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Daily Journal - Feb 10, 2006
Courts Must Nix, Not Interpret, Incomplete Laws

Forum Column

By Dana Cephas

If the California Legislature drafted a statute authorizing Superior Court judges to rewrite the statute of limitations for any law that the judges personally did not like, everyone would agree that such a law violated the separation of powers doctrine. But what if the Legislature was not so blatant in its actions?

For example, what if the Legislature wanted to enact a statute but could not agree on whether the law should be retroactive or have a one-year or three-year limitations period? Could the Legislature enact the undisputed provisions and let the courts decide which of the disputed provisions to enact?

The Civil Rights Act of 1991 offers an example of how proponents and opponents of legislation can agree to such a scenario, intentionally omitting seemingly necessary but disputed provisions of a statute with the understanding that courts will resolve them. Put another way, it's an example of how the Legislature can agree to let judges draft legislation.

Before passage of the 1991 Civil Rights Act, plaintiffs in Title VII cases were generally limited to back-pay awards. The 1991 act amended Title VII to give plaintiffs the right to seek compensatory and punitive damages and jury trials and expanded Title VII to cover overseas employers.

During the enactment process of the 1991 Civil Rights Act, there was much debate about whether the law should be retroactive. Many Republican opponents of the bill refused to permit passage if the law contained language making it retroactive; Democrats refused to insert language providing that the bill would apply only prospectively.

Eventually, the two sides agreed to disagree; that is, they agreed to omit language concerning retroactivity. As explained by Sen. Edward M. Kennedy, D-Mass., in the Congressional record dated Oct. 30, 1991: "It will be up to the courts to determine the extent to which the bill will apply to cases and claims that are pending on the date of enactment."

Thus, the U.S. Congress shirked its duty to decide an issue of obvious import, delegating that duty to the courts.

While generally declining to address retroactivity, the bill did provide that the amendments expanding the scope of Title VII to overseas employers "shall not apply with respect to conduct occurring before the date of the enactment of this Act." Because that specific retroactivity limitation applied only to overseas employers, plaintiffs litigating suits filed before passage of the 1991 Civil Rights Act argued that the act applied retroactively to "domestic" employers.

In Landgraf v. USI Film Products, 511 U.S. 244 (1994), the Supreme Court concluded that Congress did not intend the 1991 Civil Rights Act to be retroactive. The court admitted that the legislative history came down on both sides of the argument as reflected by "partisan statements about the meaning of the final effective-date language, but those statements cannot plausibly be read as reflecting any general agreement" among Congress regarding the retroactivity of the new law. Despite the court's finding that Congress was unable to reach a "general agreement" on the parameters of the law, the court did not hesitate to engage in the fiction of having "interpreted" the putative intent of the legislators.

Allowing courts to put the finishing touches on legislation seems to be a somewhat common practice in California. AB 2509, passed by the state Legislature six years ago, provides an example of what could be considered an intentionally incomplete statute that was delegated to the courts to iron out.

Enacted as Labor Code Section 226.7, the law generally requires employers to pay non-exempt employees an additional 60 minutes of pay for meal or rest period violations - for example, when an employee works a shift over five hours without a 30-minute meal period.

Plaintiffs' lawyers routinely characterize that one-hour payment as "premium" wages, while defense lawyers characterize it as a "penalty." The distinction is very significant because penalties are generally subject to one-year limitations periods under Code of Civil Procedure Section 340, while other statutes are subject to a three-year limitations period under Code of Civil Procedure Section 338(a). Given the presence of lobbyists on both sides of labor-related bills, it seems ridiculous to argue that no one in the Legislature was aware of that distinction when AB 2509 was under consideration.

Plaintiffs' attorneys have argued that Section 226.7 is not a penalty because, among other things, early versions of the bill contained language providing a "civil penalty" for violations of meal break laws, but all references to "penalties" were stricken from the final version of the statute.

Conversely, attorneys representing employers have noted that summaries provided by several legislative committees explained that the concurrence in the Senate amendments addressing the final version of the bill explained that it would "codify the lower penalty amounts" adopted by the Industrial Welfare Commission.

Appellate court decisions have now come down on both sides of the "penalty" issue. In Murphy v. Kenneth Cole Productions, 134 Cal.App.4th 728 (2005), the 1st District Court of Appeal concluded Section 226.7 imposed penalties and was subject to the one-year limitations period. But in National Steel and Shipbuilding Co. v. Superior Court, 2006 DJDAR 795 (Jan. 20), the 4th District held that the meal and rest period provisions were subject to a three-year limitations period.

But there is at least one other significant threshold issue for the appellate courts. Namely, did the Legislature intend Section 226.7 to be enforced only by the Division of Labor Standards Enforcement or were employees also given a private right of action under that statute?

In the "private right of action" dispute, the litigants have reversed roles and now the employers are relying on language stricken from early versions of a legislative bill to support their preferred interpretation. Specifically, AB 2509, as originally introduced, provided that "in a civil action," the "court shall award a prevailing plaintiff ... reasonable attorney's fees." Employers have also noted that the Senate floor analysis describing a subsequent version of the bill explained that the "option of filing a private right of action is deleted." Does it make sense to ask what the Legislature really intended?

Cases arising under Section 226.7 will ultimately have to be decided by the California Supreme Court so the court can claim to have determined the Legislature's "intent" when Section 226.7 was enacted. In the meantime, litigants on both sides will incur millions of dollars in costs because the Legislature purportedly "forgot" to include language addressing key issues in that statute.

The cynics among us are unlikely to believe that drafters of new legislation carelessly omit language that has been repeatedly emphasized during the legislative process. Rather, it is likely that legislators silenced Section 226.7 on the issues of penalties and private right of action.

Following the lead of the U.S. Supreme Court in Landgraf, the California Supreme Court will almost certainly have to review decisions concerning Section 226.7 and the court will likely claim that it has divined the intent of the California Legislature. If the court rules in favor of employees there may be cries of judicial activism, but that misses the point. A ruling in either direction is inexorably activist when a court is asked to decide an issue that was delegated by a gridlocked legislature. That is not interpreting the law; that is making it.

A more principled, albeit controversial approach for the court in that situation would be to declare the entire law unconstitutional. Just as the separation of powers doctrine precludes Congress from delegating lawmaking to the executive branch under the guise of administering the law, a deadlocked Legislature should not be permitted to delegate lawmaking to the courts in the guise of judicial interpretation.

That is not to suggest that courts should be banned from interpreting laws. For example, interpreting provisions of state and federal constitutions will always be an important part of what our courts do. And as new technologies enter the marketplace, courts will be required to decide how tomorrow's technologies are governed by ambiguous terms in yesterday's laws.

As for intentionally uncertain statutes, some may argue that our courts should put the finishing touches on new laws because our legislatures are gridlocked. Assuming that is true, the solution to an increasingly partisan legislature should be to elect new legislators - not empower the courts to fill in the blanks on new laws.

Sometime this year, the California Supreme Court will decide whether the 2004 amendments (Proposition 64) to Business and Professions Code Section 17200 apply retroactively. Like the 1991 Civil Rights Act, there was no language in the proposition discussing retroactivity. And like that earlier law, litigants on both sides have probably spent hundreds of thousands of dollars litigating an issue - with appellate decisions falling on both sides - that could and should have been resolved during the drafting of Proposition 64.

In one of the Proposition 64 cases granted review, Consumer Advocacy Group Inc. v. Kinetsu Enterprises of America, the 2nd District Court of Appeal explained that "[v]oters who support a prospective application of the statute may oppose applying the same statute to cases arising before its enactment and could not understand from the ballot pamphlet this important distinction." The state Supreme Court will nevertheless engage in an impossible effort to divine the intent of the parties who drafted and approved Proposition 64.

We can debate whether proponents of Proposition 64 intentionally omitted retroactivity language for fear of generating too much opposition to that ballot initiative. In any event, the real question remains the same: whether we should permit courts, under the guise of interpretation, to put the finishing touches on legislation that might never have been approved if properly drafted.

As more and more legislative bodies become gridlocked, the number of issues delegated to the courts in a sub rosa manner are likely to increase. Thus, rather than wait for the California Supreme Court to decide what such ambiguous statutes really mean, litigants on both sides should more frequently ask the courts to invalidate such statutes as impermissibly vague. To do otherwise will be to encourage more legislative delegation and render the separation of powers doctrine meaningless.

Dana Cephas practices employment law and criminal defense at the Cephas Law Firm in Century City.