California Supreme Court Schedules Oral Arguments In Cases Of Potential Interest To Employers

By Christopher S. Andre

The California Supreme Court has scheduled for oral argument two cases of potential interest to employers:

On May 25, 2010, the Court will hear oral arguments in Lu v. Hawaiian Gardens Casino. The issue to be decided in that case is whether "Labor Code section 351, which prohibits employers from taking 'any gratuity or part thereof that is paid, given to, or left for an employee by a patron,' create a private right of action for employees?" In other words, the Court will decide whether a current or former employee can personally sue his or her current or former employer for alleged violation of Labor Code section 351.

On June 2, 2010, the Court will hear oral arguments in Clark v. Superior Court. Although the issue to be decided is whether statutory penalties for violations of California's elder abuse laws are recoverable as restitution under California's Unfair Competition Law ("UCL") codified at California Business and Professions Code section 17200, et seq., the case is potentially of interest to California employers because the California Labor Code provides for a variety of penalties, and it is currently understood that such penalties are not recoverable as "restitution" under the UCL. If the Court holds that statutory penalties for violations of California's elder abuse laws are recoverable as restitution under the UCL, that might pave the way for plaintiff current or former employees to argue that Labor Code penalties are likewise recoverable under the UCL.

We will report on any further significant developments in these cases as information becomes available.

Court of Appeal Clarifies Rules For Determining Awards Of Attorney's Fees To Prevailing Plaintiffs

By Christopher S. Andre

A number of California statutes permit plaintiffs who prevail on various wage and hour claims to recover attorney's fees and costs. See, e.g., California Labor Code Sections 218.5, 226 (e), and 1194. Courts are also permitted to enhance such fee awards by applying a multiplier, which can result in an award of attorney's fees significantly higher than what a plaintiffs' attorney would be paid by the hour at market hourly rates.

In Pellegrino v. Robert Half International, Inc., a companion decision to the decision we previously discussed here, the Court of Appeal addressed certain issues about how awards of attorney's fees are to be determined:

1. The court reiterated that an award of attorney's fees is not available to plaintiffs who prevail on claims for alleged violation of California's Unfair Competition Law codified at California Business and Professions Code Section 17200, et seq., which forbids business practices that are unlawful, unfair, or fraudulent. Plaintiffs alleging violations of the Labor Code nearly always allege also violations of the Unfair Competition Law because a four-year statute of limitations period applies to the Unfair Competition Law instead of the three-year statute of limitations that applies to many alleged violations of the Labor Code.

2. The court held, however, that when alleged violations of the Labor Code and of the Unfair Competition Law are sufficiently interrelated, a court is not required to allocate between fees "incurred" to pursue alleged violation(s) of the Labor Code and fees "incurred" to pursue alleged violations of the Unfair Competition Law. The court held the trial court made no error when it reduced the fee award by 15% to account for fees "incurred" to pursue the plaintiffs' claims for alleged violation of the Unfair Competition law.

3. The court affirmed the trial court's use of a 1.75 multiplier to enhance the award of attorney's fees to the plaintiffs' attorneys for fees "incurred" to pursue the plaintiffs' substantive claims, which effectively increased the award from $558,926.85 to $978,121.98.

4. The court held the trial court erred when it applied a multiplier to the fees "incurred" to pursue the plaintiffs' claims for an award of attorney's fees. The court reasoned that the factors that support applying a multiplier to an award of attorney's fees to the plaintiffs for their substantive claims does not apply to attorney's fees "incurred" to pursue an award of attorney's fees.

Click here to download and to read the opinion.