Court Opinion

ID: 5666539
Source: CourtListenerOpinion
Date Created: 2022-01-12 03:57:15.353992+00
Date Added: 2024-06-11T08:39:20.471525
License: Public Domain

ARMSTRONG, J., Dissenting.
I respectfully dissent.
The following facts are undisputed: Auto Spa Express, Inc. (Auto Spa), owned and operated a carwash business at 2028 Sunset Boulevard, a parcel of real property which it owned subject to a deed of trust securing a loan; Auto Spa owed wages and Labor Code penalties to its employees; Auto Spa defaulted on its secured loan; the noteholder conducted a nonjudicial foreclosure sale at which it purchased the property at 2028 Sunset Boulevard; Auto Spa was evicted from the property and ceased doing business;1 the new owner of 2028 Sunset Boulevard leased the premises to Sunset Car Wash, LLC (Sunset), an entity unaffiliated with, and in fact a stranger to, Auto Spa; Sunset opened a new carwash business under its corporate name at 2028 Sunset Boulevard. Relying on the dictionary definition of a “successor” as “one that follows” (Merriam-Webster Online Diet. <http://www.merriamwebster.com> [as of May 16, 2012]) the Attorney General contends that pursuant to Labor Code section 2066, Sunset incurred successor liability for Auto Spa’s Labor Code violations because it operated its new carwash on the same business premises previously used by Auto Spa. This simple analysis not only violates the precepts of statutory interpretation and misapprehends the legislative intent behind the statute, but results in a gross injustice to Sunset, which has fully complied with its Labor Code obligations as a carwash operator.
*1442Labor Code section 2066 (hereafter, section 2066) imposes liability on (1) a successor to a carwash employer, (2) which owes wages and penalties to its employees, (3) if the successor fits one of four enumerated categories. As noted, it is undisputed that Auto Spa was a carwash employer which owed wages and penalties to its former employees. Thus, if Auto Spa sold, assigned, or transferred its business—that is, if any person or entity succeeded to Auto Spa’s carwash business—the purchaser, assignee or transferee would be subject to liability for Auto Spa’s wage and penalty obligations if he, she, or it met one of the criteria set forth in subdivisions (a) through (d) of the statute. However, because no person or entity succeeded to Auto Spa’s business, section 2066 does not come into play.
The majority concludes that subdivisions (a) through (d) of section 2066 provide four discrete definitions of the term “successor.” If true, the Legislature enacted a statute mandating either that (1) a successor is liable for the prior carwash employer’s wage and penalty obligations if it is a successor (a nonsense sentence), or (2) all the world is liable for the prior carwash employer’s wage and penalty debt if he, she or it “(a) Uses substantially the same facilities or workforce to offer substantially the same services as the predecessor employer. [(][] (b) Shares in the ownership, management, control of the labor relations, or interrelations of business operations with the predecessor employer, [f] (c) Employs in a managerial capacity any person who directly or indirectly controlled the wages, hours, or working conditions of the affected employees of the predecessor employer. [f] (d) Is an immediate family member of any owner, partner, officer, or director of the predecessor employer of any person who had a financial interest in the predecessor employer.” (§ 2066.) Under the latter interpretation, because subdivision (d) contains a definition of “successor,” all of the immediate family members— that is, the “spouse, domestic partner, cohabitant, child, stepchild, grandchild, parent, stepparent, mother-in-law, father-in-law, son-in-law, daughter-in-law, grandparent, great grandparent, brother, sister, half-brother, half-sister, step-sibling, brother-in-law, sister-in-law, aunt, uncle, niece, nephew, or first cousin” (Cal. Code Regs., tit. 8, § 13692)—of the officers, directors and shareholders of Auto Spa are liable for the corporation’s wage and penalty obligations, even though they had nothing to do with the operation of the carwash in the past, present or future. Likewise, under subdivision (c) of the statute, any current or future employer of any Auto Spa manager who directly controlled the wages, hours, or working conditions of the carwash’s employees is liable for Auto Spa’s obligations, even if the former Auto Spa manager is hired to work in a completely different industry, and the subsequent employer has no knowledge that its employee once worked for a carwash. I am confident that, in adopting section 2066, the Legislature composed sentences that make sense in order to achieve some public good, not nonsense sentences or those which mandate the absurd result that a carwash owner’s *1443minor children, grandma and cousin (not to mention roommate) are responsible for their deadbeat relative’s debts.
Clearly, only certain successors are liable for the predecessor’s debt, to wit; those who fall within one of the four subdivisions. Because Sunset received nothing from Auto Spa—neither its business as a going concern, nor its assets, nor its stock nor any other ownership interest—by definition it is not Auto Spa’s successor. And because it is not Auto Spa’s successor, it has no liability under the statute regardless of whether it would fall into one of the categories contained in subdivisions (a) through (d) of section 2066 if it were a successor.
The only connection between Auto Spa and Sunset is that the two separate companies conducted their unaffiliated carwash businesses on the same physical premises. That is to say, Sunset was a successor tenant of the real property on which Auto Spa operated its business. However, the fact that two business entities happened to have sequentially occupied real estate on which they operated separate and unaffiliated businesses does not create a relationship between them of predecessor and successor. If section 2066 were intended to impose liability in this situation, it would begin “A successor to any owner/occupier of real property containing a carwash facility.” Instead, the statute specifies that it applies only to the successor to the carwash employer. The real estate on which Auto Spa’s business was located did not employ anyone.
Lastly, the majority states a holding of this case to be “that imposition of liability against a successor who operates at the same location as a predecessor carwash employer does not constitute a violation of due process.” (Maj. opn., ante, at p. 1435.) I agree that there is no due process problem if a successor to the employer incurs liability based on its operation of the carwash business at the same location. What the majority sanctions in this case, however, is imposition of liability2 not upon a successor but upon a stranger to Auto Spa; that does indeed strike at the heart of Sunset’s due process rights, something I believe that, in enacting section 2066, the Legislature had no intention of doing.
In sum, a straightforward, commonsense reading of section 2066 leads me to conclude that the Legislature intended to impose “successor liability” on those who acquire, by purchase, inheritance or other means, the carwash business of an employer which owes wages and penalties to its employees— even if such liability would not attach under the traditional analysis of *1444successor liability as set forth in Ray v. Alad Corp. (1977) 19 Cal.3d 22 [136 Cal.Rptr. 574, 560 P.2d 3] and similar cases—when one of four enumerated circumstances is present. This reading of the statute comports with the plain meaning of the words the Legislature chose to use, gives meaning to each word and phrase appearing therein and, contrary to the majority’s analysis, constitutes a reasonable method of addressing the particular problem of carwash employees whose employer violates the Labor Code.
Appellant’s petition for review by the Supreme Court was denied July 25, 2012, S203480. Baxter, J., was of the opinion that the petition should be granted.

 Although not an “undisputed fact,” the record contains no evidence that Auto Spa’s carwash business owned any assets other than the real property on which the business was conducted, or that Auto Spa sold, assigned, or transferred its assets, stock or business to any person or entity.

 The stipulated judgment affirmed by the majority set Sunset’s liability at $120,000. The complaint sought an award against Sunset in the amount of $730,000.