Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
San Francisco City & County Super. Ct. No. CGC-04-429428
SIMONS, J.
Plaintiff Graham Wiseman, individually and on behalf of the plaintiff subclass he represents (collectively, plaintiffs), appeals a judgment on special jury verdict in favor of defendant IKON Office Solutions, Inc. (IKON) in plaintiffs’ action seeking damages for unreimbursed business expenses under Labor Code section 2802, and the trial court’s denial of injunctive relief under the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.). Plaintiffs contend the court erred in precluding them from presenting evidence of the tax withholdings attributable to the business expenses paid by IKON to plaintiffs. They also contend the court erred in concluding that IKON’s “general approach to necessary business expense reimbursement” comported with Labor Code section 2802. Finally, plaintiffs contend the court erred in denying their request for injunctive relief. We reject plaintiffs’ contentions and affirm.
Labor Code section 2802 provides, in relevant part: “(a) An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. [¶] . . . [¶] (c) For purposes of this section, the term ‘necessary expenditures or losses’ shall include all reasonable costs, including, but not limited to, attorney’s fees incurred by the employee enforcing the rights granted by this section.”
Business and Professions Code section 17203 provides, in part: “Any person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any court of competent jurisdiction.”
We decline, as unnecessary, plaintiffs’ September 7, 2007 request that we take judicial notice of the Department of Industrial Relations, Division of Labor Standards Enforcement’s proposed regulations regarding travel expense reimbursement policies and related interpretive material.
BACKGROUND
IKON sells and services various types of office equipment. Prior to trial, the trial court certified a plaintiff class of IKON employees employed on or after March 8, 2000. The class was divided into five subclasses. The subclass at issue was identified as, “[IKON] sales representatives who procured service agreements that were subject to [IKON’s] Copy Management Program and that were in effect on or after March 8, 2000.”
As to the other subclasses, prior to trial one was dismissed, two were settled, and one was decertified.
Complaint
Plaintiffs’ March 2005 second amended and operative complaint alleged in relevant part that IKON “made improper, unauthorized and illegal business expense deductions from the wages earned” by plaintiffs and failed to reimburse plaintiffs for work-related business expenses incurred. The third cause of action alleged that IKON violated Labor Code section 2802 by “mak[ing] improper deductions from wages earned by [plaintiffs] as a consequence of [IKON’s] policy and practice of limiting employee expense reimbursement and directly deducting work[-]related cost[s] and expenses from payroll checks. As a result, IKON underpaid [plaintiffs] wages owed.” As damages, plaintiffs sought recovery of the allegedly unpaid wages plus penalties. The fifth cause of action alleged IKON’s policy and practice regarding employee expense reimbursement was unlawful under the UCL and sought an order enjoining IKON from pursuing its unlawful business expense reimbursement policy and practice.
All undesignated section references are to the Labor Code.
Pretrial Bifurcation Motion
Prior to trial, IKON moved to bifurcate the liability and damage phases of trial, arguing in part that proving damages would be factually complex and time consuming because each class member would have to offer testimony regarding the size of their sales territory, volume of sales, size of their monthly expense allowance, how often they exceeded their monthly expense allowance and their justification for doing so. In successfully opposing the motion, plaintiffs argued that one trial on liability and damages would be most efficient and proof of damages would not be time consuming. They argued that through statistical sampling and pattern and practice evidence, their expert would prove plaintiffs uniformly exceeded IKON’s business expense allowance and the resulting damages incurred.
Pretrial Motions Regarding Tax Consequences
During pretrial discovery, plaintiffs successfully moved to compel discovery of plaintiffs’ payroll records for the purpose of arguing to the jury that IKON withheld taxes from the expense allowances paid to plaintiffs; and, as a consequence, these payments did not reimburse them for the actual expenses incurred. The discovery referee, and later the court, ruled that the burden of production of such relevant records was outweighed by plaintiffs’ need for discovery and the records’ probative value. Plaintiffs obtained the payroll records pursuant to the discovery order.
A separate but related issue concerned whether plaintiffs had taken tax deductions for their unreimbursed business expenses. Prior to trial, IKON moved in limine to preclude plaintiffs from presenting evidence of any taxes IKON withheld from the business expense allowances paid to plaintiffs, arguing that during discovery plaintiffs did not permit IKON to investigate whether plaintiffs recouped by way of tax deductions the amounts IKON withheld from plaintiffs’ business expense allowance. Alternatively, IKON argued that if plaintiffs were permitted to present evidence regarding IKON’s tax withholdings from plaintiffs’ business expense allowances, IKON should be permitted to introduce evidence of the tax deductions taken by plaintiffs for unreimbursed business expenses.
Thereafter, plaintiffs moved in limine to preclude IKON from referring to plaintiffs’ tax deductions for unreimbursed business expenses, and opposed IKON’s motion to bar evidence of tax withholdings from plaintiffs’ business expense allowances. Plaintiffs argued that their tax deductions should not be considered as an offset to damages for unreimbursed business expenses. IKON opposed plaintiffs’ motion, arguing that if plaintiffs were allowed to argue they were impacted negatively as a result of IKON’s withholding taxes from the expense allowances, IKON should be permitted to argue to the jury that any tax withholdings taken from the expense allowances paid were required by the IRS and later recouped by plaintiffs via deductions claimed by plaintiffs.
The trial court granted both parties’ motions, precluding plaintiffs from putting on evidence of IKON’s tax withholdings from business expense allowances paid to plaintiffs, and precluding defendants from putting on evidence of tax deductions taken by plaintiff for unreimbursed business expenses. The court reasoned that trying to establish the amounts withheld and deducted by each person would be complicated, would be likely to lead to confusion, and might be speculative.
Jury Trial on Liability and Damages
Since at least January 2000, IKON has had a business expense reimbursement plan for its California sales representatives contained within its written compensation agreements. Pursuant to IKON’s “non-accountable” plan, the sales representatives were paid a fixed expense allowance amount each month to be used for reimbursement of necessary business expenses. Generally, mobile telephone bills, gas, car insurance, and lunch and/or dinner with customers were considered necessary business expenses.
For example, IKON’s compensation plan for fiscal year 2002 for some plaintiffs included the following “Expense Allowances” provision: “Sales Representatives are eligible to receive an Expense Allowance, which is designed to offset costs incurred in the course of doing business. Sales Representatives will not be required to submit expense reports in order to receive their Expense Allowance, and the Expense Allowance is expected to cover all sales-related expenses (e.g., mobile telephone bills, gas, car insurance, lunch/dinner with a customer or sales team, etc.). Expenses incurred during the course of business that exceed the Expense Allowance may not be submitted for reimbursement. The Expense Allowance will be paid out at $108.33 per bi-weekly pay period for the first two paychecks in any month.”
When IKON sales representatives were hired, they were informed as to the amount of the monthly sales expense allowance to which they were entitled. The amount of an employee’s monthly sales allowance was set based on their job title, customer account assignment, and sales quota. Generally, employees responsible for larger customer accounts received higher expense allowances. All IKON employees were paid on a bi-weekly basis, and bi-weekly expense allowances ranged from $108.33 to $350.
The expense allowance was identified on IKON employees’ bi-weekly earning statements and paycheck stubs as an item of gross earnings separate from regular earnings and commissions. The expense allowance was variously identified as “Car Allowance,” “Tax Car Allow,” and “EXP.” Taxes were withheld from the gross amount of the expense allowance, but the specific amount withheld from the expense allowance was not identified on the earning statements or paycheck stubs.
Pursuant to this non-accountable expense reimbursement plan, sales representatives did not have to submit accountings of their work-related expenses and were free to budget the amount they spent on work-related expenses. IKON did not track how its sales representatives spent their expense allowances. If a sales representative did not spend his or her entire expense allowance in a given month, he or she did not have to refund IKON the unspent portion. If an IKON sales representative exceeded the reimbursement limit set by IKON, the excess amount would be nonreimbursable, with one exception—mandatory meetings or activities required by IKON outside of the employee’s normal course of business. An employee could seek preapproval and reimbursement for such extenuating expenses. When IKON sales representatives were hired, they were told they must manage expenses themselves so as to stay within the expense allowance provided.
An October 2005 memo to all California sales representatives from Jim Nelson, IKON’s Director of Corporate Sales Operations and Planning, regarding the 2006 fiscal year compensation plan supplement stated, “Each Sale[s] Representative has a monthly allocation for certain sales related expenses: mobile telephone bills, gas, car insurance, lunch/dinner with a customer or sales team. . . . [¶] The monthly expense allocations also act as a cap on all of the sales related expenses listed above. You are expected to keep your actual monthly expenses at or below your monthly expense allocation, and there is no reason why all Sales Representatives should have any trouble doing this on a regular basis. IKON does recognize that there may be occasional, unusual circumstances that require a Sales Representative to incur expenses in excess of the monthly expense allocation. If a Sales Representative is aware of such an unusual circumstance, the Sales Representative should seek advance approval to incur these additional expenses. Exceeding the monthly allocation without good cause or prior approval is grounds for discipline up to and including termination of employment, particularly if this is an ongoing issue. [¶] In the event an unusual circumstance requires a Sales Representative to exceed the expense allocation in a given month, with or without advance approval, the Sales Representative is required to submit a summary of his/her total monthly expenses to the Sales Representative’s manager for review, along with a written explanation as to what caused the Sales Representative to exceed the monthly allocation. For this purpose, all expense backup for the month should be retained at least until the month is over. IKON will evaluate the submittal to determine whether total expenses for the month were necessarily incurred as a direct result of the Sales Representative’s duties and will determine whether payment will be made accordingly. . . .”
There was great variation as to business expense reimbursement paid to plaintiffs based on individual factors, including: the type of compensation agreement a sales representative had, whether and how often the sales representative exceeded his/her expense allowance, the reasons for exceeding the expense allowance, the sales representative’s voluntary assumption of unnecessary expenses, the size and nature of the sales representative’s sales territory, the number of clients the sales representative served, what the sales representative considered to be a reasonable business expense, the type of automobile driven by the sales representative, and whether excess expenditures in one month were offset by positive balances in other months.
There was also great variation in the plaintiffs’ testimony regarding the relationship between their actual expenses and their reimbursement for the expenses. Some testified they never exceeded their monthly allowance, while others said they did so regularly. Some who exceeded their allowances said they voluntarily incurred expenses that were not necessarily incurred. Some requested reimbursement for expenses incurred over the allowance, and some did not. There was also testimony as to what expenses were considered necessary business expenses.
Plaintiffs’ expert, economist Dr. Phillip Allman testified he was retained to conduct a representative sampling of IKON sales people who were subject to the challenged expense cap, and who were required to travel frequently within their sales territories in California, and to communicate with their customers and sales managers. Allman’s objective was to estimate on average, the extent to which this population of sales representatives had business expenditures that exceeded the cap. Allman determined that the sales representative population was homogenous, i.e., there were no subgroups in the population that might cause a systematic bias. Based on his statistical sampling methodology, Allman concluded that there was a 95 percent probability that the average monthly amount by which expenses incurred by a member of the population exceeded IKON’s business expenses cap was not less than $321, and the amount of expenses that exceeded the cap totaled $400,000. On cross-examination, Allman conceded he had no training in survey methodology or construct and had never before prepared a survey instrument. He also stated that it was not possible to reach any scientifically valid conclusions about a population such as this one based upon a nonrandom small sample of the population. He conceded that he did not determine whether the expenses he considered were necessary business expenses as opposed to optional or voluntary expenses. He also conceded he considered only the direct examination deposition testimony of the employees surveyed and not their cross-examination deposition testimony.
Dr. Richard Parker testified as IKON’s expert regarding survey construct, methodology and research, and interpretation and analysis of survey information and results. After reviewing Allman’s survey, survey instrument and analyses, Parker opined that Allman’s survey “violate[d] just about every key principle of scientific survey research and statistical methodology.” Parker also opined that Allman’s survey results had no scientifically validity and were unreliable. In particular, Parker said that Allman’s statistical sample was not the result of a random selection process, there was an inadequate sample size, the survey procedures were biased and Allman performed an incorrect statistical analysis. As a result, Parker opined that Allman’s survey “establishe[d] absolutely nothing. It’s meaningless. It’s empty. It is a non-study,” and could not be used to say anything about the employees whom the survey sample purported to represent.
The thrust of plaintiffs’ closing argument was that IKON’s business expense reimbursement policy was an “arbitrary cap,” not designed to reimburse employees for their actual, necessarily incurred business expenses and therefore violated section 2802. Plaintiffs also argued they incurred class-wide damages of no less than $321 per month and individual damages to Wiseman of $29,295. IKON argued that the evidence was insufficient to establish class-wide liability, i.e., the evidence did not demonstrate that each class member’s expense allowance failed to reimburse him or her for his or her actual, necessarily incurred business expenses. IKON also argued that Wiseman’s testimony regarding his business mileage was inherently incredible.
In its first special verdict the jury concluded that as to the plaintiffs’ class claims, plaintiffs had “proved that IKON acted in a manner that violated the legal rights of every member of the class under . . . [s]ection 2802.” In its second special verdict the jury concluded that plaintiffs had not “proved class-wide loss through generally accepted standards of survey science and statistical inference.” As a result of its second special verdict the jury did not reach the question of “the amount of business expenses, if any, . . . IKON failed to reimburse the class as a whole.” In its special verdict on plaintiff Wiseman’s individual claim, the jury concluded that Wiseman had not “proved that he incurred expenses above his expense allowance that were necessary for him to incur to perform his job.”
Plaintiffs neither raise a substantial evidence claim as to the jury’s finding regarding Wiseman’s individual claim nor include facts regarding that claim in their appellate briefs, and we will not comb the voluminous record before us for facts related to Wiseman’s claim. (See Cal. Rules of Court, rule 8.204(a)(1)(C); Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2007) [¶] 9:36, pp. 9-11 to 9-12.)
Posttrial Motions
Following the jury’s verdict, plaintiffs asserted that the verdict did not dispose of the class members’ individual damage claims, and requested appointment of a special master to do so, and argued they were entitled to a permanent injunction restraining IKON’s continued violation of section 2802 as an unfair business practice under the UCL. In response, IKON moved for entry of judgment, and argued there was no legal basis for posttrial damage proceedings or injunctive relief.
In July 2006, the court issued a judgment in favor of IKON on plaintiffs’ claims under section 2802 and the UCL. Plaintiffs moved to vacate the judgment and requested a statement of decision on their equitable UCL claim. Plaintiffs also moved for new trial on the grounds that the court erroneously granted IKON’s request to submit their special verdict on class-wide damages based solely on statistical sampling, and the jury’s finding that Wiseman’s expenses did not exceed his expense allowance was not supported by the evidence. Plaintiffs also moved to file an amended complaint to identify class member Bette Bahni as an additional class representative in the event that Wiseman lacked standing to assert a representative UCL claim on behalf of the plaintiff class. IKON objected on the ground that plaintiffs were bound by the jury’s verdict and the postverdict motion to amend was untimely and prejudicial given that the jury had been dismissed. IKON also argued that the jury had already rejected the plaintiffs’ class claims, which included Bahni as a class member. Plaintiffs replied that the jury did not decide whether Bahni had suffered an individual loss under section 2802, and the court had before it sufficient evidence to make that determination.
The trial court denied the motion to amend as untimely and prejudicial to IKON. However, it issued a modified judgment based on the jury’s special verdict in favor of IKON on plaintiffs’ section 2802 and UCL claims and the court’s equitable determination denying plaintiffs’ request for injunctive relief.
The modified judgment added the court’s statement of decision.
Court’s Statement of Decision Regarding Claim for Injunctive Relief
In its August 2006 statement of decision regarding plaintiffs’ claim for injunctive relief under the UCL, the court agreed with the jury’s finding that plaintiffs had failed to prove class-wide and individual damages and as a result, IKON was entitled to judgment on plaintiffs’ section 2802 business expense reimbursement claims. The court concluded that section 2802 did not preclude IKON from indemnifying its sales employees for their necessarily incurred work-related automobile use, cell phone use, and business entertainment expenses by utilizing a compensation plan that included extra monthly compensation to cover such expenses. The court stated, “Given the basic legality of IKON’s general approach to necessary business expense reimbursement, what specific element of its policy and/or practices might warrant narrowly tailored class-wide injunctive relief is impossible to discern on the evidence before the court. The jury’s [finding that IKON acted in a manner that violated the legal rights of every member of the class under . . . section 2802] does not identify any specific policy or practice upon which the jury based its answer.” The court concluded that neither of the plaintiffs’ two class representatives had shown that IKON’s expense allowance failed to cover their necessary business expenses, and therefore neither was eligible for injunctive relief. The court further stated that based on the evidence at trial “the propriety and potential scope of any class-wide injunctive relief [were] uncertain or doubtful.” The court found the class was not entitled to injunctive relief under the UCL.
The court noted that during trial, the claim of class representative Kevin Miller was dismissed with prejudice.
The court decided that because the evidence did not establish a valid basis for a damage award, there was no evidentiary basis for a monetary award under the UCL. The court also ruled that because plaintiffs’ UCL claims were derivative of their section 2802 claims, the jury verdict on Wiseman’s individual section 2802 claim precluded his claim under the UCL. The court concluded that the jury’s finding regarding class-wide and individual damages precluded posttrial proceedings before a different trier of fact. It noted that the jury had been dismissed without objection by plaintiffs and was no longer available to decide any damages issues not previously submitted to it. The court rejected plaintiffs’ request to permit individual class members to pursue individual damage claims based on some aspect of IKON’s expense reimbursement policies that the jury may or may not have believed violated the individual class member’s rights.
Subsequently, the court denied plaintiffs’ motion for new trial, finding that the special verdict form submitted to the jury on class-wide damages was neither objected to by plaintiffs nor an error of law, and the jury verdict against Wiseman was supported by the evidence at trial. Thereafter, plaintiffs moved for a new trial based on the modified judgment, and the motion for new trial was denied.
DISCUSSION
I. Gattuso Decision
After plaintiffs’ opening brief was filed, our Supreme Court issued its decision on employer reimbursement of employee business expenses in Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554 (Gattuso). Because Gattuso addresses issues that inform our decision in this appeal, we discuss it in detail.
In Gattuso, plaintiffs were outside sales representatives seeking indemnification under section 2802 for expenses incurred in using their own automobiles to perform their employment duties. (Gattuso, supra, 42 Cal.4th at p. 560.) The parties and the court agreed that pursuant to section 2802, the employer was required to fully reimburse its outside sales representatives for the work-related automobile expenses they “actually and necessarily incurr[ed].” (Gattuso, at p. 567.) The court considered three different automobile expense reimbursement methods and found them permissible under section 2802. (Gattuso, at pp. 568-570.)
While the plaintiffs in Gattuso sought reimbursement solely for business-related automobile expenses, its holding more broadly applies to business-related expenses in general.
First, the court noted that, under the “actual expense method,” the expenses actually and necessarily incurred are calculated and the employee is then paid that amount. (Gattuso, supra, 42 Cal.4th at p. 568.) Under this method, the employee must keep detailed records of the amounts spent in each of the categories reimbursed by the employer as well as records apportioning those expenses between business and personal use. Thereafter, the employer must exercise its judgment to determine whether each of the expenses incurred by the employee was “ ‘necessary,’ ” under section 2802, i.e., reasonable under the circumstances. The reasonableness of an employee’s choices would be considered in an employer’s determination of whether an incurred expense was necessary. (Gattuso, at p. 568.)
Second, the court considered the “mileage reimbursement method,” under which the employee submits to the employer the total number of miles driven to perform job duties for a particular period, and the employer multiplies the work-required miles by a predetermined amount that approximates the per-mile cost of owning and operating an automobile. (Gattuso, supra, 42 Cal.4th at p. 569.) Since this method is an approximation of actual expenses, and section 2802 requires the employer to “fully reimburse” the employee for “all expenses actually and necessarily incurred,” if an employer uses this method, “the employee must be permitted to challenge the resulting reimbursement payment.” (Gattuso, at p. 569.) If the employee establishes that the reimbursement amount paid is less than the actual work-related expenses necessarily incurred “(as calculated using the actual expense method),” the employer must make up the difference. (Ibid.)
Third, the court considered the “lump-sum payment” method, under which the employee need not submit any information about work-required miles driven or expenses incurred. Instead, the employer pays a fixed amount for automobile reimbursement, which is generally based on the employer’s understanding of the employee’s work-related duties, including miles typically or routinely driven. (Gattuso, supra, 42 Cal.4th at p. 570.) The Supreme Court held that section 2802 does not prohibit use of the lump-sum reimbursement method for work-required automobile expenses “provided that the amount paid is sufficient to provide full reimbursement for actual expenses necessarily incurred.” (Gattuso, at p. 570.) As with the mileage reimbursement method, the court stated an employee must be permitted to challenge the amount of a lump-sum payment as being insufficient under section 2802, and may do so by comparing the amount reimbursed with the amount that would be payable under either the actual expense method or the mileage reimbursement method. (Gattuso, at p. 571.) The court also made clear that while an employer and employee may agree on a particular sum to be paid as automobile reimbursement, section 2804 does not permit an agreement which relieves the employer of its statutory obligation to pay full reimbursement, or bar an employee from challenging a lump-sum reimbursement as insufficient under section 2802. (Gattuso, at p. 571.)
Section 2804 provides: “Any contract or agreement, express or implied, made by any employee to waive the benefits of this article or any part thereof, is null and void, and this article shall not deprive any employee or his personal representative of any right or remedy to which he is entitled under the laws of this State.”
Gattuso acknowledged that “an employer’s decision to use a lump-sum method rather than a mileage reimbursement system may have income tax consequences, affecting whether the resulting payments are exempt from withholding requirements [citation] and, ultimately, the extent to which they are taxable as income or instead treated as deductible expenses.” (Gattuso, supra, 42 Cal.4th at p. 571.) Gattuso concluded, “section 2802 does not require an employer to use a reimbursement method that is congruent with any tax law or has any particular tax consequence. Of course, . . . any tax consequences that result from the employer’s choice of reimbursement method should be considered in determining whether a particular payment provides the full measure of reimbursement that section 2802 requires.” (Gattuso, at p. 571.)
Gattuso also concluded that it is permissible for an employer to combine wages and business expense reimbursements in a single enhanced employee compensation payment or increase an employee’s base salary or commission rate to include the statutorily required business expense reimbursement. However, “the employer must provide some method or formula to identify the amount of the combined employee compensation payment that is intended to provide expense reimbursement.” (Gattuso, supra, Cal.4th at pp. 572-573.) The court suggested that employers who provide business expense reimbursement to employees through increases in base salary or commission rates should separately identify the amounts that represent payment for labor performed and the amounts that represent reimbursement for business expenses in order to comply with section 226, subdivision (a), which requires an employer to document the basis of employee compensation payments. (Gattuso, at pp. 574, 575.)
Gattuso concluded: “an employer may satisfy its statutory business expense reimbursement obligation under section 2802 by paying employees enhanced compensation in the form of increases in base salary or commission rates, provided the employer establishes some means to identify the portion of overall compensation that is intended as expense reimbursement, and provided also that the amounts so identified are sufficient to fully reimburse the employees for all expenses actually and necessarily incurred.” (Gattuso, supra, 42 Cal.4th at p. 575.)
II. The Court’s in Limine Rulings Were Not Erroneous
Plaintiffs contend the court’s erroneous in limine rulings prejudicially prevented them from presenting evidence of IKON’s tax withholdings taken from employees’ expense allowances. Plaintiffs argue that by not being able to present evidence of the amount of taxes withheld from the expense allowances paid, they were unable to establish the actual amount paid them as reimbursement for business expenses. Similarly, plaintiffs argue the court erred in refusing to instruct the jury: “If an employer reimburses employees for some expenses, a violation of . . . section 2802 occurs if the increased compensation is insufficient to indemnify the employees for the automobile expenses, or other expenses, incurred by the employees in the discharge of work-related duties. Any taxes the employees are obligated to pay on the increased compensation should be taken into account in determining whether the employer is indemnifying the employees for all of their automobile or other work-related expenses.” IKON responds that the court properly excluded the evidence of the withholding amounts on the ground that establishing the amounts withheld for each class member would be confusing and speculative. Alternatively, it argues that any error was invited by plaintiffs or harmless.
The identical argument is made as to plaintiffs’ class-wide claims and Wiseman’s individual claim.
With no citation to the record, plaintiffs also argue that IKON did not consider the effect of the tax withholdings taken from the expense allowances paid when determining if the expense allowances actually compensated plaintiffs for the necessary business expenses incurred. They then argue that as a result, IKON’s business expense reimbursement policy violated section 2802. Because plaintiffs’ argument is based on a factual assertion with no citation to the record, we reject it. (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246; Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs, supra, [¶] 9:36, pp. 9-11 to 9-12.)
As we noted, ante, Gattuso stated: “an employer’s decision to use a lump-sum method rather than a mileage reimbursement system may have income tax consequences, affecting whether the resulting payments are exempt from withholding requirements [citation] and, ultimately, the extent to which they are taxable as income or instead treated as deductible business expenses. . . . [S]ection 2802 does not require an employer to use a reimbursement method that is congruent with any tax law or has any particular tax consequence. Of course, . . . any tax consequences that result from the employer’s choice of reimbursement method should be considered in determining whether a particular payment provides the full measure of reimbursement that section 2802 requires.” (Gattuso, supra, 42 Cal.4th at p. 571.)
Plaintiffs argue the court’s exclusion of evidence of IKON’s tax withholdings from plaintiffs’ lump sum expense allowances was error because without this evidence they were unable to establish the actual amount they received as reimbursement for their business expenses, and therefore unable to prove that this amount violated section 2802. Plaintiffs argue that they intended to utilize the tax withholding evidence to present an alternate calculation of damages, and that alternate calculation would not have relied upon the survey testimony of its expert witness. We reject plaintiffs’ arguments for two reasons.
First, based on the record before us, the trial court did not abuse its discretion by finding speculative the “calculation” of taxes withheld from the expense reimbursement portion of the employees’ monthly earnings. The plaintiffs’ individual payroll records do not expressly specify this amount. And, as the trial court noted, employees have significant, if not complete control over their tax withholdings. Plaintiffs never disclosed how their calculation would account for this. Speculative evidence is simply not relevant. (George Arakelian Farms, Inc. v. Agricultural Labor Relations Bd. (1989) 49 Cal.3d 1279, 1293.)
Moreover, plaintiffs’ argument that the supposed error was prejudicial because it precluded their reliance on an alternate method of calculating damages was not raised in their opening brief and is, therefore, waived. (Campos v. Anderson (1997) 57 Cal.App.4th 784, 794, fn. 3.)
III. Issues of Substantive Liability Are Moot in Light of Jury’s Finding that Plaintiffs Failed to Prove Damages
Plaintiffs argue that pursuant to Gattuso, IKON’s arbitrary “cap” approach to employee business expense reimbursement violates sections 2802 and 2804 in several ways. They quote Gattuso, supra, for the proposition that “the [lump sum] amount is generally based on the employer’s understanding of the employee’s job duties, including the number of miles that the employee typically or routinely must drive to perform those duties” (42 Cal.4th at p. 571), and argue that because it is undisputed that IKON did not base its lump-sum “cap policy” on any understanding of its sales representatives duties or miles driven, its approach to business expense reimbursement violates section 2802. Plaintiffs also argue that in contravention of Gattuso, IKON did not allow its sales representatives to challenge the amount of their business expenses reimbursement payment. Finally, plaintiffs argue that the court precluded plaintiffs from asserting that IKON and its employees could not agree to a “cap” on business expense reimbursement.
In particular, plaintiffs contend the court erroneously denied their motion in limine asking the court to admonish IKON to “refrain from making any comment or presenting any argument that its expense caps [were] legal because the employees ‘agreed’ to the caps,” and refused plaintiffs’ request that the jury be instructed that “any contract or agreement, express or implied, made by an employee to waive the benefits of the . . . Labor Code, or any part thereof, is null and void.”
Plaintiffs’ arguments all address the merits of the liability element of their statutory indemnity claims under section 2802. However, these arguments all ignore the fact that the jury found that plaintiffs failed to prove damages. Since damages is a necessary element of a claim for statutory indemnity under section 2802, the jury’s finding that plaintiffs failed to prove damages requires judgment for IKON and renders moot any issues related to IKON’s substantive liability under section 2802 or the derivative UCL claim for a monetary award.
In its statement of decision, the court found that plaintiffs failed to establish a valid evidentiary basis for a damage award as to the class or any of its members, and, therefore, there was no basis for a monetary award under the UCL. Plaintiffs do not challenge that conclusion on appeal.
IV. Injunctive Relief
A. Standard of Review
“ ‘[T]he granting, denial, dissolving or refusing to dissolve a permanent or preliminary injunction rests in the sound discretion of the trial court upon a consideration of all the particular circumstances of each individual case.’ [Citation.] Such an order will not be modified or dissolved on appeal except for an abuse of discretion. [Citations.]” (Union Interchange, Inc. v. Savage (1959) 52 Cal.2d 601, 606.)
B. Wiseman Lacked Standing
In its statement of decision, the court concluded that injunctive relief would be appropriate only as to those persons who could arguably establish a continuing violation of their rights under section 2802. It found that in light of the jury’s special verdict that Wiseman failed to prove that he incurred necessary expenses above his expense allowance reimbursement pursuant to section 2802, he was not eligible for injunctive relief because his individual UCL claim was derivative of his individual section 2802 claim. The court concluded that following the jury’s special verdicts there was no plaintiff before the court with standing to pursue a claim for injunctive relief under the UCL.
Prior to November 2004, when Proposition 64 took effect, standing to bring a UCL action did not depend on a showing of injury or damage. (Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 227, 228 (CDR).) As amended by Proposition 64, Business and Professions Code section 17204 now provides that UCL standing is conferred only on a person “who has suffered injury in fact and has lost money or property as a result of the unfair competition.” Moreover, Business and Professions Code section 17203 now provides, in part: “Any person may pursue representative claims or relief on behalf of others only if the claimant meets the standing requirements of [Business and Professions Code] Section 17204 and complies with Section 382 of the Code of Civil Procedure.” The amended standing provisions apply retroactively to cases already pending when Proposition 64 took effect. (CDR, at p. 227.)
Code of Civil Procedure section 382 authorizes class action lawsuits in California. (CDR, supra, 39 Cal.4th at p. 233, fn. 4.)
Plaintiffs contend that Wiseman had standing to bring the UCL claim for injunctive relief because his class representative’s standing to bring a UCL claim is determined at the pleading or class certification stage, and the subsequent mooting of his individual claim does not moot the class action itself. However, plaintiffs’ argument ignores the clear directive in CDR, supra: “For a lawsuit properly to be allowed to continue, standing must exist at all times until judgment is entered and not just on the date the complaint is filed.” (39 Cal.4th at pp. 232-233.) Thus, the trial court correctly determined that the jury’s verdict finding against Wiseman on his individual section 2802 claim, was determinative of his derivative UCL claim, rendering him ineligible to seek injunctive relief under the UCL in either an individual or representative capacity.
C. Leave to Amend Was Properly Denied
Plaintiffs next contend the trial court abused its discretion in denying plaintiffs’ motion to amend their complaint to add Bette Bahni as a named class representative.
In Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235 (Branick), our Supreme Court held that Proposition 64 does not forbid the amendment of complaints to substitute new plaintiffs for plaintiffs who have lost standing after the complaint was filed. In such cases, plaintiffs may seek leave to amend and trial courts grant or deny those requests in accordance with general standards for amendment of pleadings. (Branick, at pp. 242-243.) Code of Civil Procedure section 473, subdivision (a)(1), provides: “The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party . . . .” “[C]ourts liberally allow amendments for the purpose of permitting plaintiffs who lack or have lost standing to substitute as plaintiffs the true real parties in interest. [Citations.]” (Foundation for Taxpayer & Consumer Rights v. Nextel Communications, Inc. (2006) 143 Cal.App.4th 131, 136.) The important limitation on that principle is that the proposed substituted plaintiff may not “ ‘ “state facts which give rise to a wholly distinct and different legal obligation against the defendant.” [Citation.]’ [Citation.]” (Ibid.)
No such problem exists here. The proposed third amended complaint merely alleges that Bahni is, and during the class period was, employed by IKON as a sales representative, and IKON failed to reimburse her for work-related business expenses she incurred performing work required of her by IKON.
“ ‘ “[T]he trial court has wide discretion in allowing the amendment of any pleading [citations], [and] as a matter of policy the ruling of the trial court in such matters will be upheld unless a manifest or gross abuse of discretion is shown. [Citations.]” ’ [Citation.] Nevertheless, it is also true that courts generally should permit amendment to the complaint at any stage of the proceedings, up to and including trial. [Citations.] But this policy applies ‘ “only ‘[w]here no prejudice is shown to the adverse party.’ ” ’ [Citation.]” (Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 175.) The parties focus their discussion on the issue of prejudice.
In asserting prejudice, IKON argues that at the time plaintiffs sought to substitute Bahni as a named plaintiff, the jury had already ruled against plaintiffs on the class claims, which included Bahni; and the jury had been discharged without objection by plaintiffs. As to plaintiffs’ assertion that the jury did not decide the question of Bahni’s individual claim, IKON argues that Bahni’s individual claim was not presented to the jury and adding her as a class representative after the jury verdict would deprive IKON of a jury trial on her claim. Plaintiffs appear to respond that because Bahni was both deposed and subject to cross-examination at trial, the trial court had before it all the evidence it needed to address her individual claim, and, therefore, IKON would not be prejudiced by her substitution as a class representative for purposes of the UCL claim for injunctive relief.
We conclude the court did not abuse its discretion in denying plaintiffs leave to amend to substitute Bahni as a class representative. Although plaintiffs assert that until Branick was decided, neither Wiseman nor Bahni could have foreseen that substitution was an issue, Branick was pending before the Supreme Court when the jury’s verdict was entered in early April 2006. In an abundance of caution, plaintiffs could have sought leave to amend to add Bahni prior to the jury’s verdict and discharge. In addition, as asserted by IKON, permitting Bahni’s individual claim to be determined by the trial court would deprive IKON of its right to present such individual claims to a jury. While Bahni was deposed and cross-examined at trial, the evidence was not directed to her individual claim, and it is reasonably possible that had her individual claim been a focus of trial, the evidence adduced may have been different.
Branick was decided on July 24, 2006.
We conclude the trial court properly determined that following the jury’s verdict there was no plaintiff with standing to pursue a claim for injunctive relief under the UCL.
V. Ruling Regarding Posttrial Individual Damage Claims
Finally, plaintiffs contend the court erred in ruling in its statement of decision that the jury’s ruling against plaintiffs on damages precluded individual class members from “pursu[ing] posttrial individual damage claims based on issues litigated in the class action.”
Plaintiffs rely on Cooper v. Federal Reserve Bank of Richmond (1984) 467 U.S. 867. In that case, after the plaintiff class lost its race discrimination case against the Federal Reserve Bank (FRB), six individual class members filed a separate individual race discrimination action. (Id. at pp. 869-873.) The court of appeals held that under the doctrine of res judicata, the judgment in the class action precluded the individual plaintiffs from maintaining their individual claims against the FRB. (Id. at p. 873.) The Supreme Court reversed, holding that the class action judgment barred class members from bringing another discrimination class action against the FRB for the relevant time period and precluded the class members in any other litigation with the FRB from relitigating whether the FRB engaged in racial discrimination during that same time period. But the judgment was not dispositive of the individual claims of the six individual class members. (Id. at p. 880.)
Plaintiffs’ ignore the following additional statement by the trial court in its statement of decision: “The [c]ourt rejects [p]laintiffs’ request for a statement in the judgment purporting to allow individual class members to pursue individual damage claims based on some aspect of IKON’s expense reimbursement policies that the jury may or may not have believed violated the class member[s’] rights. Whether and to what extent . . . individual class member[s] may have claims against IKON that were not adjudicated in this case is not something that can or should be addressed or decided in the present judgment.”
Understood in its proper context, the court’s decision reflected a refusal to speculate or issue an advisory ruling on any possible claims the individual class members might bring in the future, or the extent to which such claims might be precluded by the jury’s verdict in the class action. This decision is consistent with Cooper.
DISPOSITION
The judgment is affirmed.
We concur. JONES, P.J., STEVENS, J.
Retired Associate Justice of the Court of Appeal, First District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.