Thurman v. Bayshore Transit Management, Inc. (203 Cal. App. 4th 1112, 2012)

Opinion

AARON, J.

In January 2004, Amalgamated Transit Union, Local 1309, AFL-CIO (the union), filed a representative action on behalf of its member bus drivers who worked in and around National City, California, alleging that the various defendant employers had violated provisions of the Labor Code that require employers to provide meal and rest periods for their employees. In February 2005, the union filed an operative verified third amended complaint, which added a number of individual employees as plaintiffs, including appellant Leander H. Thurman. The named defendants included appellants Bayshore Transit Management, Inc. (Bayshore), and its parent corporation McDonald Transit Associates, Inc. (McDonald) (collectively defendants), who, until March 3, 2007, contracted with the City of National City to operate National City Transit (NCT), a carrier that ran three fixed bus routes in the city. At the time of trial, Thurman was the only remaining plaintiff, and McDonald and Bayshore were the only remaining defendants in the action.

After a bench trial, the trial court filed a statement of decision and entered a judgment imposing civil penalties, including unpaid wages, in the total amount of $358,588.22, against defendants under the Labor Code Private Attorneys General Act of 2004 (PAGA), section 2698 et seq. The court also awarded Thurman restitution in the amount of $28,605 under the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.), and prejudgment interest in the amount of $10,253. Both Thurman and defendants appeal from the judgment.

Thurman contends that the trial court committed reversible error in (1) denying his request to continue the trial to allow him to bring a noticed motion for class certification, after the California Supreme Court issued a decision that precluded the union from maintaining its representative action; (2) denying class certification; (3) denying him recovery of civil penalties under both section 558, and wage order No. 9-2001 issued by the Industrial Welfare Commission (IWC), codified in California Code of Regulations, title 8, section 11090 (Wage Order No. 9); (4) reducing defendants’ civil penalties under section 2699, subdivision (e); and (5) ruling that defendants’ liability for his UCL claims began on January 1, 2002, rather than on October 1, 2000, due to the collective bargaining exemption in the former version of section 514. With respect to this claim, Thurman further contends that even if former section 514 created a collective bargaining exemption, section 226.7 provides an independent basis for recovering unpaid wages for missed meal and rest periods, effective January 1, 2001.

Defendants contend that the trial court erred in (1) awarding unpaid wages under section 558 as a civil penalty; (2) awarding Thurman relief under the PAGA, because Thurman failed to exhaust his administrative remedies before he was named as a plaintiff in the third amended complaint; (3) allowing Thurman to recover PAGA penalties on behalf of other bus operators for missed rest periods under section 558, because that statute allows recovery for missed meal periods only, and not for missed rest periods; and (4) allowing Thurman to avoid the judicial admission, set forth in his complaint, that defendants had provided meal periods since July 2003, and permitting him to recover for missed meal periods after July 2003. We agree with defendants’ last contention. Accordingly, we reverse the portions of the judgment awarding recovery for missed meal periods and remand for a redetermination of that recovery. In all other respects, we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

NCT operated three bus routes in the National City area, designated as Routes 601, 602, and 603. Thurman began his employment with NCT as a bus driver in 1993. The union represented the NCT bus drivers, including Thurman, and negotiated two collective bargaining agreements with NCT that are relevant to this case. The first collective bargaining agreement was in effect from August 1, 1996, through July 31, 2002; the second collective bargaining agreement was in effect from August 1, 2002, through July 2007.

When the second collective bargaining agreement went into effect on August 1, 2002, NCT bus drivers were assigned to drive Route 601, 602, or 603 as either a “straight run” or a “split run.” A driver who worked a straight run would drive continuously from the beginning of a shift until the end of the shift, with no break period or “split” during the shift. Drivers on straight runs were not provided a 30-minute meal period. Drivers who worked split runs would take an unpaid break of 30 minutes to an hour at some point during their shifts.

In 1999, the Legislature enacted section 512, which requires employers to provide a meal period of at least 30 minutes for a daily work period of more than five hours’ duration. In October 2000, the IWC issued Wage Order No. 9, which authorized penalties for an employer’s failure to provide required meal and rest periods.

In January 2003, Stephen Keiper, a management employee of NCT, had a lunch meeting with the union’s president, George Thompson, at which they discussed meal and rest periods. Thompson told Keiper that the union and the drivers were strongly opposed to working split runs as a means of implementing the required meal breaks because doing so would extend their workday, without any additional pay. The union’s shop steward, Leonard James, also told Keiper on several occasions that the employees were opposed to split runs. Keiper asked Thompson to provide “some kind of document” that would operate as a release of NCT’s obligation to provide meal periods, and Thompson agreed to provide a letter from the union to that effect.

Keiper never received a letter from Thompson. Keiper eventually called Thompson to inform him that NCT would have to implement a plan to provide meal periods for the drivers. Thompson told Keiper that he was unable to provide the letter that they had discussed because the union was now taking a different position. On July 6, 2003, NCT imposed split runs on all of its bus routes, despite objections voiced by local union representatives and individual bus drivers, in order to comply with the law that required that meal periods be provided. The trial court found that during the “straight run era” (prior to July 6, 2003), meal periods were provided on 13 percent of the NCT runs, and were not provided on 87 percent of the runs. The court found that between July 6, 2003, and March 3, 2007, NCT provided meal periods of at least 30 minutes to all drivers whose shifts had splits of 36 minutes or more.

In June 2004, NCT posted a memorandum reminding its bus drivers that they were permitted to take a 10-minute rest period for each four-hour period that they worked, and directing them to take their rest break during the “ ‘recovery time’ already ‘built in’ at the start/end of [their] runs . . . .” The memorandum instructed drivers who worked schedules that provided less than the required rest time to make sure that they “allow[ed] for this rest period even if it [meant] leaving a few minutes late from [their] starting/ending time points.” NCT also posted a second memorandum that further explained the procedure drivers were to follow for taking 10-minute rest periods. On June 28, 2004, NCT’s general manager, Webster, sent a letter to Thompson stating that the rest periods were working smoothly, and asking Thompson to let Webster know if Thompson had any questions or concerns regarding the manner in which NCT was handling the rest period issue. Thompson did not respond to Webster’s letter.

In March 2005, NCT complied with a request by then union president Steve Alcove to send him documentation showing NCT’s route schedules and reflecting that NCT was providing the bus drivers with 10-minute rest periods and 30-minute meal periods. Alcove responded with an e-mail message stating that he had received the schedules and would show the union’s attorney that “the 10-[minute] breaks were included in the schedule.” In July 2005, Thurman, who was then the union steward, told Webster and NCT operations manager Gabriel Marquez that he had informed Alcove that the NCT drivers were taking their 10-minute rest breaks.

In January 2004, the union filed a verified complaint against NCT and other defendants as a representative action on behalf of its members and other bargaining unit employees who were employed by the defendants during the relevant time period. In February 2005, the union filed the operative verified third amended complaint, which added Thurman as a plaintiff and included two causes of action—a first cause of action alleging that defendants had violated sections 226.7 and 512 and Wage Order No. 9 by failing to provide meal and rest periods or compensation in lieu of meal and rest periods, and a second cause of action for violation of the UCL, based on the same allegations as the first cause of action.

Defendants filed a demurrer and motion to strike portions of the third amended complaint. Defendants demurred to the first cause of action on the grounds that the union lacked standing to bring that cause of action on behalf of its members under the PAGA, and that all plaintiffs had failed to exhaust their administrative remedies, as required under section 2699.5, as a prerequisite to bringing a PAGA claim. As to the union, defendants demurred to the second cause of action on the ground that the union, itself, had not been injured by defendants’ alleged improper meal and rest period practices, and that it therefore lacked standing to assert a cause of action under the UCL. Defendants also demurred to the second cause of action to the extent that it sought relief on a representative basis, arguing that a private person may bring a representative action under the UCL only if that person complies with class action certification requirements, and contending that none of the plaintiffs had adequately pleaded a class action.

On December 6, 2005, the trial court overruled defendants’ demurrer and denied their motion to strike, concluding that the union had standing to bring both causes of action because it had obtained assignments of claims from all of its members. The court’s ruling did not address defendants’ demurrer to the first cause of action on the ground that all plaintiffs had failed to exhaust their administrative remedies before bringing a PAGA claim. On December 16, 2005, defendants filed a motion for reconsideration based on the circumstance that on November 23, 2005, after the court had taken the demurrer and motion to strike under submission but before it issued its ruling, the Second District Court of Appeal held in Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 365, 378 [36 Cal.Rptr.3d 31] (Caliber Bodyworks), that a plaintiff must exhaust administrative remedies under the PAGA before filing an action to recover civil penalties that the state could otherwise pursue. The Caliber Bodyworks court held that a demurrer on the ground of failure to exhaust administrative remedies must be sustained as to a cause of action that seeks only recovery of civil penalties, and that a motion to strike on that ground is appropriate if a cause of action seeks recovery of civil penalties and other relief. (Caliber Bodyworks, supra, at pp. 381-385.) Accordingly, defendants asked the court to strike the portions of the third amended complaint that sought civil penalties subject to the PAGA’s exhaustion requirements.

After reconsidering its ruling on defendants’ demurrer and motion to strike, the trial court declined to change the ruling. The court determined that Caliber Bodyworks did not apply to this action because the statutory amendments that created the administrative remedies that a plaintiff must exhaust in order to recover civil penalties under the PAGA were enacted after the action was filed.

In October 2006, the trial court stayed the case for six months, pursuant to the parties’ stipulation. The purpose of the stay was “to give the parties and the Court the benefit of the California Supreme Court’s consideration and resolution of the conflicting [appellate court] decisions concerning the applicable statute of limitations [for claims] of Labor Code [section] 226.7 violations.” The stay was lifted by stipulation and order on June 1, 2007, and the case was set for trial on May 30, 2008.

In January 2008, the parties stipulated to continue the trial date to September 8, 2008. Among other reasons, the parties stipulated to the continuance “to permit the California Supreme Court to issue a decision in the matter captioned Amalgamated Transit Union, Local 1756, et al. v. First Transit, Inc., et al., Case No. S151615 . . . .” In their ex parte application to the trial court for the stipulated continuance, plaintiffs explained that the outcome of the Supreme Court case “would fundamentally affect the case at bar in that an adverse ruling against Plaintiffs would necessitate class certification which would leave the case in a considerably different procedural posture, potentially on the eve of trial . . . .” The trial court continued the trial date to September 12, 2008. In May 2008, the parties again stipulated to a trial continuance to allow the California Supreme Court to issue its opinion in Amalgamated Transit prior to the trial in this case. The trial court continued the trial date to January 9, 2009, based on the parties’ stipulation. In September 2008, the trial court again continued the trial date to June 5, 2009.

In April 2009, the union and its coplaintiffs applied ex parte to continue the trial date to at least January 15, 2010, based on the unavailability of plaintiffs’ counsel and the fact that the California Supreme Court had not yet issued its decision in Amalgamated Transit and was considering another case that could affect the outcome of the present case. Defendants filed a response stating that they did not oppose a continuance of the trial to accommodate plaintiffs’ counsel’s 60-day emergency medical leave of absence, but that they objected to continuing the trial to January 2010. Noting that the California Supreme Court was expected to issue its decision in Amalgamated Transit by June 2009, defendants argued that a new trial date of July 20 or 27, 2009, would be appropriate. The trial court continued the trial date to July 24, 2009.

On June 29, 2009, the California Supreme Court filed its decision in Amalgamated Transit. The court held that a labor union that has not suffered actual injury under the UCL and is not an “aggrieved employee” under the PAGA may not bring a representative action under those laws, either as an assignee of employees who have suffered actual injury and are aggrieved employees, or as an association whose members have suffered actual injury and are aggrieved employees. (Amalgamated Transit, supra, 46 Cal.4th at p. 998.) On July 2, 2009, plaintiffs filed a “NOTICE OF DECISION BY CALIFORNIA SUPREME COURT,” in which they asserted that because the union no longer had standing to bring a representative action in light of the Amalgamated Transit decision, in order for the case to proceed, it would have to be certified as a class action with an individual class representative. Plaintiffs stated that they intended to propose Thurman as the class representative, and requested that the trial court vacate the July 24, 2009 trial date pending their contemplated motion for class certification. Defendants filed a response in which they strongly objected to any further continuance of the trial date.

On July 7, 2009, Thurman filed a formal request for a continuance of the trial, to permit him to bring a motion for class certification. Defendants filed an opposition to the request. At the trial readiness conference on July 10, 2009, the trial court denied Thurman’s request to continue the trial. Thurman filed a petition for writ of mandate and request for stay with this court on July 13, 2009, challenging the trial court’s denial of his request for a continuance of the trial date. This court denied Thurman’s petition on July 14, 2009.

The bench trial began on July 24, 2009. On Friday, July 31, a week into the trial, Thurman filed a motion for class certification. The trial court denied the motion the following Monday. After the trial, the court filed a statement of decision and entered a judgment imposing civil penalties, including unpaid wages, against defendants under the PAGA in the total amount of $358,588.22, and awarding Thurman restitution under the UCL in the amount of $28,605 and prejudgment interest in the amount of $10,253.

DISCUSSION OVERVIEW OF THE PAGA

“Under the Labor Code, the Labor and Workforce Development Agency (LWDA) and its constituent departments and divisions are authorized to collect civil penalties for specified labor law violations by employers. [Citation.] To enhance the enforcement of the labor laws, the Legislature enacted PAGA in 2003.” (Home Depot U.SA., Inc. v. Superior Court (2010) 191 Cal.App.4th 210, 216 [120 Cal.Rptr.3d 166] (Home Depot).) In doing so, the Legislature “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.” (Arias v. Superior Court (2009) 46 Cal.4th 969, 980 [95 Cal.Rptr.3d 588, 209 P.3d 923] (Arias).)

Section 2699, subdivision (a), part of the PAGA “permits aggrieved employees to recover civil penalties that previously could be collected only by LWDA. [Citation.] In addition, to address violations for which no such penalty had been established, subdivision (f) of the statute created ‘a default penalty and a private right of action’ for aggrieved employees.” (Home Depot, supra, 191 Cal.App.4th at p. 216.) Section 2699.3 sets forth certain administrative procedures that an aggrieved employee must follow before bringing a PAGA action.

THURMAN’S APPEAL I.

Denial of Trial Continuance

Thurman contends that the trial court’s denial of his request for a continuance of the trial date to allow him time to bring a noticed motion for class certification was reversible error. “The decision to grant or deny a continuance is committed to the sound discretion of the trial court. [Citation.] The trial court’s exercise of that discretion will be upheld if it is based on a reasoned judgment and complies with legal principles and policies appropriate to the case before the court. [Citation.] A reviewing court may not disturb the exercise of discretion by a trial court in the absence of a clear abuse thereof appearing in the record.” (Forthmann v. Boyer (2002) 97 Cal.App.4th 977, 984 [118 Cal.Rptr.2d 715].) California Rules of Court, rule 3.1332(d), provides that in ruling on a request for a continuance “the court must consider all the facts and circumstances that are relevant to the determination.” Among other facts and circumstances, the trial court properly considers the proximity of the trial date, whether there were previous trial continuances, the length of the requested continuance, and the prejudice that parties or witnesses would suffer as a result of the continuance. (Rule 3.1332(d).)

We find no abuse of discretion in the trial court’s denial of a continuance of the trial to allow Thurman to seek class certification. Trial continuances are disfavored and may be granted only on an affirmative showing of good cause. (Rule 3.1332(c); County of San Bernardino v. Doria Mining & Engineering Corp. (1977) 72 Cal.App.3d 776, 781 [140 Cal.Rptr. 383].) Thurman argues that the California Supreme Court’s decision in Amalgamated Transit constituted good cause to continue the trial because that decision essentially reversed the trial court’s earlier mling on demurrer that the union had standing to prosecute the PAGA and UCL claims in the third amended complaint in a representative capacity on behalf of its member employees. Thurman states that the trial court’s “apparent suggestion that [he] should have moved for class certification before the Supreme Court’s decision in Amalgamated Transit ... is perplexing [because] the California courts’ resources are presumably better spent adjudicating actual disputes rather than hearing motions that a court has mled to be unnecessary.”

Notwithstanding the trial court’s earlier mling that the union had standing to bring representative claims, Thurman’s counsel’s decision not to pursue a class action unless and until the California Supreme Court in Amalgamated Transit issued a decision contrary to the trial court’s mling was a dubious strategy, particularly in light of the procedural history of Amalgamated Transit. The trial court in Amalgamated Transit mled that the plaintiff unions lacked standing under the UCL because they had not suffered actual injury, and that they also lacked standing under the PAGA because they were not “ ‘aggrieved employees.’ ” (Amalgamated Transit, supra, 46 Cal.4th at p. 999.) The trial court further mled that employee assignments of rights to the plaintiff unions did not confer standing, and that the UCL claims brought on behalf of others must be brought as a class action. (46 Cal.App.4th at p. 999.) The plaintiff unions petitioned the Second District Court of Appeal for a writ of mandate and a stay of the trial court’s mling. After issuing a stay and an order to show cause, the Court of Appeal denied the petition. (Ibid.)

Thurman’s counsel in the present case represented the plaintiffs in Amalgamated Transit and was therefore well aware of the Second District Court of Appeal’s decision in that case. Counsel should also have been aware of the distinct possibility that the California Supreme Court would uphold the Court of Appeal’s decision. If Thurman’s counsel’s strategy was to pursue a class action in the event the Supreme Court decided against the union’s representational standing in Amalgamated Transit, the pmdent course would have been to amend the complaint in this case to allege a class action, and to move for class certification soon after the Court of Appeal filed its decision, rather than waiting until the eve of trial to do so. Counsel chose the latter course at its peril, particularly in light of the fact that the process of seeking certification and the time needed to prepare to try a class action would have necessitated a substantial continuance in a case that had already been pending for over five years.

In denying Thurman’s request for a continuance, the trial court stated that Thurman had not made an affirmative showing of good cause for a continuance, noting that the trial date had been continued “already at least once.” In its statement of decision, the trial court explained that in denying the request for another continuance, it had “considered the applicable law and pertinent facts and balanced all relevant factors, including the prolonged nature of this case, the absence of class allegations in the [third amended complaint], and the undue prejudice to defendants if the trial were again continued.”

The trial court reasonably found that defendants would be unduly prejudiced by another continuance of the trial date. As defendants point out, cases are statutorily required to be brought to trial within five years (Code Civ. Proc., § 583.310), to “ ‘prevent^ prosecution of stale claims where defendants could be prejudiced by loss of evidence and diminished memories of witnesses [and] to protect defendants from the annoyance of having unmeritorious claims against them unresolved for unreasonable periods of time.’ ” (Sagi Plumbing v. Chartered Construction Corp. (2004) 123 Cal.App.4th 443, 447 [19 Cal.Rptr.3d 835].) The trial court noted during posttrial proceedings that its decision to deny Thurman’s request for a trial continuance was justified in hindsight by the fact that, in the court’s words, “[t]here were many witnesses with faulty memories, and that situation would have gotten worse, not better, if I had adopted plaintiff’s proposal to continue the trial again to allow for an amendment to the complaint and a motion to certify the case as a class action. . . . The foibles of memory are real, and they were repeated numerous times through the course of this trial.”

Thurman essentially gambled that the Supreme Court would reverse the Court of Appeal on the standing issue in Amalgamated Transit, and lost. The trial court reasonably decided that Thurman should bear the consequences of that gamble rather than subject defendants to the prejudice that would result from continuing the trial again for the purpose of allowing Thurman to pursue class certification. Given the protracted history of the case, the prior continuances, and the prejudice to defendants that would result from an additional continuance, the trial court acted well within its discretion in denying Thurman’s request for a trial continuance.

II.

Denial of Class Certification

Despite the trial court’s denial of a continuance and the absence of any class action allegations in the third amended complaint, Thurman filed a motion to certify the case as a class action on the fourth day of trial. We reject Thurman’s contention that the trial court committed reversible error in denying that motion. A trial court is afforded great discretion in deciding whether to grant or deny class certification, and we review the trial court’s ruling for abuse of discretion. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326 [17 Cal.Rptr.3d 906, 96 P.3d 194].) A reviewing court generally will not disturb a ruling that is supported by substantial evidence unless the trial court used improper criteria or made erroneous legal assumptions. (Ibid.) Any valid reason that the trial court provides in granting or denying certification is sufficient to uphold the order. (Ibid.)

The trial court stated numerous valid reasons for denying certification. In its minute order denying Thurman’s certification motion, the court noted that the third amended complaint included neither the designation “CLASS ACTION” nor a separate section containing class action allegations, as required by rule 3.761. The court stated that as a result, defendants had not been properly placed on notice that Thurman wished to proceed as a class action, and that certification at that “late date would be prejudicial in light of the requirement that the court allow the opportunity for discovery before ruling on a class certification motion.”

The trial court further ruled that a class action was not a superior “mode of adjudication” in this case, based on evidence that at any given time there were between 20 and 25 drivers employed by defendants and that “the back pay claims, if established, would be substantial, in other words, one or two hours of pay at ... $7 and 14 per hour . . . per workday for several years, plus potential penalties.” The court further stated: “[Thurman] apparently wants the court to certify a class and have the court adjudicate the class claims simultaneously—thereby skipping the steps of class notice and opportunity for opt-out. This raises serious due process concerns as to absent class members.” In its statement of decision, the court summarized that it had “denied [Thurman’s] motion for class certification based on insufficient notice under the California Rules of Court, undue prejudice to defendants, and due process concerns for putative class members who had not been notified and given the opportunity to opt out of the class. It should be noted that the court’s July 10 concerns about the additional passage of time were borne out by some of the trial testimony. With the passage of several years since the events in question, there were more than a few instances of witnesses not recalling or misremembering important facts.” (Original underscoring.)

The trial court’s concern that the due process rights of absent class members would be compromised if Thurman were allowed to obtain class certification during trial was, by itself, a valid reason to deny certification. Thurman’s failure to plead a class action in the third amended complaint as required by rule 3.761, and his concomitant failure to put defendants on notice that he wished to proceed as a class action were additional valid reasons to deny certification, since these omissions prejudiced defendants’ right to conduct discovery before the court ruled on a class certification motion. The trial court did not abuse its discretion in denying Thurman’s class certification motion.

in.

Denial of Civil Penalties Under Both Section 558 and Wage Order No. 9

Thurman contends that the trial court erred in rejecting his claim that he may recover PAGA penalties under both Wage Order No. 9 and section 558.

Section 558 provides, in relevant part: “(a) Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter or any provision regulating hours and days of work in any order of the [IWC] shall be subject to a civil penalty as follows: [¶] (1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages. [¶] (2) For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages, [¶] (3) Wages recovered pursuant to this section shall be paid to the affected employee, [¶] . . . [¶] (c) The civil penalties provided for in this section are in addition to any other civil or criminal penalty provided by law.”

Wage Order No. 9, section 20, entitled “Penalties” states, in relevant part: “(A) In addition to any other civil penalties provided by law, any employer or any other person acting on behalf of the employer who violates, or causes to be violated, the provisions of this order, shall be subject to the civil penalty of: [¶] (1) Initial Violation—$50.00 for each underpaid employee for each pay period during which the employee was underpaid in addition to the amount which is sufficient to recover unpaid wages. [¶] (2) Subsequent Violations—$100.00 for each underpaid employee for each pay period during which the employee was underpaid in addition to an amount which is sufficient to recover unpaid wages, [¶] (3) The affected employee shall receive payment of all wages recovered.”

Thurman argues that the two penalty provisions are independent, and that he is entitled to recover under both because section 558, subdivision (c), states that “[t]he civil penalties provided for in this section are in addition to any other civil or criminal penalty provided by law,” and section 20 of Wage Order No. 9 similarly states that the penalties provided therein are “[i]n addition to any other civil penalties provided by law.”

The trial court ruled that Thurman could not recover civil penalties under the IWC wage orders. The court reasoned that section 2699, subdivision (a), of the “PAGA allows the recovery of civil penalties only for violations of ‘this code,’ meaning the California Labor Code,” and that allowing Thurman to recover PAGA penalties under both section 558 and Wage Order No. 9 would “allow an impermissible double recovery for the same act.” We conclude that the trial court was correct on both points.

It is well settled that there is a private right of action to enforce a statute “only if the statutory language or legislative history affirmatively indicates such an intent. [Citations.] That intent need not necessarily be expressed explicitly, but if not it must be strongly implied. [Citations.] Particularly when regulatory statutes provide a comprehensive scheme for enforcement by an administrative agency, the courts ordinarily conclude that the Legislature intended the administrative remedy to be exclusive unless the statutory language or legislative history clearly indicates an intent to create a private right of action.” (Farmers Ins. Exchange v. Superior Court (2006) 137 Cal.App.4th 842, 850 [40 Cal.Rptr.3d 653].)

Thurman is essentially arguing that the PAGA creates a private right of action to directly enforce a wage order promulgated by the IWC. However, a wage order is not a statute. As the trial court correctly pointed out, the PAGA authorizes recovery of civil penalties only for violations of the Labor Code. (§ 2699, subd. (a).) Although PAGA actions can serve to indirectly enforce certain wage order provisions by enforcing statutes that require compliance with wage orders (e.g., § 1198, which prohibits longer work hours than those fixed by wage order or employment under conditions prohibited by a wage order), the PAGA does not create any private right of action to directly enforce a wage order. (See Home Depot, supra, 191 Cal.App.4th at p. 218 [employer’s failure to provide seating for employees required by wage order was a violation of § 1198]; Bright v. 99¢ Only Stores (2010) 189 Cal.App.4th 1472, 1478 [118 Cal.Rptr.3d 723] [same].)

Only the Legislature, through enactment of a statute, can create a private right of action to directly enforce an administrative regulation, such as a wage order. (See, e.g., 47 U.S.C. § 227(b)(3)(A), part of the Telephone Consumer Protection Act of 1991 (Pub.L. No. 102-243 (Dec. 20, 1991) 105 Stat. 2394) [specifically authorizing a private right of action “based on a violation of this subsection or the regulations prescribed under this subsection . . . .”].) The IWC has not created, and has no power to create, a private right of action for violation of a wage order, and we are aware of no statute that creates a private right of action for a violation of an IWC wage order when the violation at issue is not also a violation of the Labor Code. Absent statutory authorization, there is no right of action under the PAGA to enforce an IWC wage order.

In any event, the IWC has made it clear that the penalties set forth in section 20 of Wage Order No. 9 are duplicative, and not independent of the penalties set forth in section 558. Section 1177, subdivision (b), requires that the IWC “prepare a statement as to the basis upon which an adopted or amended order is predicated.” As the trial court noted, the IWC’s “Statement as to the Basis” regarding section 20 of its wage orders, including Wage Order No. 9, expressly states: “This section sets forth the provisions of Labor Code § 558, which specifies penalties for initial and subsequent violations.” (Italics added.) Accordingly, the penalties stated in section 20 of Wage Order No. 9 are those provided by section 558; they are not recoverable independent of, and in addition to, those provided by section 558.

Thurman cites Franco v. Athens Disposal Co., Inc. (2009) 171 Cal.App.4th 1277 [90 Cal.Rptr.3d 539] (Franco) as an example of a case in which “at least one court” has concluded that section 20 of Wage Order No. 9 provides for civil penalties for violations of section 226.7, and that a plaintiff may seek those penalties under the PAGA. Section 226.7 provides: “(a) No employer shall require any employee to work during any meal or rest period mandated by an applicable order of the [IWC]. [¶] (b) If an employer fails to provide an employee a meal period or rest period in accordance with an applicable order of the [IWC], the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest period is not provided.”

The plaintiff in Franco, a trash truck driver, sued his employer for, among other Labor Code violations, denying meal and rest periods in violation of section 226.7. (Franco, supra, 171 Cal.App.4th at pp. 1282-1283.) The employer successfully petitioned for arbitration under an arbitration agreement that contained a provision waiving class arbitration and precluding the plaintiff from seeking civil penalties on behalf of other employees in a “private attorney general” capacity. (Id. at pp. 1283-1285.) The Franco court reversed the order granting the petition to compel arbitration, concluding that the arbitration agreement as a whole was tainted with illegality and was unenforceable because it contained a class arbitration waiver and precluded the plaintiff from seeking civil penalties on behalf of other employees, contrary to the PAGA. (171 Cal.App.4th at p. 1303.)

In considering the arbitration agreement’s waiver of the right to bring claims in a private attorney general capacity, the Franco court examined the purpose of the PAGA and noted that the default civil penalty established by section 2699, subdivision (f), applied to violations of “ ‘all provisions of [the Labor Code] except those for which a civil penalty is specifically provided..’ ” (.Franco, supra, 171 Cal.App.4th at p. 1302.) The Franco court then noted that the California Supreme Court in Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1099, 1102-1111 [56 Cal.Rptr.3d 880, 155 P.3d 284] (Murphy) had held that the additional hour of pay for missed meal and rest periods provided by section 226.7 was a wage or premium pay, rather than a civil penalty (Franco, supra, at p. 1302). However, the Franco court concluded that section 20 of Wage Order No. 9 “specifically provides civil penalties for violations of section 226.7.” (Franco, supra, at p. 1303.)

We disagree with the Franco court’s conclusion that the penalties set forth in section 20 of Wage Order No. 9 provide an independent basis for the assessment of civil penalties for violations of section 226.7. Because section 226.7 does not specifically provide for a civil penalty, the civil penalty for a violation of section 226.7 would be the default penalty established by section 2699, subdivision (f). (Home Depot, supra, 191 Cal.App.4th at p. 218; Bright v. 99¢ Only Stores, supra, 189 Cal.App.4th at pp. 1480-1481.)

The Franco court apparently assumed that the penalties provided by section 20 of Wage Order No. 9 are civil penalties that a plaintiff may recover in a PAGA action. However, the Franco court’s focus was whether an arbitration agreement could validly preclude an employee from asserting claims on behalf of other employees under the PAGA; the court did not consider whether a PAGA plaintiff generally may recover a penalty provided in a wage order, as opposed to one provided in a Labor Code section. Franco thus does not support Thurman’s claim that he is entitled to recover penalties under both section 558 and section 20 of Wage Order No. 9. The trial court correctly rejected that claim.

IV.

Reduction of Defendants’ Civil Penalties Under Section 2699, Subdivision (e)

Section 2699, subdivision (e)(2) provides that “[i]n any action by an aggrieved employee seeking recovery of a civil penalty available under subdivision (a) or (f), a court may award a lesser amount than the maximum penalty amount specified by this part if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary, oppressive, or confiscatory.” The court calculated the maximum penalty amount that it could award under section 558 to be “$50 per pay period per employee for each pay period during which either a missed meal or rest period is identified in accordance with the findings of this Court, during the period between January 12, 2003 and March 3, 2007.” The court then reduced that amount by 30 percent under section 2699, subdivision (e)(2), and assessed the reduced amount as a civil penalty, ruling that “[t]o do otherwise under the particular facts and circumstances of this case would be unjust, arbitrary, oppressive and confiscatory.”

Thurman contends that the only proper inquiry under section 2699, subdivision (e)(2) in determining whether an award of the maximum penalty would be “unjust, arbitrary, oppressive, or confiscatory,” is whether the defendant can afford to pay the maximum penalty amount, and that the defendant’s conduct is irrelevant. Thurman maintains that because defendants did not present evidence that they could not afford to pay the maximum penalty amount, the trial court lacked discretion to award less than the maximum civil penalty under the PAGA.

Thurman cites no authority to support his contention that a trial court may reduce the amount of a civil penalty under section 2699, subdivision (e)(2) only if the court finds that the defendant cannot afford to pay the maximum penalty amount provided by statute. He cites Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1213 [78 Cal.Rptr.3d 572] (Amaral) for the proposition that civil penalties are mandatory, not discretionary—i.e., that the trial court lacks discretion to reduce a civil penalty to zero. However, the Amaral court also recognized that under section 2699, subdivision (e)(2) a trial court may “exercise its discretion to award lesser penalties based on the enumerated considerations.” (Amaral, supra, at p. 1213, original italics.) Accordingly, we consider whether the trial court’s award of civil penalties in an amount less than the statutory maximum was an abuse of discretion—i.e., whether the trial court reasonably determined that imposition of the maximum statutory penalty amount would result in an award that is unjust, arbitrary, oppressive, or confiscatory based on the facts and circumstances of this case.

We conclude that the trial court reasonably determined that an award of the maximum penalty amount would be unjust under the facts and circumstances of this case. The trial court cited the following facts and circumstances as warranting a reduction in penalties: (1) there was no evidence that the union insisted on adding meal or rest period provisions in its 2002 collective bargaining agreement with NCT and no grievance was filed under that agreement asserting that NCT was not providing meal and rest periods; (2) the union sent a letter to another transit company on August 5, 2002, asserting that the company was not providing meal and rest periods to its bus drivers but did not send a similar letter to NCT; (3) the evidence was undisputed that NCT unilaterally implemented split run shifts into its bus drivers’ schedules in order to provide the drivers with meal and rest periods in July 2003, over the objection of the drivers and the union; (4) in June 2004 NCT posted memoranda to its bus drivers advising them to take 10-minute rest periods; (5) it was undisputed that union president Thompson did not respond to a June 28, 2004 letter from NCT’s general manager Webster stating that rest periods were working smoothly following the posting of the rest period memoranda; (6) after union president Alcove was provided with the bus driver schedules in March 2005, he sent Webster an e-mail message in which he stated that he would show the union’s attorney that the schedules included 10-minute rest breaks; (7) in July 2005 Thurman, who was at that time union steward, told Webster and Marquez that he had told Alcove that NCT was providing rest breaks; (8) in August 2005 Webster and Marquez counseled a bus driver about the need to take rest breaks; and (9) defendants lost the NCT contract in March 2007, rendering them unable to pay the penalties from ongoing revenues.

In summary, the trial court stated that the evidence showed “that after January 1, 2003 for meal periods and after June 7, 2004 for rest periods, defendants took their obligations under Wage Order No. 9 seriously and attempted to comply with the law.” In light of that undisputed finding, and the facts and circumstances that the trial court specified in its statement of decision in support of the finding, the trial court reasonably determined that imposition of the maximum statutory penalty amount against defendants would be unjust—if not also arbitrary, oppressive, or confiscatory.

The evidence supports the trial court’s penalty reduction even under Thurman’s view that section 2699, subdivision (e)(2) requires evidence of inability to pay, because the trial court made the undisputed finding that defendants’ loss of the NCT contract in March 2007 rendered them unable to pay penalties from ongoing revenues. The trial court did not abuse the discretion afforded it by section 2699, subdivision (e)(2) to reduce the civil penalties it imposed against defendants.

V.

Liability Starting Date for UCL Claims

Thurman contends that the trial court erred in ruling that liability for his UCL claims began on January 1, 2002, due to the collective bargaining exemption in the original version of section 514, rather than on October 1, 2000, the effective date of Wage Order No. 9’s penalty provision for failure to provide meal and rest breaks. We conclude that the trial court was correct in ruling that liability for Thurman’s UCL claims began January 1, 2002.

In 1999, in response to the IWC’s elimination of certain daily overtime rules, the Legislature passed the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999 (the 1999 Act), which “established a new statutory scheme governing hours of labor and overtime compensation for all industries and occupations.” (Bearden v. U.S. Borax, Inc. (2006) 138 Cal.App.4th 429, 434 [41 Cal.Rptr.3d 482] (Bearden).) The 1999 Act included section 512, which, with certain exceptions, requires employers to provide employees who work more than five hours per day a meal period of at least 30 minutes, and to provide employees who work more than 10 hours per day a second meal period of at least 30 minutes. (§ 512, subd. (a).)

The 1999 Act also added sections 516 and 517. Section 516 originally provided: “Notwithstanding any other provision of law, the [IWC] may adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers.” (§ 516, as added by Stats. 1999, ch. 134, § 10, p. 1825, italics added.) Effective September 2000, an amendment to section 516 replaced the opening phrase “Notwithstanding any other provision of law” with “Except as provided in Section 512 . . . .” (§516, as amended by Stats. 2000, ch. 492, § 4, p. 3503.) Section 517, subdivision (a) states, in relevant part: “(a) The [IWC] shall, at a public hearing to be concluded by July 1, 2000, adopt wage, hours, and working conditions orders consistent with this chapter . . . .” (§ 517, as added by Stats. 1999, ch. 134, § 11, p. 1825, italics added.) The directive to adopt wage orders consistent with “this chapter” in section 517 was a directive to adopt wage orders consistent with the 1999 Act. (Small v. Superior Court (2007) 148 Cal.App.4th 222, 230 [55 Cal.Rptr.3d 410].)

The 1999 Act also included section 514, which originally provided: “This chapter [(§§ 500-558)] does not apply to an employee covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.” (§ 514, as added by Stats. 1999, ch. 134, § 8, pp. 1823-1824, italics added; see Lazarin v. Superior Court (2010) 188 Cal.App.4th 1560, 1570-1571 [116 Cal.Rptr.3d 596] (Lazarin).) In 2001, the Legislature amended section 514 by replacing its opening phrase, “This chapter does not apply,” with the phrase: “Sections 510 and 511 do not apply.” (§ 514, as amended by Stats. 2001, ch. 148, § 1, p. 1438.) Section 510 sets forth general rules regarding overtime pay and section 511 sets forth rules regarding alternative workweek schedules.

The collective bargaining agreement exemption set forth in the original version of section 514 expressly applied to the entire chapter that includes section 512, whereas the collective bargaining agreement exemption in section 514 as amended in 2001, applies only to sections 510 and 511. Accordingly, resolution of the question of when liability under the UCL began for defendants’ violations of section 512, or any wage order adopted pursuant to section 516 or 517, depends on whether the original version of section 514 exempted workers who were covered by a qualifying collective bargaining agreement from the entire chapter containing section 514, or rather, exempted them from sections 510 and 511 only.

“In construing a statute, a court’s objective is to ascertain and effectuate legislative intent. [Citation.] To determine legislative intent, a court begins with the words of the statute, because they generally provide the most reliable indicator of legislative intent.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 871 [39 Cal.Rptr.2d 824, 891 P.2d 804].) “If the statutory language is clear and unambiguous our inquiry ends. ‘If there is no ambiguity in the language, we presume the Legislature meant what it said and the plain meaning of the statute governs.’ [Citations.] In reading statutes, we are mindful that words are to be given their plain and commonsense meaning. [Citation.] . . . Only when the statute’s language is ambiguous or susceptible of more than one reasonable interpretation, may the court turn to extrinsic aids to assist in interpretation.” (Murphy, supra, 40 Cal.4th at p. 1103.)

The original version of section 514 is neither ambiguous nor susceptible of more than one reasonable interpretation; it unambiguously stated that the provisions of “[t]his chapter” of the Labor Code—i.e., chapter 1 of part 2 (Working Hours) of division 2, consisting of sections 500 through 558—did not apply to employees who were covered by a valid collective bargaining agreement that expressly provided for the wages, hours of work, and working conditions of the employees and also provided for premium wage rates for overtime hours and regular hourly pay that was at least 30 percent above the state minimum wage. There is no need to turn to extrinsic aids to interpret the phrase “[t]his chapter does not apply.” Because the phrase is unambiguous, we presume that the Legislature meant what it said and the plain meaning of the phrase governs. (Murphy, supra, 40 Cal.4th at p. 1103.)

Thurman argues that despite the language of the original version of section 514 pertaining to its scope, it was never the Legislature’s intent that the collective bargaining agreement exemption in section 514 apply to anything other than the overtime provisions of section 510 and the alternative workweek provisions of section 511. As support for this argument, Thurman relies in large part on Valles v. Ivy Hill Corp. (9th Cir. 2005) 410 F.3d 1071 (Valles) and Lazarin, supra, 188 Cal.App.4th 1560, in which the reviewing courts gave effect to language in an uncodified section of the 2001 legislation amending section 514, stating that the amendment was “declarative of existing law.” (Stats. 2001, ch. 148, § 4, p. 1439; see Valles, at pp. 1079-1080; Lazarin, at pp. 1575-1576.)

Defendants contend that the language of section 514, as operative from January 1, 2000, through December 31, 2001, exempted employers with a qualifying collective bargaining agreement from liability under the entire chapter containing section 514—i.e., chapter 1 of part 2 (Working Hours) of division 2, consisting of sections 500 through 558. They argue that the amendment of section 514 effected a substantive change in the law because employers, such as NCT, that had a valid collective bargaining agreement assumed they were exempt from all meal and rest period obligations until January 1, 2002.

“ ‘Generally, statutes operate prospectively only.’ [Citations.] ‘[T]he presumption against retroactive legislation is deeply rooted in our jurisprudence, and embodies a legal doctrine centuries older than our Republic. Elementary considerations of fairness dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly .... For that reason, the “principle that the legal effect of conduct should ordinarily be assessed under the law that existed when the conduct took place has timeless and universal appeal.” ’ [Citations.] ‘The presumption against statutory retroactivity has consistently been explained by reference to the unfairness of imposing new burdens on persons after the fact.’ [Citation.]” (McClung v. Employment Development Dept. (2004) 34 Cal.4th 467, 475 [20 Cal.Rptr.3d 428, 99 P.3d 1015] (McClung).) “[I]t has long been established that a statute that interferes with antecedent rights will not operate retroactively unless such retroactivity be ‘the unequivocal and inflexible import of the terms, and the manifest intention of the legislature.’ [Citations.] ‘[A] statute may be applied retroactively only if it contains express language of retroactivity or if other sources provide a clear and unavoidable implication that the Legislature intended retroactive application.’ ” (Ibid.)

A statutory amendment that merely clarifies, rather than changes, existing law is deemed to not operate retrospectively, even if applied to actions that predate its enactment, “ ‘because the true meaning of the statute remains the same.’ [Citation.] In that event, personal liability would have existed at the time of the actions, and the amendment would not have changed anything. But if the amendment changed the law and imposed personal liability for earlier actions, the question of retroactivity arises.” (McClung, supra, 34 Cal.4th at pp. 471-472.)

Notwithstanding the Legislature’s declaration to the contrary, we conclude that the 2001 amendment to section 514 changed, rather than merely clarified, the law because it imposes liability on employers for past actions that were exempt from liability under the original version of section 514—i.e., the amendment imposed meal and rest period penalties on defendants for actions that they reasonably viewed as falling within the collective bargaining agreement exemption of the original version of section 514. It is settled that even if the courts have not conclusively interpreted a statute, “ ‘a legislative declaration of an existing statute’s meaning’ is but a factor for a court to consider and ‘is neither binding nor conclusive in construing the statute.’ [Citations.] This is because the ‘Legislature has no authority to interpret a statute. That is a judicial task. The Legislature may define the meaning of statutory language by a present legislative enactment which, subject to constitutional restraints, it may deem retroactive. But it has no legislative authority simply to say what it did mean.’ [Citation.] A declaration that a statutory amendment merely clarified the law ‘cannot be given an obviously absurd effect, and the court cannot accept the Legislative statement that an unmistakable change in the statute is nothing more than a clarification and restatement of its original terms.’ ” (McClung, supra, 34 Cal.4th at p. 473.)

The legislative statement in Senate Bill No. 1208 (2001-2002 Reg. Sess.) that the amendment was “declarative of existing law” is insufficient to overcome the strong presumption against retroactivity. McClung supports the proposition that “an erroneous statement that an amendment merely declares existing law is [insufficient] to overcome the strong presumption against retroactively applying a statute that responds to a judicial interpretation.” (McClung, supra, 34 Cal.4th at p. 476.) The Legislature’s assertion that the amendment was intended to clarify existing law does not show “clear and unavoidable intent to have the statute retroactively impose liability for actions not subject to liability when taken. ‘Requiring clear intent assures that [the legislative body] itself has affirmatively considered the potential unfairness of retroactive application and determined that it is an acceptable price to pay for the countervailing benefits.’ [Citation.]” (Ibid., italics added.) Retroactive application of the 2001 amendment to section 514 would impose liability for actions that were not subject to liability when taken. Although the Legislature expressed its intent that the amendment be construed as a clarification rather than a change in the law, there is no showing that it considered, let alone that it clearly and unequivocally intended, to impose such after-the-fact liability. For these reasons, we conclude that the amendment does not apply retroactively to conduct that predated its enactment, and we disagree with Valles and Lazarin to the extent that they hold otherwise.

Thurman contends that even if section 514 created a collective bargaining exemption, that exemption does not apply to section 226.7, which became effective on January 1, 2001, and provides an independent basis for recovering unpaid wages for missed meal and rest periods. Section 226.7 imposes liability on employers who fail to provide meal or rest periods in accordance with applicable orders of the IWC. Thurman’s contention thus raises the question whether Wage Order No. 9’s meal and rest period requirements applied to Thurman between January 1, 2001, the effective date of section 226.7, and January 1, 2002, the effective date of the amendment to section 514 that limited section 514’s collective bargaining agreement exemption to the overtime and alternative workweek provisions of sections 510 and 511.

We conclude that the meal and rest period requirements in Wage Order No. 9 fell within the collective bargaining agreement exemption of the original version of section 514, applicable to “[t]his chapter,” because they were adopted under the authority of statutes in the chapter referenced in section 514. As noted, section 516 authorized the IWC to “adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers,” and section 517, subdivision (a), directed the IWC to “adopt wage, hours, and working conditions orders consistent with this chapter” (italics added)—i.e., consistent with the 1999 Act. (Small v. Superior Court, supra, 148 Cal.App.4th at p. 230.) Thus, the meal period requirement contained in section 11 of Wage Order No. 9 was adopted or amended under the authority of sections 516 and 517 in addition to section 512, and section 12 of Wage Order No. 9 regarding rest periods was adopted or amended under the authority of sections 516 and 517. Because the meal and rest period requirements in Wage Order No. 9 existed in 2001 under the authority of chapter 1 of part 2 of division 2 of the Labor Code, consisting of sections 500 through 558, they did not apply to Thurman, since, as we concluded, ante, he fell within the collective bargaining agreement exemption in section 514 until January 1, 2002, the effective date of amended section 514. Accordingly, defendants incurred no liability under section 226.7 in 2001 because it was not until 2002, when the collective bargaining agreement exemption of section 514 became limited to the overtime and alternative workweek requirements of sections 510 and 511, that defendants failed to provide meal or rest periods “mandated by an applicable order of the [IWC].” (§ 226.7, subd. (a), italics added.) The trial court was therefore correct in ruling that liability for Thurman’s UCL claims began January 1, 2002.

DEFENDANTS’ APPEAL

I.

Award of Unpaid Wages Under Section 558 as a Ci