Kirby v. Immoos Fire Protection, Inc. examines fee shifting triggers in wage & hour litigation

After a very brief trip to the Windy City (aka, the Humid City in Need of a Breeze and my apologies to JB for not visiting), I bring you the first of yesterday's opinions related to class actions.  In Kirby v. Immoos Fire Protection, Inc. (July 27, 2010), the Court of Appeal (Third Appellate District) examined an award of attorney fees to the defendant following a dismissal by the plaintiff when certification was denied.  Fees were awarded by the trial court on causes of action for UCL violations (first cause of action), rest period violations (sixth cause of action) and section 2810 violation for entering into contracts while knowing them to be insufficient to pay all wages owed (seventh cause of action).

The plaintiff argued that bilateral attorney fee awards are precluded in any "action" where a claim arising under section 1194 is included as one of the claims.  The Court explained why it rejected that construction:

Although Kirby advances a plausible reading of the legislative history, we reject it in favor of construing the section 1194 exception as applying only to causes of action for unpaid minimum and overtime wages. (Accord Earley, supra, 79 Cal.App.4th at p. 1430.) To adopt Kirby‟s statutory construction would allow the exception of section 1194's unilateral fee shifting to eviscerate the rule of section 218.5.

We harmonize sections 218.5 and 1194 by holding that section 218.5 applies to causes of action alleging nonpayment of wages, fringe benefits, or contributions to health, welfare and pension funds. If, in the same case, a plaintiff adds a cause of action for nonpayment of minimum wages or overtime, a defendant cannot recover attorney's fees for work in defending against the minimum wage or overtime claims. Nonetheless, the addition of a claim for unpaid minimum wages or overtime does not preclude recovery by a prevailing defendant for a cause of action unrelated to the minimum wage or overtime claim so long as a statute or contract provides for fee shifting in favor of the defendant.

Slip op., at 16-17.

More interesting is the Court's conclusion that section 218.5 applies to rest break claims:

Kirby's sixth cause of action alleged that Kirby was “owed an additional one hour of wages per day per missed rest period.”  As a claim seeking additional wages, the sixth cause of action was subject to section 218.5's provision of attorney's fees for “any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions . . . .” (Italics added.)

Slip op., at 19 (footnotes omitted).  The Court explained why the plaintiff was incorrect that section 1194 controlled the fee issue:

Kirby's claim was not based on a failure to pay the statutory minimum wage for hours he actually worked. Instead, the cause of action was one for failure to provide rest periods. If his claim had succeeded, Kirby would have been entitled to an additional wage “at the employee's rate of compensation.” (See fn. 25, ante.) The “employee's rate of compensation” refers to the contractual rate of compensation, not the legal minimum wage. Consequently, the claim is not one premised on failure to pay the minimum wage.

Slip op., at 19.  The Court relied, in part, on Murphy, which, oddly enough, seems to provide the answer to virtually all wage & hour mysteries.  It wouldn't be surprising to see an increase in minimum wage claims and a concurrent reduction in contractual wage payment claims.

The Court had less difficulty analyzing the arguments related to the UCL claim and the section 2810 claim for underfunded contracts.  Regarding the UCL, the Court observed that it was a settled issue that attorney's fees were not specified as available under the UCL.  As for the last claim, the Court found that the fee provision in the statute was a unilateral fee-shifting statute.