Reversal of Fortune on Appeal to Plaintiff Winning Substantial Jury Verdict and Substantial Attorney’s Fees Below.
Acting Presiding Justice Bedsworth, as author for a 3-0 panel in Gardner v. Baby Trend, Inc., Case No. G043451 (4th Dist., Div. 3 Jan. 13, 2012) (unpublished), shows how reversal on the merits–even of a large substantial jury verdict based on what the jury actually found or on legal statute of limitations issues–can have a deadly effect on the fees award. In this one, a $889,000 fee award went POOF!
Harold Edgerton, photographer. 1933.
Plaintiff won a combined $8.1 million from a jury based on various claims arising from his termination of a relationship with defendant (i.e., wrongful termination, wage/hour violations, Independent Sales Act violations, etc.). Defendant was successful in getting about $64,000 in costs taxed. When it came to attorney’s fees, there were two major fee entitlement anchors: (1) Labor Code sections awarding fees to a prevailing plaintiff in an action to recover unlawful deduction of expenses from commissions and awarding fees for an employer’s wrongful refusal to reimburse an employee for business-related expenses; and (2) a fee-shifting provision for violation of the Independent Sales Act (Civ. Code, § 1738.16). Plaintiff requested $1,873,932.50 in fees (a 2-times multiplier applied to the $936,966.25 lodestar). The lower court awarded plaintiff 95% of the lodestar request, or $889,000 total fees. Then, the trial court mooted its $64,000 tax cost order by determining that these should be allowed as additional costs to plaintiff under Labor Code section 2802, which allows costs to be awarded as indemnification expenses to an employee who was following employer directives.
Defendant separately appealed the merits judgment and cost/fee awards.
Aside from doing well on the merits, defendant hit a “grand slam” on the challenges to the cost/fee awards. The Labor Code provisions did not allow for entitlement because the jury made determinations that plaintiff was not an employee. The Independent Sales Act basis was inapt because it was barred by the applicable statute of limitations. Labor Code section 2802 was unavailing for the $64,000 in costs because it does not apply to direct actions between employers and employees (Freund v. Nycomed Amersham, 347 F.3d 732 (9th Cir. 2003)) and it was also doomed by the jury’s rejection of an employee status for plaintiff. POOF!
