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United Parcel Service Wage and Hour Cases v. United Parcel Service

February 24, 2011

UNITED PARCEL SERVICE WAGE AND HOUR CASES THOMAS MCGANN, PLAINTIFF AND APPELLANT,
v.
UNITED PARCEL SERVICE, INC., DEFENDANT AND RESPONDENT.



Los Angeles County Sup. Ct. No. BC 395547 APPEAL from the judgment of the Superior Court of Los Angeles County. William F. Fahey, Judge. Affirmed in part, reversed in part.

CERTIFIED FOR PUBLICATION

JCCP No. 4606

Plaintiff and appellant Thomas McGann (McGann) brought an action against his employer, defendant and respondent United Parcel Service, Inc. (UPS), seeking recovery of unpaid overtime compensation and related claims.*fn1 Five of McGann's six causes of action were disposed of favorably to UPS in pretrial motions. The action proceeded to a jury trial on McGann's first cause of action for overtime compensation pursuant to Labor Code section 1194. The jury returned a verdict for UPS. The trial court, in posttrial motions, awarded UPS attorney fees and costs as prevailing party.

McGann appeals, raising three issues: (1) the trial court erred in awarding statutory fees to UPS because Labor Code section 1194 contains a unilateral fee-shifting provision allowing fees only to a prevailing plaintiff; (2) even assuming some fees were properly awarded to UPS, the court erred in apportioning and fixing the amount of the award; and (3) the court erred in awarding litigation costs to UPS, including costs incurred through trial. We conclude UPS is not entitled to recover statutory attorney fees as a prevailing party in this action and therefore reverse the fee award. We affirm the order awarding litigation costs to UPS.

BACKGROUND

McGann worked for UPS for a number of years, including as an On Road Supervisor from 2000 to 2005. He routinely worked in excess of eight hours per day and often skipped meal and rest periods due to the press of his work duties. Because his supervisory position was classified as exempt, McGann did not receive overtime compensation or the other benefits accorded nonexempt employees under California law. McGann filed a complaint against UPS stating six causes of action arising from his contention he was misclassified as exempt: the first cause of action for failure to pay overtime compensation pursuant to Labor Code sections 510 and 1194; the second cause of action for failure to provide meal and rest periods pursuant to Labor Code section 226.7; the third cause of action for failure to maintain and provide itemized wage statements pursuant to Labor Code sections 226 and 226.3; the fourth cause of action for common law conversion; the fifth cause of action seeking injunctive and other equitable relief; and the sixth cause of action for unfair competition pursuant to Business and Professions Code section 17200 et seq.

Causes of action two through six were disposed of favorably to UPS by way of pretrial motions. UPS obtained a dismissal of McGann's fourth cause of action for conversion following the court's granting, in part, of its motion for judgment on the pleadings. Thereafter, the court granted UPS's motion for summary adjudication of McGann's second, third, fifth and sixth causes of action. The court denied summary adjudication of McGann's first cause of action for overtime compensation, and that claim proceeded to a jury trial.

UPS raised multiple defenses to the overtime claim, including that McGann was properly classified as exempt under both state and federal law. UPS asserted McGann was an exempt employee as described in the executive and administrative exemptions set forth in Wage Order No. 9-2001, codified at California Code of Regulations, title 8, section 11090 (Wage Order 9), governing workers employed in the transportation industry like McGann. UPS further contended McGann was exempt from receiving premium pay for overtime hours under the federal Motor Carrier Act (MCA). UPS prevailed at trial, the jury finding McGann was exempt from receiving overtime compensation under both Wage Order 9 and the MCA. Judgment was entered in favor of UPS on October 2, 2009.

UPS filed a motion for attorney fees as the prevailing party pursuant to Labor Code section 218.5. UPS conceded it was not entitled to recover fees for the successful defense of McGann's overtime claim, but sought recovery of $106,799 in attorney fees incurred in the defense of the other causes of action. UPS also sought statutory costs, including trial costs, in the amount of $20,703.70. McGann opposed UPS's request for attorney fees and costs, contending primarily that the unilateral fee-shifting language in section 1194 precluded UPS, as a successful defendant, from recovering any statutory fees or costs.

After entertaining argument on UPS's motion for fees and McGann's motion to strike or tax costs, the trial court determined UPS was entitled to recover statutory attorney fees and costs as a prevailing party under Labor Code section 218.5 and Code of Civil Procedure section 1032, subdivision (b), respectively. The trial court awarded UPS $100,000 in statutory attorney fees plus $16,693.70*fn2 in costs. This appeal followed.

DISCUSSION

1. The Award of Statutory Attorney Fees to UPS

a. Standard of review

Our review of an award of attorney fees is ordinarily performed under the abuse of discretion standard. However, de novo review is warranted where, as here, determination of the propriety of such an award is dependent on statutory interpretation. (Carver v. Chevron U.S.A., Inc. (2002) 97 Cal.App.4th 132, 142 (Carver I); accord, Earley v. Superior Court (2000) 79 Cal.App.4th 1420, 1426 (Earley).) We therefore exercise our independent review.

b. Labor Code sections 218.5 and 1194

Both UPS and McGann pled a request for attorney fees in their respective operative pleadings. UPS successfully obtained an award of attorney fees as the prevailing party pursuant to Labor Code section 218.5. McGann, relying on Earley, contends the award was erroneous because the gravamen of his action was for unpaid overtime compensation, and section 1194 precludes an award of attorney fees to the prevailing employer-defendant. UPS contends it is nonetheless entitled to statutory fees on the nonovertime-related claims pursuant to section 218.5. We therefore examine the interplay between sections 218.5 and 1194.

Labor Code section 218.5 contains a reciprocal fee recovery provision in favor of the "prevailing party" in certain wage disputes. Section 218.5 states, in relevant part: "In any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, the court shall award reasonable attorney's fees and costs to the prevailing party if any party to the action requests attorney's fees and costs upon the initiation of the action. . . . [¶] This section does not apply to any action for which attorney's fees are recoverable under Section 1194." (Italics added.)

Labor Code section 1194, subdivision (a) provides that "[n]otwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney's fees, and costs of suit." The language of section 1194 evinces a nonreciprocal or unilateral attorney fee provision only in favor of prevailing employee-plaintiffs suing for unpaid minimum wages or overtime compensation. One-sided fee-shifting statutes "are created by legislators as a deliberate stratagem for ...


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