p. 576 [where
requirements of collateral estoppel are met, claim that could have
been raised in previous action between same parties may not be
brought in subsequent action].)
       The Morales complaint sought recovery of unpaid wages on
behalf of class members employed by Williams-Sonoma since
June 24, 2009. The allegations in that case included the claims of
failure to provide meal and rest periods, overtime and minimum
wages, timely wages, and final paychecks to the Morales class
plaintiffs.
       In the present action, Mr. Shine seeks reporting-time pay
for on-call shifts that were canceled in early 2013, within the
period covered by the Morales settlement agreement. Because
reporting-time pay is a form of wages, a claim for reporting-time
pay could have been raised in the Morales action. (See Murphy v.
Kenneth Cole Productions, Inc. (2007) 40 Cal. 4th 1094, 1111–
1112 [reporting-time pay, like split-shift and overtime pay, is a
form of wages even though it serves a dual purpose of shaping
employer behavior].) The fact that no claim for reporting-time
pay was alleged in Morales does not alter our determination that
the same primary right, to seek payment of wages due, was
involved in both Morales and this case. (See Boeken v. Phillip
Morris USA, Inc. (2010) 48 Cal. 4th 788, 798–799.)

                                7
       Mr. Shine argues the present claims are not covered by the
previous settlement agreement and release because there was no
“bona fide dispute” in Morales over reporting-time pay. As we
explain, his contention is based on a misunderstanding of
subdivision (a) of section 206.5, which provides: “An employer
shall not require the execution of a release of a claim or right on
account of wages due, or to become due, or made as an advance
on wages to be earned, unless payment of those wages has been
made. A release required or executed in violation of the
provisions of this section shall be null and void as between the
employer and the employee. Violation of this section by the
employer is a misdemeanor.”
       Wages are considered “due” within the meaning of section
206 either when the employer concedes they are due or, when
following investigation and hearing, the Labor Commissioner
rules they must be paid. (§ 206, subd. (b).) Reading this
provision in conjunction with section 206.5, the Labor Code
requires payment by the employer of all wages considered “due”
within the meaning of section 206 before a release may be
obtained from an employee in a wage and hour dispute. (Watkins
v. Wachovia Corp. (2009) 172 Cal. App. 4th 1576, 1587; Chindarah
v. Pick Up Stix, Inc. (2009) 171 Cal. App. 4th 796, 801–803.)
       In this case it is undisputed that there was a bona fide
disagreement on the right to reporting-time pay. Williams-
Sonoma denies that reporting-time pay is owed when on-call
shifts are canceled by the employer. Because the right to
reporting-time pay is in dispute, reporting-time pay was not
“due” within the meaning of section 206 when the Morales
settlement agreement was signed. Accordingly, the limitation
imposed by section 206.5 does not apply to invalidate the release.

                                 8
        There is no applicable statute that precludes the release of
wage claims that could have been raised in the previous action.
(See Villacres, supra, 189 Cal.App.4th at pp. 584–585 [citing
numerous cases in which subsequent actions for additional wages
were barred under doctrine of res judicata].) “‘[A] judgment
pursuant to a class settlement can bar [subsequent] claims based
on the allegations underlying the claims in the settled class
action. This is true even though the precluded claim was not
presented, and could not have been presented, in the class action
itself.’ (In re Prudential Ins. Co. of America (3d Cir. 2001) 261
F.3d 355, 366, italics added; accord, In re General American Life
Ins. Company Sales Prac. Lit. (8th Cir. 2004) 357 F.3d 800, 804–
805.)” (Id. at pp. 586–587.)
        Mr. Shine’s reliance on Consumer Advocacy Group, Inc. v.
ExxonMobil Corp. (2008) 168 Cal. App. 4th 675 is misplaced. That
case was preceded by a previous action between the same parties
(the “CBE” action). (Id. at p. 689.) The settlement agreement in
the CBE action contained a provision that expressly released all
claims that could have been raised arising out of any alleged
discharge of or exposure to two specific chemicals, benzene and
toluene. (Id. at p. 688.) Lead, the chemical at issue in the
subsequent Consumer Advocacy action, was not mentioned in the
previous CBE settlement agreement, either by name or more
generally as a “gasoline constituent.” (Ibid.) Accordingly,
Consumer Advocacy held that the release in the CBE action did
not bar a subsequent action concerning discharge of or exposure
to lead. (Id. at p. 689.) In this case, however, paragraph A.6 of
the Morales settlement agreement broadly releases any claim
that could have been brought under the enumerated provisions,
which necessarily includes Wage Order 7-2001.

                                 9
                                      II
        Mr. Shine alternatively argues the Morales settlement
agreement includes a waiver by Williams-Sonoma of the right to
assert a res judicata defense to wage claims which, like the
present claim for reporting-time pay, are dependent on facts not
mentioned in the Morales complaint. We do not agree.
        The release in the Morales settlement agreement is
comparable to the “standard general release” discussed in the
Villacres case. (Villacres, supra, 189 Cal.App.4th at p. 587.) The
release at issue in Villacres was entered in a previous case,
Augustus v. American Commercial Security Services, Inc. (Super.
Ct. L.A. County, 2006, No. BC347914) (Augustus)). (Villacres, at
p. 570.) The Augustus release stated that the “‘Class Members
hereby . . . fully release . . . the [defendant employer] from any
and all claims, debts, liabilities, demands, obligations, . . .
damages, action or causes of action . . . which have been or could
have been asserted against the [employer] arising out of or
related to all claims for wages, overtime pay, pay for all time
allegedly worked but not compensated, and all other claims of
any kind for wages, penalties, interests, costs and attorneys’ fees
arising from the alleged violation of any provision of
. . . California law and/or Federal law which [were] or could have
been raised as part of the Plaintiffs’ claims.’ [Italics omitted.]”
(Id. at pp. 585–586.)
        In enforcing the Augustus release, the court in Villacres
explained that the term “all claims” as used in the Augustus
settlement agreement “includes ‘claims that are not expressly
enumerated in the release.’ [Citation.]” (Villacres, supra, 189
Cal.App.4th at p. 587.) The Villacres court held that the
Augustus settlement agreement released the plaintiffs’ “‘PAGA

                                10
claims’ without mentioning the PAGA by name,” and it was
“immaterial that Augustus did not include a PAGA cause of
action. [Citation.] Nor does it matter that none of the settlement
proceeds in Augustus were allocated to PAGA claims. [Citation.]
[¶] Reduced to its essence, the Augustus settlement agreement
released ‘all claims . . . of any kind for . . . penalties . . . arising
from the alleged violation of any provision of common law,
California law and/or Federal law which [were] or could have
been raised as part of the Plaintiffs’ claims.’ This provision
constitutes a standard general release, barring any claims based
on conduct occurring before its effective date. [Italics omitted.]”
(Ibid.) In reaching this conclusion, the Villacres court reasoned
that a “‘judgment pursuant to a class settlement can bar
[subsequent] claims based on the allegations underlying the
claims in the settled class action. This is true even though the
precluded claim was not presented, and could not have been
presented, in the class action itself.’ [Citations.] [Italics
omitted.]” (Id. at pp. 586–587.)
       We agree with Villacres, supra, 189 Cal.App.4th at p. 589
that “‘the release of “all claims and causes of action” must be
given a comprehensive scope. [¶] If courts did not follow this
rule, “it [would be] virtually impossible to create a general release
that . . . actually achieve[d] its literal purpose” . . . , and language
releasing all claims would be inherently misleading, causing
unfair surprise to parties that offer payment on the reasonable
expectation that all claims are settled, only later to face
continuing litigation. . . . Moreover, if courts did not enforce
general releases, an employer . . . seeking a comprehensive
settlement, would have to struggle to enumerate all claims the
employee might plan to allege. The employer would never be able

                                  11
to know for sure that it had thought of every claim, and therefore
it would never be able to put a definitive end to the matter.
Employers would then be disinclined to enter into settlements,
because certainty as to the full extent of liability is one factor
that motivates employers to choose settlement over litigation.’
[Citation, italics omitted.]” (Ibid.)
       Like the Augustus release, the Bonilla settlement
agreement released “all claims, demands, rights, liabilities and
causes of action that were or could have been asserted (whether in
tort, contract or otherwise) for violation of the Fair Labor
Standards Act, the California Labor Code, the California
Business and Professions Code, the Private Attorneys General Act
(‘PAGA’), the applicable Industrial Welfare Commission Orders or
any similar state or federal law, whether for economic damages,
non-economic damages, liquidated damages, punitive damages,
restitution, penalties, other monies, or other relief based on any
facts, transactions, events, policies, occurrences, acts, disclosures,
statements, omissions or failures to act pled in the Complaint,
which are or could be the basis of claims that Defendant failed to
pay wages or overtime, failed to provide meal or rest breaks or
compensation in lieu thereof, failed to provide timely wages and
final paychecks, committed record-keeping violations, provided
noncompliant wage statements, failed to reimburse for business
expenses, or engaged in unfair business practices at any time on
or before the date of Preliminary Approval.” (Italics added.)
       As with any contract, the language of a settlement
agreement must be viewed in its entirety, and, if possible, every
provision must be given effect. (City of El Cajon v. El Cajon
Police Officers’ Assn. (1996) 49 Cal. App. 4th 64, 71.) Reading the
terms of the Morales settlement agreement together as whole,

                                 12
and attempting to give effect to every provision, we conclude the
first clause of the release provided a general release of all claims
that were or could have been asserted in the previous action
between the same parties for payment of wages due under the
enumerated provisions. We do not read the subsequent phrase,
“pled in the complaint,” as modifying the first clause of the
release. By construing the release in this manner, we give effect
to the entire agreement and avoid rendering the general release
contained in the first clause of the provision meaningless. (Ibid.
[every provision in instrument should be given effect if possible];
Super 7 Motel Associates v. Wang (1993) 16 Cal. App. 4th 541, 546
[same].)
       The parties rely on competing rules for interpretation of a
contract: Williams-Sonoma relies on the last antecedent rule,
which is “a rule of statutory and contractual interpretation
requiring that prepositional phrases be read to modify the
preceding term or phrase.” (People ex rel. Lockyer v. R.J.
Reynolds Tobacco Co. (2003) 107 Cal. App. 4th 516, 529.) Mr.
Shine relies on the rule of natural construction, which provides
an exception to the last antecedent rule: “[W]hen several words
are followed by a clause that applies as much to the first and
other words as to the last, ‘“‘the natural construction of the
language demands that the clause be read as applicable to all.’”’
[Citation.]” (Renee J. v. Superior Court (2001) 26 Cal. 4th 735,
743.)
       Williams-Sonoma argues that under the last antecedent
rule, the phrase “pled in the Complaint” should be read to modify
only the phrase that immediately precedes it, “or other relief.”
Mr. Shine argues that under the rule of natural construction, the

                                 13
phrase “pled in the Complaint” imposes a natural limitation on
the scope of the entire release.
       We conclude the last antecedent rule provides the more
accurate and natural construction of the release. The
interpretation advanced by Mr. Shine contradicts the plain
language of the agreement and fails to give effect to the general
release contained in the opening clause of the paragraph. His
assertion that application of the last antecedent rule would
erroneously release even non-wage and hour claims is incorrect.
The final passage limits the release to claims related to a wage
and hour action. Moreover, in construing the agreement, it is
assumed that the parties incorporated all applicable laws
including res judicata and collateral estoppel. (See Bodle v. Bodle
(1978) 76 Cal. App. 3d 758, 764.) Because collateral estoppel
applies only to claims that are related by subject matter and
could have been pleaded in the first action, there is no danger
that application of the last antecedent rule would release claims
completely unrelated to employment claims.
       Mr. Shine also relies on the rule applicable to contract
actions where the instrument is attached as an exhibit to the
complaint. The rule in such cases is that a general demurrer
“admits not only the contents of the instrument but also any
pleaded meaning to which the instrument is reasonably
susceptible. [Citation.]” (Aragon-Haas v. Family Security Ins.
Services, Inc. (1991) 231 Cal. App. 3d 232, 239.) Assuming this
rule applies to the present situation, it does not compel a
different result. As previously discussed, the Morales settlement
agreement is not reasonably susceptible to the meaning ascribed
by Mr. Shine, and his interpretation is not dispositive. (See
George v. Automobile Club of Southern California (2011) 201

                                14
Cal. App. 4th 1112, 1128–1129 [demurrer properly sustained
without leave to amend because insurance contract not
reasonably susceptible to meaning alleged in complaint]; Winet v.
Price (1992) 4 Cal. App. 4th 1159, 1166–1168 [threshold
determination of ambiguity always subject to de novo review, and
based on independent review of disputed phrase, appellate court
found provisions of agreement to be “as complete, explicit and
non-ambiguous as a general release can be”].)
       Mr. Shine argues that at minimum, because the release is
ambiguous as to whether Williams-Sonoma waived the res
judicata defense, he is entitled to discovery on the intention of the
parties. However, the release is not ambiguous, and discovery is
not a valid basis for reversal. Extrinsic evidence is not
admissible to provide a meaning to which an instrument is not
reasonably susceptible, and the language of the contract governs
its interpretation when it is clear and explicit and does not
involve an absurdity. (G & W Warren’s, Inc. v. Dabney (2017) 11
Cal.App.5th 565, 576.)

                                III
      We conclude the demurrer was properly sustained without
leave to amend on grounds of res judicata. Because we conclude
the release is clear and unambiguous, further amendment of the
complaint would be pointless. We do not reach the other issues
briefed by the parties, and express no opinion as to the merits of
the complaint or Mr. Shine’s standing to pursue this action.

                                 15
                          DISPOSITION
     The judgment (order of dismissal) is affirmed. Williams-
Sonoma is entitled to its costs on appeal.
     CERTIFIED FOR PUBLICATION

                                   EPSTEIN, P. J.
We concur:

     WILLHITE, J.

     MANELLA, J.

                              16