132 | 2024 Cal-Peculiarities ©2024 Seyfarth Shaw LLP www.seyfarth.com employees to sue for prompt payment of wages, as well for civil penalties and attorney fees and costs. Although the California Supreme Court indicated an action for conversion might be available in a tip-pooling case (see § 7.20),548 that was a special situation (the employer allegedly had misappropriated gratuities left for employees), and was not a simple case of unpaid wages. A 2019 Supreme Court decision held that conversion of earned but unpaid wages is not a valid tort claim. The plaintiff worked for the individual defendant on several start-up companies, in return for a promise to pay wages later. The promised pay never materialized. The plaintiff successfully sued the companies for unpaid wages but also wanted to recover personally from the individual defendant, on a theory of conversion. In rejecting this theory, the high court noted that employees already have “extensive remedies” for unpaid wages, including contract and statutory remedies. The high court concluded that “a conversion claim is an awfully blunt tool” for deterring intentional failures to pay wages, as conversion “does not require bad faith, knowledge, or even negligence; it requires only that the defendant have intentionally done the act depriving the plaintiff of … rightful possession.” Conversion liability for unpaid wages would thus “not only reach those who act in bad faith, but also those who make good faith mistakes—for example, an employer who fails to pay the correct amount in wages because of a glitch in the payroll system or a clerical error. We see no sufficient justification for layering tort liability on top of the extensive existing remedies demanding that this sort of error promptly be fixed.”549 This large helping of common sense did not entirely win the day. A dissent by Justice Cuellar, joined by Justice Liu, formalistically argued that conversion should be available to recover unpaid wages because unpaid wages are the employee’s property once they are earned and payable.550 “Theft of labor.” The Court of Appeal has rejected a novel claim that an employer’s failure to pay commissions amounts to stealing property, in violation of the Penal Code.551 1 Grafton Partners v. Superior Ct. (PricewaterhouseCoopers), 36 Cal. 4th 944 (2005). But see Woodside Homes of California, Inc. v. Superior Ct. (Wheeler), 142 Cal. App. 4th 99 (2006) (enforcing contract clause that any controversy arising under contract shall be submitted to general judicial reference). 2 Grafton Partners, 36 Cal. 4th at 968 (Chin, J., concurring). 3 Id. at 970. 4 See, e.g., Hodge v. Superior Ct. (Aon Insurance Servs.), 145 Cal. App. 4th 278, 284-85 (2006) (because claim for violation of the UCL is equitable in nature, no right to a jury trial exists). 5 See, e.g., Pellegrino v. Robert Half Int’l, Inc., 181 Cal. App. 4th 713, 737-38 (2010) (equitable issues could be tried first to the judge alone and a bench trial of the equitable issues could dispense with the legal issues and end the case). 6 ATT Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). 7 Civ. Proc. Code §§ 1280 et seq. 8 OTO, L.L.C. v. Kho, 8 Cal. 5th 111, 125 (2019) (citations omitted). 9 9 U.S.C. § 1. 10 Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001). 11 Muller v. Roy Miller Freight Lines, LLC, 34 Cal. App. 5th 1056, 1069 (2019) (truck driver who drove intrastate portion of interstate trips for transportation company was engaged in interstate commerce and thus FAA-exempt, because company’s goods originated primarily outside of California); Nieto v. Fresno Beverage Co., 33 Cal. App. 5th 274, 284 (2019) (intrastate delivery driver was FAA-exempt because he “was engaged in interstate commerce through his participation in the continuation of the movement of interstate goods to their destinations”). 12 Southwest Airlines Co. v. Saxon, 142 S. Ct. 1783, 1790 (2022). 13 Id. 14 9 U.S.C. § 2. 15 Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 266 (1995).
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