Court: Superior County: Sacramento Judge: Loren E. McMaster Ct.App. 3 C062306 Super. Ct. No. 07AS00032
The opinion of the court was delivered by: Liu, J.
In general, a prevailing party may recover attorney's fees only when a statute or an agreement of the parties provides for fee shifting. (Santisas v. Goodin (1998) 17 Cal.4th 599, 606.) Labor Code section 218.5 requires the awarding of attorney's fees to the prevailing party "[i]n any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions." This provision awards fees to the prevailing party whether it is the employee or the employer; it is a two-way fee-shifting provision. However, Labor Code section 218.5 "does not apply to any action for which attorney's fees are recoverable under [Labor Code] Section 1194." (Lab. Code, § 218.5.) Labor Code section 1194 provides that employees who prevail in an action for any unpaid "legal minimum wage or . . . legal overtime compensation" are entitled to recover attorney's fees. It is a one-way fee-shifting provision. (All subsequent unlabeled statutory references are to the Labor Code.)
In this case, plaintiffs Anthony Kirby and Rick Leech, Jr., sued defendant Immoos Fire Protection, Inc. (IFP) and multiple Doe defendants for violating various labor laws as well as the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.). The amended complaint stated seven claims, the sixth of which alleged the failure to provide rest breaks as required by section 226.7. The remedy for such a violation is "one additional hour of pay . . . for each work day that the . . . rest period is not provided." (§226.7, subd. (b); see Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1102 (Murphy).) Plaintiffs ultimately dismissed this claim with prejudice after settling with the Doe defendants. IFP subsequently moved for attorney's fees under section 218.5. The trial court awarded fees, and the Court of Appeal affirmed.
We granted review to consider when, if ever, a party who prevails on a section 226.7 action for an alleged failure to provide rest breaks may be awarded attorney's fees. We conclude, in light of the relevant statutory language and legislative history, that neither section 1194 nor section 218.5 authorizes an award of attorney's fees to a party that prevails on a section 226.7 claim. We accordingly reverse the judgment of the Court of Appeal on this claim and affirm the judgment on plaintiffs' other claims.
Plaintiffs' amended complaint, filed in August 2007, alleged six claims against IFP and a seventh claim naming the Doe defendants but not IFP. The first claim alleged that IFP engaged in 12 enumerated instances of unlawful and unfair business practices in violation of the UCL. The second claim alleged that IFP failed to pay plaintiffs owed wages at each pay period and upon plaintiffs' discharge, as sections 201, 203, and 204 require. The third claim alleged that IFP failed to pay overtime compensation, as sections 204.3, 510, and the applicable Industrial Welfare Commission (IWC) wage order require.
The fourth claim alleged that IFP paid plaintiffs wages that were less than those required by statute, regulation, and contract, in violation of section 223. The fifth claim alleged that IFP failed to provide plaintiffs with accurate, itemized wage statements, as required by section 226. The sixth claim alleged that IFP failed to provide plaintiffs with rest periods, as required by section 226.7.
The seventh claim alleged that 750 Doe defendants violated section 2810 by entering into contracts with IFP while knowing that the contracts did not provide sufficient funds to allow IFP to comply with all applicable labor and wage laws. Plaintiffs later amended this claim to identify defendants Shea Homes, Inc., Hilbert Homes, Inc., Meritage Homes of California, Inc., and D.R. Horton, Inc. (collectively, the builder defendants).
Plaintiffs subsequently settled with the builder defendants in agreements not made part of the record. In November 2008, plaintiffs moved for certification of a class action, but their motion was denied. In February 2009, plaintiffs dismissed with prejudice their complaint as to all claims and all parties.
In April 2009, IFP moved to recover attorney's fees from plaintiffs under section 218.5. Plaintiffs opposed the motion, arguing in part that section 1194 barred an award of fees to IFP. In June 2009, the trial court awarded fees to IFP "for [its] defense of the [first, sixth] and [seventh] causes of action." The trial court concluded that section 218.5 authorized an award of fees for plaintiffs' sixth claim, which alleged rest period violations. As for plaintiffs' first claim, invoking the UCL, the trial court explained that the claim incorporated allegations from the rest period claim. Regarding the seventh claim, asserting that the Doe defendants violated section 2810, the trial court reasoned that IFP was united in interest with the Doe defendants, defended the claim alone until the builder defendants were named, and continued to defend it after plaintiffs settled with the builder defendants until the claim was dismissed. In its fee motion, IFP impliedly conceded that section 1194 barred a fee award on plaintiffs' second, third, fourth, and fifth claims because they involved or overlapped with plaintiffs' overtime cause of action. The trial court ordered plaintiffs to pay $49,846.05 in fees.
The Court of Appeal affirmed the award of fees as to the rest period claim, but reversed as to the section 2810 and UCL claims. Regarding the rest period claim, the Court of Appeal concluded that an award of fees was proper under section 218.5 because plaintiffs were seeking payment of "additional wages" for missed rest periods. The court rejected plaintiffs' argument that, because at least some of their claims fell under section 1194, the entireaction was shielded from an award of fees under section 218.5. The court also rejected plaintiffs' alternative argument that the rest period claim is properly construed as a claim for a statutorily mandated minimum wage and is thus governed by section 1194's one-way fee-shifting provision in favor of employees, not employers.
The Court of Appeal reversed the trial court's fee award on the section 2810 claim, noting that the statute contains a one-way fee-shifting provision in favor of prevailing employees. (See § 2810, subd. (g).) The Court of Appeal also reversed the fee award on the UCL claim, explaining that any fees awarded to IFP for that claim were merely duplicative of those derived from the defense against the rest period claim. The Court of Appeal remanded for a determination as to the amount of fees expended solely to defend against the rest period claim. We granted plaintiffs' petition for review, but limited the issue to whether attorney's fees can be awarded under either section 1194 or section 218.5 to a party that prevails in a section 226.7 action.
We independently review questions of statutory construction. (Imperial Merchant Services, Inc. v. Hunt (2009) 47 Cal.4th 381, 387-388.) In doing so, "it is well settled that we must look first to the words of the statute, 'because they generally provide the most reliable indicator of legislative intent.' [Citation.] If the statutory language is clear and unambiguous our inquiry ends. 'If there is no ambiguity in the language, we presume the Legislature meant what it said and the plain meaning of the statute governs.' [Citations.] In reading statutes, we are mindful that words are to be given their plain and commonsense meaning. [Citation.] We have also recognized that statutes governing conditions of employment are to be construed broadly in favor of protecting employees. [Citations.] Only when the statute's language is ambiguous or susceptible of more than one reasonable interpretation, may the court turn to extrinsic aids to assist in interpretation. [Citation.]" (Murphy, supra, 40 Cal.4th at p. 1103.) We thus begin with the language of the two fee-shifting statutes at issue here: section 1194 and section 218.5.
Section 1194, subdivision (a) provides: "Notwithstanding 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." Section 218.5 provides: "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."
As noted above, section 1194 is a one-way fee-shifting statute, authorizing an award of attorney's fees only to employees who prevail on their minimum wage or overtime claims. Section 218.5 is a two-way fee-shifting statute, permitting an award of fees to either employees or employers who, as relevant here, prevail on an "action brought for the nonpayment of wages." Prevailing employers cannot obtain attorney's fees under section 218.5, however, if the employees could have ...