December 5, 2008

Further Thoughts on Brewer and Punitive Damages in Wage and Hour Cases

Our colleague Felix Shafir has additional thoughts on the recent Brewer opinion. Take it away, Felix:

Wage Law, run by Michael and Mark Walsh of Walsh & Walsh, P.C, has a thoughtful post about the Brewer case we blogged about two days ago, in which the Court of Appeal recently held that punitive damages were unavailable for violations of the California laws governing meal and rest breaks, minimum wages, and pay stubs.

Wage Law describes the arguments some employers and employees advanced prior to Brewer over whether the new right-exclusive remedy rule applied to preclude punitive damages in certain wage and hour cases. Interestingly, in setting out the arguments that employees would occasionally make on this issue, Wage Law mentions Bender v. Darden Restaurants, Inc. (9th Cir. 2002) 26 Fed.Appx. 726, where a jury previously awarded punitive damages in a wage and hour case involving meal and rest break violations.

If the California Supreme Court were to take up the issue of whether the new-right, exclusive remedy rule barred the recovery of punitive damages in certain wage and hour cases (for example, by granting review in Brewer or Savaglio v. Wal-Mart, a case we blogged about several months ago that is currently pending before the Court of Appeal and in which the parties are arguing over a similar punitive damages issue), we suspect Bender would offer little guidance. In Bender, the Ninth Circuit’s opinion (which the court did not even select for publication) never once mentioned the new right-exclusive remedy rule, much less offered any substantive analysis addressing whether that rule bars punitive damages sought for violations of California’s Labor Code. As the Supreme Court has explained, a court’s “‘opinion is not authority for a proposition not therein considered.’” (Elisa B. v. Superior Court (2005) 37 Cal.4th 108, 118.)

For the same reason, another case mentioned by Wage Law, Bureerong v. Uvawas (C.D. Cal. 1996) 922 F.Supp. 1450, is equally unlikely to provide the Supreme Court with any legal guidance about the new right-exclusive remedy rule. In Bureerong, a district court declined to strike a claim for punitive damages in a lawsuit alleging many causes of action, including several for violations of the Labor Code. Id. at pp. 1461, 1480-1481. Like the Ninth Circuit in Bender, the district court in Bureerong never examined whether the new right-exclusive remedy rule barred punitive damages in the case. In fact, the plaintiffs in Bureerong “did not tie their punitive damages claim . . . to any particular cause of action” (id. at p. 1480) and, given that those plaintiffs also asserted negligence causes of action for which punitive damages would ordinarily be available (see id. at p. 1461), there is no way to determine whether the plaintiffs were attempting to recover punitive damages solely on their tort causes of action or whether they were also pursuing punitive damages for alleged violations of the Labor Code.

Interestingly, although the new right-exclusive remedy rule has been a staple of California jurisprudence for over 150 years (see, e.g., Russell v. Pacific Railway Co. (1896) 113 Cal. 258, 261; Ward v. Severance (1857) 7 Cal. 126, 129), our research indicates that California federal or state courts primarily began examining how this rule applies in wage and hour cases relatively recently (i.e., within the past 20 years). Perhaps this is because the marked increased in the number of wage and hour lawsuits, especially wage and hour class actions, is an almost equally recent phenomenon. (See, e.g., Time is Big Bucks, Class-Action Wage Lawsuits Show [noting recent growth in wage and hour class actions filed in federal court].) Simply put, the issue of whether punitive damages are barred by the new right-exclusive remedy rule may be arising far more often than it ever did in the past because many more employees are pursuing wage and hour claims today.