Are You Entitled to an Award of Attorney's Fees in a California Wage Claim?

When employers violate the wage and hour provisions of the California Labor Code, employees are entitled to file claims to recover damages. They may also be able to recover attorney's fees and legal costs if they prevail. In Cruz v. Fusion Buffet, Inc., Cal. Ct. App. Case No. D075479, the appeals court considered whether an award of attorney's fees and costs was appropriate in a case that could have been pursued as a limited jurisdiction action.[1]

From Feb. 2014 to Jan. 2016, Justine Cruz worked as a server at a restaurant named Great Plaza Buffet, which was owned and operated by Fusion Buffet. Before she began working on the floor, she underwent a 12-hour training that she was not paid for. Cruz also had to participate in a tip pool through which half of her tips plus an additional $3 to $5 per day had to be contributed. Cruz regularly worked six- to 12-hour shifts and claimed that she was not given rest or meal breaks and was not paid overtime. She also claimed that the restaurant failed to pay the minimum wage and that she was forced to pay the bills for people who left without paying.

She filed a wage and hour claim against Fusion Buffet, alleging multiple violations, including failure to pay the minimum wage, failure to pay overtime pay, failing to pay meal and rest break compensation, conversion of tips, failure to provide accurate wage and hour records, and others. A year after she filed her complaint, the defendants appeared and asked the court to reclassify her action as a limited action. After Cruz provided an estimate of her damages at more than $40,000, the court denied the defendants' motion.

The case went to a bench trial on July 16, 2018. Following a three-day trial, the court ruled in favor of Cruz on seven out of 10 of her counts, including nonpayment of wages, failing to pay overtime pay, failing to pay compensation for meal and rest breaks, and others. It found for the defendants on three causes of action, including an alter ego theory of liability for the two officers of Fusion Buffet in their individual capacity and the conversion cause of action.

Cruz and Fusion both filed motions with the court for attorney's fees and to tax costs on the other side. The court granted Cruz's motion while denying Fusion's motion. Cruz was awarded a reduced award for attorney's fees in the amount of $47,132.50 and taxed costs and fees in her favor in the amount of $4,583.50. The court also found that Cruz was the prevailing party and granted her motion to strike the defendants' motion for attorney's fees and to tax legal fees and costs. The defendants filed an appeal.
Issue: Whether the court should have denied Cruz's motion for attorney's fees and costs because her case could have been reclassified as a limited action?

The defendants argued that Cruz's case could have been reclassified as a limited action. As such, they argued that the court should have denied her motion for attorneys' fees and costs because she opposed the motion to reclassify the case but secured monetary damages that would have otherwise been awarded in a limited action. Cruz argued that other provisions of the Labor Code applied to her claim. She also argued that even if the default rule applied, it does not mandate that judges deny attorneys' fees and costs but rather gives them the discretion to decide whether to grant or deny them.
Rule: When a plaintiff recovers damages in an unlimited civil action that are less than the maximum recoverable amount in a limited cause of action, the court has the discretion to reduce or deny the plaintiff's motion to recover attorney's fees and costs.

Under Cal. Civ. Code § 1033, judges have the discretion to deny a plaintiff's request for attorney's fees and costs when the plaintiff recovers damages in an amount that is less than the maximum statutory amount allowed for limited actions in an unlimited civil action.[2] Since the defendants filed a motion to reclassify Cruz's case as a limited action that Cruz opposed, the defendants argued that the court should have denied her motion for attorney's fees and costs. Cruz argued that other provisions of the California Labor Code applied to wage and hour claims like hers. She also argued that even if § 1033 applied, it gives judges the discretion to determine whether to award attorney's fees and legal costs and does not mandate that they deny them.

In California, employers have several obligations to pay their workers on time and to properly account for their wages. They must pay workers at least the minimum wage, pay overtime for all hours worked above 40 in a week or eight in a day, provide rest and meal breaks, and only take deductions from their employees' paychecks for allowed purposes under state and federal law. When employers violate these provisions, the employees may recover damages by filing wage and hour lawsuits.[3]

In Cruz's case, the court considered the defendants' argument that § 1033 required the judge to deny Cruz's motion for attorney's fees and costs since her damages award was less than the statutory maximum for a limited action and she had opposed their reclassification motion. The court disagreed and found that § 1033 did not require judges to deny motions for attorney's fees and costs in such cases but instead gave judges the discretion to determine whether awarding them is appropriate. The court also found that the defendants did not meet their burden of proof to show that the judge abused his discretion in determining that the award of attorney's fees and costs to Cruz was appropriate.

To prove an abuse of discretion, an appellant must present evidence showing that the court's decision was unreasonable in light of the reasonable amount of damages that the plaintiff could have reasonably expected to receive. The appeals court pointed out that since the defendants' motion to reclassify the action as a limited action was denied by the court, Cruz could be understood to have reasonably expected to recover damages in an amount that would have exceeded the maximum for a limited jurisdiction action. The court noted that in her opposition to the reclassification motion, Cruz had provided a detailed estimate of the damages she was seeking. Her damages estimate was above the maximum statutory amount for a limited jurisdiction action. Since the defendants did not object to the court's denial of their reclassification motion, the appeals court found that they conceded that it was reasonable. The court found that just because the amount that she ultimately recovered was less than the statutory maximum did not mean that the damages she was seeking were unreasonable.

The defendants also argued that the court abused its discretion because it did not apportion the attorney's fees and costs between the causes of action that each side won. While a court can apportion attorney's fees across multiple causes of actions in which plaintiffs prevail on some but not all, the court does not have to do so. Finally, the court found that the attorney's fees and costs award was not excessive or unreasonable.

The trial court's decision was affirmed. Cruz was awarded her costs on appeal.

If your employer has failed to pay the wages and overtime that you have earned, you may be entitled to recover damages by filing a wage and hour claim. Contact the law firm of Steven M. Sweat, APC to schedule a free consultation by calling us at 866.966.5240.

[1] Cruz v. Fusion Buffet, Inc.

[2] California Code, Code of Civil Procedure - CCP § 1033

[3] Wage and Hour Claims