Opinion
NOT TO BE PUBLISHED
Super. Ct. No. 04AS03697
BUTZ, J.Plaintiffs filed an action for restitution and injunctive relief on behalf of the general public, alleging that general contractor John F. Otto, Inc. (Otto), violated the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.) by using subcontractors on public works projects who failed to pay their workers the prevailing wage rate (Lab. Code, §§ 1771, 1774), and by failing to pay apprenticeship contributions to the Director of Industrial Relations (§ 1777.5).
Undesignated statutory references are to the Labor Code.
The trial court sustained Otto’s motion for judgment on the pleadings, on the dual grounds that plaintiffs had no standing to sue and that a general contractor is not liable to private parties for the failure of its subcontractor to pay a prevailing wage to its employees (see Violante v. Communities Southwest Development & Construction Co. (2006) 138 Cal.App.4th 972 (Violante).) The court granted plaintiffs limited leave to amend the complaint to add parties who had proper standing under the UCL.
An amended complaint was filed as a class action, naming two labor unions and individual union members as representative plaintiffs. The amended complaint sought damages, an injunction and restitutionary relief based upon Otto’s alleged violations of the UCL and tortious interference with economic advantage.
The trial court granted Otto’s motion to strike the amended complaint as not in conformance with the court’s prior ruling. Further leave to amend was denied.
Plaintiffs appeal from the order granting the motion to strike, which effectively constituted a judgment of dismissal. (See Laraway v. Pasadena Unified School Dist. (2002) 98 Cal.App.4th 579, 582-583.) They claim that Violante was wrongly decided and, in any event, is not applicable to the claims advanced in the amended complaint. Finding that the trial court’s rulings on both the motion for judgment on the pleadings and the motion to strike were correct, we shall affirm the judgment of dismissal.
PROCEDURAL HISTORY
The complaint
The original complaint in this action was filed by Rodney L. Cameron and Harry M. Rotz, who identified themselves as California citizens bringing the action “on behalf of the general public and in the general public interest.”
The complaint alleged that Otto regularly used subcontractors on many public works projects that paid their laborers less than the prevailing wage rate in violation of the prevailing wage law set forth in Labor Code sections 1771, 1774 and 1778. Plaintiffs alleged that this practice constituted unfair competition under the UCL (Bus. & Prof. Code, §§ 17203, 17204.) They sought an injunction preventing Otto from continuing this practice and restitution for all employees of subcontractors who were underpaid. In a separate cause of action, plaintiffs alleged that Otto also violated the UCL by failing to make the requisite “apprenticeship training contributions” under Labor Code section 1777.5, subdivision (m) and title 8 of the California Code of Regulations, section 230.2. Plaintiffs also sought injunctive and restitutionary relief as provided for under the UCL.
Motion for judgment on the pleadings
Otto moved for judgment on the pleadings based on Violante’s holding that California recognizes no private right of action against a general contractor for his subcontractor’s failure to pay prevailing wages to its employees. (See Violante, supra, 138 Cal.App.4th at pp. 978-979.) The trial court granted the motion on this ground, and on the additional ground that Proposition 64, which was enacted by voter initiative after the lawsuit was filed, barred private persons who had not suffered actual injury, such as plaintiffs, from enforcing the UCL on behalf of the general public. However, based upon plaintiffs’ representations at oral argument on the motion that they “were ready and capable of amending the complaint to state viable claims on behalf of substitute representative plaintiffs with standing under the UCL,” the trial court granted leave to amend the complaint.
The first amended complaint
Plaintiffs filed a first amended complaint (FAC) in purported compliance with the court’s ruling. In addition to retaining plaintiffs Cameron and Rotz for technical reasons, the FAC also named as plaintiffs two labor unions, Plumbers and Steamfitters Local Union Nos. 447 and 343, and two members of Local Union No. 447, Craig A. Sani and George S. Marshall.
In contrast to the original complaint, the FAC was styled as a class action on behalf of all “qualified, unemployed workers who were registered with their local unions for work referral at the times when defendant Otto was performing public works projects using subcontractors it knew or should have known to have bid those projects based on labor costs below the required prevailing wage rates.”
According to the FAC, Otto has, since September of 2000, awarded numerous subcontracts on public works projects to subcontractors who “have paid their workers less than the prevailing wages required by Labor Code sections 1771 and 1774.” The FAC cited one particular instance in which Otto successfully bid on a public works project in Sacramento and used newly added defendant Acme Mechanical Contractors (Acme) as its subcontractor, a company that paid its workers less than prevailing wages. Plaintiffs alleged that Otto violated prevailing wage laws by entering into a subcontract on the project from Acme, whom it knew or should have known was paying less than prevailing wage rates to its workers.
Plaintiffs alleged that as a result of Otto’s unlawful conduct, they and fellow class members suffered injury “in that they have lost work and income they would have received if defendants had complied with the prevailing wage law.”
The FAC also included a second cause of action for intentional interference with prospective economic advantage, based on the same set of facts.
Motion to strike
Otto responded with a motion to strike the FAC. The trial court granted the motion. Citing Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235 (Branick), the court ruled that the FAC stated facts giving rise to a wholly different legal obligation than that originally stated. Furthermore, the relief sought by the FAC plaintiffs constituted consequential damages rather than restitutionary relief and was therefore impermissible under the UCL.
The court also ordered Acme stricken as a defendant, since no leave to add party defendants had been granted. This ruling is not challenged on appeal.
The court denied plaintiffs further leave to amend, as they failed to show how they could amend their complaint without violating the pleading restrictions of Branick and the holding of Violante.
DISCUSSION
I. The Motion for Judgment on the Pleadings
Plaintiffs first claim the trial court erred in granting Otto’s motion for judgment on the pleadings.
Although an order granting a motion for judgment on the pleadings is not an appealable order (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 154, p. 231), it is reviewable after an appeal from the final judgment (Code Civ. Proc., § 906).
“A motion for judgment on the pleadings is tantamount to a general demurrer [citations], although it is not governed by statute and may be made at any time prior to a final judgment.” (Orange Unified School Dist. v. Rancho Santiago Community College Dist. (1997) 54 Cal.App.4th 750, 764.) “The standard for granting a motion for judgment on the pleadings is essentially the same as that applicable to a general demurrer, that is, under the state of the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law.” (Guardianship of Olivia J. (2000) 84 Cal.App.4th 1146, 1155.) We read the complaint as a whole and all its parts in context (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125), and imply or infer facts from those expressly alleged (Estate of Lind (1989) 209 Cal.App.3d 1424, 1430).
On appeal, the standard of review is de novo. (Balikov v. Southern Cal. Gas Co. (2001) 94 Cal.App.4th 816, 819.) Because we review the ruling of the trial court and not its reasoning, the judgment will be affirmed if it is correct on any ground. (Trinkle v. California State Lottery (1999) 71 Cal.App.4th 1198, 1201; Davey v. Southern Pacific Co. (1897) 116 Cal. 325, 329.)
The trial court granted Otto’s motion for judgment on the pleadings, in part, based on the holding of Violante. Plaintiffs assert that Violante was wrongly decided and, in any event, that the facts pleaded in the complaint did not fall within its holding. In Violante, the Court of Appeal for the Fourth Appellate District, Division Two, held that “a subcontractor’s employee on a public works project cannot sue the prime or general contractor on theories of statutory or contractual liability for the nonpayment of prevailing wages by the subcontractor, the employee’s direct employer.” (Violante, supra, 138 Cal.App.4th at p. 975.)
We need not reach Violante’s applicability to the original complaint because the trial court based its ruling on a second ground that was unimpeachably correct--plaintiffs lacked standing to sue under the UCL.
All four causes of action of the original complaint sought restitutionary and injunctive relief under the UCL. Plaintiffs filed this action purely “on behalf of the general public,” seeking redress for Otto’s alleged unfair business practices.
Prior to 2004, the UCL authorized “‘any person acting for the interests of itself, its members or the general public’ ([Bus. & Prof. Code,] former § 17204) to file a civil action for relief [from unfair competition]. Standing to bring such an action did not depend on a showing of injury or damage.” (Californians for Disability Rights v. Mervyn’s, LLC, (2006) 39 Cal.4th 223, 228 (Mervyn’s).)
“After Proposition 64, which the voters approved at the November 2, 2004, General Election, a private person has standing to sue only if he or she ‘has suffered injury in fact and has lost money or property as a result of such unfair competition.’ ([Bus. & Prof. Code,] § 17204, as amended by Prop. 64, § 3; see also [Bus. & Prof. Code,] § 17203, as amended by Prop. 64, § 2.)” (Mervyn’s, supra, 39 Cal.4th at p. 227.) In Mervyn’s, the California Supreme Court held that Proposition 64’s standing requirements applied to all cases pending at the time the initiative was adopted. (Ibid.)
In their original complaint, plaintiffs here did not allege they suffered injury or lost property as a result of Otto’s Labor Code violations. Hence, it was defective as a matter of law because, as plaintiffs expressly admitted in their FAC, Proposition 64 deprived them of standing to enforce the UCL as members of the general public.
II. Motion to Strike the FAC
The plaintiffs added to the FAC were two labor unions and two union members of one of the unions. According to the FAC, the individual plaintiffs and the class members they purport to represent lost wages they would have earned had Otto not violated the prevailing wage law by using subcontractors who paid less than prevailing wage rates. Likewise, the labor unions sought dues revenue they would have earned if Otto had awarded subcontracts on its public works projects to subcontractors who paid the prevailing wage.
The trial court cited two independent reasons why the FAC was defective. We agree on both counts, as we shall explain.
A. Violation of Branick
First, the FAC exceeded the permissible scope of amendment as set forth in Branick, supra, 39 Cal.4th 235. The plaintiffs in Branick stood in a similar procedural predicament as plaintiffs here. Their original complaint was filed on behalf of the general public, but Proposition 64, which was enacted while the suit was pending, stripped them of such standing. (Branick, supra, 39 Cal.4th at pp. 239-240.) The California Supreme Court ruled that since the plaintiffs had not had the opportunity to amend their complaint, they should be granted leave to amend to substitute plaintiffs with proper standing based on the suffering of actual injury or loss. (Id. at p. 239.) However, the court cautioned, “the plaintiff proposed to be substituted may not ‘state facts which give rise to a wholly distinct and different legal obligation against the defendant.’ (Klopstock v. Superior Court [(1941)] 17 Cal.2d 13, 20.) For this purpose, ‘[i]n determining whether a wholly different cause of action is introduced by the amendment . . . nothing more is meant than that the defendant not be required to answer a wholly different legal liability or obligation from that originally stated.’” (Branick, supra, at pp. 243-244.) In general, the new pleading must satisfy the same requirements as an amended complaint for purposes of applying the “relation-back” doctrine for statute of limitations purposes; i.e., it “‘must (1) rest on the same general set of facts, (2) involve the same injury, and (3) refer to the same instrumentality, as the original one.’” (Id. at p. 244, quoting Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 408-409.)
The FAC here contravened these principles. The original complaint sought “restitutionary disgorgement” of the amounts unlawfully withheld from subcontractors’ employees who did not receive a prevailing wage on Otto’s public works projects, as well as recoupment of apprenticeship contributions that Otto was required, but failed to pay to the Director of Industrial Relations.
By contrast, the FAC sought monetary relief on behalf of labor union workers who allegedly lost the opportunity to work on public works projects because of Otto’s use of subcontractors who paid less than the prevailing wage--as well as union dues that would have been paid to labor unions had Otto complied with the law. A second cause of action sought damages for interference with prospective economic advantage.
Unlike the original complaint, which sought recoupment of lost wages on behalf of employees of Otto’s subcontractors, the FAC was filed as a class action, seeking monetary compensation on behalf of individuals and unions who were never involved in or worked on any of Otto’s projects. The UCL cause of action complained of a wholly new injury and sought damages based on an entirely different theory of relief than the original complaint.
The FAC’s second cause of action, for intentional interference with prospective economic advantage, was an even more serious violation of Branick. That cause of action did not purport to qualify any plaintiff with proper standing under the UCL, but constituted a private claim for money damages rooted in common law tort. Accordingly, the entire FAC was properly stricken as beyond the scope of permissible amendment under Branick.
B. Nonrestitutionary Relief
The FAC was properly stricken for the additional reason that it sought relief not permitted under the UCL.
The exclusive monetary remedy available to private plaintiffs under the UCL is restitution. (Bus. & Prof. Code, § 17203; Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144 (Korea Supply); Madrid v. Perot Systems Corp. (2005) 130 Cal.App.4th 440, 452 (Madrid).) “Disgorgement of profits” is not available as a remedy to a private plaintiff under the UCL. (Korea Supply, supra,29 Cal.4th at p. 1140.)
As we stated in Madrid, “the California Supreme Court has defined a UCL order for restitution as one ‘“compelling a UCL defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken, that is, to persons who had an ownership interest in the property or those claiming through that person.”’ (Madrid, supra, 130 Cal.App.4th at p. 453.) “Restitution thus is available where ‘a defendant has wrongfully acquired funds or property in which a plaintiff has an ownership or vested interest.’ [Citations.] In other words, ‘in the UCL context . . . restitution means the return of money to those persons from whom it was taken or who had an ownership interest in it.’” (Feitelberg v. Credit Suisse First Boston, LLC (2005) 134 Cal.App.4th 997, 1012-1013, quoting Madrid, at p. 455, italics added.)
The FAC did not seek to recover money or property that was either wrongfully withheld from plaintiffs or in which they had a vested interest. (Cf. Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 176 [employees who had wages wrongfully withheld through employer’s unfair business practice were entitled to restitutionary relief].) Instead plaintiffs, who performed no work for Otto or its subcontractors, advanced the exotic theory that they were harmed monetarily because they were not employed on various public works projects, owing to Otto’s use of subcontractors who violated the prevailing wage law. This type of loss of “expectancy” does not qualify as a claim for restitution under the UCL. (Korea Supply, supra, 29 Cal.4th at pp. 1149-1150.) Courts have no authority to fashion a remedy under the UCL absent an “adequate allegation of recoverable restitution” (Madrid, supra, 130 Cal.App.4th at p. 459), which the FAC lacked.
Plaintiffs’ prayer for injunctive relief fares no better than their claim for money damages. The same rationale that applies to the restitution analysis would preclude any right to any action for injunction, which can be brought only by public prosecutors or by a person “who has suffered injury in fact and has lost money or property as a result of the unfair competition.” (Bus. & Prof. Code, § 17204.)
C. Violante
Although unnecessary to our decision, we briefly comment upon Violante, a case which plaintiffs say was wrongly decided and whose holding they urge us to reject.
Violante involved plaintiffs with a far greater claim of standing than plaintiffs here--they were construction workers employed by a subcontractor who failed to pay them prevailing wages on a public works project. (Violante, supra, 138 Cal.App.4th at pp. 975-976.) They filed a class action against the general contractor for breach of contract and UCL violations, based on several Labor Code violations including section 1774, which provides: “The contractor to whom the contract is awarded, and any subcontractor under him, shall pay not less than the specified prevailing rates of wages to all workmen employed in the execution of the contract.” (Violante, supra, 138 Cal.App.4th at p. 978.)
The trial court sustained the general contractor’s demurrer without leave to amend, and the Violante court affirmed. (Violante, supra, 138 Cal.App.4th at pp. 976, 982.) Noting that the plaintiffs had several alternative remedies for the subcontractor’s prevailing wage violations, Violante concluded that the statutory scheme did not countenance a private right of action against the general contractor. Stated the court: “Plaintiffs have a right of action against the subcontractor, their direct employer. [Citations.] Additionally, a joint labor-management committee may bring an action against a direct employer who does not pay prevailing wages to its employees. The labor commissioner may also seek penalties against the contractor and any [sub]contractor under him. (§ 1775, subd. (a)[(1)].) Other administrative remedies are available. (Mobley v. Los Angeles Unified School District (2001) 90 Cal.App.4th 1221, 1232-1233.) But the Labor Code nowhere requires the contractor to pay prevailing wages to a subcontractor’s employee or permits a subcontractor’s employee to sue the prime contractor when the subcontractor fails to pay prevailing wages.” (Violante, supra, 138 Cal.App.4th at p. 979, italics added.) The court also noted that, in addition to administrative remedies they may pursue through the labor commissioner, workers who were not paid prevailing wages may sue their employer based on theories of rescission, restitution for fraud, and unfair competition. (Id. at p. 980.) The California Supreme Court unanimously denied review in Violante. (Id. at p. 982.)
In our view, Violante’s statutory analysis is sound, and plaintiffs present no principled reason to depart from it. The trial court thus committed no error in following Violante’s holding that a nongovernmental plaintiff may not maintain an action against a general contractor for the failure of its subcontractor to pay prevailing wages to the subcontractor’s employees.
DISPOSITION
The judgment of dismissal is affirmed. Otto is awarded costs on appeal. (California Rules of Court, rule 8.278(a)(2).)
We concur: SIMS, Acting P. J., HULL, J.