Molina v. Lexmark International CA2/2

Filed 9/19/13 Molina v. Lexmark International CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

RON MOLINA, B227746, B233272,
B234675, B237836
Plaintiff and Respondent,
(Los Angeles County
v. Super. Ct. No. BC339177)

LEXMARK INTERNATIONAL, INC.,

Defendant and Appellant.

APPEAL from a judgment of the Superior Court of Los Angeles County. Gregory
Alarcon, Judge. Reversed in part and remanded; affirmed in part.

Jackson Lewis, Frank M. Liberatore, Henry L. Sanchez, Sherry L. Swieca and
Sarine C. Sahatjian for Defendant and Appellant.

Law Offices of Sheila Thomas, Sheila Y. Thomas; Lawson Law Offices,
Antonio M. Lawson; Bird, Marella, Boxer, Wolpert, Nessim, Drooks & Lincenberg,
Thomas R. Freeman, Ekwan E. Rhow, Bonita D. Moore, Karis A. Chi; Law Offices of
Richard M. Pearl and Richard M. Pearl for Plaintiff and Respondent.

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 In this consolidated appeal, appellant and employer Lexmark International, Inc.
(appellant) challenges a class action $7,777,620 amended judgment entered against it
after a court trial.1 The trial court determined appellant’s vacation policy between 1991
and 2009 constituted a “use it or lose it policy” in violation of Labor Code2 section 227.3.
The appeal raises a number of issues including whether: the class was properly certified;
the policy was a lawful “accrual cap”; and damages were properly calculated and/or
awarded to all or some of the class members. Appellant also challenges awards of costs
in the amount of $145,341.93 and attorney fees in the amount of $5,722,008.
With respect to the judgment as amended, we conclude the trial court erred in
calculating the wages to include commissions rather than base rate of pay. In all other
respects, the judgment as amended is affirmed. We also affirm the postjudgment awards
of costs and attorney fees in their entireties.
FACTUAL AND PROCEDURAL BACKGROUND
Appellant’s Vacation Policy
Appellant is a Delaware corporation with its principal place of business in
Lexington, Kentucky. Appellant has been qualified to do business in California since
1991. Appellant, which is a “spin-off” of IBM, began operating as a separate entity in
March 1991. From 1991 through 2009, appellant has employed a total of 181 employees
in California. At the time of trial, appellant had 41 California employees. The class
members were or are employed as account and sales managers.

1 Appellant filed four separate appeals from: a judgment (case No. B227746); an
amended judgment (case No. B233272); a cost memorandum (case No. B234675); and an
attorney fee award. On June 8, 2011, pursuant to the parties stipulation, we consolidated
the appeals from the judgment (case No. B227746) and amended judgment (case
No. B233272). On January 5, 2012, we ordered the cost and attorney fees appeals
consolidated. On February 6, 2013, on our own motion we ordered the appeals from the
judgment and amended judgment (case No. B227746) consolidated with the cost and
attorney fees appeal (case No. B234675) for oral argument and decision.

2 All further statutory references are to the Labor Code unless otherwise indicated.

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 In 1991, appellant’s new owners offered a number of IBM employees incentives
to work for the new company including signing bonuses and recognition of accrued IBM
benefits. Appellant promised to honor vacation and personal choice days. Accrued
vacation at IBM could be carried over to employment with appellant. IBM employees
had the right to defer vacation time from year to year if they had five years of service or
were at least 50 years old. Under the IBM policy, employees had a minimum
requirement to take 10 vacation days in the year or within a grace period ending April 30
of the next year.
The parties stipulated that, for each year since 1991, appellant “had only one
vacation and personal choice day policy per year applicable to its California employees.”
The parties also stipulated: “[appellant] has since 1991 applied each of its vacation and
personal choice day policies in the same manner to all of its California employees.”
However, as noted below, the vacation policies varied somewhat between 1991 and 2006.
Appellant changed its vacation policy effective May 31, 1991 through
December 31, 1994. Under the new policy, appellant informed managers that the
company would “require that employees use all of their earned vacation by year-end.”
The policy states: “This will be effective for 1991 and all future years. No earned
vacation may be deferred and the grace period for unused vacation is discontinued. Also
beginning in 1992, each employee with deferred vacation days will be required to use
ten previously deferred days annually until all deferred vacation is used.” Under the new
policy, “[v]acation earned in 1991 which is not used will be lost.” A senior manager of
employee relations testified in a deposition that the new policy would reduce any
succeeding year’s vacation time by the number of unused vacation dates. Under the
May 31, 1991 policy, employees accrued vacation on an anniversary date.
In January 1995, appellant changed its policy to permit employees to accrue
vacation within a calendar year rather than on an anniversary date. There were no other
changes to the May 1991 policy. Thus, appellant’s vacation policy from 1995 through
January 2001 required all employees to take all their vacation in the calendar year it was
earned. Employees could not “carry over any unused vacation days into the next year.”

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 Effective January 1, 2001 through December 2005, appellant’s vacation policy
was that an employee “must use all accrued vacation by the end of the year in which it
was accrued.”
In January 2006, appellant revised its vacation policy regarding California
employees. The revised policy provides: “Employees who are based in California are
expected to use their entire accrued vacation during the year in which it accrued just as all
other employees. However, in the event that business needs prevent an employee from
using all of his or her vacation in a given year, any remaining vacation will carry over to
the following year subject to the limitation that no employee may have more than
240 accrued hours of vacation and/or personal choice holiday time at any given time. . . .”
Appellant normally sent policy changes to its employees. However, employees
were not informed of the 2006 vacation policy change. Cynthia Brooker testified that she
was currently employed at Lexmark. She was a supervisor from 1997 through 2004. She
discovered the 2006 policy change regarding California employees after she became a
manager and again when she went online to look at appellant’s employee manual.
Appellant also offered four or five personal choice days, which were meant to be
floating holidays. Footnote six of appellant’s opening brief concedes “that personal
choice days are legally equivalent to vacation days under California law, and, as such, all
references to vacation days or vacation pay . . . include personal choice days.” The
personal choice days were lost if not used in the year they accrued. There was no payout
for unused personal choice days at the time of termination.
The Complaint
Respondent, Ron Molina, filed the class action complaint against appellant on
August 31, 2005. The complaint alleged appellant’s vacation policy violated
section 227.3 by depriving California employees of earned wages. The complaint
contained five causes of action for: unpaid wages for accrued vacation pay (§ 200
et seq.); unpaid wages for accrued vacation due upon termination (§§ 201-204, 210,
227.3); penalties for unpaid wages upon termination (§ 203); unfair competition (Bus. &
Prof. Code, § 17200 et seq.); and unpaid wages for commissions (solely as to

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respondent). The complaint requested damages, injunctive relief and attorney fees.
Compensation was sought for unpaid vacation wages for the four years preceding the
filing of the complaint. The trial court subsequently granted leave to amend the
complaint to: allege claims for unpaid personal choice days; extend the period of liability
to appellant’s inception in 1991; and add a punitive damages claim.
On August 17, 2006, appellant filed a motion to strike portions of the amended
complaint, which referred to current and future employees on the ground section 227.3
only applied to former employees. On September 14, 2006, the trial court granted the
motion with respect to future employees. But, the trial court denied the motion to strike
as to current employees on the ground case law interpreting section 227.3 was not limited
to whether an employee must be paid at termination. Rather, the section also concerned
whether an employer could force forfeiture of accrued vacation through a use it or lose it
policy. On October 2, 2006, respondent filed an amended complaint to eliminate claims
on behalf of future employees.
Class Certification
Respondent filed a motion for class certification on March 19, 2007. He defined
the proposed class as “All California employees of Lexmark International, Inc. employed
from January 1, 1991 to the present.” The trial court granted the class certification
motion on June 20, 2007. The class consisted of 178 of appellant’s current and former
employees. The trial court found common issues of fact and law predominate and to the
extent there was different vacation usage amongst the various class members, the
damages could be easily calculated. The trial court also found: the class was
ascertainable and consisted of 178 of appellant’s current and former employees; the
claims were typical of the class representative; and the class representation was
adequate.3 The trial court determined a class action was a superior means rather than
individual trials to redress the alleged wrongdoing ( i.e., to prevent advantage to appellant
from a policy of requiring employees to lose unused vacation).

3 Two employees opted out of the class prior to trial.

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Liability Evidence
The trial court bifurcated the liability and damages phases of the case. The
following evidence was presented during the liability phase of the trial.
In 1991, appellant stopped tracking its employees’ vacation usage.4 Rather, the
managers were responsible for keeping track of vacation accrual and usage of the
employees they supervised. The managers chose the method of keeping track of the time.
When an employee left the company, appellant’s human resources department contacted
the manager to determine the number of vacation and personal choice days an employee
was owed. Each manager would then consult his or her records and the employee
regarding the vacation usage.
The evidence showed that vacation usage by employees varied. Appellant
presented evidence which showed that some members of the class had taken some or all
of their vacation time. A manager testified appellant’s employees had pressure to meet
sales quotas and that employees would often miss vacation days trying to meet year-end
goals. One employee testified that Lexmark was a growing and brand new company.
Employees did not feel comfortable taking vacation because they had to meet their
numbers. Management set high quotas to encourage employees to “stretch” to meet
goals. The employee testified that she “never made quota until the very last month or
two weeks into it or to the very end.” Commissions made up approximately 40 percent
of employees’ annual compensation. Employees “weren’t going to reach [their] salary
potential unless [they] made [their] numbers first.”
In October 2003, class member Manfred John Washington sent an e-mail to
Brooker, who was his immediate supervisor. The e-mail stated appellant’s vacation
policy violated California law. The e-mail contained a link to the California Division of

4 Appellant utilized a software program for tracking hourly employees including
time, attendance and vacation usage. Brooker discovered the system at the same time she
discovered the 2006 policy change. She tried to use the tracking system to track
employee vacation usage. Initially, she was able to use the system but it subsequently
changed so that she was no longer able to access it.

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Labor Standards Enforcement Web site. Brooker forwarded the e-mail to human
resources generalist Rebecca Cox on October 27, 2003. In her e-mail, Brooker stated:
“Hi Becky, How do I address this issue with my California employees? Lexmark policy
states that we do not carry over vacation and California State Law says it is illegal not to
let an employee carry over their vacation.” The e-mail was forwarded to Cox’s
supervisor, Susan Gentry. Gentry promised to follow-up on the information in a
telephone call with Washington and Brooker and in an e-mail with Washington.
Washington subsequently sent another e-mail to Gentry and Cox which provided
the same link provided in the original e-mail to Brooker. Gentry shared the information
with corporate counsel, Robert Patton. Patton referred Gentry to vice-president of human
resources, Jeri Stromquist Isbell. Isbell eventually instructed Gentry to draft an e-mail to
California managers, which emphasized that employees were to use all their vacation by
the end of the year.
On October 14, 2005, appellant’s general counsel sent an e-mail to its California
managers. The e-mail stated that appellant was reviewing its vacation and personal time
policy in California. The California employees were to fill out a “survey” indicating
whether he or she had taken “all” vacation and personal time given by appellant. The
employees were instructed to identify all vacation and personal time not taken while
working for appellant. Employees were required to “certify” the information was
accurate and correct. By taking the “survey,” employees agreed that they were subject to
disciplinary action for false or inaccurate information. Two employees testified that the
threat of disciplinary action including termination affected the results of the survey. This
was because the survey covered an entire course of employment and they did not have
documentation to support whether the time was taken or not taken. One manager
testified that he understood that unused vacation from prior years had been forfeited.
Therefore, he answered he had taken all the vacation even though the response was
inaccurate.
On September 30, 2005, the California Labor Commissioner determined that
appellant had a “use it or lose it” policy that violated section 227.3. Appellant was

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ordered to pay class member John Martin damages for lost vacation and personal choice
day wages from January 2001 through March 2005.
In May 2006, Washington filed a complaint with the California Labor
Commissioner against appellant seeking vacation and personal choice day wages due at
the time of termination from the company. On January 23, 2007, the Commissioner
awarded Washington a “pro rata” share of earned vacation wages for the time period
between January 1, 2006 and May 23, 2006.
The Liability Determination
The trial court determined that vacation pay is a form of deferred compensation,
which vests as labor is rendered. Section 227.3 protects vested wages from forfeiture
under “use it or lose it” policies. The trial court determined Lexmark’s vacation policy
violated the provisions of section 227.3 prohibiting forfeiture of vacation and personal
choice days and requiring payment upon termination of all vacation and personal choice
day wages.
The trial court further concluded the law and the facts did not support any of
appellant’s affirmative defenses. The statute of limitations was tolled because Lexmark
had a vacation policy that required forfeiture of vacation and personal choice days. And,
the law and the facts did not support the affirmative defense that class members John
Martin and Manny Washington must be excluded from the class.
The class was not limited to former employees employed from August 31, 2001,
who did not sign releases upon termination. Section 206.5 “prohibits an employer from
requiring an execution of any release of a claim or right on account of wages due or to
become due, unless payment of those wages have been paid.” Appellant failed to
produce any evidence that terminated employees were paid all accrued, unused vacation
wages which were owed. The court found that “Lexmark cannot rely upon releases that
violate the requirements of . . . [sections] 206 and 206.5.”
The trial court found that appellant’s policy constituted a violation of California
Business and Professions Code section 17200. Appellant was ordered to develop and
implement vacation and personal choice policies for California employees that they may

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carry over vacation and may accrue up to 240 hours of vacation and personal choice days
without a business needs requirement. The trial court also ordered appellant to:
(1) notify its California employees in writing of their rights under sections 200 et seq. and
227.3; and (2) maintain a tracking system to notify the California employees of usage and
unused vacation and personal choice days.
Damages Evidence
In the damages phase of the trial, the parties presented conflicting lay evidence
concerning the amount of vacation time the employees had used or lost during the course
of employment with appellant. The parties’ experts disagreed on the methodology for
calculating the damage to the class.
Respondent’s expert, Amy Aukstikalnis, Ph.D., had expertise in class actions
involving economics and employment litigation. Her expertise included calculation of
damages in class actions, wage and hour, meal and rest breaks and a vacation forfeiture
case. Aukstikalnis used information from appellant’s vacation pay policy on how the
vacation time and personal choice days accrued annually. She then relied on birth and
start date data from information provided by appellant to calculate accruals on an annual
basis. She multiplied that rate by regular pay rate based on gross earnings during the last
year of employment with appellant. This amount was calculated after she subtracted any
amount for vacation paid at termination, separation or severance payment. She then
subtracted out any vacation days where appellant’s records showed that a class member
had received vacation payouts upon termination.
Aukstikalnis calculated wait time penalties by multiplying 30 days of wage at the
final rate for all class member terminated as of October 2007. She calculated interest on
the accrued vacation through October 31, 2009.
Aukstikalnis opined that the value of lost vacation and personal choice day wages
was $10,539,043. The calculation was for the time period between 1991 and year-end
2007. The interest accrued through June 30, 2008 was $3,981,537 at 10 percent per
annum. The total damage estimate was $16,721,608 valuing the forfeited vacation time
and waiting time penalties. The $16,721,608 figure represented a forfeiture rate of

9
100 percent. She also calculated forfeiture rates of 80 percent and 65 percent. She
subtracted what was paid out at the time of termination from each rate.
Appellant’s expert, Stefan Boedeker, specialized in statistics and economics. His
methodology involved a review of company policy and other company records to
establish vacation the individuals were entitled to receive. He considered the measure of
damages by making an assessment of vacation usage. Boedeker reviewed a list of current
and former employees, biographical information about them, termination information
showing vacation payouts, pay stubs, employee surveys and deposition testimony. He
used a statistical approach because appellant had no vacation usage records. He
extrapolated from available data to estimate vacation usage for individuals for whom he
had no data. Boedeker opined that the value of the vacation and personal time not taken
from current and former employees was $594,398. His opinion assumed the vacation
days did not expire and were not subject to an accrual cap. The total was $405,000 if
current employees were subtracted.
The parties pointed out what they perceived to be the weaknesses or flaws in their
opponent’s expert’s methodology. For example, respondent focused on the fact
appellant’s expert did not consider vacation and personal choice time which had been lost
due to the vacation policy.
By contrast, appellant criticized respondent’s expert for not using a statistical
model and for using accrued vacation from employment with IBM. Appellant also found
fault with Aukstikalnis’s testimony that she did not consider any evidence of vacation
usage other than records showing vacation time was paid out at the time of separation.
The $16,721,608 figure was based on an assumed 100 percent forfeiture of vacation by
all class members. The rate was premised upon the fact that there were no
contemporaneous company records which she considered to be the most reliable source
of information.
The Statement of Decision and Judgment
On June 18, 2010, the trial court issued its statement of decision on class action
damages. The trial court found appellant “failed to maintain accurate and adequate

10
records of the employees’ vacation usage and forfeitures.” The trial court noted that
California had adopted United States Supreme Court authority in Anderson v.
Mt. Clemens Pottery Co. (1946) 328 U.S. 680 (Anderson) regarding the burden of
proving damages in wage and hour cases where the employer failed to maintain records.
The trial court found respondent satisfied the initial burden of proving work had
been performed and employees were not properly compensated under an illegal use it or
lose it policy. The burden then shifted to appellant to refute respondent’s evidence with
evidence of the precise amount of work performed or sufficient evidence to negate
inferences. The burden shifted because fundamental fairness standards required that
injured parties be compensated for damage proximately caused by a wrongdoer and the
essential facts necessary to prove the damages were exclusively in appellant’s knowledge
and control. In the absence of the evidence, the trial court was authorized to award
damages even if the calculation is only an approximation.
The trial court noted that there were flaws in the analyses of both experts. With
respect to appellant’s expert the trial court concluded that the methods withstood an
admissibility challenge by respondent. But, the trial court gave very little weight to his
analysis because of “the extremely limited data set” available given appellant’s failure to
keep proper business records.
The trial court found similar flaws in respondent’s expert analysis. Although her
analysis contained a reliable total possible day estimate less payouts at termination, it
failed to account for class member evidence indicating usage rates greater than
zero percent. So, while dismissing the 100 percent forfeiture rate, the trial court
determined “Dr. Aukstikalnis’s calculations serve as a reliable base from which the court
may calculate a more reasonable damage measure.”
The statement of decision states: “Because of the aforementioned deficiencies, it
is within the court’s discretion to determine a reasonable approximation of damages . . . .
Taking into account the flaws and limitations inherent in both [respondent’s] and
[appellant’s] calculations, which ranged from 10.3 [percent] to 80 [percent], this court
finds that a reasonable approximation of the forfeiture rate is 45.2 [percent].” Under this

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rate, the trial court awarded damages in the total amount of $8,299,242, including
estimated forfeiture, interest, wait-time penalties and offsets. The trial court rejected
appellant’s claims that all applicable class members should be deposed to determine
damages on the ground such a process would defeat the purpose of class action litigation.
That is a class action is “a reasonably expeditious means of calculation and distribution of
class-wide aggregate damages if individual adjudication of entitlements of all class
members or a substantial portion of the class members would impose impossible burdens
on courts and the litigants.”
The trial court entered a judgment in favor of the class on September 20, 2010 in
the amount of $8,299,242 plus interest. Respondents were awarded attorney fees upon
motion and costs upon a timely filed memorandum of costs. The trial court awarded
injunctive relief pursuant to Business and Professions Code section 17200 et seq. With
regard to its California employees, appellant was ordered, among other things, to develop
and implement vacation and personal choice policies providing that they may carry over
at least 240 hours of earned vacation and personal choice holidays without a business
needs requirement. The trial court retained jurisdiction to interpret, implement, and
enforce the judgment. Appellant filed a notice of appeal of the judgment on
September 30, 2010 (case No. B227746).
The New Trial Motion and Amended Judgment
On October 18, 2010, appellant moved for a new trial, on among other grounds,
that the damages award was excessive. Appellant asserted the award improperly
included damages for current employees, who had not been terminated within the
meaning of section 227.3 The award should have excluded $1,865,276 in damages for
IBM legacy days. The award was excessive in that it was calculated at gross rate of pay.
Appellant’s vacation policy since 1991 has clearly been that vacation pay is not a “gross
rate of pay” but at base rate of pay.
Appellant also asserted the trial court erred in its findings regarding Boedeker’s
expert opinion and the percentages of damages. Appellant argued the statement of

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decision failed to address many of appellant’s claims including IBM legacy employees
and the alleged deficiencies in relying on Aukstikalnis’s expert opinion.
Appellant contended the statement of decision was inconsistent because it
conflicted with prior rulings that: current employees were not entitled to damages; and
wait time penalties accrue only after October 2003. The statement of decision did not
address the manner and or method of distribution of damages. The trial court cannot set
appellant’s accrual cap. The burden was improperly shifted to appellant because it had
no statutory obligation to maintain vacation records and class members had superior
knowledge of vacation usage. Respondent did not meet the burden of establishing class
damages. The trial court improperly denied appellant the right to depose all 176 class
members in order to show actual damages.
On November 17, 2010, the trial court granted the new trial motion in part by
subtracting the payment of damages to current employees from $8,299,242. The trial
court reopened the proceedings for introduction of additional evidence on damages. The
trial court rejected appellant’s other claims on the ground they lacked merit.
On January 21, 2011, the trial court reopened trial on the damages issue and
ordered further briefing. The parties filed additional briefs with evidence. On March 7,
2011, the trial court issued a ruling on damages calculations in response to appellant’s
new trial motion. The trial court found that respondent’s calculation of damages of
$7,774,620 was correct. On April 21, 2011, the trial court amended the September 20,
2010 judgment “as to the amount of the damage award only.” The trial court ruled: “The
original judgment, as amended, stands.” On May 24, 2011, appellant filed a notice of
appeal of the amended judgment (case No. B233272).
The Costs and Attorney Fee Awards
On March 17, 2011, respondent filed a memorandum of costs seeking $156,899.76
in costs. After appellant filed a motion to strike costs, the trial court awarded respondent
$145,341.93 in costs on May 25, 2011. Appellant appealed the cost award on July 21,
2011 (case No. B234675).

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 On June 20, 2011, respondent filed a motion for an attorney fee award and
additional costs. Appellant opposed the motion. The hearing on the attorney fees motion
was originally set for July 29, 2011. Prior to the hearing date, appellant moved ex parte
for production of time records in electronic form or alternatively for an extension of time
to oppose the motion. The parties subsequently agreed to a continued hearing. On
July 13, 2011, appellant filed a notice of ruling which stated that, upon stipulation of the
parties, the hearing date was continued to September 13, 2011. However, apparently due
to some misunderstanding between the parties, the original hearing date remained on the
court’s calendar.
On September 29, 2011, after briefing, motions, and stipulations, the trial court
issued an order on respondent’s application to set a new hearing date for award of
reasonable attorney fees. The September 29, 2011 order provided among other things
that the judgment was effectively entered on April 21, 2011. Respondent’s new trial
motion, which was originally filed on June 14, 2011 [sic], was set to be heard on July 29,
2011. The trial court concluded that, if respondent filed a Code of Civil Procedure
section 473 motion, the trial court would grant him relief for excusable neglect based on
the misunderstanding as well as appellant’s notice of ruling.
On October 6, 2011, respondent filed a motion for relief from default pursuant to
Code of Civil Procedure section 473. On October 28, 2011, the trial court entered an
order granting respondent relief pursuant to Code of Civil Procedure section 473. On
October 28, 2011, the trial court granted respondent’s motion for attorney fees and costs
in the amount of $5,722,008.07. Appellant appealed the attorney fee award on
December 9, 2011 (case No. B237836).
DISCUSSION
I. Class Certification
In a supplemental opening brief, appellant argues the trial court abused its
discretion in certifying or refusing to decertify the class for alleged violations of
section 227.3. To support this contention, appellant relies primarily on Duran v.

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U.S. Bank National Assn. (2012) 203 Cal.App.4th 212, review granted and opinion
superseded by Duran v. U.S. Bank National Assn. (2012) 275 P.3d 1266.
Code of Civil Procedure section 382 provides that a class action may be brought
“when the question is one of a common or general interest, of many persons, or when the
parties are numerous, and it is impracticable to bring them all before the court.” A class
action is authorized when a plaintiff meets his or her burden of establishing the existence
of an ascertainable class and a well-defined community of interest. (Lockheed Martin
Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1103–1104; Washington Mutual Bank v.
Superior Court (2001) 24 Cal.4th 906, 913.) “The community of interest requirement
embodies three factors: (1) predominant common questions of law or fact; (2) class
representatives with claims or defenses typical of the class; and (3) class representatives
who can adequately represent the class.” (Richmond v. Dart Industries, Inc. (1981) 29
Cal.3d 462, 470; accord, Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th
319, 326.)
The focus in a class certification dispute is not on the merits but on the procedural
issue of what types of questions are likely to arise in the litigation—common or
individual. (Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at pp. 326–
327; Lockheed Martin Corp. v. Superior Court, supra, 29 Cal.4th at pp. 1106–1107;
Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 439–440.) Thus, the existence of some
common issues of law and fact does not dispose of the class certification issue.
(Lockheed Martin Corp. v. Superior Court, supra, at pp. 1108–1109; Washington Mutual
Bank v. Superior Court, supra, 24 Cal.4th at p. 913.) Rather, in order to justify class
certification, a class plaintiff is required to establish the “questions of law or fact
common to the class predominate over the questions affecting the individual members.”
(Washington Mutual Bank v. Superior Court, supra, at p. 913, italics added; accord,
Lockheed Martin Corp. v. Superior Court, supra, at p. 1108.) “[I]f a class action ‘will
splinter into individual trials,’ common questions do not predominate and litigation of the
action in the class format is inappropriate.” (Hamwi v. Citinational-Buckeye Inv. Co.
(1977) 72 Cal.App.3d 462, 471; accord, McCullah v. Southern Cal. Gas Co. (2000) 82

15
Cal.App.4th 495, 501–502.) Thus, a class action is inappropriate if each class member is
required to “litigate substantial and numerous factually unique questions to determine his
or her individual right to recover.” (Acree v. General Motors Acceptance Corp. (2001)
92 Cal.App.4th 385, 397; accord, Wilens v. TD Waterhouse Group, Inc. (2003) 120
Cal.App.4th 746, 756; Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715, 742.)
But, a class action may be maintained even if each class member must individually show
eligibility for recovery or the amount of damages. (Brinker Restaurant Corp. v. Superior
Court (2012) 53 Cal.4th 1004, 1022; Sav-On Drug Stores, Inc. v. Superior Court, supra,
at pp. 332–333.)
Review of a class certification “is narrowly circumscribed.” (Brinker Restaurant
Corp. v. Superior Court, supra, 53 Cal.4th at p. 1022.) In Brinker, our Supreme Court
explained: “‘The decision to certify a class rests squarely within the discretion of the trial
court, and we afford that decision great deference on appeal, reversing only for a manifest
abuse of discretion: “Because trial courts are ideally situated to evaluate the efficiencies
and practicalities of permitting group action, they are afforded great discretion in granting
or denying certification.” [Citation.] A certification order generally will not be disturbed
unless (1) it is unsupported by substantial evidence, (2) it rests on improper criteria, or
(3) it rests on erroneous legal assumptions. [Citations.]’ [Citations.] Predominance is a
factual question; accordingly, the trial court’s finding that common issues predominate
generally is reviewed for substantial evidence. [Citation.] We must ‘[p]resum[e] in favor
of the certification order . . . the existence of every fact the trial court could reasonably
deduce from the record . . . .’ [Citation.]” (Ibid.)
A. Substantial evidence supports the predominance finding.
Appellant claims the predominance finding was deficient. We find no basis for
setting it aside because the finding was supported by substantial evidence. The parties
stipulated that appellant had one vacation policy since 1991 which had been uniformly
applied to all its employees. Appellant’s written vacation policy required employees to
“use or lose” vacation and personal choice days. The class action alleged that this policy
violated California law. Evidence presented in support of the certification motion

16
showed that respondent and other putative class members had forfeited vacation and
personal choice under the alleged illegal policy. Thus, the trial court did not abuse its
discretion in finding common issues predominate as to whether an illegal employment
policy was imposed against the putative class members. (See Brinker Restaurant Corp.
v. Superior Court, supra, 53 Cal.4th at pp. 1032–1033; Prince v. CLS Transportation,
Inc. (2004) 118 Cal.App.4th 1320, 1328.)
For that reason, there is no merit to appellant’s claim the certification motion
should have been denied because the amount of damages varied with individual class
members based on how many vacation days they may have forfeited. The fact “that each
member of the class must prove his [or her] separate claim to a portion of any recovery
by the class is only one factor to be considered in determining whether a class action is
proper.” (Vasquez v. Superior Court (1971) 4 Cal.3d 800, 809.) As previously noted, the
class action could be maintained even if individual claims of recovery and the amount of
damages differed among the class members. (See Brinker Restaurant Corp. v. Superior
Court, supra, 53 Cal.4th at p. 1022; Sav-On Drug Stores, Inc. v. Superior Court, supra,
34 Cal.4th at pp. 332–333.)
B. The class was ascertainable.
Appellant also contends the class was not ascertainable. “The ascertainability
requirement is a due process safeguard, ensuring that notice can be provided ‘to putative
class members as to whom the judgment in the action will be res judicata.’ [Citation.]
‘Class members are “ascertainable” where they may be readily identified without
unreasonable expense or time by reference to official records. [Citation.]’ [Citation.] In
determining whether a class is ascertainable, the trial court examines the class definition,
the size of the class and the means of identifying class members. [Citation.]” (Sotelo v.
MediaNews Group, Inc. (2012) 207 Cal.App.4th 639, 647–648; see also Hicks v.
Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 914.)
In this case, the class was defined as “All California employees of Lexmark
International, Inc. employed from January 1, 1991 to the present.” The parties agreed
that there were 178 former and current employees of Lexmark that comprised the class as

17
defined. The class members were identified by Lexmark’s corporate records. (Sotelo v.
MediaNews Group, Inc., supra, 207 Cal.App.4th at p. 648; Rose v. City of Hayward
(1981) 126 Cal.App.3d 926, 932.) There was nothing amiss in the trial court’s
determination that the class was ascertainable.
C. The existence of affirmative defenses did not preclude class certification.
Appellant asserts, in certifying the class, the trial court improperly rejected its
affirmative defenses that certain class members were potentially barred by: a four-year
statute of limitations (Code Civ. Proc., §§ 312, 337); collateral estoppel or res judicata
principles; voluntary releases; and status as current employees. Normally, “[t]he
certification question is ‘essentially a procedural one that does not ask whether an action
is legally or factually meritorious.’” (Lockheed Martin Corp. v. Superior Court, supra,
29 Cal.4th at p. 1104 quoting Linder v. Thrifty Oil Co., supra, 23 Cal.4th at pp. 439–440.)
The assertion of an affirmative defense such as a limitations defense does not
categorically preclude class certification. (Lockheed, supra, at pp. 1104–1106 & fn. 4.)
Rather, “‘[t]he ultimate question in every case of this type is whether . . . the issues which
may be jointly tried, when compared with those requiring separate adjudication, are so
numerous or substantial that the maintenance of a class action would be advantageous to
the judicial process and to the litigants.’ [Citations]” (Id. at pp. 1104–1105.) We cannot
conclude that, at the time of class certification motion, the existence of potential
affirmative defenses regarding limitation of actions, releases, collateral estoppel or
res judicata principles precluded class treatment of the alleged unlawful vacation policy.
II. Liability for Appellant’s Vacation Policies
Appellant claims the trial court misinterpreted section 227.3 and erroneously
concluded that the vacation policies provided for forfeiture rather than “accrual caps.”
To the extent resolution of the issue involves interpretation of the statute, the question is
legal requiring de novo review. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 801;
Samples v. Brown (2007) 146 Cal.App.4th 787, 799; In re Marriage of Norviel (2002)
102 Cal.App.4th 1152, 1157.) But, the trial court’s resolution of the dispute as to
whether appellant’s stated policy was an accrual cap rather than a use it or lose policy is

18
more in the nature of a factual issue (Boothby v. Atlas Mechanical, Inc. (1992) 6
Cal.App.4th 1595, 1603), which we review for substantial evidence. (Jessup Farms v.
Baldwin (1983) 33 Cal.3d 639, 660; SFPP v. Burlington Northern & Santa Fe Ry. Co.
(2004) 121 Cal.App.4th 452, 461–462.)
A. Appellant’s vacation policy violated section 227.3.
Section 227.3 provides: “Unless otherwise provided by a collective-bargaining
agreement, whenever a contract of employment or employer policy provides for paid
vacations, and an employee is terminated without having taken off his vested vacation
time, all vested vacation shall be paid to him as wages at his final rate in accordance with
such contract of employment or employer policy respecting eligibility or time served;
provided, however, that an employment contract or employer policy shall not provide for
forfeiture of vested vacation time upon termination. The Labor Commissioner or a
designated representative, in the resolution of any dispute with regard to vested vacation
time, shall apply the principles of equity and fairness.”
“It is established that vacation pay is not a gratuity or a gift, but it is, in effect,
additional wages for services performed.” (Suastez v. Plastic Dress-Up Co. (1982) 31
Cal.3d 774, 779 (Suastez).) And, once vacation pay has vested, section 227.3 precludes
its forfeiture. (Suastez, supra, at p. 784; Henry v. Amrol, Inc. (1990) 222 Cal.App.3d
Supp. 1, 5.) Thus, a policy that forces employees to either use or forfeit already accrued
vacation time violates section 227.3. (Suastez, supra, at p. 784; Boothby v. Atlas
Mechanical, Inc., supra, 6 Cal.App.4th at p. 1601.)
The evidence in this case established that, beginning in 1991, appellant adopted a
policy that required class members to take vacation and personal choice days. A number
of employees lost vacation and personal choice days as a result of the policy. Under the
policy, employees were only paid for vacation time accrued during the years they were
terminated without regard to prior vested vacation which had been forfeited. We agree
with the trial court’s determination that appellant had an illegal policy that forced its
employees to either use or forfeit already accrued vacation time in violation of
section 227.3. (Boothby v. Atlas Mechanical, Inc., supra, 6 Cal.App.4th at p. 1601.)

19
 B. There was substantial evidence that appellant had a forfeiture policy.
Appellant claims it could not have violated section 227.3 because its vacation
policy was an “accrual cap” rather than a forfeiture policy. Boothby v. Atlas Mechanical,
Inc., supra, 6 Cal.App.4th at page 1601 explained the distinction between the two
concepts as follows: “A ‘use it or lose it’ vacation policy provides for forfeiture of vested
vacation pay if not used within a designated time, while a ‘no additional accrual’ vacation
policy prevents an employee from earning vacation over a certain limit. Although both
policies achieve virtually the same result, the former is impermissible and the latter
permissible.”
Boothby further explained: “This distinction is consistent with Suastez. Because
vacation in an amount established by the employment agreement is deferred
compensation for services rendered, the right to paid vacation vests as the employee
labors. It is nonforfeitable. However, if the employment agreement precludes an
employee from accruing more vacation time after accumulating a specified amount of
unused vacation time (a ‘no additional accrual’ policy), the employee does not forfeit
vested vacation pay. A ‘no additional accrual’ policy simply provides for paid vacation
as part of the compensation package until a maximum amount of vacation is accrued.
The policy, however, does not provide for paid vacation as part of the compensation
package while accrued, unused vacation remains at the maximum. Since no more
vacation is earned, no more vests. A ‘no additional accrual’ policy, therefore, does not
attempt an illegal forfeiture of vested vacation. [¶] As stated in Henry v. Amrol, Inc.
(1990) 222 Cal.App.3d Supp. 1, the law does not prevent an employer from ‘announcing
a level beyond which additional vacation time would no longer accrue. This would
prevent additional vacation from vesting after a certain level had been reached.
However, once vacation time has vested, it cannot be divested. There is an obvious
difference between a policy which prevents additional vacation time from accruing after a
certain amount of such time accrues and a policy which would divest an employee of
already accrued vacation time.’ [Citations.]” (Boothby v. Atlas Mechanical, Inc., supra,
6 Cal.App.4th at pp. 1601–1602.)

20
 Appellant’s primary claim is that since 2006 it has an accrual cap policy. In 2006
appellant revised its vacation policy regarding California employees. The revised policy
provided California employees were expected to use entire accrued vacation during the
accrual year. However, to the extent there were business needs, “any remaining vacation
will carry over to the following year subject to the limitation that no employee may have
more than 240 accrued hours of vacation and/or person choice holiday time at any given
time. . . .”
We begin by noting that there was no evidence appellant notified its California
employees including the supervisors of this 2006 policy change. Indeed, many
employees still understood that vacation and personal choice days which were not taken
were lost. One of appellant’s current employees, who was also a supervisor, testified that
she only discovered the new policy by chance online. The failure to notify its employees
of the purported business exception created in 2006 accrual cap was sufficient to raise the
inference that there was no real change in what the trial court determined was a forfeiture
policy.
Furthermore, the record does not show appellant ever announced a level beyond
which additional vacation time would no longer accrue prior to 2006. Indeed, appellant
does not dispute that its 2001-2005 policy specifically stated it was use it or lose it. From
May 1991 through 2000, the vacation policy stated accumulated but unused vacation time
could be carried over into the next year. The employee’s allotment was reduced by the
number of vacation days that carried over. However, the record shows the policy
ultimately divested employees of already accrued vacation time. Employees were told
that they either take vacation or they lost it. They could not carry over vested time. At
the beginning of the year, the employees started fresh. Employees testified that they lost
vacation hours when they did not take all of their vacation. This was sufficient evidence
to show a forfeiture policy rather than an accrual cap.

21
III. Damages
Appellant claims the damages award must be set aside because: the class failed to
submit evidence of classwide damages; and, the trial court erroneously shifted the burden
of proof to appellant to disprove damages.
In Anderson, supra, 328 U.S. 680, the United States Supreme Court considered the
measure of damages where an employer failed to compensate employees for overtime
under the Fair Labor Standards Act of 1938 (29 U.S.C. § 201 et seq.) and failed to keep
adequate records. (Anderson, supra, at p. 684.) Anderson rejected the Circuit Court of
Appeals’ conclusion the employees had the burden of proving they did not receive wages
and overtime payments. (Id. at p. 687.) Rather, the employees had the burden of
proving: (1) the work was performed; and (2) there was inadequate compensation.
(Ibid.) But, the remedial nature of the Fair Labor Standards Act as well as the great
public policy in its enactment “militate[d] against making that burden an impossible
hurdle for the employee.” (Ibid.)
Anderson noted that the Fair Labor Standards Act required the employer to keep
proper records of wages, hours, and other employment conditions and practices. As such,
the employer “is in position to know and to produce the most probative facts concerning
the nature and amount of work performed.” (Anderson, supra, 328 U.S. at p. 687.)
Anderson further explained: “Employees seldom keep such records themselves;
even if they do, the records may be and frequently are untrustworthy. It is in this setting
that a proper and fair standard must be erected for the employee to meet in carrying out
his burden of proof. [¶] When the employer has kept proper and accurate records, the
employee may easily discharge his burden by securing the production of those records.
But where the employer’s records are inaccurate or inadequate and the employee cannot
offer convincing substitutes, a more difficult problem arises. The solution, however, is
not to penalize the employee by denying him any recovery on the ground that he is
unable to prove the precise extent of uncompensated work. Such a result would place a
premium on an employer’s failure to keep proper records in conformity with his statutory
duty; it would allow the employer to keep the benefits of an employee’s labors without

22
paying due compensation as contemplated by the Fair Labor Standards Act. In such a
situation we hold that an employee has carried out his burden if he proves that he has in
fact performed work for which he was improperly compensated and if he produces
sufficient evidence to show the amount and extent of that work as a matter of just and
reasonable inference. The burden then shifts to the employer to come forward with
evidence of the precise amount of work performed or with evidence to negative the
reasonableness of the inference to be drawn from the employee’s evidence. If the
employer fails to produce such evidence, the court may then award damages to the
employee, even though the result be only approximate. [Citation.]” (Anderson, supra,
328 U.S. at pp. 687–688.)
Anderson’s holding has been adopted by California courts to shift the burden of
proof to employers when their failure to keep adequate records would prevent employees
from proving labor disputes. (See Bell v. Farmers Ins. Exchange, supra, 115 Cal.App.4th
715 [unpaid overtime compensation]; Hernandez v. Mendoza (1988) 199 Cal.App.3d
721, 726–728 [overtime hours]; see also Amaral v. Cintas Corp. No. 2 (2008) 163
Cal.App.4th 1157, 1188–1189 [to prove the class members]; Cicairos v. Summit
Logistics, Inc. (2005) 133 Cal.App.4th 949, 961–963 [meal and rest time breaks].)
Contrary to appellant’s assertions otherwise, the burden shifts even in the absence
of a statutory recordkeeping duty. (Amaral v. Cintas Corp. No. 2, supra, 163
Cal.App.4th at p. 1188; Hernandez v. Mendoza, supra, 199 Cal.App.3d at p. 726.) “[T]he
underlying rationale for burden shifting is not the employer’s duty of recordkeeping but
the ‘fundamental principle of American jurisprudence that for every wrong there is a
remedy, and that, unless countered by public policy, an injured party should be
compensated for all damage proximately caused by the wrongdoer. [Citations.]’
[Citation.]” (Amaral v. Cintas Corp. No. 2, supra, at p. 1190; Hernandez v. Mendoza,
supra, at p. 726.)
Here, the class presented evidence of forfeited unused vacation pay. Appellant
had not kept vacation records since 1991. Under these standards, the trial court properly
shifted the burden of proof.

23
IV. Due Process
Appellant is also not entitled to prevail on its claims its due process rights were
violated by the trial court’s use of a statistical methodology to calculate an aggregate
damage.
Bell v. Farmers Ins. Exchange, supra, 115 Cal.App.4th 715 explained: “the
question whether a procedural device used in judicial proceedings to deprive a defendant
of property comports with due process is determined by a balancing of interests: ‘[F]irst,
consideration of the private interest that will be affected by the [procedure]; second, an
examination of the risk of erroneous deprivation through the procedures under attack and
the probable value of additional or alternative safeguards; and third, . . . principal
attention to the interest of the party seeking the [procedure], with, nonetheless, due regard
for any ancillary interest the government may have in providing the procedure or
forgoing the added burden of providing greater protections.’ [Citations.]” (Id. at
pp. 751–752 quoting Connecticut v. Doehr (1991) 501 U.S. 1, 11.)
Appellant’s interest, which was affected by the method of proof, was the total
liability to the class members for forfeited vacation and personal choice days. But,
appellant’s due process objection to a statistical sampling determination must be limited
to the argument “the procedure affected its overall liability for damages.” (Bell v.
Farmers Ins. Exchange, supra, 115 Cal.App.4th at p. 752.) This is because appellant’s
liability is not affected by determining the individual entitlements of class members. The
presence of members in the class, who may not be entitled to damages, while pertinent to
the trial court’s discretion in certifying the class, is not pertinent to due process principles
unless inclusion of those class members increased the total amount of damages. (Ibid.)
Second, the risk of an erroneous deprivation did not preclude the statistical
methodology. Bell v. Farmers Ins. Exchange, supra, 115 Cal.App.4th 715, rejected the
argument that the determination of aggregate damages on the basis of statistical
inferences improperly allows particular employees to recover damages who are otherwise
not entitled to them. Bell noted the same possibility existed in federal wage cases as well
as most class actions. (Id. at p. 750.) As a result, individualized proof of damages is not

24
required because it “would challenge all class action judgments adopting reasonably
expeditious means of distributing the recovery among class members.” (Ibid.) Bell
further explained that the use of statistical sampling to calculate damages yielded an
average figure which would overcompensate some and under compensate other
individual employees. (Id. at pp. 750–751.) But, the disadvantage to the individual
employees offered a means of vindicating underlying labor policies without clogging
courts or deterring small claimants who could not afford the cost of litigation. (Ibid.)
Indeed, an employer who is liable for unpaid wages “cannot be heard to complain
that the damages lack the exactness and precision of measurement,” which would have
been possible with adequate record keeping. (Anderson, supra, 328 U.S. at p. 688.)
Even if the lack of adequate record keeping is mistaken, an employer, who has received
the benefit of the employees’ work, “cannot object to the payment for the work on the
most accurate basis possible under the circumstances.” (Ibid.) In addition, rules
prohibiting recovery of uncertain and speculative damages are inapplicable in such case
because those rules only apply “where the fact of damage is itself uncertain.” (Ibid.)
Rather, the damage is made certain by proof: (1) the employee performed work; and
(2) the employer did not pay as required by law. (Ibid.) “The uncertainty lies only in the
amount of damages arising from the statutory violation by the employer. In such a case
‘it would be a perversion of fundamental principles of justice to deny all relief to the
injured person, and thereby relieve the wrongdoer from making any amend for his acts.’
[Citation.] It is enough under these circumstances if there is a basis for a reasonable
inference as to the extent of the damages. [Citations.]” (Ibid.) Under a just and
reasonable inference analysis, the question is whether the testimonial evidence is “‘fairly
representational.’” (Bell v. Farmers Ins. Exchange, supra, 115 Cal.App.4th at p. 748.)
Here, the evidence established that appellant began enforcing a use it or lose it
vacation policy with its employees beginning as early as 1991. A number of employees
forfeited all or some of the vacation and personal choice days. Appellant kept no records
of accrued vacation time. Appellant had a policy of not paying its employees for vested
unused vacation days when they terminated their employment. The trial court calculated

25
damages at a forfeiture rate of 45.2 percent. The evidence varies as to whether some
employees forfeited all, some, or none of their vacation and personal choice days as a
result of the forfeiture policy dating back to 1991. Thus, an inference may be that the
employer is actually advantaged as to those class members, who forfeited as much as
100 percent of their vacation and personal choices days.
Under the circumstances, the trial court had discretion “to weigh the disadvantage
of statistical inference—the calculation of average damages imperfectly tailored to the
facts of particular employees—with the opportunity it afforded to vindicate an important
statutory policy without unduly burdening the courts.” (Bell v. Farmers Ins. Exchange,
supra, 115 Cal.App.4th at p. 751.)
Third, the trial court’s utilization of the statistical sampling method comported
with due process principles. “In this area of litigation, the California Supreme Court has
in fact ‘challenged the trial courts to develop “pragmatic procedural devices” to “simplify
the potentially complex litigation while at the same time protecting the rights of all the
parties.” [Citations.]’” (Bell v. Farmers Ins. Exchange, supra, 115 Cal.App.4th at p. 747
quoting State of California v. Levi Strauss & Co. (1986) 41 Cal.3d 460, 471.) Due
process principles do not prevent a trial court from calculating damages on a classwide
basis as opposed to requiring individual testimony by all class members. (Bell v.
Farmers Ins. Exchange, supra, at p. 747; Bruno v. Superior Court (1981) 127 Cal.App.3d
120, 129, fn. 4.) This is because “‘such an aggregate calculation will be far more
accurate than summing all individual claims.’” (Bell v. Farmers Ins. Exchange, supra, at
p. 747, fn. 19.)
The use of pattern and practice evidence by representative testimony of a small
percentage of employees is a common practice in wage disputes for back pay in federal
and state courts. (Bell v. Farmers Ins. Exchange, supra, 115 Cal.App.4th at pp. 748–750
[citing federal cases granting back wages to nontestifying employees on the basis of
pattern and practice evidence].) “[T]he use of statistical sampling in an overtime class
action ‘does not dispense with the proof of damages but rather offers a different method

26
of proof.’ [Citation.]” (Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at
p. 333.)
We also disagree with appellant’s claim in the supplemental opening brief that the
trial court management orders were unduly restrictive as to appellant’s discovery rights
and ability to present affirmative defenses as to each class member. Appellate “‘review
of a trial court’s plan for proceeding in a complex case is a deferential one that recognizes
the fact that the trial judge is in a much better position than an appellate court to
formulate an appropriate methodology for a trial.’” (Bell v. Farmers Ins. Exchange,
supra, 115 Cal.App.4th at p. 751; In re Chevron U.S.A. (5th Cir. 1997) 109 F.3d 1016,
1018.) As Bell v. Farmers Ins. Exchange explained: “[S]tatistical inference offers a
means of vindicating the policy underlying the Industrial Welfare Commission’s wage
orders without clogging the courts or deterring small claimants with the cost of litigation.
In a particular case, the alternative to the award of classwide aggregate damages may be
the sort of random and fragmentary enforcement of the overtime laws that will fail to
effectively assure compliance on a classwide basis. In [Anderson], the court held that
‘the remedial nature of this statute and the great public policy which it embodies’
justified a reduced standard of proof of damages. [Citation.] The same consideration
militates in favor of a reasonably expeditious means of calculating and distributing
classwide aggregate damages if individual adjudication of the entitlements of all class
members, or a substantial portion of the members, would impose impossible burdens on
the courts and litigants.” (Bell v. Farmers Ins. Exchange, supra, at p. 751, fn. omitted.)
Respondent is correct that due process principles did not preclude the trial court from
utilizing the statistical methodology to determine damages. Appellant cannot prevail on
its due process claims.

27
V. The Affirmative Defenses
Appellant also challenges the trial court’s resolution of a number of its affirmative
defenses.
A. The releases did not make the class over-inclusive.
Appellant asserts that the trial court failed to exclude from the class employees
who signed releases upon termination. Contract principles apply in interpreting releases;
and contract interpretation is normally a legal question requiring independent review.
(Benedek v. PLC Santa Monica (2002) 104 Cal.App.4th 1351, 1356.) The goal in
interpreting a release is “to ascertain the parties’ actual intent at the time they made the
contract.” (Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 528 citing Civ. Code,
§ 1636.) “A contract must receive such an interpretation as will make it lawful,
operative, definite, reasonable, and capable of being carried into effect, if it can be done
without violating the intention of the parties.” (Civ. Code, § 1643.)
Section 223.7 requires an employer to pay for all vested vacation to terminated
employees as wages and prohibits the employer from having a policy providing for
forfeiture of vested vacation time. Section 201, subdivision (a) provides that upon
discharge “the wages earned and unpaid at the time of discharge are due and payable
immediately.” Section 219, subdivision (a) provides that section 223.7 cannot “in any
way be contravened or set aside by private agreement, whether written, oral or implied.”
Moreover, section 219 prohibits employers and employees from “even voluntarily”
agreeing to circumvent section 227.3. (Schachter v. Citigroup, Inc. (2009) 47 Cal.4th
610, 619.) Similarly, the general prohibition against waiver of public benefits statutes
prohibits circumvention of section 227.3’s protections. (Henry v. Amrol, Inc., supra, 222
Cal.App.3d Supp. at pp. 6–7.)
In addition, wage dispute releases are governed by sections 206 and 206.5.
Section 206, subdivision (a) states: “In case of a dispute over wages, the employer shall
pay, without condition and within the time set by this article, all wages, or parts thereof,
conceded by him to be due, leaving to the employee all remedies he might otherwise be
entitled to as to any balance claimed.” Section 206.5, subdivision (a) provides: “An

28
employer shall not require the execution of a release of a claim or right on account of
wages due, or to become due, or made as an advance on wages to be earned, unless
payment of those wages has been made. A release required or executed in violation of
the provisions of this section shall be null and void as between the employer and the
employee. Violation of this section by the employer is a misdemeanor.” Nevertheless, a
release may be effective in the case of a bona fide wage dispute and the employee accepts
benefits in exchange for a release of all claims. (See, e.g., Aleman v. AirTouch Cellular
(2012) 209 Cal.App.4th 556, 577–578; Watkins v. Wachovia Corp. (2009) 172
Cal.App.4th 1576, 1586–1587; Chindarah v. Pick Up Stix, Inc. (2009) 171 Cal.App.4th
796, 802–804.)
At issue here is whether 25 releases signed by terminated employees were meant
to cover forfeited vested vacation time. The question is whether the evidence showed as
a matter of law bona fide disputes with the 25 employees over the vacation wages and
acceptance of benefits in exchange for the release of all claims. But, there was no
evidence that any of releases concerned an actual dispute over lost or forfeited vacation
time. It is not apparent from any of the releases that the parties intended to compensate
the terminated employees for illegally lost or forfeited vacation pay. Thus, there is no
basis for concluding any of the releases were intended to compensate the terminated
employees for any lost or forfeited vacation pay. The trial court did not err in refusing to
exclude the 25 members who had signed releases.
B. Appellant was not entitled to rely on the statute of limitations as a
defense.
Appellant argues the class was overly inclusive because it included claims barred
by the four-year statute of limitations in Code of Civil Procedure section 337. The statute
of limitations for bringing a claim under section 227.3 is four years if the vacation pay
claim is based on a written contract or policy or two years if the claim is an oral contract
or policy. (Code Civ. Proc., §§ 337, subd. 1, 339, subd. 1; Church v. Jamison (2006) 143
Cal.App.4th 1568, 1577.) Citing Sequeira v. Rincon-Vitova Insectaries, Inc. (1995) 32
Cal.App.4th 632 (Sequeira), the trial court concluded that “the statute of limitations is

29
tolled where [appellant] had a vacation policy that required employees to forfeit vacation
and personal choice days for years.”
We agree with respondent that the result in this case is controlled by the reasoning
of Reynolds v. Workmen’s Comp. Appeals Bd. (1974) 12 Cal.3d 726 (Reynolds). In
Reynolds, after an employee suffered a heart attack at work, his employer failed to give
the employee requisite workers’ compensation benefits notices. (Id. at pp. 727–728.)
The Workers’ Compensation Appeals Board concluded the employee’s workers’
compensation claim filed almost three years later was untimely. Reynolds rejected the
contention the employee’s claim was time-barred because the employer failed to notify
the injured employee of his rights under the law. (Id. at pp. 728–730.) Reynolds noted
that the employer had statutory obligations to notify an injured employee of rights under
the workers’ compensation law. (Id. at pp. 729–730.) “The clear purpose of these rules
is to protect and preserve the rights of an injured employee who may be ignorant of the
procedures or, indeed, the very existence of the workmen’s compensation law. Since the
employer is generally in a better position to be aware of the employee’s rights, it is
proper that he should be charged with the responsibility of notifying the employee, under
circumstances such as those existing here, that there is a possibility he may have a claim
for workmen’s compensation benefits.” (Id. at p. 729.) Because the employer failed to
give obligatory notices, “it [could] not raise the technical defense of the statute of
limitations to defeat [the employee’s] claim.” (Id. at p. 730.)
Evidence Code section 623 provides in this respect: “Whenever a party has, by
his own statement or conduct, intentionally and deliberately led another to believe a
particular thing true and to act upon such belief, he is not, in any litigation arising out of
such statement or conduct, permitted to contradict it.” Evidence Code section 623 is a
codification of one aspect of equitable estoppel. (Lantzy v. Centex Homes (2003) 31
Cal.4th 363, 384.) However, an estoppel may arise from a defendant’s conduct even if
there is no “‘“designed fraud”’” in the defendant’s conduct. (Ibid.) “‘“To create an
equitable estoppel, ‘it is enough if the party has been induced to refrain from using such
means or taking such action as lay in his power, by which he might have retrieved his

30
position and saved himself from loss.’ . . . ‘. . . Where the delay in commencing action is
induced by the conduct of the defendant it cannot be availed of by him as a defense.’”’
[Citations.]” (Ibid.)
The aforementioned authorities support the conclusion appellant’s unlawful policy
precluded appellant from relying on the statute of limitations as a defense. (Evid. Code,
§ 623; Reynolds, supra, 12 Cal.3d at p. 729.) Since 1991, appellant has enforced a use it
or lose policy against its employees in violation of section 227.3.
However, appellant claims respondent cannot rely on Reynolds because it involves
“equitable estoppel” principles, rather than “tolling” principles, which was the basis of
the trial court’s decision. Our Supreme Court explained the distinction between equitable
tolling and equitable estoppel in Lantzy v. Centex Homes, supra, 31 Cal.4th at page 383.
“‘“Tolling, strictly speaking, is concerned with the point at which the limitations period
begins to run and with the circumstances in which the running of the limitations period
may be suspended. . . . Equitable estoppel, however, . . . comes into play only after the
limitations period has run and addresses . . . the circumstances in which a party will be
estopped from asserting the statute of limitations as a defense to an admittedly untimely
action because his conduct has induced another into forbearing suit within the applicable
limitations period. [Equitable estoppel] is wholly independent of the limitations period
itself and takes its life . . . from the equitable principle that no man [may] profit from his
own wrongdoing in a court of justice.”’ [Citations.] Thus, equitable estoppel is available
even where the limitations statute at issue expressly precludes equitable tolling.
[Citations.]” (Id. at pp. 383–384.)
“The equitable tolling of statutes of limitations is a judicially created, nonstatutory
doctrine. [Citations.] It is ‘designed to prevent unjust and technical forfeitures of the
right to a trial on the merits when the purpose of the statute of limitations—timely notice
to the defendant of the plaintiff’s claims—has been satisfied.’ [Citation.] Where
applicable, the doctrine will ‘suspend or extend a statute of limitations as necessary to
ensure fundamental practicality and fairness.’ [Citation.] [¶] Though the doctrine
operates independently of the language of the Code of Civil Procedure and other codified

31
sources of statutes of limitations [citations], its legitimacy is unquestioned. We have
described it as a creature of the judiciary’s inherent power ‘“to formulate rules of
procedure where justice demands it.”’ [Citations.]” (McDonald v. Antelope Valley
Community College Dist. (2008) 45 Cal.4th 88, 99–100.)
The equitable tolling doctrine broadly applies when an injured party reasonably
and in good faith pursues one of several legal remedies. (McDonald v. Antelope Valley
Community College Dist., supra, 45 Cal.4th at p. 99; Elkins v. Derby (1974) 12 Cal.3d
410, 414.) “Thus, it may apply where one action stands to lessen the harm that is the
subject of a potential second action; where administrative remedies must be exhausted
before a second action can proceed; or where a first action, embarked upon in good faith,
is found to be defective for some reason.” (McDonald v. Antelope Valley Community
College Dist., supra, at p. 100.)
We are not persuaded that the trial court’s refusal to allow the statute of limitations
as an affirmative defense was error because the trial court referred to “tolling” language
in Sequeira.
First, although appellant is correct that there is a distinction between equitable
tolling and equitable estoppel, it is of no consequence in this case. This is because the
discussion in Sequeira was not predicated upon equitable tolling principles; but, it was
based upon equitable estoppel principles. There was no claim in Sequeira that an
employee was seeking one of several remedies so that equitable tolling applied. (Addison
v. State of California (1978) 21 Cal.3d 313, 317.) Rather, the discussion concerned
whether an employer’s forfeiture policy could bar a statute of limitations defense. As
such, the issue is not one of tolling but of an estoppel, which are two distinct doctrines.5

5 The use of “equitable tolling” language in Sequeira is more in line with the federal
principles. (See, e.g., Sagehorn v. Engle (2006) 141 Cal.App.4th 452, 460–461
[discussing equitable tolling in regard to a federal Securities Act of 1933 claim, which
requires proof of: “‘fraudulent conduct by the defendant resulting in concealment of the
operative facts, failure of the plaintiff to discover the operative facts that are the basis of
its cause of action within the limitations period, and due diligence by the plaintiff’”].)

32
 Second, the fact that the trial court relied on “equitable tolling” language in
Sequeira does not require a different result. We review a trial court’s ruling as opposed
to its reasons for the decision. (Oiye v. Fox (2012) 211 Cal.App.4th 1036, 1049.) The
ruling in this case was that appellant’s conduct barred it from asserting the statute of
limitations as a defense. The trial court concluded appellant’s vacation policy violated
section 227.3 by requiring its employees to use it or lose vacation days. The undisputed
evidence showed that since 1991 appellant advised its employees that they could not
carry over vacation days. Appellant repeatedly misrepresented (or concealed from) its
employees that they had a statutory right to be paid unused vacation on termination. The
misrepresentations were repeatedly made to class members through appellant’s written
policies over the course of years. Appellant’s human resources employee testified that
terminated employees were only paid for the vacation time accrued during the last year.
Furthermore, appellant never disclosed that the employees could carry over the vacation
time. Appellant also did not disclose that it had a statutory obligation under section 227.3
to pay any unused vacation time on termination. Indeed, the evidence shows that when
the illegal policy was brought to appellant’s attention through class member
Washington’s administrative remedy in 2003, appellant did nothing to correct its policy.
Rather, it continued to advise its employees they were required to use all their vacation
time. By concealing its unlawful conduct from its employees, appellant precluded class
members from bringing the action within the statutory period. Reynolds supports the trial
court’s conclusion that the statute of limitations was not available to appellant as a
defense notwithstanding a reference to “tolling” language. (Evid. Code, § 623.)
Third, appellant cannot prevail on its claim the estoppel principles were asserted
for the first time on appeal. It is true that, because estoppel is an affirmative defense, it
must be pled and proved as a bar to a statute of limitations defense. (See Ard v. County
of Contra Costa (2001) 93 Cal.App.4th 339, 347–348; Munoz v. State of California
(1995) 33 Cal.App.4th 1767, 1785.) But, the record shows that the issue of whether the
appellant’s conduct precluded the affirmative defense was litigated. When respondent
sought to file the first amended complaint, appellant asserted the statute of limitations

33
barred claims dating back to 1991. The trial court granted leave to amend on the ground
that appellant’s conduct precluded use of the statute of limitations under standards
articulated in Sequeira (i.e., an employer’s forfeiture policy would bar a statute of
limitations defense). In addition, the first amended complaint alleged facts sufficient to
support the estoppel theory. The first amended complaint alleged appellant had since
1991 and continued to have a policy which denied employees wages. Paragraph No. 14
alleges that appellant “falsely and wrongfully represented to its employees that accrued
vacation and accrued personal choice days are not earned wages.” Thus, the issue of
whether appellant’s conduct barred use of the statute of limitations as a defense to this
class action was litigated.
C. Collateral estoppel and res judicata principles do not bar two class
members.
Appellant claims that class members Washington and Martin should be excluded
under collateral estoppel and res judicata principles because they recovered damages for
portions of unused vacation in administrative proceedings.
Res judicata bars a subsequent action when the party asserting it proves identical
claims; a final judgment; and the party against whom the doctrine is asserted was a party
or in privity with a party in the prior adjudication. (Levy v. Cohen (1977) 19 Cal.3d 165,
171; Nathanson v. Hecker (2002) 99 Cal.App.4th 1158, 1162.) “‘The doctrine of
res judicata precludes parties or their privies from relitigating a cause of action that has
been finally determined by a court of competent jurisdiction.’ [Citation.]” (Kopp v. Fair
Pol. Practices Com. (1995) 11 Cal.4th 607, 620.) A matter will be deemed decided by a
prior judgment if it was raised or conclusively determined. (Sutphin v. Speik (1940) 15
Cal.2d 195, 202.) “But the rule goes further. If the matter was within the scope of the
action, related to the subject-matter and relevant to the issues, so that it could have been
raised, the judgment is conclusive on it despite the fact that it was not in fact expressly
pleaded or otherwise urged.” (Ibid.; In re Marriage of Mason (1996) 46 Cal.App.4th
1025, 1028.)

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 “The application of the doctrine [of res judicata] . . . depends upon an affirmative
answer to these questions: ‘(1) Was the issue decided in the prior adjudication identical
with the one presented in the action in question? (2) Was there a final judgment on the
merits? (3) Was the party against whom the plea is asserted a party to or in privity with a
party to the prior adjudication?’” (Levy v. Cohen, supra, 19 Cal.3d at p. 171; Nathanson
v. Hecker, supra, 99 Cal.App.4th at p. 1162.)
Collateral estoppel is the issue preclusion aspect of res judicata. (Vandenberg v.
Superior Court (1999) 21 Cal.4th 815, 828; Lucido v. Superior Court (1990) 51 Cal.3d
335, 341, fn. 3.) The collateral estoppel aspect of the res judicata “may also preclude a
party to prior litigation from redisputing issues therein decided against him, even when
those issues bear on different claims raised in a later case.” (Vandenberg v. Superior
Court, supra, at p. 828; Lucido v. Superior Court, supra, at p. 341.) “Collateral estoppel
(like the narrower ‘claim preclusion’ aspect of res judicata) is intended to preserve the
integrity of the judicial system, promote judicial economy, and protect litigants from
harassment by vexatious litigation. [Citation.] However, even where the minimal
prerequisites for invocation of the doctrine are present, collateral estoppel ‘“is not an
inflexible, universally applicable principle; policy considerations may limit its use where
the . . . underpinnings of the doctrine are outweighed by other factors.”’ [Citations.]”
(Vandenberg v. Superior Court, supra, at p. 829.)
“Collateral estoppel may be applied to decisions made by administrative agencies
‘[w]hen an administrative agency is acting in a judicial capacity and resolves disputed
issues of fact properly before it which the parties have had an adequate opportunity to
litigate.’” (People v. Sims (1982) 32 Cal.3d 468, 479 superseded by statute on a different
point as stated in Gikas v. Zolin (1993) 6 Cal.4th 841, 851; Noble v. Draper (2008) 160
Cal.App.4th 1, 10.) An administrative decision can have conclusive and binding effects
on necessarily decided issues in a later civil action so long as the administrative
proceeding had the requisite judicial character. (State Bd. of Chiropractic Examiners v.
Superior Court (2009) 45 Cal.4th 963, 975–976; McDonald v. Antelope Valley
Community College Dist., supra, 45 Cal.4th at p. 113.)

35
 The application of collateral estoppel and res judicata doctrines are legal questions
subject to de novo review. (Noble v. Draper, supra, 160 Cal.App.4th at p. 10; Roos v.
Red (2005) 130 Cal.App.4th 870, 878.) The party asserting the application of res judicata
has the burden of proving the requirements. (Lucido v. Superior Court, supra, 51 Cal.3d
at p. 341; Vella v. Hudgins (1977) 20 Cal.3d 251, 257.) A de novo review shows that the
trial court did not err in determining that neither res judicata nor collateral estoppel
precluded these class members from participating in the judgment.
At issue here is whether the doctrines should be applied against two class
members who obtained Labor Commissioner awards: Martin (for the period of
January 1, 2001 to December 31, 2004); and Washington (for earned vacation wages for
the period of January 1 to May 22, 2006). The class members claim that they could not
have litigated the vacation policy issue because prior to March 2007 the Division of
Labor Standards Enforcement (DLSE) enforced Interpretive Bulletin No. 87-7 issued on
July 29, 1987. Under that policy, regarding the application of the statute of limitations to
vacation pay claims under Labor Code section 227.3, employees were precluded from
seeking damages for vacation that accrued more than four years before termination.
Sequeira, supra, 32 Cal.App.4th at page 635 relied on the 1987 DLSE policy to
conclude that the statute began running as the vacation time was earned. Sequeira
explained: “The bulletin defines and regulates when an employee may make a claim for
payment of unused contractual vacation time which comports with equity under Labor
Code section 227.3 and with the applicable statutes of limitation. Unless tolled by a
contractual or policy provision which forces employees to use or lose earned vacation
time, one has four years from the date of termination to bring an action for compensation
for vested time not claimed under a written contract of employment. One may claim
payment only for unused time accrued during the four-year period preceding termination.
(DLSE Interpretive Bulletin No. 87.7.)” (Id. at p. 636.) Sequeira considered whether an
employee could recover for unused vacation time he had accumulated over 12 years of
employment. (Id. at pp. 633–634.) Sequeira concluded the employee was not entitled to
recover for all the unused vacation time over a 12-year employment. (Id. at p. 637.)

36
Rather, he was only entitled to recover for unused vacation time within a four-year
limitation period from the date of termination. (Id. at pp. 634, 636–637.)
Church v. Jamison, supra, 143 Cal.App.4th 1568 subsequently disagreed with
Sequeira’s conclusion that the statute of limitations on vacation pay begins to run as it
accrues. Instead, Church concluded the employer’s obligation to pay an employee for
unused vacation benefits under section 227.3 is triggered by termination of employment.
(Church v. Jamison, supra, at p. 1576.) Church held a cause of action to enforce the
statutory right to be paid for vested vacation accrues on the date employment is
terminated. (Id. at p. 1577.)
Both parties agree that the DLSE’s policy was abandoned in March 2007, which
was after both these individual class member claims were decided. Thus, respondent is
correct that the claims could not have been pursued in the administrative action prior to
2007 because both administrative law and Sequeira limited an employee’s right to
recover vacation time which had accrued more than four years before termination.
Neither collateral estoppel nor res judicata principles bar them from class membership.
VI. The Use of Gross Wages to Calculate Lost Wages
Appellant claims the trial court erred in basing the calculations on gross pay rather
than base rate of pay. We agree.
Respondent claims the trial court did not err based on express language defining
wages in section 200. Section 200, subdivision (a) provides that a wage “includes all
amounts for labor performed by employees of every description, whether the amount is
fixed or ascertained by the standard of time, task, piece, commission basis, or other
method of calculation.” Our Supreme Court has held: “We construe the term ‘wages’
broadly to ‘include not only the periodic monetary earnings of the employee but also the
other benefits to which he is entitled as a part of his compensation.’ [Citation.] ‘Courts
have recognized that “wages” also include those benefits to which an employee is entitled
as a part of his or her compensation, including money, room, board, clothing, vacation
pay, and sick pay. [Citations.]’ [Citation.] Incentive compensation, such as bonuses and

37
profit-sharing plans, also constitute wages. [Citations.]” (Schachter v. Citigroup, Inc.,
supra, 47 Cal.4th at p. 618.)
However, we agree with appellant that the trial court erred in calculating the rate
of vacation pay to include the commission. Section 227.3 specifically states that on an
employee’s termination “all vested vacation shall be paid to him as wages at his final rate
in accordance with such contract of employment or employer policy respecting eligibility
or time served . . . .” Appellant’s policy has always stated that vacation pay is calculated
at “base rate.” Thus, the trial court erred in concluding that the vacation pay should be
calculated using the commission when the employer’s policy provides otherwise.
This result is consistent with two DLSE opinion letters cited by appellant, which
explain the rate of vacation pay is determined by the employer or contract. An agency’s
interpretation of a statute, while not binding, is entitled to consideration by the courts.
(Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7–8.)
Opinion Letter 2003.01.21 states that California law allows an employer to
“choose to have a vacation policy which promises to pay a sum while the employee is on
vacation which bears no relationship to the wage normally paid to the worker.” Opinion
Letter 2003.01.21 further explains that “the term ‘final rate’ as used in Section 227.3
refers to the final rate at which vacation benefits would be paid under the applicable
contract of employer policy were the employee to take vacation.”
Opinion Letter 2003.01.28 provides: “If the contract of employment bases the
vacation pay to be received by the employee on a calculation which includes the base
salary and the bonuses, the employee would, of course, be entitled to recover unused
vacation pay based on the base salary ‘at the final rate’ and the bonus based on the rate at
which the bonus was calculated.” Opinion Letter 2003.01.28 further states: “If, on the
other hand, the employer policy simply provides that the vacation paid to an employee is
base on the base salary then, obviously, the unpaid vacation would be based on the same
criteria calculated at the final rate of that base salary.”

38
 In sum, the trial court erred in concluding the employer’s express policy on
vacation pay should be ignored. Section 227.3 expressly states that the rate of vacation
pay due on termination is set by employer policy or contract.
VII. Vacation Time From IBM
Appellant claims the trial court improperly included forfeited vacation time which
had accrued while employed by IBM. The evidence showed appellant began operating as
a “spinoff” of IBM in 1991. When it began operating, appellant hired class members,
who were formerly employed by IBM. As part of their new employment terms, class
members were permitted to carry over vacation, which had been accrued while they were
employed with IBM. Appellant subsequently revised the agreement allowing the carry
over. However, the trial court determined that the revised terms were based on a “use it
or lose it” policy, which violated section 227.3. The trial court’s conclusion that the
hours should be included in the damages calculations must be upheld because it was
supported by the evidence. (Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 531–532.)
VIII. Rejection of Appellant’s Expert’s Calculations
Appellant claims its expert’s calculations were “improperly rejected” by the trial
court. We review a trial court’s rejection or acceptance of an expert’s opinion for abuse
of discretion. (People v. Williams (1997) 16 Cal.4th 153, 196–197; Bell v. Farmers Ins.
Exchange, supra, 115 Cal.App.4th at pp. 748–749.) An abuse of discretion is established
when the ruling exceeds the bounds of reason. (Burton v. Sanner (2012) 207 Cal.App.4th
12, 18; North American Capacity Ins. Co. v. Claremont Liability Ins. Co. (2009) 177
Cal.App.4th 272, 285.)
Notwithstanding appellant’s attempt to characterize the issue as a legal challenge,
the issue is really an evidentiary one. In addition, appellant points to a number of
purported deficiencies in the trial court’s findings and “criticisms” of its expert. The
parties presented competing and conflicting expert testimony on methodologies to prove
class damages. It was in the trial court’s province to weigh and resolve conflicts and
choose the appropriate methodology that would best compensate the class members.
(In re Marriage of Ackerman (2006) 146 Cal.App.4th 191, 204; Bell v. Farmers Ins.

39
Exchange, supra, 115 Cal.App.4th at pp. 748–749.) Appellate courts do not reweigh
evidence or reassess the credibility of witnesses. (In re Marriage of Balcof (2006) 141
Cal.App.4th 1509, 1531.) Appellant has failed to establish an abuse of discretion under
the circumstances of this case.
IX. Attorney Fees and Costs
Appellant contends the attorney fee award: was made on an untimely motion; was
excessive based on the multiplier; and otherwise was an abuse of discretion. Appellant
further contends the trial court abused its discretion in awarding nonrecoverable costs.
A. The attorney fees motion was timely.
According to appellant, the attorney fees motion was untimely. The time limits
for filing an attorney fees motion do not run until entry of a judgment at the conclusion of
the litigation. (Carpenter v. Jack In The Box Corp. (2007) 151 Cal.App.4th 454, 462–
468; see also Crespin v. Shewry (2004) 125 Cal.App.4th 259, 270–271.)
The trial court originally entered judgment on September 20, 2010. On
October 18, 2010, appellant filed a new trial motion. On November 17, 2010, the trial
court granted appellant’s new trial motion in part; vacated the damages award and
reopened the case for a new trial on the portion of damages related to current employees.
On March 7, 2011, after additional briefing and expert declarations, the trial court issued
an order ruling on damages calculations in response to appellant’s new trial motion. On
April 21, 2011, the trial court entered an order stating: “The Judgment signed and filed
by this Court on [September 9, 2010] is amended as to the amount of the damage award
only. The original judgment, as amended, stands.”
Respondent filed an attorney fees motion on June 20, 2011, which was set for
hearing on July 29, 2011. Appellant claims the attorney fee award was untimely.
California Rules of Court, rule 3.1702(b) provides: “A notice of motion to claim
attorney’s fees for services up to and including the rendition of judgment in the trial
court—including attorney’s fees on an appeal before the rendition of judgment in the trial
court—must be served and filed within the time for filing a notice of appeal under
rules 8.104 and 8.108 in an unlimited civil case or under rules 8.822 and 8.823 in a

40
limited civil case.” Because the new trial motion was granted in part, the September
2010 judgment was effectively vacated, the amended judgment became the final
judgment of the court. (Neff v. Ernst (1957) 48 Cal.2d 628, 634–635; Avenida San Juan
Partnership v. City of San Clemente (2011) 201 Cal.App.4th 1256, 1267–1268.) This
rule applies even in the case of a partial new trial because to hold otherwise would violate
the one final judgment rule. (Beavers v. Allstate Ins. Co. (1990) 225 Cal.App.3d 310,
329.) Here, an amended judgment was filed on April 21, 2011 after the trial court
granted a partial new trial. The attorney fees motion was filed within 60 days after entry
of the amended judgment. The attorney fees motion was timely. (Cal. Rules of Court,
rules 3.1702(b), 8.104, 8.108; Sanchez v. Strickland (2011) 200 Cal.App.4th 758, 765.)
B. The attorney fees were reasonable.
Appellant claims the attorney fees awarded were excessive and unreasonable
under a lodestar approach. The method requires the trial court to first determine a
touchstone or lodestar, which is the number of hours reasonably, expended multiplied by
a reasonable hourly compensation for each attorney. (Ketchum v. Moses (2001) 24
Cal.4th 1122, 1134; PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095; Serrano
v. Priest (1977) 20 Cal.3d 25, 48.) The trial court may then adjust the lodestar figure
upward or downward by taking various “relevant factors” into account. (Chavez v. City
of Los Angeles (2010) 47 Cal.4th 970, 985; Ketchum v. Moses, supra, at p. 1132; Serrano
v. Priest, supra, at p. 48.)
The Supreme Court has also noted: “The ‘lodestar adjustment method of
calculating attorney fees set forth in Serrano III [Serrano v. Priest (1977) 20 Cal.3d 25]
is designed expressly for the purposes of maintaining objectivity.’ [Citation.] The trial
judge ultimately has discretion to determine the value of the attorney services.
‘However, since determination of the lodestar figure is so “[f]undamental” to calculating
the amount of the award, the exercise of that discretion must be based on the lodestar
adjustment method.’ [Citation.]” (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295
quoting Press v. Lucky Stores, Inc. (1983) 34 Cal.3d 311, 322.)

41
 In this case, the trial court found that a multiplier of 2.0 was warranted. Appellant
claims no enhancement was warranted. Our Supreme Court has identified the relevant
factors in the determination as follows: “Among these factors were: (1) the novelty and
difficulty of the questions involved, and the skill displayed in presenting them; (2) the
extent to which the nature of the litigation precluded other employment by the attorneys;
(3) the contingent nature of the fee award, both from the point of view of eventual victory
on the merits and the point of view of establishing eligibility for an award; (4) the fact
that an award against the state would ultimately fall upon the taxpayers; (5) the fact that
the attorneys in question received public and charitable funding for the purpose of
bringing law suits of the character here involved; (6) the fact that the monies awarded
would inure not to the individual benefit of the attorneys involved but the organizations
by which they are employed; and (7) the fact that in the court’s view the two law firms
involved had approximately an equal share in the success of the litigation.” (Serrano v.
Priest, supra, 20 Cal.3d at p. 49, fn. omitted.)
In applying these factors, the trial court’s analysis is anchored to an objective
determination of the value of the services so that the amount awarded is not arbitrary.
(Ketchum v. Moses, supra, 24 Cal.4th at p. 1134; PLCM Group, Inc. v. Drexler, supra,
22 Cal.4th at p. 1095.) Ultimately, though “‘[t]he experienced trial judge is the best
judge of the value of professional services rendered in his court, and while his judgment
is of course subject to review, it will not be disturbed unless the appellate court is
convinced that it is clearly wrong.’” (PLCM Group, Inc. v. Drexler, supra, at p. 1095.)
The trial court found that use of enhancement multiplier of 2.0 was warranted “due
to the length of the case (over 5 years), the complexities of the matter (often the result of
the contentiousness of the litigation), the results obtained for the client (over $7 million in
damages as well as an injunction against the Defendant), the thousands of hours spent on
the case which precluded other employment by the attorneys, and the substantial risk to
the attorneys involved due to the contingent nature of the fee award.”
Appellant attacks the trial court’s determination that a multiplier was warranted as
a “windfall” under standards articulated in Flannery v. California Highway Patrol (1998)

42
61 Cal.App.4th 629 and Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128.
Appellant asserts: respondent’s counsel “touted themselves as top-notch attorneys
commanding top rates” so the questions were not novel or difficult for them; the
attorneys were not meaningfully or substantially kept from other legal work; the risk
involved did not justify an upward adjustment; and the result obtained “was not as great
as it seems at first blush.” None of these arguments are persuasive. We have examined
the entire voluminous record in the case including: the complexity of issues; the
contentious nature of the pretrial, trial, and posttrial proceedings; and the amount of
briefing and rebriefing of issues which occurred during the proceedings. In addition, five
writs were taken in this case. Appellant also tried to remove the case to federal court.
Respondent’s counsel worked on the case for over five years and spent 5,200 hours and
$300,000 litigating the case. We are convinced that the trial court did nothing wrong in
determining the value of services rendered by respondent’s counsel. (Maria P. v. Riles,
supra, 43 Cal.3d at p. 1295.)
Appellant also claims the trial court included appellate work in the award. But,
the record shows that respondent conceded that $14,932.50 spent on the appeal should be
excluded. So the amount was not included in the attorney fee award.
Appellant contends respondent obtained attorney fees for his unsuccessful
commission claims. Respondent’s counsel declared that hours spent solely litigating the
individual claims including the trial dates were excised from the attorney fees request.
The trial court found respondent’s 200-hour discount plus a 5 percent reduction “was
adequate for the three days of time dealing [with] at least a portion of [respondent’s]
individual claim” was sufficient. We cannot reweigh or discount the trial court resolution
of this factual matter.
Similarly, appellant cannot prevail on additional challenges to other factual
resolutions by the trial court and the exercise of its discretion to reject appellant’s
objections to particular tasks. “Where a lawsuit consists of related claims, and the
plaintiff has won substantial relief, a trial court has discretion to award all or substantially
all of the plaintiff’s fees even if the court did not adopt each contention raised.” (See

43
Downey Cares v. Downey Community Development Com. (1987) 196 Cal.App.3d 983,
997.) The trial court rejected appellant’s contentions regarding time spent for work on
motions in limine and other jury related work. Rather, the trial court found that,
notwithstanding the jury waiver, some of the in limine motions were granted and were
useful at trial as to admission of evidence. Appellant has failed to establish the trial court
abused its discretion in rejecting appellant’s objections to any fees related to the in limine
motions. Appellant has also not established the trial court abused its discretion in
allowing attorney fees for unsuccessful motions and relief from a late expert designation.
Appellant also claims the trial court should have excluded time for the unfair
competition claims under the Business and Professions Code. But, the trial court did not
abuse its discretion because the unfair competition claims in this case were “interrelated.”
(See Pellegrino v. Robert Half Internat., Inc. (2010) 182 Cal.App.4th 278, 288–289; see
also Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129–130.) Proof of the
unfair competition claim required proof of the vacation policy embodied in section 227.3.
The trial court’s exercise of its discretion under the circumstances did not exceed the
bounds of reason under all the circumstances. (Amtower v. Photon Dynamics, Inc. (2008)
158 Cal.App.4th 1582, 1604.)
Finally, there is no basis to set aside the $146,783.50 award for the attorney fees
motion. The fee was based on 129.15 hours for fee-related work. Appellant has not
demonstrated that the attorney fees were unreasonable as a matter of law because they
were sought for “a single motion.” (Serrano v. Unruh (1982) 32 Cal.3d 621, 639.) The
record in this case establishes the contrary.
C. The cost award was within the trial court’s discretion.
Appellant claims the trial court abused its discretion in awarding unnecessary and
unrecoverable costs. The right to recover costs is purely statutory. (Davis v. KGO-T.V.,
Inc. (1998) 17 Cal.4th 436, 439; Boonyarit v. Payless Shoesource, Inc. (2006) 145
Cal.App.4th 1188, 1192.) Code of Civil Procedure section 1032, subdivision (b)
provides: “Except as otherwise expressly provided by statute, a prevailing party is
entitled as a matter of right to recover costs in any action or proceeding.” As a general

44
rule, the costs of a civil action include the expenses of litigation, excluding attorney fees.
(Davis v. KGO-T.V., Inc., supra, at p. 439.) Code of Civil Procedure section 1033.5,
subdivisions (a) and (b), set forth allowable or not allowable items as costs, respectively.
Code of Civil Procedure section 1033.5, subdivision (c)(4), however, allows the trial
court at its discretion to allow or deny any costs not specifically mentioned in the section.
Appellant contends the trial court should have taxed costs for: expert witness fees
in the amount of $65,030; unnecessary high tech equipment in the amount of $18,393.87;
miscellaneous expenses; and $8,752.56 in computerized research.
Appellant also claims the trial court abused its discretion in failing to strike
$65,030 in costs for the expert fees. Code of Civil Procedure section 1033.5,
subdivision (b)(1) does not allow as costs “[f]ees of experts not ordered by the court.” In
the absence of a court order appointing the expert, the fees are not recoverable. (Davis v.
KGO-T.V., Inc., supra, 17 Cal.4th at pp. 439–442; Sanchez v. Bay Shores Medical Group
(1999) 75 Cal.App.4th 946, 950.) The record shows that, in awarding the costs, the trial
court found that it had ordered the parties to submit additional expert testimony to assist
the trial court in the partial new trial on damages. The trial court found: “[I]t would have
been exceedingly difficult to comply with the court’s order otherwise. The complexities
of the damage calculations in this case have required expert involvement not only to
establish the formulas behind the calculations but also to apply those formulas on the
addition of new facts.” The appointment was in accordance with Evidence Code
section 730, so the fees are recoverable. (Sanchez v. Bay Shores Medical Group, supra,
at p. 950.)
Appellant has not cited any authority which shows that the costs for the so-called
“high tech” equipment in the amount of $18,393.87 were not recoverable. Contrary to
appellant’s contentions, Science Applications Internat. Corp. v. Superior Court (1995) 39
Cal.App.4th 1095 does not establish that the trial court abused its discretion in allowing
costs for a PowerPoint presentation computerized, equipment rental, technician, to
present exhibits to the trial court on a monitor. Science Applications was not followed by
the court in El Dorado Meat Co. v. Yosemite Meat & Locker Service, Inc. (2007) 150

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Cal.App.4th 612. El Dorado concluded that, even assuming the costs are not allowable
for models and blowups (Code Civ. Proc., § 1033.5, subd. (a)(12)), the recovery of the
costs including labor to support the displays is discretionary with the court. (El Dorado
Meat Co. v. Yosemite Meat & Locker Service, Inc., supra, at pp. 617–618.) Because the
costs are discretionary, appellant was required to establish the costs were unreasonably
high such that the trial court abused its discretion in allowing them.
Similarly, appellant failed to establish the trial court abused its discretion in
awarding costs in the following amounts for: unspecified travel costs ($15,572.71);
messenger service fees ($5,213.85); and routine expenses such as parking ($1,170.13),
hotel and rental car expense ($295.48); and weekend air conditioning ($280).
Appellant also challenges an item of cost for $8,204.07 for computerized legal
research which it concedes the trial court denied. Appellant claims the trial court then
improperly award the item in the attorney fee award. We agree with respondent that the
costs were recoverable as attorney fees. (See Plumbers & Steamfitters, Local 290 v.
Duncan (2007) 157 Cal.App.4th 1083, 1099.)

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 DISPOSITION
The amended judgment is reversed insofar as it awards damages calculated at the
gross rate of pay rather than at the base rate. The matter is remanded for the trial court to
recalculate damages in accordance with the views expressed in this opinion. In all other
respects, the amended judgment is affirmed. Respondent, Ron Molina, is awarded his
costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

_____________________, J. *
FERNS
We concur:

____________________________, Acting P. J.
ASHMANN-GERST

____________________________, J.
CHAVEZ

* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

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