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Unions Cannot Use Wage Assignments To Bring Representative Wage and Hour Cases

A union has standing, as assignee, to assert the claims of union members who have assigned to the union their rights to recover wages owing to them. Unions may not, however, assert claims on behalf of members who have not assigned their claims. Thus, although a laborer can sued in a representative capacity, an entity which receives a wage assignment cannot, even if the wage assignment purports to transfer the laborer's right to sue in a representative capacity on behalf of current and former employees. So said the Second District Court of Appeal in Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court. The opinion was spit 2-1, and a petition for rehearing was denied by a 2-1 margin. On the petition for rehearing, the court made the following modifications, which, for most practitioners, tell you all you need to know about the case:

(1) An individual’s assignment of a cause of action to a third party does not carry with it the individual’s statutory right to sue in a representative capacity conferred under the Labor Code Private Attorneys General Act of 2004 (Labor Code section 2699) and under the unfair competition law (Business and Professions Code section 17203).

The assignment of a cause of action, as authorized by Civil Code sections 953 and 954, is the transfer “by the owner” of “a right to recover money or other personal property” in a judicial proceeding. An individual’s statutorily conferred right to sue on behalf of others is not itself a cause of action, or any other form of property, that is owned and therefore assignable within the meaning of the Civil Code.  Accordingly, while a person may assign his own cause of action to another, the assignment does not carry with it the right to sue in a representative capacity.  Nothing in Vermont Agency of Natural Resources v. United States ex rel. Stevens (2000) 529 U.S. 765 (Vermont Agency), upon which the Unions rely, supports a contrary conclusion.

In a petition for rehearing, the Unions asserted they do not rely on the language in the employee’s assignment, which states that the employee’s assignment of his right to sue to recover wages owing to him ‘includ[es] my right to sue in a representative capacity ….’  At oral argument, counsel stated this language was ‘a mistake’ and is ‘surplusage’ because, by virtue of the assignment of the employee’s cause of action or injury, the assignee-union has all the rights the employee had, including the right to sue in a representative capacity.  We agree it does not matter whether or not the assignment by its terms purports to assign the right to sue in a representative capacity.  We disagree, however, with the Unions’ conclusion that the assignment of the employee’s cause of action effectively transfers ‘[a]ll of the rights to which the assignor may have been entitled had the assignor brought the action himself ….’  In short, the question at issue is the legal effect of the assignment of the employee’s cause of action, that is, whether or not it includes, by operation of law, the employee’s right to sue in a representative capacity.

Authorization to bring a representative suit is conferred by the Legislature, and persons authorized to bring suit have no power to assign that authorization to a third party, nor does an assignment of a cause of action include, by operation of law, the authorization to bring a representative suit.

While an employee may assign his own cause of action, the statutes defining causes of action and the law of assignment clearly demonstrate that the right to sue in a representative capacity is not a cause of action, or any other form of property right, and is therefore not assignable, either expressly or by operation of law.

Stated differently, because the assignor (the employee), although authorized by section 17203 or PAGA to bring an action on behalf of others, has no ownership interest in the causes of action owned by others, the employee necessarily has no right, expressly or by operation of law, to transfer those causes of action to a third party.

The original opinion can be viewed here in PDF or Word format, but be sure to read the modified opinion, too, which can be downloaded here. We'll be watching this one to see if review will be granted by the Supreme Court.

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