California Courts of Appeal
BETANCOURT v. OS RESTAURANT SERVICES, LLC
PLAINTIFF ALLEGED FAILURE TO PROVIDE REST BREAKS, AS WELL AS WRONGFUL TERMINATION
Plaintiff/Respondent Betancourt, a server in one of Defendant/Appellant OS Restaurant’s places, sued for missed rest breaks and wrongful termination in violation of public policy. She alleged that she was fired for complaining about the missed breaks, as well as for complaining about alleged health and food preparation violations.
THE CASE SETTLED AND THE COURT AWARDED ATTORNEY’S FEES
After extensive discovery issues, the parties resolved the matter for just over $13,000. The settlement agreement permitted plaintiff to file a motion for attorney’s fees to the extent allowed for by law. Ultimately, the trial court awarded attorney’s fees in an amount exceeding $280,000.
ATTORNEY’S FEES ARE NOT ALLOWABLE ON REST OR MEAL BREAK CLAIMS
Defendant appealed, claiming that the attorney’s fee award was not permissible because the only claim was for meal and rest break violations. Plaintiff/Respondent countered by saying that 90% of their work performed was directed at proving timekeeping irregularities which resulted in unpaid wages.
The appellate court agreed with Defendant. Citing Kirby v. Immoos Fire Protection, Inc., 53 Cal.4th 1244 (2012), the court acknowledged that meal and rest break violations were subject to a wage premium. Nonetheless, under Kirby, those claims are wholly derivative of wage claims and not subject to attorney’s fees provisions. Kirby has since been extended by the appellate courts to find that failure to pay meal and rest break premiums does not result in waiting time penalties under Ca. Lab. Code §203.
CONCLUSION
Although meal and rest break premiums are wages, claims to pursue them are derivative of unpaid wage claims, and are not subject to attorney’s fee shifting provisions.
COA, 2nd Dist., Div. 8. Filed 5/21/20. Opinion by Justice Grimes.
CALDERA v. DEPARTMENT OF CORRECTIONS AND REHABILITATION
PLAINTIFF PREVAILED IN A CONTENTIOUS CASE AND WAS AWARDED ATTORNEY FEES MUCH LESS THAN THE FEES SOUGHT.
Plaintiff Augustine Caldera prevailed in a disability discrimination case against Defendant California Department of Corrections and Rehabilitation (“CDCR”). After nearly a decade of litigation and two previous successful appeals, Caldera sought $2.4 million in attorney fees, a $1.2 million lodestar with a 2.0 multiplier. When Caldera could not find a local attorney to take his case, he hired an out-of-town firm. The trial court found the $750 per hour rates sought too high for the locale, finding a reasonable local rate of $450-$550. The trial court then awarded the higher rate of $550 due to the length of the case and the “hurdles” Caldera overcame. The trial court recognized that several of the multiplier factors applied but found that it had already considered those factors in setting the hourly rate at $550, which was high for the area. The trial court awarded slightly over $800,000 in attorney fees. Caldera appealed, and the Court of Appeal reversed.
ATTORNEY FEE AWARDS SHOULD INCENTIVIZE ATTORNEYS TO ACCEPT AND PROSECUTE FEHA CASES AND REWARD ATTORNEYS FOR SUCCESS.
Attorney fee awards in FEHA cases are designed to incentivize attorneys to take these cases and reward those attorneys for success. The lodestar equals the attorneys’ hourly rates times their hours spent on the case. The multiplier compensates for other factors such as risk of nonpayment (in contingency cases), the importance of the litigation, difficulty, attorney skill, and magnitude of results. The trial court erred by assigning Caldera’s attorneys local rates rather than the higher out-of-town rates and by applying the extrinsic multiplier factors to the hourly rates instead of applying a multiplier. When a plaintiff needs to hire out-of-town counsel, the court is required to use counsel’s home market rate rather than the local market rate. Failure to apply the appropriate rate was an abuse of discretion.
A MULTIPLIER SHOULD BE APPLIED TO THE TOTAL LODESTAR, NOT TO THE HOURLY RATES.
The trial court acknowledged that most of the Ketchum multiplier factors weighed in favor of a positive multiplier. However, instead of applying a multiplier, the trial court made some unclear adjustment to the hourly rates. Because the Court of Appeal could not determine what increase in the hourly rate the trial court applied, and because the total attorney fee award was manifestly inadequate, the Court of Appeal remanded the fee calculation back to the trial court. The Court of Appeal also noted that the “total attorney fee award must support the purposes of the FEHA.”
CELA INVOLVEMENT
Congratulations to CELA members Todd Nevell of Scolinos, Sheldon & Nevell and Norm Pine of Pine Tillett Pine LLP!
COA, 4th Dist., Div. 3. Filed 4/30/20. 48 Cal.App.5th 601. Opinion by Justice Moore.
FLEMING DISTRIBUTION v. YOUNAN
PLAINTIFF FILED A COMPLAINT FOR UNPAID WAGES WITH THE LABOR COMMISSIONER
Plaintiff/Respondent Alfonus Younan filed a complaint with the Labor Commissioner in June 2017, alleging Defendant/Appellant Fleming Distribution’s failure to pay commission.
After a full evidentiary hearing, in which Fleming Distribution participated, the Labor Commissioner awarded Younan a total of $27,412.60.
FLEMING DISTRIBUTION OBJECTED, AND ASSERTED ITS RIGHT TO ARBITRATE SEVERAL TIMES
At least twice, Fleming Distribution wrote a letter to the Labor Commissioner, attaching a copy of its arbitration agreement with Younan. In each letter, Fleming Distribution requested that the Labor Commissioner honor the agreement and dismiss the matter so that it could be arbitrated. In each letter, Fleming Distribution stated that it would file a petition with the Superior Court if the Labor Commissioner did not comply.
The Labor Commissioner did not comply, and held a hearing. At that hearing, Fleming Distribution moved for dismissal so that it could have the matter heard in arbitration. The Labor Commissioner denied the motion, finding that Fleming Distribution had not petitioned the superior court for a stay, and that there was therefore no reason to stay the hearing.
After the adverse ruling, Fleming Distribution appealed to the superior court for a trial de novo. It included arbitration as an affirmative defense. At this point, nearly two years later, Fleming Distribution petitioned the superior court to compel arbitration.
THE SUPERIOR COURT DENIED THE PETITION TO COMPEL ARBITRATION
The Superior Court denied the petition. It held that Fleming Distribution had waived its right to arbitrate by acting in a manner inconsistent with the desire to arbitrate by participating in a full evidentiary hearing. Moreover, its delay of two years before filing a petition to compel arbitration was unreasonable.
FLEMING DISTRIBUTION WAIVED THE RIGHT TO ARBITRATE
The appellate court examined only the issue of waiver, as this was dispositive. The court found that, although participating in litigation does not immediately waive the right to arbitrate, it will do so at some point in continued litigation.
Because waiver must be knowing and voluntary, the Court of Appeals pointed out that Fleming Distribution twice stated that it would file a petition with the superior court, and then actually did so once in the superior court. This indicated that Fleming Distribution knew of its ability to do so, and chose not to.
It did not matter that Fleming Distribution asserted its right to arbitration by letter, argument and motion before the Labor Commissioner. The correct course of action was to petition the superior court, and Fleming Distribution did not do it.
Prejudice to Plaintiff Younan was shown by undue delay, and by the necessity of hiring an attorney to represent him in the superior court, although the latter was not necessary to the result.
CONCLUSION
Although waiver is not to be found lightly, a defendant that acts inconsistently with its right to arbitrate will be found to have waived that right under the appropriate circumstances.
COA, 1st Dist., Div. 3, Filed 4/23/20, certified for publication 5/15/20; Opinion by Justice Petrou.
LOPEZ v. ESCAMILLA
Plaintiff Alice Lopez recovered a judgment against Magnolia Home Loans in 2012. In 2018, Lopez sued Defendant Jose Escamilla, claiming that Escamilla was an alter ego of Magnolia. Escamilla was Magnolia’s only shareholder, board member, and officer. Escamilla signed the corporate checks and supplied Magnolia’s only capitalization. Magnolia was suspended, and all of its cash was paid to Escamilla, who continued to do business in Magnolia’s location. Escamilla moved for judgment on the pleadings, arguing that the only proper procedure for naming someone an alter ego is via a motion in the original action. The trial court granted the motion, and the Court of Appeal reversed. The substantive question of whether Escamilla was an alter ego of Magnolia could be properly addressed either via a complaint in a new action, or via a motion in the original action. Because a money judgment is enforceable for an initial period of ten years and could be renewed, there was no statute of limitation issues. Addition of an alter ego defendant merely inserts the correct name of the defendant in the judgment; it does not enter a new judgment. This correction may be done at any time.
COA 2nd Dist., Div. 6. Filed 5/4/20. 48 Cal.App.5th 763. Opinion by Presiding Justice Gilbert.
PATEL v. CHAVEZ
Plaintiff Balubhai Patel and others sued Defendant Manuel Chavez, their former employee. Plaintiffs accused Chavez of giving false testimony at a Labor Commissioner hearing on wage claims that Chavez had filed against Plaintiffs. Plaintiffs sued Chavez under 42 U.S.C. §1983. Chavez filed an anti-SLAPP motion, which the trial court granted. Plaintiffs appealed, and the Court of Appeal affirmed.
On appeal, the Plaintiffs argued that California’s anti-SLAPP statute (Code of Civil Procedure §425.16) does not apply to federal claims. The Court of Appeal disagreed, finding that anti-SLAPP is a procedural law. Although anti-SLAPP does not apply to claims filed in federal court, it does apply to federal claims filed in state court. There are only two exceptions: (1) when the federal statute provides otherwise, and (2) where the anti-SLAPP statute affects the plaintiffs’ substantive federal rights and is therefore preempted. Neither exception applied here. If a plaintiff chooses to file a section 1983 claim in state court, the anti-SLAPP statute applies.
CELA INVOLVEMENT
Congratulations to CELA member Eugene Lee!
COA, 2nd Dist., Div. 1. Filed 4/30/20. 48 Cal.App.5th 484. Opinion by Justice Rothschild.
WILLIS v. CITY OF CARLSBAD
Plaintiff James Willis worked for the Carlsbad Police Department as a peace officer. Willis sued Carlsbad for whistleblower retaliation in violation of Labor Code §1102.5 after he reported another officer’s misconduct and objected to an illegal quota system. The trial court struck several retaliatory acts because Willis had not filed a government tort claim within six months as required by the Government Claims Act (Gov. Code §911.2). The jury found that Carlsbad had retaliated against Willis and that Carlsbad would have denied Willis a promotion anyway for legitimate independent reasons. The court entered judgment for Carlsbad. Willis appealed, and the Court of Appeal affirmed.
Willis submitted a government tort claim in December 2015, based on conduct occurring over the prior four years. The doctrine of equitable tolling did not apply because the tort claim deadline is not a statute of limitations to which tolling rules might apply. Therefore, Willis’ filing of a Labor Commissioner complaint in 2013 did not toll his deadline to file a tort claim. The continuing violation doctrine also did not apply because each promotional decision became permanent when a different officer was promoted over Willis. Wills was therefore required to file a tort claim within six months of permanence, and he did not do so.
COA, 4th Dist, Div. 1. Filed 4/22/20, publication ordered 5/12/20. 48 Cal.App.5th 1104. Opinion by Justice O’Rourke.