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Court of Appeal:
Labor Code §925 Trumps Compulsory Cross-Complaint Law
California Employee, Sued in Utah, May Bring Action in Fresno Superior Court, Snauffer Says
By a MetNews Staff Writer
Labor Code §925, which entitles an employee who resides in California to have his or her causes of action against the employer tried in this state, applies where the employee is facing suit by a former employer in another state, the Fifth District Court of Appeal declared yesterday.
Justice Mark W. Snauffer wrote the opinion denying a petition for a writ of mandate sought by LGCY Power, LLC, a Utah solar company. LGCY sought to block proceedings against in Fresno Superior Court by Californian Michael Jed Sewell, who claims that while he worked for the company as a sales representative, he was misclassified as an independent contractor and is owed about $80,000 in commissions.
That claim, LGCY asserted, must be tried in Utah where it had earlier brought suit against Sewell and other former employees who had set up a competing concern. It cited California’s compulsory cross-complaint statute, Code of Civil Procedure §426.30, as well as Full Faith and Credit Clause of the U.S. Constitution, Art. IV, §1.
Issues Delineated
Setting the stage for his discussion, Snauffer said:
“We are required to answer two related questions of first impression in this opinion. First, does section 925 provide an exception to California’s compulsory cross-complaint statute…such that an employee who comes within section 925’s purview may file a complaint in California alleging claims that are related to the causes of action their employer has filed against them in a pending action in a sister state? We conclude the answer to this question is yes.
“Second, if a related action was filed first and is still pending in a sister state (here, Utah), does the Clause compel a state court (here, California) to extend credit to and apply the sister state’s compulsory cross-complaint statute? We conclude the answer to this question is no.”
Wording of Statutes
Labor Code Sec. 925, enacted in 2017, provides, in part:
“Labor Code section 925 provides in full:
“(a) An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following:
“(1) Require the employee to adjudicate outside of California a claim arising in California.
“(2) Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.”
Code of Civil Procedure §426.30(a) says:
“Except as otherwise provided by statute, if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded.”
Resolution of Issue
Sec. 925 takes precedence over §426.30, Snauffer said, explaining:
“We recognize that section 925 does not reference Code of Civil Procedure section 426.30, nor does it otherwise expressly state that it operates as an exception to the compulsory cross-complaint rules. However, section 925’s language conveys that it is intended as an exception to Code of Civil Procedure section 426.30, subdivision (a).
“Section 925, subdivision (b), provides that in any instance in which a contractual provision that violates subdivision (a) is rendered void at the employee’s request, ‘the matter shall be adjudicated in California and California law shall govern the disputes.’ (Italics added.) This language clearly evinces a legislative intent that all cases and controversies that fall within section 925’s purview be litigated in California. Consistent with this interpretation is the fact that section 925 provides no exceptions to its applicability, even for instances in which the employer has already filed a pending action against the employee in another state.”
Utah Statute
The Full Faith and Credit Clause does not require the Fresno Superior Court to bow to Utah’s compulsory cross complaint statute, Snauffer wrote, explaining:
“The United States Supreme Court has interpreted the Clause as requiring that an out-of-state judgment be given the same effect in the several states as it would be given in the adjudicating state….
“However, different credit is owed to statutes versus judgments under full faith and credit precedent.”
He went on to say:
“There is no federal or California authority standing for the proposition that, in situations where an action is pending in one state and no final judgment has been entered, and a related action is filed in a sister state, full faith and credit principles compel the second state’s court to give credit to the first state’s compulsory cross-complaint statute.”
The case is LGCY Power v. Superior Court, F082353.
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