Business Litigation Information from Temecula Business and Employment Attorney

Business Litigation Information from Temecula Business and Employment Attorney

Court of Appeal Examines Interplay of Attorney Fee-Shifting Statutes of California Labor Code - A winning party in litigation may require the other side to pay its attorney's fees only in limited situations, such as where a statute or contract provides for the payment. This is what is referred to as the "American Rule." Legal systems of some other countries often require the loser in a suit to pay the other side's attorney's fees, but ours generally does not.

Because attorney's fees to bring or defend a case can be a considerable amount of money, the ability of a prevailing party to a lawsuit to shift them to the other side can drastically influence litigation behavior. For example, where fees are available to a prevailing plaintiff, it may be the only thing allowing a plaintiff with a minor claim to find a lawyer for the case, because a probable award of fees makes the suit worthwhile. The ability of a winning defendant to recoup attorney's fees can have a chilling consequence on litigation, rendering potential plaintiffs hesitant to assert their claims. But such provisions can also keep defendants from, and reward them for, having to defend a frivolous lawsuit.

In litigation over unpaid wages in California, two primary statutes provide for fee-shifting: California Labor Code 218.5 and 1194. 218.5 provides that a prevailing party - i.e., including a victorious employer defendant - can recover its attorney's fees in a claim over "wages." Yet this is understood to cover only actions for wages higher than the minimum wage. In contrast, in suits for unpaid minimum wages and overtime, courts apply 1194, which permits only a victorious employee in the suit to recover its attorney's fees, not a winning employer. Obviously, employees who sue their employers seek to have 1194 applied, and not 218.5, as 1194 allows only the employee to get back her fees.

In the recent case of United Parcel Service Wage & Hour Cases, 192 Cal. App. 4th 1425 (2011), the Court of Appeal examined the interplay of 218.5 and 1194. In the case, the employee plaintiff brought 6 claims, including those under the Labor Code for outstanding overtime, inaccurate wage statements and missed meal/rest breaks. The employee lost on all claims and the employer defendant, while admitting that no fees could be shifted on the overtime claim (in light of 1194), requested an award of attorney's fees pertinent to the other five claims.

The trial court awarded the employer its fees, but the Appellate Court reversed that decision. The court initially discarded the employee's reading of 1194 as providing that as long as an employee adds a claim for minimum wage or overtime in the case, attorney's fees may not be given to a winning defendant even if the other claims provide for such fee-shifting. Nevertheless, no fees were due the employer for reasons particular to each one of the claims. Most remarkable is the court's holding with regard to the claim for missed meal/rest periods. Notwithstanding a California Supreme Court ruling labeling the monies an employee can recover for missed breaks as "wages," the court held that this claim did not invoke the two-way fee-shifting of 218.5. Thus, employers cannot recover their legal fees when they defeat such claims.

Another recent case, Kirby v. Immoos Fire Protection, Inc., 186 Cal. App. 4th 1361 (2010), also dealt with the application of 218.5 to claims for missed meal periods. In Kirby, the court ruled that such claims were in fact subject to 218.5, and thus employer defendants can recover fees if they win. Kirby, however, was accepted for review by the California Supreme Court, signaling that the court's holding will likely be overturned.

Both the United Parcel suit and the Supreme Court's grant of review in Kirby are favorable factors for employees bringing claims for missed meal and rest periods. These claims have been filed quite often in the past few years.

This article is intended to convey accurate general information concerning the subject matter covered, but should not be construed as legal advice, which would be dependent upon the specific circumstances of the client.

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