Category Archives: Attorneys’ Fees

Second District Reverses Class Action Judgment Relating to Bonuses Allegedly Due After Merger

Fiber Optic Candle
Image by Chris Tengi via Flickr

The Second District reversed a trial court’s judgment in favor of employees in a class action trial.  Pearline Zalewa v. Tempo Research Corporation, B210429, 2010 WL 3735240 (Cal. Ct. App. 2d Dist. Sept. 27, 2010).  Defendant  fiber-optic equipment manufacturer was sued in a class action by its former employees who claimed that the manufacturer breached an obligation to pay them annual bonuses, an obligation that allegedly continued for years after they were laid off from work during a business downturn.  Id. The court concluded that the employees were not entitled to any recovery: “All but two of the employees relinquished their right to sue when they were laid off, in return for compensation that exceeded their earned severance pay. In any event, there was no promise made to pay bonuses to the employees after they were laid off.”  Id.

The Trial Court’s Judgment

The trial court conducted a bench trial in January 2008, finding that plaintiffs were entitled to recover a direct bonus under theories of breach of contract, promissory estoppel, accounting, and unfair business practices. Id. The court deemed the bonus payments to be “wages” under the Labor Code. Id. And because the bonus payments are wages, plaintiffs were awarded prejudgment interest and attorney fees under the Labor Code. Id. The court enumerated the amount of the award for each employee, less offsets for monies already paid by defendants, plus interest. Id. The total amount of the award, including interest, was approximately $99,000, and plaintiffs’ counsel was awarded attorney fees of $881,715.  Id. Continue reading

Advertisements
Tagged , , , , , , ,

First District Denies Alter Ego Liability Even Where Officer Pays Self and Wife, While Failing to Pay Wages and Commissions

I'm not hungry - I'm just greedy
Image by CaptPiper via Flickr

The Court of Appeal for the First District held that an officer’s failure to pay wages and commissions to an employee, while paying himself and his wife during the same period, is not the type of conduct that requires piercing the corporate veil.  Wymore v. Minto, No. A125476, 2010 WL 3687511 (Cal. Ct. App. 1st Dist. Sept. 22, 2010).

Nor do we see any merit to appellants’ various arguments that it would work an injustice to allow respondent to hide behind EWM because it was his decision, as a director and officer of EWM, not to pay appellants wages and commissions in 2007, while paying himself and his wife during the same calendar year. The fact that respondent, as the president of EWM, may have intentionally failed to pay appellants is not the type of conduct that requires piercing the corporate veil. Continue reading

Tagged , , , , , , ,

Fourth District Affirms Reduction of Fee Award to 12% of Fees Requested Under Labor Code Section 218.5

El Cajon Classic Car & Hot Rod Cruise 062508 -32
Image by christopherallisonphotography.com via Flickr

The Fourth District Court of Appeal affirmed a fee award of $7,475 (about 12% of requested fees) under Labor Code section 218.5, where plaintiff recovered only $3,290 in statutory waiting time penalties and the damages sought in his complaint and ultimately obtained at trial were substantially less than the jurisdictional maximum for a limited civil case.  Cochran v. El Cajon Motors, No. D055390, 2010 WL 3637540 (Cal. Ct. App. 4th Dist. Sept. 21, 2010).

Background

Defendant El Cajon Motors employed Cochran as a sales manager at its El Cajon Ford dealership until it terminated his employment in mid-January 2007. Id. *1. Continue reading

Tagged , , , , , , ,

Northern District Awards $618,812.82 in Compensatory Damages and Punitive Damages in Case Involving Labor Code and Human Trafficking Allegations

The Northern District granted a default judgment in a human trafficking and Labor Code case.  Canal v. Dann, No. 09-03366 CW, 2010 WL 3491136 (N.D. Cal. Sept. 2, 2010) (slip op.).

Plaintiff Zoraida Peña Cenal alleged that from July, 2006 to April, 2008, Peña Canal worked for Defendant Dann for fifteen hours a day, seven days a week, caring for Defendant’s three young children and cooking and cleaning for the household. Id. For all of this work, plaintiff alleged that Defendant paid Peña Canal only once: on Christmas day in 2006, Defendant gave Peña Canal $100. Id. *1

After Peña Canal escaped from Defendant, the U.S. Attorney charged Dann with five counts: forced labor, unlawful use of documents in furtherance of servitude, harboring an illegal alien for private financial gain, visa fraud and conspiracy to commit visa fraud.  Id. *2.  A jury convicted Dann on all counts, and the criminal court sentenced her to sixty months in prison and three years of supervised release, and ordered her to pay $123,740.34 in restitution. Id. The restitution amount was based upon the government’s calculation, which was derived from data submitted from the federal government’s Foreign Labor Certification Program, as evidence of the value of Peña Canal’s labor during the period at issue. Id. Continue reading

Tagged , , , , , , ,

Third District Affirms Arbitrator’s Award Denying Mandatory Attorneys’ Fees to Prevailing Plaintiff

Seniors Dancing, Mayfest
Image by StevenM_61 via Flickr

The Third District in Miller v. Lifestyles Senior Housing Managers et al., No. C059843, 2010 WL 3398750 (Cal. Ct. App. 3d Dist. Aug. 31, 2010), affirmed the trial court’s judgment confirming an arbitrator’s decision denying statutorily mandated attorneys fees to the prevailing plaintiff.  Id. *1. Continue reading

Tagged , , , , , , ,

Northern District Approves 28.9% Fee Award in Wage and Hour Class Action Settlement

Seal of the United States Court of Appeals for...
Image via Wikipedia

Judge Jeffrey S. White approved a wage and hour class action settlement of a non-reversionary $1.8 million, inclusive of $520,000 in attorneys fees, in Ozga v. U.S. Remodelers, Inc., No. C 09-05112 JSW, 2010 WL 3186971 (N.D. Cal. Aug. 9, 2010).

Plaintiff filed a class action in the Alameda Superior Court on February 17, 2009, alleging that Defendant U.S. Remodelers Inc. violated the California Labor Code and violated California Industrial Welfare Commission Wage Orders by: (1) requiring its Installer employees to work substantial amounts of time without compensation; (2) regularly failing to provide Installers with meal and rest periods; and (3) refusing to reimburse expenses that Installers incurred in the performance of their work duties, including travel expenses and equipment costs.

Defendant removed the action to this Court, and Plaintiff subsequently moved to remand.  But before the hearing on the motion to remand, the parties reached a settlement, which was facilitated, in part, by a mediation that occurred on October 1, 2009, before Michael Loeb.  The parties also engaged in some discovery, and Class Counsel interviewed a number of Settlement Class members.

The Court finds that the terms of the Settlement are fair, adequate and reasonable. As noted, the settlement was reached after the parties engaged in discovery, conducted a meditation, and continued to engage in arms-length negotiations. The parties agreed to a Settlement payment of $1,800,000.00, none of which will revert to the Defendant. The overall reaction to the settlement has been positive. The Claims Administrator has received 156 claim forms from the 270 Class Members. (Id., ¶¶ 20-21.) Neither the Claims Administrator nor the Court received any objections to the Settlement. No Class Member appeared at the final approval hearing to object. According to the Claims Administrator, assuming the Court were to grant in full Plaintiff’s motion for attorneys’ fees and costs and service awards, approximately $1,108,917.72 would be available to distribute Class Members who submitted timely claim forms, for an average award of just over $7,000. (Id. ¶¶ 16-18.)

The Court approved costs to be paid to the Claims Administrator of $10,000.00 from the Settlement Fund.

Attorneys Fees, Costs, and Service Awards

Plaintiff brought an unopposed fee application, seeking $600,000.00 in attorneys’ fees, $11,274.89 in costs, and $10,000.00 in service awards to him and to class member Boris Moskovich.

Plaintiff’s counsel sought an award of attorneys’ fees based on the percentage method, asking for 33 1/3% of the Settlement Fund.  The court agreed to depart from the 25% benchmark.  See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002) (noting that 25% is benchmark and “usual” range of awards is 20-30%); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir. 1998) (stating that 25% is benchmark).  But the court would not vary from the benchmark to the degree requested by counsel.

The Court concludes that counsel did achieve an excellent result for the class, that the reaction to the settlement has been overwhelmingly positive, and that Plaintiff faced significant risk in prosecuting this case given the uncertain state of California law in similar wage and hour cases. The Court also recognizes that other courts have awarded settlement fees of up to 33 1/3% in such cases. However, the parties reached this settlement quickly and did not engage in any motion practice. Seee.g.Navarro v. Servisair, 2010 WL 1729538 (N.D. Cal. Apr. 27, 2010) (finding that proposed award of 30% of settlement fund unjustifiably departed from benchmark based in part on speed with which parties reached a settlement). Moreover, the requested percentage would amount to award that is more than double the fees actually incurred by counsel. Compare Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 491 (E.D. Cal. 2010) (awarding 33 1/3% of settlement fund which was “significantly less” than asserted lodestar).

Thus the court found that an award of  $520,000.00 was reasonable.

The court found counsels’ requests for costs in the amount of $11,274.89 reasonable.

The court also approved service awards in the amount of $10,000.00 for the lead plaintiff and for a class member.

By CHARLES H. JUNG

Enhanced by Zemanta
Tagged , , , , , , ,

Northern District Approves $4.5 Million Settlement Against RadioShack in Expense Reimbursement Case, With $1.5 Million in Fees, and $5,000 Incentive Payments to Each Lead Plaintiff

NEW YORK - OCTOBER 26:  Customers patronize a ...
Image by Getty Images via @daylife

Magistrate Judge Edward M. Chen (whose confirmation to the Northern District of California bench has unfortunately been stalled for far too long) approved the class settlement and attorney fee application in Stuart v. RadioShack Corp., 2010 WL 3155645, No. C-07-4499 EMC (N.D. Cal. Aug. 9, 2010).

This class action was initiated in state court in June 2007, alleging that RadioShack had improperly failed to reimburse its employees for expenses they incurred in using their personal vehicles to perform inter-company transfers (“ICSTs”). Plaintiffs claimed for reimbursement pursuant to California Labor Code § 2802 and for a violation of California Business & Professions Code.  Subsequently Plaintiffs added a claim for recovery of penalties under the California Labor Code Private Attorneys General Act (“PAGA”).  The case was removed in August 2007. And in February 2009, Judge Chen granted the motion for class certification, certifying a class consisting of “all persons employed by RadioShack within the State of California, at any time from June 3, 2003, to the present, who drove their personal vehicles to and from RadioShack stores to carry out ICSTs and who were not reimbursed for mileage.”  On October 1, 2009–nine days before trial was scheduled to begin–the parties reached a settlement.

Under the Settlement Agreement, RadioShack will pay a total of $4.5 million for the release by the class, as an all-inclusive sum (proceeds to be distributed to the class, attorney’s fees and litigation expenses, costs of claim administration, incentive payments to the class representatives, and the PAGA award to the state), without reversion of any of the $4.5 million to RadioShack.

After attorney’s fees, litigation expenses, costs of claim administration, incentive payments, and the PAGA award to the state have been deducted from the $4.5 million, the remainder for distribution to the class members and/or donation to charity is $2,796,563.31.

Each class member’s award “depends on the number of weeks that the class member worked.”

The Court found that, importantly, “the amount available to the class after deductions for, e.g., fees and costs–i.e., $2,796,563.31–is not far off what the class might be awarded if it were to prevail on the merits after a trial.” Id. *4.

Plaintiffs’ counsel asked for an award of $1.5 million  (i.e., one-third of the total settlement amount), plus litigation expenses which total $78,436.69.

The Court has reviewed the expenses and determined that they are reasonable. The Court notes that the sum is not excessive given that this litigation has been ongoing for more than three years.

Attorneys Fees Application

The attorneys presented a fee application claiming $1.5 million as a lodestar for fees–excluding work performed in preparing for final approval and any post-judgment work that may be needed.  The $1.5 million sum represents 2,116.69 hours of work over a period of more than three years, at hourly rates of the billing attorneys ranging from $600 to $1,000.

After reviewing the billing records submitted by counsel as well as the declarations regarding the hourly rates of counsel, the court found that the number of hours was reasonable given the length of the lawsuit and the vigorous disputes over the course of the litigation (e.g., regarding RadioShack’s defense that it had no duty to reimburse until an employee made a request for reimbursement).

The court did express some “concerns about the $1,000 hourly rate” claimed by one of the attorneys.  “Based on the Court’s experience, this is an inordinately large hourly rate, even if the Court were to assume that [the attorney] has fifty years of experience.”  But the Court concluded that “given the 2,116.69 hours incurred, the average hourly rate for a fee award of $1.5 million total is $708, an amount that the Court deems appropriate, particularly when no multiplier is being sought on top of the lodestar.”

Compared to the percentage of the fund, the court noted that “the total settlement amount to be paid by RadioShack (with no possibility of reversion), the fee award represents one-third of the settlement amount.”  The court found that this was “well within the range of percentages which courts have upheld as reasonable in other class action lawsuits.”

The court also approved an incentive award of $5,000 for each of the two class representatives, for a total of $10,000.  The Court concluded that the incentive payments were appropriate and reasonable.  “Although the class representatives did not enter this litigation until late in the proceedings, due consideration must be given to the fact that they were willing and ready to go to trial.”  The court noted that if the “class representatives had asked for a larger sum, the Court might well have reached a different conclusion, but the $5,000 sought for each representative was viewed as “relatively modest.”

By CHARLES H. JUNG

Enhanced by Zemanta
Tagged , , , , , , ,

Central District Approves $4,385,000 and 30% Attorney Fee Award in Class Settlement of Cicero v. DirecTV, Inc.

A standard DirecTV satellite dish with Dual LN...
Image via Wikipedia

Judge Avern Cohn of the Central District of California approved a wage and hour class settlement in Cicero v. DirecTV, Inc., 2010 WL 2991486 (C.D. Cal. July 27, 2010) (not reported).  Judge Cohn approved a payout fund to class members of $4,385,000, a 30% attorney fee award of $1,950,000 to class counsel, and incentive awards of $7,500 and $5,000 the representative plaintiffs.

The class action claimed violations of California’s wage and hour laws.  The named plaintiffs are former satellite television installation and service technicians who brought this case individually and on behalf of all other similarly situated current and former satellite installation and/or service technicians against their former employers Mountain Center, Inc., and Ironwood Communications Inc. (currently DirecTV, Inc. doing business as DirecTV Home Services, collectively “Defendant”) for allegedly violating California’s labor and unfair competition laws. Named Plaintiffs alleged that Defendant violated applicable provisions of the Industrial Welfare Commission’s (“the IWC”) Wage Orders, the Labor Code, and the Business and Professions Code by: (1) failing to provide employees duty-free meal periods; (2) failing to reimburse employees for tools necessary to the performance of the employees’ work; (3) failing to pay wages for all hours worked, including hours worked in excess of eight per day and forty per week; (4) failing to pay all wages owed employees upon termination of the employment relationship; and (5) failing to provide accurate wage statements.

The parties engaged in two mediations of the matter before the Hon. William Cahill (Ret.) in March, 2009, and subsequently before the Hon. Diane Wayne (Ret.).

The Court approved the attorneys’ fees request, which represented 30% of the total gross settlement amount.  The Court noted that:

California recognizes the common fund doctrine for the award of attorneys’ fees. Under California and Ninth Circuit precedent, a court has discretion to calculate and award attorneys’ fees using either the lodestar method or the percentage-of-the-fund method. Wersha v. Apple Computer, Inc., 91 Cal.App. 4th 224, 253 (2001); Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir.2002). The Court, in its discretion, finds that the percentage method is a fair, reasonable, and appropriate method for awarding attorneys’ fees in this case. . . .

Overall, although this percentage is slightly higher than the 25% benchmark for fees in class action cases, it is consistent with other wage and hour class actions where the recovery is less than $10 million. Moreover, there have been no objections to the amount of attorneys’ fees. The Court therefore finds that the amount of attorneys’ fees is warranted by the complexity of the case and Class Counsel’s dedication of extraordinary time and resources to the prosecution of this claim.

Id. **6-7.

By CHARLES H. JUNG

Enhanced by Zemanta
Tagged , , , , , , ,

Third District Holds that Employer May Recover Fees for Defense Against Allegation of Wrongly Denied Rest Periods

Labor law concerns the inequality of bargainin...
Image via Wikipedia

In a case with serious implications for Plaintiff’s wage & hour attorneys, the Third District Court of Appeal held that an employer may recover its attorneys fees in a case alleging wrongful denial of rest breaks.  In Kirby v. Immoos Fire Protection, Inc., 2010 WL 2910075 (Cal. Ct. App. 3 Dist. July 27,2010) two former employees challenged an award of attorney’s fees to an employer who successfully defended against allegations of labor law violations. Plaintiff-Appellants Anthony Kirby and Rick Leech, Jr. sued Respondent-Defendant Immoos Fire Protection, Inc. as well as 750 Doe defendants for violating various labor laws as well as the unfair competition law (Bus. & Prof.Code, § 17200 et seq.). Plaintiff dismissed the case after the trial court denied class certification.

Judge Loren McMaster of the Sacramento Superior Court subsequently awarded $49,846.05 in attorney’s fees to Defendant for its defense of the first, sixth and seventh causes of action.  The first cause of action sought recover for violations of the UCL.  The third cause of action alleged that Immoos failed to pay overtime compensation, as required by sections 204.3, 510, and Industrial Wage Commission Order No. 16-2001 (Order No. 16-2001).  The sixth cause of action alleged that Immoos failed to provide Kirby with rest periods as required by Order No. 16-2001.  The Third District Court of Appeal reversed, allowing reasonable fees for the sixth cause of action only.

Defendant moved to recover attorney’s fees from Plaintiff pursuant to Labor Code section 218.5. Plaintiff opposed the motion arguing, in part, that the unilateral fee-shifting provision in favor of plaintiffs provided by Labor Code section 1194 barred an award of fees to Immoos.

Section 218.5 provides in pertinent part: “In any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, the court shall award reasonable attorney’s fees and costs to the prevailing party if any party to the action requests attorney’s fees and costs upon the initiation of the action…. [¶] This section does not apply to any action for which attorney’s fees are recoverable under Section 1194.”

Section 1194 provides in relevant part: “Notwithstanding any agreement to work for a lesser wage, any 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 trial court concluded that it is “apparent from the express language of … section 218.5, that only section 1194 can defeat a prevailing party employer’s entitlement to attorneys’ fees under that statute, under the rule of statutory construction, expressio unius est exclusio alterius-the expression of one thing is the exclusion of another.”  “As only [section] 1194 is named as an exception to 218.5, no other Labor Code sections may be implied to defeat a prevailing party employer’s entitlement to attorneys’ fees under that section.”

In addition to the fees allowed for defense against the complaint, the trial court awarded Immoos fees for bringing the motion for attorney’s fees.  Altogether, attorney’s fees were awarded to Immoos in the amount of $49,846.05.

The Court of Appeals concluded that the trial court did not err in awarding fees to Defendant for the sixth cause of action.  However, the court erred in awarding attorney’s fees for defense against claimed violations of section 2810 as set forth in the first and seventh causes of action.

Plaintiff argued that fees should not be awarded since section 218.5 includes an express exception to its bilateral fee-shifting provision, which states: “This section does not apply to any action for which attorney’s fees are recoverable under Section 1194.” Arguing that an “action” refers to an entire case, Kirby concluded that the inclusion of causes of action subject to section 1194 bars Immoos’s recovery of any attorney’s fees in this case.  The Court rejected the argument.

The Court construes the “section 1194 exception as applying only to causes of action for unpaid minimum and overtime wages.”  Id. at *6. “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.”  Id.

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.

Id.

Since Plaintiff’s sixth cause of action alleged that Plaintiff was “owed an additional one hour of wages per day per missed rest period” the court concluded that it was a claim seeking additional wages.  Therefore 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…” applied.  Id. **7-8.

It is now common practice to include a rest break claim in wage & hour complaints.  Plaintiffs attorneys will need to seriously reconsider whether they will continue this practice or risk bearing defendant’s fees in an unsuccessful claim.

By CHARLES H. JUNG

Enhanced by Zemanta
Tagged , , , , , , ,
Advertisements