Case Demonstrates How Fee Claimant Must Have Solid Fee Entitlement Basis (Not Shifting Grounds At The Last Moment) And Discusses When Settlement Demands Are Admissible In Fee Proceedings.
This next opinion discusses several aspects of fee motions, oppositions, replies, and supplemental papers all pointing to a universal truth: that fee motions primarily involve credibility of claimant’s counsel. When there is no solid fee entitlement bases and the claimant’s attorney tries to inaptly shift grounds at the last juncture of the fee proceedings, that frequently results in an adverse credibility determination, as happened here. The opinion, Betancourt v. OS Restaurant Services, LLC, Case No. B293625 (2d Dist., Div. 8 Apr. 30, 2020) (unpublished), which we now discuss, also shows how settlement demands can be used in a fee proceeding where they have a different purpose than to demonstrate the invalidity of a substantive claim.
Plaintiff was a server/employee for defendant for about 7 years at a Fleming’s Steakhouse located on Olympic Boulevard in Los Angeles. She filed a complaint alleging claims for rest and meal break violations and associated penalties (failure to include the rest break premiums on wage statements and waiting time penalties), as well as retaliation and wrongful termination claims. Although mentioning the Labor Code § 218.5 pure wage/hour statute, she pled no such claim. In a pretrial settlement demand, plaintiff demanded $750,000, estimating that only about a $13,000 value was attributable to her rest/meal break claims and their derivative penalties.
Eventually, plaintiff agreed to settle for $15,375 on the rest/meal break claims and associated penalties after the defense waived some discovery sanctions. Plaintiff cryptically referred to wage/hour claims which could have been asserted (but were not) and dismissed the retaliation/wrongful termination claims. The fee issue was kicked down the road, to be made “consistent with applicable law” as part of the settlement.
Subsequently, plaintiff moved for attorney’s fees of $580,794 (inclusive of a multiplier) primarily under Labor Code §§ 218.5 (pure wage/hour) and 226 (rest/meal break) statutes. No time records were ever submitted by plaintiff’s counsel. Defendants claimed that the thrust of plaintiff’s case had been on the dismissed retaliation/wrongful termination claims, with plaintiff never presenting a pure wage/hour claim. In reply, plaintiff dramatically shifted focus to say that the case was 10% about retaliation/wrongful termination claims and 90% on wage/hour claims, going so far as to attach for the first time some documents on the wage/hour claims never presented during the course of the case or before the settlement. Plaintiff, however, did drop her fee request down to $348,476.40 (a slight lodestar reduction and abandoning the multiplier request) plus a $48,914 “fees on fees” request. In supplemental papers, plaintiff stuck to her new ground, and the defense again presented evidence showing why no pure wage/hour claim was involved based on what was presented during the litigation as well as through a deposition admission by plaintiff.
The trial judge granted the fee request, awarding plaintiff $280,794, prompting an appeal by defendants.
The 2/8 DCA, in an opinion authored by Justice Grimes, reversed the fee award as a matter of law—put another way, it went POOF!
The panel found that the thrust of the case concerned rest/meal break violations for which there is no fee entitlement under Labor Code § 218.5. (See Kirby v. Immoos Fire Protection, Inc., 53 Cal.4th 1244, 1255-1257, 1259 (2013).). Likewise, there was no fee entitlement for derivative penalties relating to these claims. (Naranjo v. Spectrum Security Services, Inc., 40 Cal.App.4th 444, 474 (2019); Ling v. P.F. Chang’s China Bistro, Inc., 245 Cal.App.4th 1242, 1261 (2016).) In determining what the gist of the case was about, the Court of Appeal credited many of the defense submissions which showed (1) plaintiff had shifted grounds on reply and had not correctly acknowledged that the retaliation/wrongful termination claims were the main claims for which time had been expended, as shown by the pretrial settlement demand; (2) no evidence on pure wage/hour claims was presented before the settlement given that no claim was even pled in the complaint; and (3) plaintiff made an admission in her deposition that the case was about rest breaks on the wage/hour front.
With respect to the presentation of the settlement demand, plaintiff took the defense to task on appeal. However, in a footnote, Justice Grimes diffused the criticism by observing that the demand was not being used to show the invalidity of any claim, but instead was used to show that plaintiff did not make a claim to which any fee entitlement could be hinged. In past posts, we have suggested that settlement demands, if used wisely, should be used in fee motion paperwork submissions—a practice tip validated by the result in this opinion.
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