An employee's labor is not property that can be stolen, state appeals court rules

By Karen Kidd | Aug 12, 2018

Mill workers in Macon, Georgia in 1909  

SAN FRANCISCO — A person's labor is not property that can be stolen, a California appeals court ruled earlier this month in the case of a pharmaceutical software company's former vice president who said he was recruited by false promises so the firm could use his industry contacts and then fire him.

In its unanimous 24-page decision issued Aug. 3, a three-judge panel on California's First District Court of Appeal, Division Four, reversed a portion of a lower court's ruling that nonsuited a jury award to David Lacagnina against his former employer, Comprehend Systems, in 2015. 

The appeals court reinstated a full jury award to Lacagnina in the case but rejected his claim that his labor had been stolen.

"In the published portion of this opinion, we reject Lacagnina's contention that an employee who recovers a judgment against an employee for lost compensation has suffered a 'theft' of 'labor' for which he or she is entitled to recover treble damages and attorneys' fees," Judge Ethan P. Schulman wrote in the court's decision.

Mill workers in Macon, Georgia in 1909  

Schulman, a judge on San Francisco Superior Court, sat pro tem in the Lacagnina case.

Appeals Court Justice Jon B. Streeter and Justice Timothy A. Reardon concurred in the decision.

The appeals court affirmed the lower court order that granted Comprehend's motion for nonsuit but reversed the lower court order that granted judgment notwithstanding the verdict and remanded the case for the lower court to enter a corrected judgment in Lacagnina.

Lacagnina was for little more than a year vice president of business development for Comprehend Systems, from June 1, 2012,when he was hired by the company's cofounders, Richard Morrison and Jud Gardner, to his termination on Nov. 20, 2013, according to the background portion of the appeals court ruling. 

"The gist of Lacgnina's claims was that he was fraudulently induced to enter into an employment agreement with Comprehend by false representations made to him by Morrison and Gardner," the appeals court's ruling said.

In August 2015, a San Mateo County Superior Court jury handed down a special verdict awarding Lacagnina more than $555,000 in damages for fraud and emotional distress. The following October, the trial court granted Comprehend's motion for judgment notwithstanding the verdict, finding that Lacagnina had not been damaged by the alleged fraud, and entered an amended judgment of $255,000. Lacagnina appealed.

In its ruling, the appeals court restored the full jury award, saying labor itself can be stolen but is not property an employee owns, and voiced concern about what would happen if it were. "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," the ruling said.

"We cannot believe the legislature contemplated, much less intended, those consequences."

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