JANUARY 2007

JUDICIAL UPDATES

A Plaintiff Has No Right to a Jury Trial for a Claim Based on the Unfair Competition Law, Even When That Claim Involves a Claim of Unpaid Overtime Wages

The plaintiffs were claims adjustors who brought a class action on behalf of a hundred such workers against their employer, claiming that they were not paid overtime wages to which they became entitled.  They claimed that the employer misclassified them as exempt under the administrative exemption of Wage Order 4.  The plaintiffs sued for violations of various Labor Code provisions, and also brought a claim for violation of California’s unfair competition law (“UCL”), Business & Professions Code section 17200.  The UCL claim stated that the employer committed unfair competition when it failed to pay overtime wages that were due. (Hodge v. Superior Court, California Court of Appeal case number B189941, November 29, 2006.)

A jury trial took place, but a mistrial was declared when the jury was not able to agree on a verdict.  After that trial, the plaintiffs dismissed their claims of violations of the Labor Code, and pursued only the cause of action for violation of section 17200.  The plaintiffs admitted that their strategy was to obtain only a bench trial, rather than a jury trial.  In response, the employer argued that it was entitled to a jury trial on the UCL claim.  The trial court agreed, and the plaintiffs sought appellate relief.  The Court of Appeal held that the employer had no constitutional right to a jury trial on the UCL claim.

The court followed previous case decisions that recognized that section 17200 provides equitable rather than legal relief.  Under long-standing California law, a jury trial is required only for legal claims, not equitable claims.  The defendant argued that the court should look at the underlying Labor Code violations as the true nature of the claims being asserted in the UCL action.  But the Court of Appeal noted that relief under the UCL was separate and apart from the relief available for the underlying violations on which the claim is pursued.  A UCL claim is not simply a conversion of a legal right into an equitable one.  It is a separate, equitable cause of action.

If you would like to discuss these or any other employment law matters, please do not hesitate to contact any member of Klinedinst's Employment Law Department.