A new California appellate decision has addressed whether a prevailing plaintiff on claims for unpaid overtime or minimum wages under Labor Code § 1194 can be denied reasonable fees and costs under Civil Procedure Code § 1033(a) if the amount of the recovery is minimal or whether a plaintiff prevailing on these claims is automatically entitled to their reasonable fees and costs.
In Gramajo v. Joe’s Pizza On Sunset, Inc., certified for publication on March 25, 2024, the plaintiff sought $26,159.33 in unpaid minimum and overtime wages, meal and rest break premium wages, waiting time penalties, and unreimbursed expenses. The jury awarded only $7,659.63, consisting of $2.17 in unpaid minimum wages and $3,340 in overtime wages; $2,115.59 in statutory interest; $2,100 in waiting time penalties under Labor Code § 203; $2.17 in liquidated damages; and $100 in statutory penalties.
Plaintiff then sought to recover $296,920 in attorney’s fees for 228.4 hours billed at $650 per hour with a multiplier of two, as well as $26,932.84 in costs. The trial court denied both the fees and costs recovery pursuant to Civil Procedure Code § 1033(a), which gives trial courts discretion to deny a prevailing plaintiff their litigation costs when a plaintiff files their case as an unlimited civil proceeding but recovers an amount less than $25,000, which could have been recovered in a limited civil proceeding. The trial court also determined that Plaintiff acted in bad faith, including by artificially inflating his damages amount and including equity claims he never intended to pursue to get over the jurisdictional amount required to have his case heard in unlimited civil court.
The appellate court, however, reversed, holding that employees who prevail in actions to recover unpaid minimum and overtime wages are entitled to their reasonable litigation attorney’s fees and costs under Labor Code § 1194, subdivision (a), irrespective of the amount recovered. The appellate court remanded the case to the trial court to determine the reasonable fees and costs incurred. The court cautioned that its decision “should not be read as a license for attorneys litigating minimum wage and overtime cases to over-file their cases or request unreasonable and excessive cost awards free of consequence. In assessing requests for litigation costs, trial courts must always be guided by what is reasonable and exercise their discretion to strike costs or reduce fees they find unreasonable.” The appellate court cited Harrington v. Payroll Entertainment Services, Inc. (2008) 160 Cal. App.4th 589, 593–594, in which the prevailing plaintiff was awarded only $500 in attorney’s fees as illustrative of what could be an appropriate fee award in a wage and hour case, and concluded by stating, “Harrington demonstrates, there are still sufficient consequences for attorneys who make unreasonable and excessive requests to recover fees and costs even in the face of a mandatory fee statute like Labor Code section 1194, subdivision (a).”
The Gramajo decision underscores the risk to both sides in single-plaintiff wage and hour matters where attorney’s fees can often exceed the potential underlying recovery. Mediation can provide an efficient and cost-effective method to reaching a resolution in such a case. A recent article I wrote discussing best practices that can increase the likelihood of settling a case in which wage and hour claims are alleged can be found here.