Employers Sought Over $2.2 Million in Costs And Fees, Previously Denied But Get a Second Chance Against Losing Employees.
Zalewa v. Tempo Research Corp., Case No. B238142 (2d Dist., Div. 2 Mar. 1, 2013) (unpublished) is a wild “reversal of fortune” case on appeal.
This was a remand from a previous appeal to determine if fees were authorized after a prior reversal of a class action judgment in favor of plaintiff and whether they were warranted under the specific circumstances of the case. Employees got the short end of the stick.
The appellate court earlier reversed a prior award of $881,715 in fees to employees, but did not specify which side was entitled to fees under Labor Code section 218.5 (mutual wage/hour fee-shifting statute), augmented by the private attorney general statute given that this was a class action. Employees eventually garnered a $346,947 award under a “catalyst theory” as far as bonus payments, while defendants lost a $2,210,360 costs/fees request.
Zowie--reversal of employees’ fee award and remand to see what employers get as far as fees and costs on appeal.
The problem here for employees was that the bonus payments were gifts, not contractual or statutory obligations to remit unpaid wages, meaning they did not prevail on the merits. That meant no significant benefit was conferred on the public/large class of persons, so there was no CCP § 1021.5 entitlement.
However, here was the rub. Labor Code section 218.5 is a reciprocal fee-shifting statute, and has “no equitable exemption allowing the courts to give a pass to employees who invoke its provisions then lose their case, causing the employer to become the prevailing party in the litigation.” (Slip Opn., p. 10.) This translated into the “bottom line” that defendants prevailed, which means a big, big fee/costs request will be coming soon.
This is must reading for wage/hour class action or other attorneys as far as warning clients about potential fee exposure.