United Parcel Service Wage And Hour Cases holds that a defendant cannot recover fees after prevailing on Labor Code section 226.7 claims

In Kirby v. Immoos Fire Protection, Inc. (July 27, 2010), the Court of Appeal (Third Appellate District) held that a prevailing defendant could recover fees when it prevailed against a plaintiff asserting claims arising under Labor Code section 226.7 (meal and rest periods).  The Supreme Court then granted review.  The answering brief is currently due in that matter on March 21, 2011.   Today, the inscrutable Second Appellate District (Division Eight) held, in United Parcel Service Wage And Hour Cases (February 24, 2011), that fees were not available to a prevailing defendant in such actions.  In its analysis, the Court said:

Nothing in the legislative history suggests the Legislature meant the reciprocal fee recovery provisions of Labor Code section 218.5 to apply in an action for violation of the section 226.7 mandate that employers provide meal and rest breaks for certain nonexempt employees. The statutory remedy of section 226.7, providing compensation for missed breaks, was first enacted in 2000 in response to poor employer compliance with the meal and rest break requirements. (Murphy, supra, 40 Cal.4th at pp. 1105-1106; Stats. 2000, ch. 876, § 7, p. 6509.) Before 2000, the only remedy available to an aggrieved employee was injunctive relief to prevent future abuse. (Murphy, at p. 1105.)

The 2000 amendment providing a pay remedy bears sufficient hallmarks of a penalty designed to shape employer behavior, and is sufficiently distinct from the customary types of bargained-for wages recognized under the law, that we cannot conclude the Legislature intended a claim under Labor Code section 226.7 to be interpreted as a claim for “nonpayment of wages” within the meaning of section 218.5. The section 226.7 pay remedy for missed meal and rest breaks was enacted 14 years after the Legislature enacted the reciprocal fee recovery provisions of section 218.5. It is therefore not reasonable to assume that when the Legislature enacted section 218.5 in 1986 to provide for recovery of prevailing party fees in claims for nonpayment of wages and benefits, it intended that provision to permit a prevailing employer-defendant to recover fees from an employee raising a claim for denial of breaks -- a claim which at that time only supported injunctive relief.

Construing the entire statutory scheme with a view toward protecting employees, as we must, we find that a claim for remedial compensation under Labor Code section 226.7 does not trigger the reciprocal fee recovery provisions of section 218.5. Since none of the claims on which UPS prevailed permit the recovery of attorney fees, the award of statutory fees to UPS was in error.

Slip op., at 14.

Considering the current state of Kirby, it seems like this decision will be citable law for about 90 days, give or take a week here or there.  If a Petition for Review wasn't granted, we'd certainly have a good idea about how a part of Kirby will be decided.

Order from In re Wal-Mart Stores, Inc. Wage and Hour Litigation highlights need to support incentive award requests with detailed facts when the requested award is substantial

Untited States District Court Judge Saundra B. Armstrong (Northern District of California) granted in part and denied in part the unopposed motion of plaintiffs for an award of incentive payments and attorney's fees.  In re Wal-Mart Stores, Inc. Wage and Hour Litigation, 2011 WL 31266 (N.D.Cal. Jan. 05, 2011).  Counsel requested 33.3% of the maximum settlement amount of $86 million.  The Court agreed that a departure from the 25% benchmark in the Ninth Circuit was appropriate but not to that degree.  The Court awarded a fee equal to 27% of the maximum settlement amount.

On the requested enhancement awards, the Court said:

Upon review of the record in this case, the Court finds that Plaintiffs are entitled to a reasonable incentive payment. However, the Court finds the requested award of $25,000 per named Plaintiff to be excessive, in view of the nature of their assistance in this case.  First, the Court notes that the named Plaintiffs have not indicated in their declarations the total number of hours they spent on this litigation. Rather, they generally explain that they were deposed, responded to written discovery, and assisted and met with counsel. Second, in arguing that $25,000 is an appropriate award, Plaintiffs cite to cases that are clearly distinguishable. For instance, in Brotherton v. Cleveland, 141 F.Supp.2d 907 (S.D.Ohio 2001), the court awarded $50,000 to a single named plaintiff, finding that “she has spent approximately 800 hours working on this litigation.” Id. at 914. By contrast, here, there is no evidence that the named Plaintiffs' involvement reached anywhere near this level.

Slip op., at 4.  The Court awarded $5,000 to each plaintiff.

Sacks v. City of Oakland examines fees under Code of Civil Procedure section 1021.5 and common fund doctrine

For those interested in the extent to which attorney's fees are recoverable under two theories, the common fund doctrine and Code of Civil Procedure § 1021.5, a decision issued today by the Court of Appeal (First Appellate District, Division One) reviews those bases for fee awards.  In Sacks v. City of Oakland (December 10, 2010), the Court of Appeal reviewed a judgment after a bench trial in a mandate action challenging the allocation of and use of tax revenue collected by the City of Oakland pursuant to Measure Y.  The decision is interesting mostly for the fact that it discusses the scenarios under which attorney's fees are either unlikely to be awarded or are entirely unavailable.

Supreme Court activity for the week of November 15, 2010

The California Supreme Court held its (usually) weekly conference on November 17, 2010.  Notable results include:

• On a Petition for Review, review was granted in  in Kirby v. Immoos Fire Protection, Inc. (July 27, 2010), covered previously here.  The issue under review is limited as follows:  "Does Labor Code section 218.5 govern attorney's fees awarded on a cause of action alleging violation of the statutorily mandated wage payment for missed meal and rest periods (Lab. Code, [sec.] 226.7), or is an attorney's fee award governed by Labor Code section 1194?"
• On a Request for Depublication, depublication was denied in Nelson v. Pearson Ford Co. (July 15, 2010).  Prior comments from this blog are here.

Does Anderson v. Nextel presage assault on percentage-of-fund fee awards?

United States District Court Judge Stephen V. Wilson refused to award a percentage-of-fund fee award, choosing, instead, to apply a lodestar approach with no multiplier and refused to award an incentive payment to the plaintiffs, as part of an Order granting in part and denying in part a final award of attorneys' fees, costs and incentive payments.  Anderson, et al. v. Nextel Retail Stores LLC (June 30, 2010).

The opinion includes an incredibly thorough analysis of hourly rates and fee billing entries (it is helpful reading in that regard), among other things, as part of the Court's decision to examine the lodestar and then cross-check against the requested 25% of the available fund in the wage & hour class action settlement.  After determining that the lodestar would need to multiplied by all of 1.64 to arrive at the percentage-of-fund request at the 25% level, the Court offers this surprising analysis:

In the present case, the Court is unable to conclude that counsel is entitled to a multiplier over the lodestar amount. The lodestar amounts provide perfectly adequate compensation, see generally Perdue, 130 S.Ct. 1662, 1674-75, and none of the relevant considerations justify an upward increase in the amount of compensation. For example, the considerations raised in Vizcaino – the complexity of the case, the duration of the litigation, the risk of nonpayment – are inapplicable. This case was little more than a run-of-the-mill wage-and-hour dispute.

Slip op., at 17.  I find this statement astounding.  No wage & hour class action is "run-of-the-mill" in federal court.  A survey of outcomes in the last few years would, I submit, confirm that.

If a trend favoring lodestar awards over percentage of the fund awards develops, plaintiffs' firms will face an asymmetrical result when compared to firms paid on an hourly basis.  The contingent award (the percentage of the fund in class actions) offsets to some degree the fact that a good percentage of cases generate no recovery to speak of.  This mitigation of risk allows plaintiffs with no resources to challenge unlawful practices causing comparatively smaller amounts of harm on a per capita basis.  An increase in lodestar awards won't cause children to starve, but it will likely result in decisions to decline difficult cases and induce some unscrupulous members of the bar to inflate billing entries.  Courts will then view all fee bills with even more skepticism, further punishing the ethical billers in the plaintiffs' bar.

"See, with those plaintiffs' lawyers, it's all about the fees."  Come closer so I can do that Moe thing to your eyes.  "Why I oughta..."  You don't like working for free any more than I do or anyone else does.  If I won the lottery, I'd be willing to work for a trifling.  Then it would be just about the ability to help others and the intellectual reward.  But I digress.  Taking percentage of the fund awards off the table means that a good portion of the work done by plaintiffs' attorneys in class actions will be done for free.  I hear that at some defense firms, partners don't get paid their shares unless they collect their clients' accounts receivable.  Who's all about the fees again?

In another fairly uncommon move, the Court declined to award any incentive payment to the plaintiffs that obtained the recovery for the class.  So much for rewarding the plaintiffs that accept the stigma associated with suing their employer.

You can view the embedded opinion in the acrobat.com flash viewer below:

If the viewer isn't working for you (say, if you are viewing this on an iPad or iPhone), you can download the opinion here.  Thanks to the (other) reader that alerted me to this decision.

Mundy v. Neal confirms that pre-filing settlement attempt necessary for catalyst theory fees sought via Civil Code section 55

The plaintiff sued to force a land owner to install a van-accessible handicap parking space.  The landowner installed the space.  Plaintiff filed a dismissal with prejudice.  Plaintiff then sought his attorney fees under a catalyst theory because his lawsuit motivated corrective action that inures to the public benefit.  The trial court denied the motion for fees. The Court of Appeal, in Mundy v. Neal (June 30, 2010) (Second Appellate District, Division Two) affirmed, holding that the plaintiff did not attempt to settle prior to filing suit and was not the prevailing party under Graham v. DaimlerChrysler Corp., 34 Cal. 4th 553, 577 (2004).  Simple as that.