Earley v. Superior Court
| Decision Date | 20 April 2000 |
| Docket Number | No. B134741.,B134741. |
| Citation | 95 Cal.Rptr.2d 57,79 Cal.App.4th 1420 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Carol EARLEY et al., Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent, Washington Mutual Bank, F.A., Real Party in Interest. |
Fenigstein & Kaufman, Harold J. Tomin and John L. Johnson, III; Salerno & Dassoff, Nancy L. Dassoff and Paul R. Salerno, Los Angeles, for Petitioners.
Saperstein, Goldstein, Demchak & Bailer, David Borgen and Laura L. Ho, Oakland, as Amici Curiae on behalf of Petitioners.
No appearance for Respondent.
Gibson, Dunn & Crutcher, Chad S. Hummel, Deborah J. Clarke, Ellen L. Farrell and Paul DeCamp, Los Angeles, for Real Party in Interest.
This case arises out of a claim made by petitioners on behalf of themselves and others similarly situated to recover unpaid overtime compensation. Petitioners, Carol Earley, Donna Alvarez and Martin Garcia (hereafter, "petitioners"), seek review of the trial court's order, made as part of a class certification process, which required a particular notice to be mailed to absent class members giving them the option of "opting out" of petitioners' class action to recover unpaid overtime compensation from the defendant and real party in interest herein, Washington Mutual Bank, F.A., successor-in-interest to Home Savings of America, F.S.B. (hereafter, "defendant"). Petitioners ask us to conclude that such notice was improper and to direct the trial court to vacate the order adopting it and directing its distribution.
Petitioners question the propriety of the inclusion in the proposed notice to class members of a warning that absent class members might be held liable for the attorney's fees and costs of the defendant should the suit be unsuccessful. To resolve the matter, we have to determine (1) if relevant provisions of the Labor Code allow for a successful defendant's recovery of attorney's fees in a case involving a claim for overtime compensation, and (2) whether absent class members, who have failed to "opt out," may be held liable for a successful defendant's fees or costs. As we explain, we answer both of these questions in the negative and, therefore, we will issue a writ of mandate which grants, in part, the relief requested by petitioners.
Prior to May 20, 1999,1 petitioners filed a complaint alleging that defendant had imposed alternative work week schedules on a number of its employees. Such schedules required those employees to work either 10 hours per day for four days or 11.5 hours per day for three days. Petitioners alleged that these scheduling changes were accomplished by defendant without complying with Labor Code former section 1183.5 or a relevant wage order previously issued by the California Industrial Welfare Commission; as a result, defendant was required to pay the overtime rate to such employees for all time worked over eight hours per day. Plaintiffs further alleged that more than 500 of defendant's employees were affected2 and that, given the predominance of questions of fact and law, class action certification of the prosecution of these claims was appropriate.
On August 13, 1999, the trial court ordered that a particular notice be mailed to class members by no later than September 10, 1999. This order was the result of the failure of petitioners and defendant to agree on the content of such notice relative to the "likely" exposure of absent class members to attorney's fees and costs to which defendant might be entitled if it were successful in the action. As is relevant to the issues before us, the notice which the trial court directed be sent provided:
3
Petitioners responded to the order requiring the above notice by filing the instant petition for writ relief, arguing that Labor Code section 218.54 has no application to this case, but rather Labor Code section 11945 is the controlling statute. The latter statute authorizes an award of attorney's fees in actions seeking to recover unpaid overtime claims only to a successful plaintiff; that is, it is a "one-way" attorney's-fee-shifting statute which would preclude any claim by a defendant even if it had prevailed in the underlying action. In addition, and in any event, petitioners contend that absent class members cannot be held liable for a successful defendant's attorney's fees and costs. Based on these two arguments, petitioners ask us to direct the trial court to vacate its order regarding the contents of the notice to class members. Defendant disputes each of petitioners' contentions and argues that the notice reflects applicable law and is proper.
On September 10, 1999, we issued an alternative writ of mandate and stayed all further proceedings in the trial court pending our resolution of these questions.
We have two issues to resolve. First, do the provisions of Labor Code section 11946 control the question of whether attorney's fees could be awarded in defendant's favor or does section 218.5 also apply? Second, can absent class members, at least in those cases where class membership is subject to an opt-out provision, be held liable for a defendant's attorney's fee and/or costs in the event the class action is not successful?
When presented with pure questions of law, our review standard is de novo (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799, 35 Cal.Rptr.2d 418, 883 P.2d 960.) The determination of the applicable Labor Code section governing an overtime claimant's rights and obligations regarding an award of attorney's fees involves settled principles of statutory construction. The extent to which absent class members should be exposed to personal liability for a successful defendant's attorney's fees and costs is a matter dependent upon questions of public policy as well as statutory interpretation. These are questions of law subject to our independent review. (Californians For Population Stabilization v. Hewlett-Packard Co. (1997) 58 Cal.App.4th 273, 294, 67 Cal. Rptr.2d 621.)
Essentially, petitioners contend that section 1194, subdivision (a), is a specific statute amended by the Legislature in 1991 to provide additional remedies to an employee who successfully prosecutes a claim for unpaid overtime compensation. Those additional remedies include attorney's fees and interest. It allows a recovery only for the successful employee. It is a one-way fee-shifting provision and does not extend a similar right to a successful employer defendant. Given these provisions, and the legislative history of this amendment, which was made five years after the enactment of the more general provisions contained in section 218.5, petitioners argue that only section 1194, subdivision (a), should be applied in this case. They contend that to recognize the applicability of section 218.5, as the trial court did, would frustrate the legislative purpose behind the very specific and focused provisions of section 1194.
Defendant counters that, properly construed, section 218.5 does not conflict with section 1194 and both sections may be applied to a case such as the one before us. Section 218.5 entitles the prevailing party, in any action for "wages," to a mandatory award of costs and attorney's fees if, as is the case here, any party requests costs and fees at the start of the case. According to defendant, section 1194, subdivision (a), is simply an overlapping statute which entitles a prevailing overtime claimant to recover attorney's fees, costs, and interest regardless of whether such relief was sought at the outset of the litigation. Defendant argues that a prevailing employer will be entitled to relief if the conditions of section 218.5 are satisfied, while a prevailing employee will be entitled to relief if the conditions of either section 1194, subdivision (a), or section 218.5 are satisfied. Thus, defendant concludes, neither statute precludes operation of the other, so there is no conflict, and both can and should be applied.
After careful review, we find ourselves in agreement with the petitioners. We do not, as does the defendant, see petitioners' argument as depending upon a conclusion of implied repeal of section 218.5 by the subsequent amendment of section 1194. Rather, it is a matter of the proper interpretation of both sections so as to harmonize their provisions. As stated above, defendant argues that such harmonization is best accomplished by the recognition that both sections should apply. We believe, however, that the more reasoned approach is to focus on the obvious legislative purpose of giving special treatment to claims for unpaid overtime compensation.
Prior to the 1991 amendment to former section 1194, that section read (since 1973): "Any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to such employee is entitled to recover in a civil action the unpaid balance of the full amount of such minimum wage or overtime compensation, together with costs of suit, notwithstanding any agreement to work for a lesser wage."7 Under former section 1194, as it read prior to 1991, an overtime claimant had no right to recover...
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