On June 28, 2016, in Rogelio Ramos v. Manuel Garcia (“Ramos”) (Superior Court Case No. 37-2013-00037990-CU-OE-CTL), the Court of Appeal for the Fourth Appellate District reaffirmed that under Labor Code Section 218.5 an employee who is the “prevailing party” is entitled to an award of attorney’s fees, while an employer who is found to be the prevailing party is only entitled to attorney’s fees where the employee brought his or her claims in “bad faith.”
In Ramos, Plaintiff sued the owners of the company for which he worked and sought unpaid overtime, minimum wages and penalties. Plaintiff also sued Defendant Garcia claiming he was similarly an owner/employer. The trial court ruled against Plaintiff finding that Defendant Garcia was a co-worker employee and not Plaintiff’s employer. The trial court awarded Defendant Garcia attorney’s fees under the “employee prevailing party” provision of Labor Code Section 218.5.
In an interesting twist, the Court of Appeal rejected a fee award to Defendant Garcia, even though the trial court determined he was a prevailing employee. The Court of Appeal reversed the trial court, finding that the intent of Labor Code Section 218.5 was to reward plaintiff employees suing to recover wages, and not defendants who are not seeking unpaid wages. As the Court stated in its holding: “[Defendant Garcia] was not an employee seeking unpaid minimum wage or overtime compensation against his employer and who was deserving of this form of statutory protection. . . . [Defendant Garcia] was simply the incorrect person for [Plaintiff] to bring his causes of action against, and that is the sole reason he prevailed at trial.”
The issue on appeal was whether a “defendant employee” is entitled to attorney’s fees under either Labor Code Section 218.5 or Labor Code Section 1194. Both code sections contain one sided attorney’s fee award provisions. Under Labor Code section 218.5, prevailing employees are entitled to recover their attorney’s fees, while prevailing employers can recover attorney’s fees only if they show that the employees “brought the court action in bad faith.” Labor Code Section 1194 is even more stringent – prevailing employees are entitled to their attorney’s fees, while prevailing employers are not.
Plaintiff argued that the intent of both sections was to award fees only to a plaintiff employee seeking unpaid wages. Defendant argued that the code sections did not make such a distinction and that any “employee” who “prevailed” in a lawsuit involving the two labor code sections was entitled to recover his or her attorney’s fees. The Court of Appeal disagreed with Defendant and overturned the trial court’s award of attorney’s fees. The Court found that the intent of both statutes was to encourage plaintiff employees to sue for unpaid wages. Both statutes were drafted to provide a “bounty” to plaintiff employees who sue to “enforce a right the Legislature has chosen to favor.” The Court found that the one sided fee award was meant to encourage employees to “seek redress – and thus simultaneously enforce public policy – in situations where they otherwise would not find it economical to sue.” There was no evidence that the Legislature intended “to offer the same bounty to defendants” who show they had not violated the law. Thus, although the defendant in this case was an “employee,” he was not entitled to an award of attorney’s fees under either section since he was not the moving party who was suing to enforce a statutory right.
The Ramos case affirms that not every “prevailing employee” is entitled to an award of attorney’s fees. Under the Court’s holding, Sections 218.5 and 1194 are intended to provide an incentive to employees to sue for unpaid wages and cannot be used to “authorize an attorney fee award against an employee who unsuccessfully sues a fellow employee, even on nonpayment of wage claims.” The Court’s overriding message is that the fee provisions under both sections is, in reality, a one way provision – it rewards a plaintiff suing to enforce a right to payment while disallowing fees to a successful defendant. The only exception to the one way provision is where an employer can show that the losing plaintiff employee acted in “bad faith” in bringing his or her suit. From the lack of case law awarding fees to prevailing employers, proving a bad faith motive appears to be a substantially high evidentiary burden.
