Shine v. Williams-Sonoma, Inc.
Shine v. Williams-Sonoma, Inc.
Opinion of the Court
*679*1073In 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.
*1074FACTUAL 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 ),
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,
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. 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.
*1076DISCUSSION
In reviewing a dismissal based on an order sustaining a demurrer, we apply the de novo standard. ( Balikov v. Southern Cal. Gas Co. (2001)
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)
A second aspect of the res judicata doctrine is issue preclusion, also known as collateral estoppel. ( Frommhagen v. Board of Supervisors (1987)
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,
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)
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 *1078employee in a wage and hour dispute. ( Watkins v. Wachovia Corp. (2009)
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.
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,
Mr. Shine's reliance on Consumer Advocacy Group, Inc. v. ExxonMobil Corp . (2008)
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 *1079wage 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,
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,
We agree with Villacres, supra , 189 Cal.App.4th at p. 589,
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)
*1081The 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)
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 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)
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)
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)
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 *686other 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.
DISPOSITION
The judgment (order of dismissal) is affirmed. Williams-Sonoma is entitled to its costs on appeal.
We concur:
WILLHITE, J.
MANELLA, J.
All further undesignated statutory references are to the Labor Code.
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).)
Reference
- Full Case Name
- Harley SHINE, and v. WILLIAMS-SONOMA, INC., and
- Cited By
- 15 cases
- Status
- Published