Coming on the heels of its decision in Brinker Restaurant Corporation v. Superior Court (2012) 53 Cal.4th 1004, 139 Cal.Rptr.3d 315, on April 30th, the California Supreme Court issued another ruling limiting the scope of recovery in lawsuits alleging failure to provide the employee meal and rest breaks required by California law. As set forth in Kirby v. Immoos Fire Protection, Inc. (2012) --- P.3d ----, 2012 WL 1470313 (Cal.) ("Kirby"), the Supreme Court held that a neither a plaintiff nor a defendant can recover attorneys’ fees as a "prevailing party" in action for an employer’s alleged failure to provide rest breaks brought under California Labor Code § 226.7.
In Kirby, the former employee plaintiffs brought an action against the employer for various labor and wage law violations. After their motion for class certification was denied, the former employees dismissed the case. The defendant employer then moved to recover attorneys' fees as the "prevailing party." The trial court granted the employer's request for attorney fees, and the employees appealed, arguing that only prevailing employees should be entitled to recoup attorneys’ fees in actions brought under Section 226.7. The employer, on the other hand, argued that because it was the prevailing party in the lawsuit, it should be allowed to recover its attorneys’ fees from the plaintiffs. The Supreme Court rejected both arguments.
Perhaps foreshadowing their conclusion, the Court noted initially that it "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." (Emphasis added)
First, the Court assessed the possible recovery of attorneys' fees under the "one-way" attorney fee shifting provisions of Labor Code § 1194, which entitles “any employee receiving less than the legal minimum wage or the legal overtime compensation ... to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation ... [and] reasonable attorney's fees..." [Labor Code § 1194(a)] The Court held that this section was inapplicable, finding: "[w]e conclude that [Labor Code] section 1194 does not authorize an award of attorney's fees to employees who prevail on a section 226.7 action for the non provision of statutorily mandated rest periods."
Secondly, the Court addressed the defense argument that it was entitled to recover fees under Labor Code § 218.5, which authorizes "prevailing parties" (i.e. either the defense or the plaintiff) to receive attorneys’ fees in actions for the nonpayment of wages or fringe benefits. The question, as phrased by the Court was "whether a section 226.7 claim, which concerns an employer's alleged failure to provide statutorily mandated meal and rest periods, constitutes an 'action brought for the nonpayment of wages' within the meaning of section 218.5." The Court concluded that it does not.
The Supreme Court analyzed the potential recovery of attorneys' fees for Section 226.7 violations from the perspective of two other sections of the Labor Code dealing with attorneys' fees; one of which provides for prevailing employees to recover attorneys’ fees in actions for any unpaid legal minimum wages or legal overtime compensation (Labor Code § 1194), while the other authorizes prevailing parties to receive attorneys’ fees in actions for the nonpayment of wages or fringe benefits (Labor Code § 218.5). The Court found that neither of the attorneys' fees statutes applied to Section 226.7. ("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.")