United States District Court, N.D. California, San Francisco Division
ORDER ON DEFENDANT'S MOTION FOR ATTORNEY'S FEES Re: Dkt. No. 52
NATHANAEL M. COUSINS, Magistrate Judge.
This action was brought by plaintiff Nelia Virtusio against her former employer, defendant Financial Industry Regulatory Authority, Inc. ("FINRA"). Virtusio brought claims for breach of contract, bad faith, intentional infliction of emotional distress, and failure to pay wages arising out of FINRA's failure to pay short-term disability ("STD") benefits. The Court granted FINRA's motion for summary judgment because Virtusio failed to establish that FINRA was contractually obligated to provide STD benefits. Dkt. No. 49 at 1:22-25. Pending before the Court is FINRA's motion for attorney's fees. Dkt. No. 52. For the reasons set forth below, the Court GRANTS FINRA reasonable attorney's fees as required by California Labor Code § 218.5 and DENIES FINRA's request for sanctions against plaintiff's counsel under 28 U.S.C. § 1927 or the Court's inherent authority.
FINRA has filed a motion for attorney's fees incurred in defense of Virtusio's claims. Dkt. No. 52. FINRA argues that awarding attorney's fees is mandatory under California Labor Code § 218.5 and also appropriate as a sanction under 28 U.S.C. § 1927. Dkt. No. 52 at 10:1-2, 11:20-22. Thus, the Court examines whether California Labor Code § 218.5 applies and whether sanctions against plaintiff's counsel under 28 U.S.C. § 1927 or the Court's inherent authority are proper.
A. California Labor Code § 218.5 is Applicable.
California Labor Code § 218.5 provides 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.
Cal. Labor Code § 218.5 (1986).
FINRA claims that Virtusio's action was brought for the nonpayment of wages, that FINRA requested attorney's fees in answer to Virtusio's complaint, and that FINRA is therefore entitled to a mandatory award of attorney's fees under California Labor Code § 218.5 as a prevailing party. Dkt. Nos. 1 at 20:10; 52 at 10:1-2. In opposition, Virtusio argues that she did not request attorney's fees in connection with her labor code claim as required by § 218.5. Dkt. No. 55 at 6:24-7:1-6. Virtusio also argues that § 218.5 only applies to attorney's fees accrued specifically in defense of her fourth cause of action, violation of California Labor Code § 203. Id. at 7:23-26. For the reasons discussed below, the Court is not convinced by these arguments.
1. FINRA Requested Attorney's Fees Upon Initiation of the Action.
California Labor Code § 218.5 provides for an award of attorney's fees if "any party to the action [request] attorney's fees and costs upon the initiation of the action." Virtusio argues that, although she did request fees, her complaint did not request attorney's fees for her Labor Code claim. Dkt. Nos. 1 at 10-14; 55 at 6:19-28, 7:1-21. While the Court is not convinced that Virtusio's characterization of her request for attorney's fees is accurate, the plain language of the statute requires an award of fees if " any party to the action" request attorney's fees. Cal. Labor Code § 218.5 (emphasis added); McAlpine v. Superior Court, 209 Cal.App.3d 1, 6 (1989) (holding that, unless doing so would produce "absurd results, " courts should interpret statutory language in accordance with its ordinary meaning). Because California Labor Code § 218.5 is a "two-way fee-shifting statute, " and as FINRA is a party to the action who requested attorney's fees, the Court finds that fees were requested upon initiation of the present action as required for § 218.5 to apply. Dkt. No. 1 at 20:10; see Aleman v. AirTouch Cellular, 209 Cal.App.4th 556, 583 (2012).
2. The STD Benefits Are Wages Under California Labor Code § 218.5.
Virtusio's complaint primarily involved the alleged nonpayment of STD benefits. Dkt. No. 1 at 10-12. Because California Labor Code § 218.5 applies to causes of action brought for the nonpayment of wages, a threshold issues is whether the STD benefits in question constitute wages under the statute. Virtusio has never disputed that the STD benefits are wages. Dkt. No. 1 at 12:7-18. FINRA now claims that the STD benefits are wages, however FINRA previously argued in its motion for summary judgment that they were not. Dkt. Nos. 26-1 at 19:15-24; 52 at 10:18-23.
California Labor Code § 200 defines wages as "all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation." The Supreme Court of California noted that § 218.5 "would require courts to award attorney fees to a prevailing party in any action involving employment benefits (salary, pension fund, health benefits, etc.)...." Kirby v. Immoos Fire Protection, Inc., 53 Cal.4th 1244, 1258 (2012) (citing Cal. S. Rules Comm., Rep. on Bill No. 2570, as amended May 14, 1986, p. 1) (internal quotation marks omitted) (discussing the legislative history of § 218.5). Similarly, Virtusio previously argued that "health and fringe benefits are included within Labor Code ...