California Supreme Court Limits Recovery of Attorneys’ Fees on Meal and Rest Claims
Yesterday the California Supreme Court issued its opinion in Kirby v. Immoos Fire Protection, Inc., addressing whether a prevailing party in a rest break case is entitled to recover attorneys' fees incurred in litigating the case. In this case, the defendant employer was the prevailing party on a claim by plaintiffs for alleged missed rest breaks in violation of Labor Code section 226.7. The employer, as the prevailing party, sought to recover its attorneys' fees under Labor Code section 218.5, which on its face allows for an award of attorneys' fees to "the prevailing party" in "any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions." The trial court awarded attorneys' fees to the employer on multiple claims, but the court of appeal reversed claims covered by Labor Code section 1194 (minimum wage and overtime claims) and 2810 because each of these provisions specifically allow for only one-way fee shifting in favor of a prevailing plaintiff. The court of appeal upheld the award of attorneys' fees to the employer on the rest break claim, holding that the claim sought additional "wages" and was, therefore, covered by Labor Code section 218.5 and its mutual fee shifting provision. The plaintiffs sought review by the California Supreme Court, arguing that the rest break claim was governed by section 1194's unilateral fee shifting provision because it was really in the nature of an action for payment of less than the minimum wages required by law. Plaintiffs also argued that because they had a separate claim for unpaid overtime covered by section 1194, that section should apply to the whole action, including the rest break claim.
The Supreme Court rejected the plaintiffs' argument that section 1194 applies to a rest break claim, reasoning that section 1194 expressly states that it only applies to claims for unpaid minimum wage or overtime compensation. As such, the Court held that section 1194 does not provide a mechanism for a prevailing party to recover attorneys' fees on a rest break claim. Turning to section 218.5, the Court similarly held that this fee shifting statute does not apply to rest break claims. Using somewhat strained reasoning, the Court held that a claim for missed rest breaks is not a claim for "nonpayment of wages" within the meaning of 218.5 (even though the Supreme Court recently held that the premium pay owed for missed breaks is a "wage" and not a "penalty"). Nor is a claim for missed rest breaks a claim for nonpayment of fringe benefits or health and welfare contributions. Instead, according to the Court, a claim for missed breaks is a claim for denial of a mandated break and, as such, is not covered by the express language of section 218.5 and 218.5 does not provide a mechanism for a prevailing party to recover attorneys' fees on a claim for missed breaks.
The Supreme Court's decision was bad news for the employer in the Kirby case, who had its attorneys' fee award reversed. However, the result appears to be a good one for California employers in the larger sense because the decision precludes prevailing plaintiffs from using section 218.5 (or 1194) to recover attorneys' fees in connection with meal and rest break claims. This should operate to drive down the incentive for the plaintiffs' bar in connection with such suits. They may try to utilize PAGA or California Code of Civil Procedure section 1021.5's private attorney general theory as means to recover fees on these claims, but these avenues are not without hurdles and in many cases, will not work.