The Court of Appeal's opinion in Bradstreet v. Wong, ___ Cal.App.4th ___ (Apr. 16, 2008) addresses "vested interest" restitution, which is one of the three types of UCL restitution. The California Supreme Court has held that the Labor Code gives employees a vested interest in earned but unpaid wages, which are therefore recoverable as restitution in a UCL action. Cortez v. Purolator Air Filtration Products Co., 23 Cal.4th 163 (2000); see slip op. at 19-20 (citing Cortez). In Bradstreet, the Court of Appeal (First Appellate District, Division One) held that a defunct corporation's individual owner-officers could not be required to restore unpaid wages earned by the corporation's employees. The plaintiff-employees had a vested right to be paid by the corporate employer, but that right did not extend to its owner-officers:
There is no dispute ... that the unpaid wages could be recovered from the Wins Corporations as restitution pursuant to Business and Professions Code section 17203. “[A]n order that a business pay to an employee wages unlawfully withheld is consistent with the legislative intent underlying the authorization in [Business and Professions Code] section 17203 for orders necessary to restore to a person in interest money or property acquired by means of an unfair business practice.” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 178.) ....
The issue in the case before us is whether [the individual] defendants, who were not the employers, and who were not found to have required any employee to work for them personally, or to have misappropriated corporate funds for their own use, may also be required to pay the earned but unpaid wages as restitution.
“[A]n order for restitution is one ‘compelling a UCL defendant to return money [or earned wages for service performed] obtained through an unfair business practice to those persons in interest from whom the property was taken, that is, to persons who had an ownership interest in the property or those claiming through that person.’ ” (Korea Supply, supra, 29 Cal.4th at p. 1149.) The problem with requiring defendants, rather than the Wins Corporations, to pay unpaid wages as restitution is that the labor intervener performed was not for defendants personally, but for the employers, the Wins Corporations. Defendants did not personally obtain the benefit of those services, and the duty to pay wages was owed by the corporations as employers, not by defendants as owners, officers or managers. (See Reynolds, supra, 36 Cal.4th at p. 1087.)
Nor is this a case in which defendants “misappropriated to themselves, as individuals for their individual advantage, the unpaid wages” the Wins Corporations owed. (Reynolds, supra, 36 Cal.4th at p. 1090.) Although intervener cites evidence that she contends establishes defendants did take funds out of the Wins Corporations for their personal use, the court, as trier of fact, found that defendants did not personally obtain any “money or gains from which to . . . pay restitution.” It resolved against intervener conflicts in the evidence on the issue of withdrawal of funds from the Wins Corporations for defendants’ personal use. It found, instead, that defendants “put far more personal funds into the corporations in the form of capital infusions and loans than were alleged to have been improperly taken out. . . . [E]vidence indicated capital contributions and loans from Defendants to the corporations in excess of $1,000,000. These capital contributions and loans came largely toward the end of the Wins Corporations’ existence in an unsuccessful effort to keep the corporations afloat.”
In the absence of a finding that intervener performed labor for defendants personally, rather than for the benefit of Wins Corporations, or that defendants appropriated for themselves corporate funds that otherwise would have been used to pay the unpaid wages, we agree with the trial court’s conclusion that an order requiring defendants to pay the unpaid wages would not be “restitutionary as it would not replace any money or property that [defendants] took directly from” intervener. (Korea Supply, supra, 29 Cal.4th at p. 1149.) “[T]he notion of restoring something to a victim of unfair competition includes two separate components. The offending party must have obtained something to which it was not entitled and the victim must have given up something which he or she was entitled to keep.” (Day v. AT&T Corp. (1998) 63 Cal.App.4th 325, 340.) Therefore, restitution is available where “ ‘a defendant has wrongfully acquired funds or property in which a plaintiff has an ownership or vested interest.’ ” (Feitelberg v. Credit Suisse First Boston, LLC (2005) 134 Cal.App.4th 997, 1012.) Defendants cannot be required to return or restore to intervener something they never obtained. (See Madrid v. Perot Systems Corp. (2005) 130 Cal.App.4th 440, 456 [noting absence of authority for proposition that “a UCL plaintiff may recover money from a defendant who never received it . . . ].) The intervener provided her labor to the employer, i.e., the Wins Corporations. The Wins Corporations, not their owners, officers or managers, owed the earned wages that became due and payable when the labor was performed. (See Reynolds, supra, 36 Cal.4th at p. 1087.) Not having acquired or directly and personally benefited from intervener’s labor without paying for it, or having misappropriated for their personal use corporate funds that could have been used to pay her wages, defendants could not be required to pay the unpaid wages as restitution. Such relief would not be “restitutionary as it would not replace any money or property that [defendants] took directly from” intervener. (Korea Supply, at p. 1149.)
Slip op. at 20-22 (emphasis in original) (footnote omitted). It is critical here that the owner-officers never misappropriated funds for their own use and contributed more capital to the corporation than they took out. Otherwise, a stronger argument might have been made that the value of the employees' labor passed from the employees, to the corporation, to the owners, and was thus traceable and subject to a restitutionary award.