May 21, 2008

The Complex Litigator Weighs in on the Likely Impact of Savaglio v. Wal-Mart

H. Scott Leviant at The Complex Litigator has a thoughtful and detailed post referring to our post last week on the pending Savaglio v. Wal-Mart appeal. He argues that the "new right-exclusive remedy" rule that Wal-Mart urges as a bar to the punitive damages award is inapplicable to claims based on a right to wages, since he contends that the right to wages was a common law "right[] in existence prior to California's Labor Code . . . ." But even if that were so, as Scott correctly acknowledges the Savaglio class action is primarily a case about meal periods. One could certainly characterize the right at issue in Savaglio (for purposes of the "new right-exclusive remedy" rule) as a right to meal periods rather than a right to wages. Several courts appear to have recognized that the right to such meal periods did not exist at common law but are instead the product of wage orders and statutory law. (E.g., Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1105 [explaining that the Industrial Welfare Commission "issued wage orders mandating the provision of meal and rest periods in 1916 and 1932"].)

Moreover, even if courts were to accept the argument that the right to wages was a common law right, perhaps courts may distinguish between a right to wages generally and an entitlement to certain premium payments created by statute. For example, the California Supreme Court has indicated that both overtime pay and Labor Code section 226.7 payments for missed or late meal periods are "premium" payments. (Murphy, supra, 40 Cal.4th at pp. 1109, 1120.) At least one federal district court, applying the "new right-exclusive remedy" rule, has held that a plaintiff could not maintain a conversion claim based on the right to overtime pay on the ground that this was a right created by statute rather than by common law for which the detailed remedial scheme in the Labor Code provided exclusive remedies. (See, e.g., Green v. Party City Corp. (C.D.Cal. Apr. 9, 2002), Case No. CV-01-09681 CAS (EX), 2002 WL 553219, at pp. *4-*5.) If other courts arrive at the same conclusion, the "new right-exclusive remedy" rule may bar punitive damages claims based on the right to premium wage payments.