A California appellate court gave the green light for a lawsuit against UBS Financial Securities to go forward when earlier this week it reversed a lower court’s decision to prohibit one plaintiff who was taking over another plaintiff’s complaint to also take over that plaintiff’s statute of limitations in a fight over unreimbursed business expenses and untimely commission payments.
Monday’s decision, filed in Alameda County in the First Appellate District, maintained that both employees worked for UBS around the same time and their suits were virtually identical, and to not reverse the prior court’s decision would weaken the punitive and deterrent force of the state’s Private Attorneys General Act of 2004 (PAGA).
In an emailed statement, a spokesperson for UBS said the firm is reviewing the decision but remains confident it has a strong defense in the lawsuit.
PAGA was designed to increase the state’s limited capacity to enforce violations of the Labor Code, and it allows “aggrieved employees” to file lawsuits on behalf of the state when those suits seek civil penalties for labor violations. In exchange for that support, the statute also allocates 75% of any civil penalties recovered to the California Labor and Workforce Development Agency (LWDA) and the other 25% to all employees affected by the violation.
“The issue before us is whether the amended PAGA complaint (with the second employee as the named plaintiff) can relate back to the original PAGA complaint where the second employee submitted his PAGA notice after the original complaint was filed,” the decision said.
The legal guideline being disputed is whether the “doctrine of relation back” can apply in this case, the filing said. Under the doctrine, a court can consider an amended complaint to have the same filing date as an earlier complaint, as long as the amended complaint details “rest on the same general set of facts, involve the same injury and involve the same ‘instrumentality’ or cause of injury,” the filing stated. This includes amendments that substitute a plaintiff because, ultimately, the plaintiff is merely a stand-in for the state in these PAGA cases, the filing said.
According to the filing, the original complaint was launched by Larry Van Steenhuyse on Dec. 22, 2017, when he gave notice to the LWDA and UBS that he was going to seek penalties under PAGA on behalf of himself and all other UBS financial advisors for alleged violations of California’s Labor Code. Specifically, he alleged that the financial advisors “routinely incurred reasonable and necessary business expenses for travel, mileage, education, entertainment, and marketing, but were not reimbursed by UBS, in violation of section 2802. He also alleged that UBS failed to timely pay commissions to him and other financial advisors, in violation of section 204,” this week’s decision said. The statute of limitations would have allowed him to collect civil penalties for the prior year.
When Van Steenhuyse did not receive a response from the LWDA within 65 days, the statute permitted him to file a lawsuit in Alameda County Superior Court under PAGA.
A second UBS advisor, Andrew Hutcheson, filed his intention with the LWDA and UBS that he was going to do the same on April 18, 2018. But when he did not receive a response in 65 days, he waited until Feb. 2019 to file his lawsuit.