Section 998 Cost-Shifting Did Not Preempt Labor Code Cost-Shifting Provisions So As To Allow Fee and Costs Recovery To Certain Defendants.
Cruz v. Fusion Buffet, Inc., Case No. D075479 (4th Dist., Div. 1 Oct. 15, 2020) (unpublished) is an interesting unpublished decision discussing the intersection of Labor Code costs shifting and CCP § 998 costs shifting. In the end, which scheme prevailed—stay tuned, but the employment provisions did.
Plaintiff ex-employee sued for various wage/hour violations, including meal and rest breaks, eventually winning a compensatory bench trial award under $25,000 against employer but not against certain putative alter ego individual defendants, even though the matter was filed as an unlimited jurisdiction matter. Plaintiff moved for fees under various Labor Code provisions against employer to the tune of $107,118.75 in fees (inclusive of a 1.25 multiplier) and to the tune of $4,583.35 in costs. The alter ego defendants moved for fees and costs against plaintiff in the sum of $22,735. Defendants moved to strike/tax costs claimed by plaintiff, and plaintiff moved to strike/tax costs asserted by the alter ego defendants. In the end, the lower court granted plaintiff’s fees motion for the much lesser amount of $47,132.50, denied the defense motions to strike/tax costs, denied the alter ego defendant’s fees motion, and granted plaintiff’s motion to strike/tax costs as to the alter ego defendants.
Defendants timely appealed, but all of the post-judgment orders were affirmed.
Plaintiff’s fee/costs award was proper because the lower court was not required to deny a fee/costs request where the compensatory award in an unlimited matter was one which could have been awarded by a limited jurisdiction court—it was a discretionary decision, and there was no abuse of discretion under the circumstances. The defense argued that the lower court should have apportioned fees between compensable wage/hour claims and non-compensable meal/rest break claims, but the trial judge’s determination that the fees were inextricably intertwined ended the challenge based on the interrelated nature of proof relating to all of these claims. Finally, the fees were not grossly inflated and unreasonable given there was fairly detailed fee substantiation and the trial court observed the conduct of counsel in a fee request which was not hugely substantial in nature—bolstered by a more than half reduction in requested fees.
The interesting part of this opinion is whether the alter ego defendants, who sent a CCP § 998 offer which was successful, were properly refused costs requested against plaintiff. The problem here was that the Labor Code costs-shifting provisions were inapt for these defendants, such that section 998 was the only avenue--but it could not prevail over the more specific employment costs-shifting provisions. The 4/2 DCA panel acknowledged that Plancich v. United Parcel Service, Inc., 198 Cal.App.4th 308, 310-312 (2011) might dictate a different result under Labor Code section 1194, but the panel disagreed with Plancich’s analysis and sided with the view that the one-sided, pro-plaintiff statute prevailed over section 998 (which dealt only with section 1032 costs). On the alter ego defendants’ argument that fees and costs were justified under Labor Code section 218.5, no fees/costs-shifting was warranted based on the lower court’s finding that plaintiff did not bring the alter ego case in bad faith; she presented proof of same, but simply lost. All post-judgment orders affirmed.
BLOG UPDATE: Cruz was certified for publication on November 9, 2020.
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