Dissenting Justice Found Fee Award Appropriate As Successful Writ Petition Conferred A Significant Benefit To The Public Or At Least To The Large Class Of California Public Works Contractors.
In Hobbs Construction, Inc. v. Dept. of Industrial Relations, Case No. D074385 (4th Dist., Div. 1 November 22, 2019) (unpublished), the Division of Labor Standards Enforcement received notice that a construction company performing park renovations for the City of Tracy may have underpaid an employee who worked on the project. Following up on this notice, the Division requested the construction company provide its payroll records – including original time cards for all work performed on the project. When the construction company produced payroll records without providing original time cards, the Division issued a $149,200 civil wage and penalty assessment.
Construction company then sought administrative review of the assessment, but the Department of Industrial Relations affirmed – concluding the Division was statutorily authorized to request original time cards under Labor Code section 1776(b). Construction company then sought a writ of mandate to vacate the administrative decision and an injunction prohibiting imposition of the assessment – arguing Labor Code section 1776 did not authorize the Division to request original time cards. The trial court agreed – finding the Division was allowed to issue assessment under section 1776 only when a public works contractor fails to produce/make available certified copies of payroll records, and not for failure to produce original (uncertified) payroll records. Construction company then successfully moved for an attorney fees award of $53,165.95 pursuant to Code Civ. Proc. section 1021.5.
The Division and Dept. of Industrial Relations appealed the fees award – arguing that the award was improper under section 1021.5 because the writ proceeding/injunction benefited the construction company and not the general public, and because the financial cost the construction company faced in filing suit did not outweigh its personal incentive for doing so as the construction company was facing an assessment of $149,200.
A 2-1 majority of the 4/1 DCA agreed – with an 18-page dissent from Justice O’Rourke – and additionally found that the $53,165.95 in fees incurred by the construction company included prelitigation costs for the initial response to the assessment and for the administrative appeal process. Although the 2-1 majority of the 4/1 DCA found the record insufficient in showing whether the construction company met its “heavy burden” of establishing such costs contributed to the success of the litigation, it found the prelitigation fees provided an inaccurate and inflated representation of the construction company’s financial burden in filing the writ petition.
In an 18-page dissent, Justice O’Rourke discussed his belief that the record supported, and the trial court had properly concluded, that construction company’s action had conferred a significant benefit to the public or at least to the large class of California public works contractors. Further, Justice O’Rourke also agreed with the trial court’s finding that the award was appropriate in light of the necessity and financial burden of construction company’s writ procedure as construction company did not expect, nor realize, financial gains through its writ procedure that would offset the litigation costs. Finally, Justice O’Rourke found that pre-filing costs are awardable as long as they are reasonable (Stokus v. Marsh (1990) 217 Cal.App. 3d 647, 655), and that the trial court’s implied findings should not have been disturbed. He found the burden was on the appellants to show the trial court could not reasonably conclude pre-filing fees were appropriately awarded – not on the construction company to highlight evidence supporting the court’s implicit conclusion.
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