Second District Finds that Plaintiff Individually Settling for $10,500—Even Though His Claim Was Only For $44.63—Entitled to Garner a $500 Fee Award.
There are many sections of the California Labor Code that have mandatory fee award authority. As examples, Labor Code section 1194(a) provides that employees paid less than their legal overtime compensation “shall to entitled” to reasonable attorney’s fees, section 2699(g) provides that employers’ actions resulting in payment of civil penalties “shall be entitled” to reasonable attorney’s fees, and section 226(e) provides that employees suffering injury from a failure to receive pay stubs are entitled to an award of reasonable fees. Even though these provisions are mandatory in nature, the next case illustrates that courts have considerable discretion in applying equitable principles to make sure the amount of the award is not runaway in nature to the “prevailing party.”
In Harrington v. Payroll Entertainment Serv., Inc., 160 Cal.App.4th 589 (2008), rev. den., off-duty police officer plaintiff filed suit against a movie production company for California labor statutory violations. The gist of plaintiff’s claim was that the defendant underpaid him when he worked one 14 hour day. The defense acknowledged a clerical error in calculating plaintiff’s pay, but opposed class certification on the basis that only 16 officers were involved with a total of $714 at issue. The trial judge denied certification primarily on numerosity grounds. Plaintiff later settled with defendant for $10,500, with $500 of the amount being civil penalties payable to governmental entities. Defendant agreed in the settlement that plaintiff was the “prevailing party.”
This leads us to the inevitable fee motion. Plaintiff sought $46,000 in fees. The trial judge denied any fees because he believed the claimed amount was disproportionate to the amount at issue ($44.63) as well as the settlement amount ($10,500).
The Court of Appeal reversed, nominally, but set its own fee award without remanding back to the trial judge.
The appellate court, in a 3-0 unanimous decision authored by Justice Miriam Vogel, had no doubt concluding that the Labor Code statutes cited in the first paragraph above authorized mandatory fee recovery. However, that is as far as the court felt its hands were tied, because each statutory provision permitted an award of reasonable fees. That caveat was the determinative one for purposes of the ultimate result reached in Harrington.
The Second District, Division One agreed with the trial judge’s reasoning that to award four times the $10,500 settlement amount (which itself was labeled as a “windfall” to plaintiff) would be “confiscatory and unfair.” The appellate court concluded that the case did not come close to justifying the hours purportedly billed by plaintiff’s lawyers.
Rather than remand, the Court of Appeal independently decided that $500 was a fair fee award. If one remembers, this matched the amount of the civil penalties paid as a component of the overall $10,500 settlement. (PRACTICE POINTER—In over 85% of the cases we see, the appellate courts usually remand these types of reversals for trial court reconsideration. However, we have seen results like this, where the appellate court sets the fee, especially where the court obtains some admissions at oral argument about the fees that might be reasonable. See, e.g., Deane Gardenhome Assn. v. Denktas, 13 Cal.App.4th 1394, 1399 (1993) [fee denial order reversed and prevailing party awarded $15,000 by appellate court where defense counsel admitted his fees were $16,000 through trial].)
The lesson here: even though the fee statute entitlement is mandatory, courts have plenty of discretion to award reasonable fees—weighing many circumstances in coming to what they feel is equitable under the specific facts involved in a particular case.