Prokop v. Brown CA2/5

Filed 10/22/14 Prokop v. Brown CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication

or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

JOHN PROKOP et al., B247393

Plaintiffs and Appellants, (Los Angeles County Super. Ct.

No. BS138805)

v.

EDMUND G. BROWN, JR., et al.,

Defendants and Respondents.

APPEAL from a judgment of the Superior Court of Los Angeles County, Luis

Lavin, Judge. Affirmed.

Krutcik & Georggin, James A. Krutcik, A. Nicholas Georggin, Alexandra

Buechner, for Plaintiffs and Appellants.

Joan A. Markoff, Chief Counsel, David J. Neill, Deputy Chief Counsel, Jennifer

M. Garten, Labor Relations Counsel, and David D. King, Labor Relations Counsel, for

Defendants and Respondents.

___________________

Supervisory engineers employed by the State of California brought this claim

concerning pay raises on behalf of themselves and all persons similarly situated. In the

trial court, plaintiffs argued they were entitled to a 10.1 percent pay raise from 2008 to

the present, as initially allocated in the 2008 Budget Act, which the Department of

Human Resources (CalHR) failed to pay in violation of the pay parity provisions of

Government Code section 19826.1 The court sustained the demurrers of defendant

government officials and entered a judgment of dismissal. On appeal, plaintiffs have

limited their claim to the contention that they are entitled to compensation appropriated

and approved in the 2008 Budget Act. We hold the one-year statute of limitations

contained in section 19815.8 bars plaintiffs’ claims based on the 2008 Budget Act, and

therefore, we affirm.

FACTS2

Plaintiffs John Prokop, A. Samad Hamoud, Kelly Ann Holden, and Victor Zengler

are employed by the California Department of Transportation in engineering positions

with supervisory responsibilities. They are members of the employee organization

Professional Engineers in California Government (PECG). Plaintiffs represent a class of

1,000 former and current engineering supervisors excluded from collective bargaining

under the Ralph C. Dills Act (§ 3512 et seq.). Their salaries are paid from federal or

special funds.

Plaintiffs are in civil service classifications designated S09, and supervisory

positions in classifications designated U09 and E48. U09 includes rank-and-file

1 All further statutory references are to the Government Code, unless otherwise

stated.

2

The facts are drawn from plaintiffs’ amended petition, as well as documents of

which the court and appellate court have taken judicial notice.

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engineering and supervisory positions. Although they are in the same civil service

classification, rank-and-file employees are covered by a collective bargaining agreement

and supervisory employees have salaries set by defendants. For several years,

engineering supervisors received the same raises as rank-and-file engineering employees.

The Department of Personal Administration (DPA) and Governor Schwarzenegger

proposed funding in the 2008 Budget Act for salary increases of 10.1 percent for rank-

and-file engineers and engineering supervisors. The California Legislature and Governor

Schwarzenegger approved the 2008 Budget Act. The 2008 Budget Act provides in

pertinent part, “The funds appropriated in this item are for compensation increases . . . of

employees whose compensation, or portion thereof, is chargeable to special funds, to be

allocated by executive order by the Department of Finance . . . in accordance with salary

and benefit schedules established by the Department of Personnel Administration.”

(Assem. Bill No. 1781 (2007-2008 Reg. Sess.) § 2.)

Section 4.01, subdivision (b) of the 2008 Budget Act provides, “Notwithstanding

any other provision of law, the Director of Finance shall reduce items of appropriation in

this act to reflect savings achieved through reforms in employee compensation, subject to

memoranda of understanding negotiated with collective bargaining units and ratified by

the Legislature. These reductions shall apply to all agencies and departments whose

employees are subject to collective bargaining agreements negotiated by the Department

of Personnel Administration or are excluded employees as defined in Section 3527 of the

Government Code.” (Assem. Bill No. 1781 (2007-2008 Reg. Sess.) § 4.01, subd. (b).)

The 2008 Budget Act contains appropriations for the fiscal year beginning July 1,

2008, and ending June 30, 2009. Rank-and-file engineers in the U9 civil service

classification received the pay raise of 10.1 percent as of July 2008. The engineering

supervisors did not receive the pay raise. Certain supervisor positions have been earning

less than the rank-and-file employees that they supervise.

On June 24, 2009, PECG filed a request with the DPA seeking salary adjustments

for all supervisory engineering classifications, including plaintiffs, as approved in the

2008 Budget Act. PECG claimed the DPA violated the provisions of section 19826 to

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pay like salaries for comparable work. PECG requested the DPA raise salaries or

conduct a quasi-legislative hearing.

DPA ordered a hearing pursuant to section 19826. Beginning September 9, 2009,

several days of hearings were held before Administrative Law Judge (ALJ) Karla

Broussard-Boyd. On June 15, 2010, ALJ Broussard-Boyd sent a letter asking PECG to

identify specific classifications for which it claimed like salaries. The declarations PECG

submitted did not show a prima facie case of comparable duties and did not identify

which salary ranges should be compared. If information was not received by July 31,

2010, the matter would be considered closed.

On January 24, 2011, ALJ Broussard-Boyd wrote a letter to PECG reiterating that

no information had been received on 46 of the 102 claimant classes. “Therefore, this

memorandum shall serve as notification to the claimant class of Supervisory Engineers its

pay parity quasi-legislative hearing will be closed if the required information is not

received by February 4, 2011.” PECG requested an extension of time to provide the

required documentation to February 18, 2011. Broussard-Boyd agreed, but warned that

the file would have to be closed without a recommendation to the Director of DPA if no

additional information was received. PECG requested a second extension until February

28, 2011. ALJ Broussard-Boyd agreed to extend the deadline to March 4, 2011, but

again warned that the file would be closed without a recommendation if no information

was received by March 4, 2011. On March 9, 2011, ALJ Broussard-Boyd sent a letter

notifying PECG that the pay parity claim had been closed. She added, “As noted in my

earlier correspondence, the panel was without the required facts or data to make

meaningful comparisons as required by Government Code section 19826(a) to support a

pay parity recommendation.”

In 2012, the Legislature created CalHR, which succeeded to all the powers and

duties exercised by the former DPA. (§ 18502, subd.(a).)

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PROCEDURAL HISTORY

On July 31, 2012, plaintiffs filed a petition for writ of mandate and class action

complaint for wages against defendants Edmund G. Brown, Jr., as Governor of the State

of California, Arnold Schwarzenegger as former Governor of the State of California,

Maeley L. Tom as President of CalHR, Debbie Endsley as former Director of the

California DPA, Malcolm Dougherty as Director of the California Department of

Transportation, Will Kempton as former Director of the California Department of

Transportation, Ana Matosantos as former Director of the California Department of

Finance, and John Chiang as State Controller of California. Plaintiffs filed an amended

petition on October 19, 2012, for writ of mandate, failure to pay wages, breach of

contract and declaratory relief.

The petition alleged defendants have authority under section 19826 to establish

and adjust salary ranges for each class and position in state service. Section 19826 relies

on the principle that like salaries shall be paid for comparable duties. Defendants must

ensure horizontal parity for comparable positions in the civil service system. Plaintiffs

are in the same civil service classification as rank-and-file engineers who received salary

increases and have positions which are sufficiently similar.

The petition additionally alleged that after three years without an administrative

decision, plaintiffs were seeking to adjudicate their rights in the trial court because

continuing with the administrative process was futile. As a result of PECG’s

administrative complaint and the administrative proceedings, limitation periods have

been tolled since June 24, 2009. The petition sought recovery of the salary increase

withheld every year for the past five years, an injunction enjoining defendants from

refusing to pay salary increases approved in the 2008 Budget Act, liquidated damages,

interest, costs and attorney fees.

The petition alleged common questions of law and fact existed, including whether

class members have comparable duties to rank-and-file engineers, whether defendants

unlawfully withheld wages in violation of the Government Code, and whether there has

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been a pay disparity between rank-and-file engineers and plaintiffs beginning July 1,

2008, to the date that judgment is entered.

The petition for writ of mandate alleged defendants have a clear, present,

mandatory and ministerial duty to pay plaintiffs equal salaries to rank-and-file engineers

with comparable duties. Defendants have no authority to fix salaries which violate

section 19826. They violated this mandatory duty by refusing to pay plaintiffs the

salaries approved in the State Budget Act. If defendants have discretion, they abused it

by acting inconsistently with California law by refusing to pay engineering supervisors

the wages to which they were entitled. DPA, the Governor, and the implementing

agencies included funding in the 2008 Budget Act for raises of 10.1 percent, the

Legislature and the Governor approved the raises as part of the 2008 Budget Act, but

plaintiffs have not received the raises. Rank-and-file engineers have received the

additional 10.1 percent salary since July 1, 2008. Plaintiffs sought recovery of the salary

increase withheld every year for the past five years.

In the cause of action for failure to pay wages, plaintiffs alleged defendants’ policy

was to refuse to pay the salary increases despite the mandates of section 19826 to pay like

salaries for comparable work.

The cause of action for breach of contract alleged defendants promised to pay

earned wages, including paying like salaries for comparable work. Defendants breached

their employment agreements by failing to pay plaintiffs the salary increases received by

rank-and-file engineers, who have comparable duties and responsibilities.

The final cause of action for declaratory and injunctive relief alleged defendants

violated and continued to violate section 19826 by refusing to pay plaintiffs like salaries

for comparable work. Plaintiffs sought a declaration of their rights with respect to

withholding of pay raises.

Plaintiffs asked the court to issue a peremptory writ of mandate ordering

defendants to raise the salaries of plaintiffs to correspond with the salary increases paid to

the rank-and-file engineers from July 1, 2008 to the date judgment is entered in the case.

Plaintiffs also sought an award of unpaid wages equaling 10.1 percent per year of their

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salaries from July 1, 2008 to the present. They also requested a declaratory judgment

holding defendants violated the mandatory duties imposed under California law,

including but not limited to section 19826.

Tom filed a motion to strike on the ground that she is employed by an entity

unrelated to the action. Chiang filed a response to the petition. The remaining

defendants filed demurrers and a request for judicial notice. Plaintiffs opposed the

motion to strike by asserting the complaint would be amended to allege Tom in her

representative capacity for the correct entity and a new defendant for the misidentified

entity. They also opposed the demurrers, and the demurring parties filed replies.

A hearing was held on February 7, 2013. The trial court granted the request for

judicial notice, sustained the demurrers without leave to amend and granted the motion to

strike without leave to amend. The court entered a judgment of dismissal on February 25,

2013. Plaintiffs filed a timely notice of appeal from the judgment.3

DISCUSSION

Standard of Review

“‘A demurrer tests the legal sufficiency of the complaint, . . .’ [Citations.] On

appeal from an order of dismissal after an order sustaining a demurrer, our standard of

review is de novo, i.e., we exercise our independent judgment about whether the

complaint states a cause of action as a matter of law. [Citation.] We deem to be true all

material facts properly pled [citation] and those facts that may be implied or inferred

from those expressly alleged [citation][.]” (Montclair Parkowners Ass’n v. City of

Montclair (1999) 76 Cal.App.4th 784, 709.)

“While a decision to sustain or overrule a demurrer is subject to de novo review on

appeal, a grant or denial of leave to amend calls for an exercise of discretion on the part

3 Chiang has not filed a respondent’s brief on appeal.

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of the trial court. [Citation.] Denial of leave to amend is reviewed for abuse of

discretion. [Citation.] The trial court abuses its discretion in denying leave to amend

only if the plaintiff shows a reasonable possibility of curing any defect by amendment.

[Citation.]” (Montclair Parkowners Ass’n v. City of Montclair, supra, 76 Cal.App.4th at

p. 709.)

Statutory Scheme

“The Legislature created the DPA in 1981 for the purpose of managing the

nonmerit aspect of the state’s personnel system. [Citation.]” (Tirapelle v. Davis (1993)

20 Cal.App.4th 1317, 1322.) “In general, the DPA has jurisdiction over the state’s

financial relationship with its employees, including matter of salary, layoffs and

nondisciplinary demotions. (§§ 19816, 19816.2, 19825, 19826.)” (Ibid.)

“[S]etting employee compensation is a legislative function which, in this instance,

the Legislature has delegated to the DPA. (Pacific Legal Foundation v. Brown [(1981)]

29 Cal.3d [168,] 189.) The DPA can act only to the extent and in a manner consistent

with the legislative delegation of authority. And the DPA’s exercise of this authority is

quasi-legislative (see Lowe v. California Resources Agency (1991) 1 Cal.App.4th 1140,

1151-1152), and is thus subject to the ultimate authority of the Legislature to reject or

alter such exercise of authority through appropriate legislation.” (Tirapelle v. Davis,

supra, 20 Cal.App.4th at p. 1323, fn. 8.)

Section 19826, subdivision (a) provides: “The department shall establish and

adjust salary ranges for each class of position in the state civil service subject to any merit

limits contained in Article VII of the California Constitution. The salary range shall be

based on the principle that like salaries shall be paid for comparable duties and

responsibilities. In establishing or changing these ranges, consideration shall be given to

the prevailing rates for comparable service in other public employment and in private

business. The department shall make no adjustments that require expenditures in excess

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of existing appropriations that may be used for salary increase purposes. The department

may make a change in salary range retroactive to the date of application of this change.”

When a state agency has statutory authority to fix an employee’s salary or

compensation paid from state funds, “the salary is subject only to the approval of the

department before it becomes effective and payable, except as provided [for certain

employees exempt from civil service]. The Legislature may expressly provide that

approval of the department is not required.” (§ 19825, subd. (a).)

“It is well established that public employees have no vested rights to particular

levels of compensation and salaries may be modified or reduced by the proper statutory

authority. [Citations.]” (Tirapelle v. Davis, supra, 20 Cal.App.4th at pp. 1332-1333.)

“‘[The department] may not unilaterally decrease salaries for represented employees.’

[Citation.]” (Professional Engineers in Cal. Government v. Schwarzenegger (2010) 50

Cal.4th 989, 1019.) However, when the Legislature reduced appropriations for state

employee compensation in the 1991 Budget Act without explicitly directing how to

implement the reductions, the DPA had authority to reduce the salaries of exempt and

nonrepresented employees. (Id. at p. 1023.)

Government Code Section 19815.8

Plaintiffs contend the payment of compensation approved by CalHR and

appropriated by the Legislature is a ministerial act subject to a writ of mandate. Plaintiffs

further contend their action is not subject to the one-year statute of limitations contained

in section 19815.8 because it is not related to any law administered by CalHR. We need

not determine whether plaintiffs were entitled to receive the additional compensation

appropriated in the 2008 Budget Act, because even assuming they were entitled to it,

their action is time-barred by section 19815.8.

Section 19815.8, subdivision (a) provides: “No action or proceeding shall be

brought by any person having or claiming to have a cause of action or complaint or

ground for issuance of any complaint or legal remedy for wrongs or grievances based on

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or related to any law administered by the Department of Human Resources unless the

action or proceeding is commenced and served within one year after the cause of action

or complaint or ground for issuance of any writ or legal remedy first arose. Such a

person shall not be compensated for the time subsequent to the date when the cause or

ground arose unless the action or proceeding is filed and served within 90 days after the

cause or ground arose. Where an appeal is taken from a decision of the department, the

cause of action does not arise until the final decision of the department.”

CalHR has the authority to establish and adjust salary ranges under section 19826,

subdivision (a). Plaintiffs’ claim that they have not received compensation approved by

CalHR and allocated in the 2008 Budget Act is related to a law administered by CalHR.

Therefore, the one-year statute of limitations provided in section 19815.8 applies.

Plaintiffs were required to initiate their action within one year of the date that they failed

to receive the additional compensation.

Plaintiffs contend each pay period that they did not receive proper compensation

constituted a separate violation triggering a new statute of limitation period. (See Jones

v. Tracy School Dist. (1980) 27 Cal.3d 99, 105-106.) “[T]he employee can recover only

those payments which accrued within the period of the applicable statute of limitations

preceding the filing of his complaint. [Citations.]” (Green v. Obledo (1981) 29 Cal.3d

126, 215.) The last deficient payment was the final payment under the 2008-2009

budget. There is no allegation that subsequent budget acts allocated and appropriated

compensation for pay raises for supervisory engineers. Plaintiffs’ complaint in 2012 was

filed long after the one-year limitations period ran on deficient payments made under the

2008 Budget Act. The trial court properly found the complaint barred under section

19815.8.

There is no issue of tolling of the statute of limitations. Plaintiffs emphatically

state they were not parties to the proceedings before the administrative law judge. They

argue that administrative action was not required or taken. Respondents point out that

even if the statute of limitations were tolled during the administrative proceedings, it

began to run no later than March 9, 2011, when the ALJ notified PECG that the matter

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was closed. Plaintiffs filed this lawsuit more than one year after the administrative

proceedings were closed.

Plaintiffs contend the four-year statute of limitations for actions based upon a

written contract applies in this case. However, the gravamen of the action on appeal is

CalHR’s allocation of compensation appropriated in the 2008 Budget Act. Section

19815.8 expressly applies to claims related to laws administered by CalHR, and plaintiffs

have not alleged a written contract between themselves and any party promised to pay

them additional compensation.

DISPOSITION

The judgment is affirmed. Respondents Edmund G. Brown, Jr., Arnold

Schwarzenegger, Maeley L. Tom, Debbie Endsley, Malcolm Dougherty, Will Kempton,

and Ana Matosantos are awarded their costs on appeal.

KRIEGLER, J.

We concur:

TURNER, P. J.

MOSK, J.

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