Court Opinion

ID: 4705348
Source: CourtListenerOpinion
Date Created: 2021-07-21 19:04:53.48359+00
Date Added: 2024-06-11T08:06:18.227471
License: Public Domain

Filed 7/21/21
                        CERTIFIED FOR PUBLICATION

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                   DIVISION ONE

                           STATE OF CALIFORNIA

 GINA JOHNSON,                               D077599

        Plaintiff and Appellant,

        v.                                   (Super. Ct. No. 37-2019-
                                             00047448-CU-OE-CTL)
 MAXIM HEALTHCARE SERVICES,
 INC.,

        Defendant and Respondent.

       APPEAL from a judgment of the Superior Court of San Diego County,
Gregory W. Pollack, Judge. Reversed.
       Mashiri Law Firm, Alex Asil Mashiri; The Jami Law Firm and Tamim
Jami, for Plaintiff and Appellant.
       Morgan, Lewis & Bockius, John S. Battenfeld and Alexander L.
Grodan, for Defendant and Respondent.
       Gina Johnson filed a lawsuit against her employer, Maxim Healthcare
Services, Inc. (Maxim), under the Private Attorney General Act of 2004

(PAGA) (Lab. Code,1 § 2698, et seq.). The superior court sustained Maxim’s
demurrer to complaint, finding that Johnson’s individual claim was time-

1      Statutory references are to the Labor Code unless otherwise specified.
barred. The court subsequently dismissed Johnson’s suit with prejudice.
Relying on Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73
(Kim), we reverse.
              FACTUAL AND PROCEDURAL BACKGROUND
      Maxim is a national healthcare staffing company and provides
temporary staffing and healthcare services to its clients. Maxim hired
Johnson as an hourly, nonexempt employee in 2016. On September 7, 2016,
Johnson signed a document entitled “Non-Solicitation, Non-Disclosure and
Non-Competition Agreement” (Agreement).
      On June 19, 2019, Johnson sent notice to the California Labor and
Workforce Development Agency (Agency) that her execution of the

Agreement violated section 432.5.2 Specifically, Johnson claimed that the
Agreement included a noncompetition clause, which is prohibited under

California law.3 Johnson informed the Agency that she intended to pursue a
representative action under PAGA on behalf of all allegedly aggrieved
employees who signed a document similar to the Agreement, containing the
same noncompete language. After 65 days lapsed without a response from
the Agency, Johnson filed a complaint in San Diego Superior

2     Section 432.5 provides: “No employer, or agent, manager,
superintendent, or officer thereof, shall require any employee or applicant for
employment to agree, in writing, to any term or condition which is known by
such employer, or agent, manager, superintendent, or officer thereof to be
prohibited by law.”

3     See Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 955
[“Noncompetition agreements are invalid under [Business and Professions
Code] section 16600 in California, even if narrowly drawn, unless they fall
within the applicable statutory exceptions of [Business and Professions Code]
sections 16601, 16602, or 16602.5”].
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Court on September 9, 2019. The complaint consisted of a single cause of
action for representative claims for penalties under PAGA for violation of
section 432.5.
      Maxim demurred to the complaint, arguing that Johnson’s individual
claim was time-barred because she signed the Agreement three years before
she filed suit. Johnson opposed the demurrer, contending she had standing
to bring a claim under PAGA because she was an aggrieved employee and
had exhausted the necessary administrative remedies. Further, she
maintained that the representative claims were not time-barred because,
under PAGA, Maxim was subject to penalties for any of its employees who
signed the Agreement during the applicable period. Finally, as a current
Maxim employee who signed the Agreement, Johnson argued that she
continued to suffer under the violation committed by Maxim.
      After considering the papers and entertaining oral argument, the
superior court sustained the demurrer without leave to amend. The court
determined that Johnson’s individual claim was time-barred, and, as such,
she could not pursue a PAGA claim in a representative capacity.
      Johnson appealed from the order sustaining the demurrer without
leave to amend. We requested that one of the parties obtain a dismissal
order from the trial court. Eventually, the superior court dismissed the
entire action with prejudice.
                                 DISCUSSION
      We review the superior court’s order sustaining the demurrer,
including any standing determination, de novo. (Martin v. Bridgeport
Community Assn., Inc. (2009) 173 Cal.App.4th 1024, 1031.)
      “In September 2003, the Legislature enacted [PAGA] (Lab. Code,
§ 2698 et seq.; Stats. 2003, ch. 906, § 2, eff. Jan. 1, 2004). The Legislature

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declared that adequate financing of labor law enforcement was necessary to
achieve maximum compliance with state labor laws, that staffing levels for
labor law enforcement agencies had declined and were unlikely to keep pace
with the future growth of the labor market, and that it was therefore in the
public interest to allow aggrieved employees, acting as private attorneys
general, to recover civil penalties for Labor Code violations, with the
understanding that labor law enforcement agencies were to retain primacy
over private enforcement efforts. (Stats. 2003, ch. 906, § 1.)” (Arias v.
Superior Court (2009) 46 Cal.4th 969, 980 (Arias).)
      A PAGA claim is legally and conceptually different from an employee’s
own suit for damages and statutory penalties. An employee suing under
PAGA “does so as the proxy or agent of the state’s labor law enforcement
agencies.” (Arias, supra, 46 Cal.4th at p. 986.) Every PAGA claim is “a
dispute between an employer and the state.” (Iskanian v. CLS
Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 384, 386 (Iskanian);
Arias, at p. 986.) Moreover, the civil penalties a PAGA plaintiff may recover
on the state’s behalf are distinct from the statutory damages or penalties that
may be available to employees suing for individual violations. (Iskanian, at
p. 381.) Relief under PAGA is designed primarily to benefit the general
public, not the party bringing the action. (Arias, at p. 986.) “A PAGA
representative action is therefore a type of qui tam action,” conforming to all
“traditional criteria, except that a portion of the penalty goes not only to the
citizen bringing the suit but to all employees affected by the Labor Code
violation.” (Iskanian, at p. 382.) The “government entity on whose behalf the
plaintiff files suit is always the real party in interest.” (Ibid.)
      However, not every private citizen in California can serve as the state’s
representative. Instead, only an aggrieved employee has standing under

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PAGA. An “aggrieved employee” is “any person who was employed by the
alleged violator and against whom one or more of the alleged violations was
committed.” (§ 2699, subd. (c).) “Under [PAGA], an ‘aggrieved employee’ may
bring a civil action personally and on behalf of other current or former
employees to recover civil penalties for Labor Code violations. [Citation.]”
(Arias, supra, 46 Cal.4th at p. 980, fn. omitted.)
      For purposes of our analysis here, it is undisputed that Johnson, at
least at one time, was an aggrieved employee under PAGA. However, Maxim
argues that Johnson’s individual claim is time-barred because she signed the
Agreement some three years before she brought suit. Johnson counters that
there is no requirement that she be able to recover on her individual claim to
continue with the PAGA action against Maxim. Accordingly, the main issue
posed by the parties on appeal is whether an employee, whose individual
claim is time-barred, may still pursue a representative claim under PAGA.
Under Kim, supra, 9 Cal.5th 73, we conclude the answer is yes.
      In Kim, supra, 9 Cal.5th 73, an employee brought a putative class
action lawsuit against his former employer alleging Labor Code violations
and a PAGA claim. (Id. at pp. 82-83.) The superior court ordered the
individual claims to arbitration, stayed the PAGA claim, and dismissed the
class claims. (Id. at p. 82.) Later, the employee settled and dismissed the
individual claims, “leaving only the PAGA claim for resolution.” (Ibid.) With
the stay lifted, the employer “successfully moved for summary adjudication”
on the PAGA claim, contending the dismissal of the employee’s individual
claims meant he was no longer an “ ‘aggrieved employee’ ” with PAGA
standing. (Id. at pp. 82-83.)
      The California Supreme Court reversed. It concluded an employee who
settles and dismisses individual Labor Code claims does not lose standing to

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pursue a PAGA claim. (Kim, supra, 9 Cal.5th at p. 84.) To this end, the court
emphasized that the plain language of section 2699, subdivision (c) has two
requirements for standing: the plaintiff “must be an aggrieved employee,
that is, someone ‘who was employed by the alleged violator’ and ‘against
whom one or more of the alleged violations was committed.’ ” (Kim, at pp. 83-
84.) Our high court concluded that the employee satisfied those requirements
because he was employed by the alleged violator, and he personally suffered
at least one Labor Code violation on which the PAGA claim was based. (Id.
at pp. 82, 84.)
      The California Supreme Court rejected the contention that a plaintiff
loses standing by settling individual Labor Code claims and accepting
“compensation for his injury.” (Kim, supra, 9 Cal.5th at p. 84.) As it
explained, the “Legislature defined PAGA standing in terms of violations, not
injury,” and the employee became “aggrieved” when “one or more Labor Code
violations were committed against him. [Citation.] Settlement did not
nullify these violations.” (Ibid.) The court also observed PAGA standing is
not “inextricably linked to the plaintiff’s own injury. Employees who were
subject to at least one unlawful practice have standing to serve as PAGA
representatives even if they did not personally experience each and every
alleged violation.” (Id. at p. 85.)
      The court further clarified that PAGA standing does not depend on
maintaining an individual Labor Code claim. (Kim, supra, 9 Cal.5th at
p. 88.) Our high court found support for this conclusion in section 2699,
subdivision (g)(1), which authorizes “stand-alone PAGA claims,” and in
various Labor Code statutes imposing “civil penalties without affording a
private right of action.” (Kim, at pp. 88-89.) Finally, the court observed
“[n]othing in the legislative history suggests the Legislature intended to

                                       6
make PAGA standing dependent on the existence of an unredressed injury, or
the maintenance of a separate, unresolved claim.” (Id. at pp. 90-91.)
      Kim compels reversal here. Under Kim, we conclude Johnson is an
“aggrieved employee” with standing to pursue her PAGA claim. Johnson
alleged she is employed by Maxim and that she personally suffered at least
one Labor Code violation on which the PAGA claim is based. (See Kim,
supra, 9 Cal.5th at pp. 82, 84; § 2699, subd. (c).) The fact that Johnson’s
individual claim may be time-barred does not nullify the alleged Labor Code
violations nor strip Johnson of her standing to pursue PAGA remedies. (See
Kim, at pp. 80, 84.) In this sense, we find the fact that Johnson’s claim is
time-barred places her in a similar situation as a plaintiff who settles her
individual claims or dismisses her individual claims to pursue a stand-alone
PAGA claim.
      Maxim’s attempt to distinguish Kim is not persuasive. For example,
Maxim contends that we would have to “distort[ ]” the holding of Kim to
conclude that Johnson’s standing to bring a PAGA action has not been
stripped by the relevant statute of limitation. Not so. The rule from Kim is
an “aggrieved employee” has standing to pursue a PAGA claim, irrespective
of whether that employee maintains a separate Labor Code claim. And, as
discussed ante, Johnson alleged she was an aggrieved employee. Under Kim,
this allegation is sufficient, at this stage, to establish standing. To the extent
Maxim argues Kim applies only when a plaintiff settles the underlying Labor
Code claims, we disagree.
      Nor do we agree with Maxim that Robinson v. Southern Counties Oil
Co. (2020) 53 Cal.App.5th 476 (Robinson) warrants a different conclusion. In
that case, the plaintiff worked for the defendant from February 4, 2015
through June 14, 2017. In August 2018, the plaintiff filed the required notice

                                        7
of a Labor Code violation with the Agency. After waiting the required time,
he filed suit, alleging the defendant violated sections 226.7 and 512 by failing
to provide the required meal and rest breaks. (Robinson, at p. 480.)
      However, in February 2019, in a case entitled Gutierrez v. Southern
Counties Oil Company (Sup. Ct. San Diego County, No. 37-2017-00040850-
CU-OE-CTL) (Gutierrez), the San Diego Superior Court approved a
settlement in a class action that sought individual damages as well as civil
penalties under PAGA for the same alleged Labor Code violations on which
the plaintiff in Robinson brought suit. (Robinson, supra, 53 Cal.App.5th at
p. 480.) The plaintiff in Robinson and three other employees opted out the
class settlement in Gutierrez. The plaintiff then amended the allegations in
his complaint to represent employees of the defendant who opted out of the
settlement in Gutierrez and people who were employed from January 27,
2018 to present. (Robinson, at p. 480.)
      The superior court subsequently sustained without leave to amend a
demurrer to the plaintiff’s complaint. The court found that the plaintiff was
barred from bringing a PAGA action asserting the same claims that were
settled in Gutierrez and that he lacked standing to bring a representative
action on behalf of employees employed during the time period when he was
no longer also employed by the defendant. (Robinson, supra, 53 Cal.App.5th
at pp. 480-481.)
      The appellate court affirmed the judgment based on the order
sustaining the demurrer. In doing so, the court explained that the doctrine of
claim preclusion barred the plaintiff’s claims with respect to the violations
settled in Gutierrez. (Robinson, supra, 53 Cal.App.5th at p. 482.) The court
noted that the plaintiff’s suit and the Gutierrez action involved “PAGA claims
based on the same alleged violations of the Labor Code.” (Robinson, at

                                       8
p. 482.) As such, although the plaintiff could opt out on an individual basis,
there was no mechanism to opt out of the judgment entered on the PAGA
claim. To this end, the court emphasized that a PAGA action substitutes as
an action brought by the government; thus, a judgment or settlement in that
action “binds all those, including nonparty aggrieved employees, who would
be bound by a judgment in an action brought by the government.” (Ibid.)
      Regarding the plaintiff’s attempt to represent aggrieved employees for
violations occurring after January 27, 2018, the appellate court concluded the
plaintiff lacked standing because he was not employed by the defendant at
that time and was not affected by any of the alleged violations. (Robinson,
supra, 53 Cal.App.5th at p. 484.)
      Robinson is not applicable to the instant action. Here, there is no
parallel case, like Gutierrez, that has been settled, involving the same PAGA
claims Johnson advances in this case. Thus, the court’s discussion of issue
preclusion in Robinson is not instructive. Further, unlike the plaintiff in
Robinson, Johnson remains an employee of Maxim and continues to be
governed by the terms of the Agreement. Moreover, she alleged that Maxim
persists in requiring employees to sign agreements that contain the
prohibited terms. Accordingly, nothing in Robinson supports Maxim’s
argument that Johnson no longer has standing to bring a PAGA claim based

                                       9
on violations associated with the Agreement that occurred during the

applicable statute of limitations.4
      In short, under Kim, supra, 9 Cal.5th 73, Johnson has standing to bring
the subject PAGA claim. Additionally, she alleged in the operative complaint
that Maxim had violated section 432.5 during the applicable statute of
limitations, subjecting the company to penalties under PAGA. As such, the
superior court erred in sustaining the demurrer without leave to amend.

Johnson has stated a valid cause of action under PAGA against Maxim.5

4       In the respondent’s brief, Maxim relies on multiple federal district
court cases to support its position that Johnson may not proceed with a
representative claim under PAGA in the instant action. We are not bound by
these federal cases. (See People v. Crittenden (1994) 9 Cal.4th 83, 120, fn. 3.)
Moreover, these federal cases predate Kim, supra, 9 Cal.5th 73, and thus, are
of little help here. In addition, after briefing concluded, Maxim submitted a
notice of new authority, referring us to a newly issued Ninth Circuit opinion.
(See Magadia v. Wal-Mart Associates, Inc. (9th Cir. 2021) 999 F.3d 668.)
That case is not instructive here as it addresses standing under Article III of
the United States Constitution and does not address Kim whatsoever.

5     Because we conclude that Johnson has stated a valid claim against
Maxim under PAGA, we do not reach her alternative argument that the
continuous accrual doctrine applies to her individual claim.
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                             DISPOSITION
    The judgment is reversed. Johnson is entitled to her costs on appeal.

                                                   HUFFMAN, Acting P. J.

WE CONCUR:

HALLER, J.

AARON, J.

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