Employment: Penal Code Section 496(c) Does Not Allow Plaintiff Employee To Recover Treble Damages Or Attorney’s Fees On The Theory That Lost Compensation Is A “Theft” Of “Property”

Labor Is Not Property Under Section 496(c) From Statutory Or Policy Perspectives.

            In Lacagnina v. Comprehend Systems, Inc., Case No. A147559 (1^st Dist., Div. 4 Aug. 3, 2018) (partially published; Penal Code section 496 and fee discussion published), plaintiff, a former vice president of business development, sued defendant former employer and defendant’s co-founders on various lost compensation theories, including a claim that lost compensation was effectively a theft of property under Penal Code section 496(c)—a provision allowing for treble damages and attorney’s fees recovery. Eventually, plaintiff recovered $556,446 on some theories, but the trial judge non-suited the section 496 claim. The trial judge also granted a JNOV on the fraud claim and reduced the damages down to $225,000, although the appellate court reversed that reduction so that the ultimate judgment went back to $556,446.

            The published portion of the appeal dealt with whether lost compensation was “theft” of stolen “property” so as to allow for treble damages and fee recovery under section 496(c). The appellate court determined that “labor” was not mentioned in section 496(c) and that it was not the equivalent of “property” for purposes of the statute. It also believed that any other construction would result in a bad policy result: “If every plaintiff in an employment or contract dispute could also seek treble damages and attorneys’ fees on the ground that the defendant received ‘stolen property,’ such claims would become the rule rather than the exception, parties would more frequently assert claims for ‘theft’ in run-of-the-mill commercial disputes, and cases would be harder to settle. We cannot believe the Legislature contemplated, much less intended, those consequences when it enacted section 496, subdivision (c).”