Attorney's Fees and Costs Awards to Prevailing Plaintiffs Mandatory on Overtime And Minimum Wage Claims, Court of Appeals Says

Attorney's Fees and Costs Awards to Prevailing Plaintiffs Mandatory on Overtime And Minimum Wage Claims, Court of Appeals Says

An ex-employee sued his former employer for Labor Code violations in connection with his work as a pizza delivery driver. He argued on appeal that the trial court should have awarded him reasonable litigation costs under California Labor Code § 1194(a) and abused its discretion by applying Code of Civil Procedure § 1033(a) to deny those costs.

Background

Elinton Gramajo worked as a delivery driver for Joe's Pizza on Sunset from February 2014 to June 2015. In February 2018, he sued the pizza restaurant for the following violations:

  • Failure to pay minimum and overtime wages;
  • Failure to provide rest and meal periods;
  • Failure to pay wages due at the time of termination;
  • Failure to reimburse for business expenses; and
  • unfair business practices.

He also sought declaratory and injunctive relief.

At trial, the jury awarded him $2.17 in unpaid minimum wages and $3,340 in unpaid overtime wages. In total, he recovered $7,659.63, consisting of the unpaid minimum and overtime wages; $2,115.59 in statutory interest; $2,100 in waiting time penalties calculated at the daily wage rate of $70 per day for 30 days per Labor Code § 203; $2.17 in liquidated damages; and $100 in statutory penalties. Gramajo moved for attorney fees totaling $297,000 for 228 hours billed at $650 per hour and applying a multiplier of two. He also requested roughly $27,000 in costs. Joe's Pizza opposed the fee request and moved to tax his costs in their entirety.

The trial court denied Gramajo's fee request and granted Joe's Pizza's motion to tax costs, ultimately awarding Gramajo nothing. The trial court found Gramajo acted in bad faith by artificially inflating his damages figure and including equity claims he never intended to pursue to justify filing the case as an unlimited civil proceeding. The trial court noted Gramajo sought $26,159.33 at trial, just over the jurisdictional amount, which included $10,822.16 in unreimbursed expenses. But he never introduced any evidence at trial to support his expense claim. Similarly, he never pursued injunctive or declaratory relief at trial despite requesting that relief in his complaint. The trial court also found the case was severely over-litigated, noting Gramajo had propounded 15 sets of written discovery requests and noticed 14 depositions despite only admitting 12 exhibits at trial. The trial court denied Gramajo's costs on the same grounds.

The trial court relied on the Code of Civil Procedure (CCP) § 1033(a), which gives trial courts discretion to deny prevailing plaintiffs their litigation costs when they file their case as an unlimited civil proceeding but only recover an amount available in a limited civil case. Gramajo appealed.

Discussion

On appeal, Gramajo argued he’s entitled to his reasonable litigation costs under Labor Code § 1194(a) and that the trial court abused its discretion by relying on CCP § 1033(a) to deny his litigation costs in their entirety.

Associate Justice Victor Viramontes of the California Court of Appeal, Second Appellate District, wrote that California Labor Code § 1194(a) provides:

[A]ny employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney's fees, and costs of suit.

The statute is a one-way fee-shifting provision. Its purpose is to disincentivize violations of state minimum and overtime wage laws.

CCP § 1033(a) provides:

Costs or any portion of claimed costs shall be as determined by the court in its discretion in a case other than a limited civil case in accordance with Section 1034 where the prevailing party recovers a judgment that could have been rendered in a limited civil case.”

Justice Viramontes emphasized that the California Supreme Court said that CCP § 1033(a) “applies when a plaintiff has obtained a judgment for money damages in an amount (now $25,000 or less) that could have been recovered in a limited civil case, but the plaintiff did not bring the action as a limited civil case and thus did not take advantage of the cost-and time-saving advantages of limited civil case procedures.” Section 1033(a) gives the trial court discretion to deny litigation costs to a plaintiff, who would otherwise be entitled to those costs as a matter of right. The purpose of the statute “is to encourage plaintiffs to bring their actions as limited civil actions whenever it is reasonably practicable to do so.”

Did the Trial Court Have Discretion to Deny Gramajo's Fees And Costs in their Entirety Under CCP § 1033(a)?

As an initial matter, Justice Viramontes said that the Court must determine whether CCP § 1033(a) and Labor Code § 1194(a) are irreconcilable such that concurrent operation is impossible. The Court determined that they are.

On the one hand, CCP § 1033(a) gives the trial court discretion to deny litigation costs altogether when it finds the plaintiff failed to take advantage of the efficiency of a limited civil proceeding as evidenced by the plaintiff's recovery of less than the jurisdictional threshold. However, on the other hand, Labor Code § 1194(a) provides for a mandatory award of reasonable litigation costs where an employee prevails on unpaid minimum and overtime wage claims irrespective of the amount recovered. One statute gives the trial court discretion to deny litigation costs based on the amount recovered while the other provides for a mandatory cost award regardless of that amount. Neither statute addressed the question of which one should control in this area of overlap, for example, by including qualifying language such as “‘[e]xcept as otherwise provided by statute’ or ‘[n]otwithstanding any other provision of law.’” As a consequence, there’s a discrepancy between the two statutes concerning the trial court's discretion to award or deny litigation costs where an employee recovers unpaid minimum and overtime wages, but where his or her counsel seemingly overstates the value of the case and files in the incorrect jurisdiction. We find this discrepancy is an irreconcilable conflict that prevents the concurrent operation of the two statutes in the circumstances before us.

Since the Court found that the statutes conflicted, it had to determine which controls. The Court of Appeals held that Labor Code § 1194(a) controls given the legislative intent and because that statute is more recently enacted and more specific relative to CCP § 1033. Justice Viramontes explained that generally, when two statutes conflict, a specific statute will take precedence over a general one, and a more recently enacted statute will take precedence over an earlier one. Here, there was no question that Labor Code § 1194(a) is the more recently enacted statute, amended to require the recovery of reasonable attorney fees in 1991. The relevant portion of CCCP § 1033(a) was enacted in 1953. Justice Viramontes and the Court of Appeal also found that Labor Code § 1194(a) is the more specific statute relative to CCP § 1033(a). As a result, Labor Code § 1194(a) is the more specific statute relative to CCP § 1033(a). Labor Code § 1194(a) applies only to certain wage and hour actions whereas CCP § 1033(a) can apply to any case in which a plaintiff recovers less than the jurisdictional amount regardless of subject matter.

As a note of caution, Justice Viramontes stated that the Court’s holding shouldn’t be read as a license for attorneys litigating minimum and overtime wage cases to over-file their cases or request unreasonable and excessive cost awards free of consequence. Under Labor Code § 1194(a), a prevailing employee is still only entitled to a reasonable fee and cost award. In assessing requests for litigation costs, trial courts must always be guided by what is reasonable and exercise their discretion to strike costs or reduce fees they find unreasonable.

There are still sufficient consequences for attorneys who make unreasonable and excessive requests to recover fees and costs even in the face of a mandatory fee statute like Labor Code § 1194(a).

Gramajo was Entitled to Reasonable Fees and Costs

Since the Court of Appeals concluded that Gramajo was entitled to his reasonable fees and costs, the case was remanded to the trial court, which is in the best position to assess the value of the services rendered by Gramajo's attorney. Under Labor Code § 1194(a), Gramajo was only entitled to his reasonable fees and costs, nothing more.

The orders denying Gramajo’s motion for attorney fees and granting Joe's Pizza’s motion to tax costs were reversed, and the cause was remanded to the trial court to exercise its discretion to determine a “reasonable” fee for Gramajo’s attorney, as well as his costs under Labor Code § 1194(a). Gramajo v. Joe's Pizza on Sunset, Inc. (California Court of Appeal of California, Second Appellate District, 3/25/24)

Takeaway

The Court of Appeals held that Gramajo was entitled to an award of his reasonable litigation costs under Labor Code § 1194(a), and the trial court erred when it relied on CCP § 1033(a), to deny those costs in their entirety.

Employees who prevail in actions to recover unpaid minimum and overtime wages are entitled to their reasonable litigation costs under Labor Code § 1194(a), no matter the amount recovered.

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