On the last day of April, the California Supreme Court issued its second significant decision of the month concerning meal and rest break claims in California. Like the Brinker v. Superior Court decision, issued on April 12, 2012, the Kirby v. Immoos Fire Protection, Inc. case is favorable to California employers.
In Kirby, Plaintiffs alleged seven causes of action in their Amended Complaint, the sixth of which alleged the failure to provide rest breaks as required by California Labor Code Section 226.7. At the trial court level, in February 2009, Plaintiffs’ dismissed their rest break claim, and in April 2009, Defendant filed a motion to recover attorney’s fees under California Labor Code Section 218.5 for having prevailed on the rest break claim. The trial court eventually ordered Plaintiffs to pay nearly $50,000 in fees to Defendant. Plaintiffs appealed, but the Appellate Court sided with the trial court. The California Supreme Court, however, overturned the lower-court’s order and determined that no party is entitled to recover attorney’s fees even if that party prevailed on meal and rest break claims.
Though this particular Defendant lost an award of approximately $50,000, most defendants in any such future claims can view this case as very favorable. Essentially, this decision tells potential plaintiffs, and their lawyers, that even if they prevail on such claims, they will not be entitled to attorney’s fees on such claims. This decision reduces some of the leverage plaintiffs had regarding such claims during litigation and especially during settlement negotiations. Further, most defendants rarely pursued attorney’s fees even if they prevailed on such claims anyway since they were rarely awarded, and even if awarded, prevailing defendants knew it was unlikely they could collect any money from the typically asset-poor plaintiff(s) who bring such claims. Thus, while this Defendant may have lost this battle, it won the war on behalf of other defendants concerned about courts awarding attorney’s fees to plaintiffs who prevail on meal and rest break claims.
This case likely will also influence how plaintiffs pursue such claims in the future and will encourage plaintiffs to bring other claims where attorney’s fees can be awarded under the Labor Code. The decision may also drive more plaintiffs to pursue meal and rest break claims via the California Labor Commissioner’s office which is generally faster and cheaper than litigating in court.
For those of you who are interested in Court’s analysis of the competing Labor Code sections, a short summary is here: The Court pointed out that Labor Code Section 218.5 requires the awarding of attorney’s fees to the prevailing party “[i]n any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions.” The Court further noted that this provision awards fees to the prevailing party whether it is the employee or the employer; it is a two-way fee-shifting provision. However, Labor Code Section 218.5 “does not apply to any action for which attorney’s fees are recoverable under” California Labor Code Section 1194, which provides that employees who prevail in any action for any unpaid “legal minimum wage or . . . legal overtime compensation” are entitled to recover attorney’s fees; it is a one-way fee shifting provision.
According to the Court, the first question was whether attorney’s fees were recoverable under Labor Code Section 1194. Since rest breaks do not constitute a “minimum wage,” the Court found that attorney’s were not available under Labor Code Section 1194.
Next, the Court considered whether attorney’s fees were recoverable under Labor Code Section 218.5. The Court found that rest breaks do not constitute wages of any kind, and thus, Labor Code Section 218.5 was not applicable to the claim. In analyzing the various sections of the Labor Code, the Court also examined their legislative histories. And, while the Court found that no party is entitled to attorney’s fees for such claims, it noted that the legislature could easily broaden the Labor Code in such situations.
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