Wage Law

A pre-filing attempt to settle might be relevant in determining the amount of an award of reasonable attorney's fees under a fee application under Code of Civil Procedure § 1021.5, but the statute does not require such an attempt as a condition to recovery of fees by a prevailing plaintiff. Vasquez v. Superior Court (2008) 45 Cal.4th 243. Thus, where the attorney fee award does not depend on the “catalyst” theory (Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553) a court may award private attorney general fees to a plaintiff even if the plaintiff made no attempt to settle before resorting to litigation. Because the plaintiffs in Vasquez obtained actual relief, and were prevailing parties, this is not a catalyst case and that the “limitations on the catalyst theory” adopted in Graham do not apply.

The case did have an underlying wage and hour issue, in that it arose out of Proposition 139, known as the Prison Inmate Labor Initiative of 1990 (Penal Code § 2717.1 et seq.), which instructs the Secretary of the Department of Correction and Rehabilitation to establish joint venture programs with private employers within state prison facilities to employ inmates. The law provides, among other things, that inmates be paid wages “comparable to wages paid by the joint venture employer to non-inmate employees performing similar work for that employer” or wages “comparable to wages paid for work of a similar nature in the locality in which the work is to be performed.” (Penal Code § 2717.8.) The law also requires the Secretary to deduct up to 80 percent of each inmate employee’s gross wages for taxes, room and board, restitution to the victims of crime, and support for the inmate’s family.

The original plaintiffs alleged defendants had committed unfair business practices by failing to pay comparable wages (Penal Code § 2717.8) or minimum wages (Labor Code §§ 1197, 3351(e)), by directing inmates working on joint ventures with private employers to remove and replace “Made in Honduras” labels with others reading “Made in the USA,” and by selling these garments to consumers throughout California. Vasquez later joined the action asserting standing as a taxpayer to prevent the waste of state property (Code of Civil Procedure § 526a), alleged the State had failed to collect and disburse payments due from the joint venture employers. This failure had occurred, Vasquez alleged, because the State had permitted employers, in violation of Proposition 139, to require inmates to complete unpaid training periods of 30 to 60 days and to pay less than comparable wages.

The trial of the taxpayer claim resulted in a stipulated injunction, which the court approved and entered as a judgment. Vasquez subsequently moved for attorney fees under Code of Civil Procedure § 1021.5 and was awarded $1,257,258.60, based on a lodestar amount of $967,122 and a multiplier of 1.3. The Court of Appeal affirmed, as did the Supreme Court.

While this is not a catalyst case (see post, at p. 19), defendant argues the rule just mentioned should apply whenever fees are sought under section 1021.5.  We hold that no such categorical rule applies in noncatalyst cases.  In all cases, however, section 1021.5 requires the court to determine that “the necessity and financial burden of private enforcement . . . are such as to make the award appropriate . . . .”  (Ibid., italics added.)  In making this determination, one that implicates the court’s equitable discretion concerning attorney fees, the court properly considers all circumstances bearing on the question whether private enforcement was necessary, including whether the party seeking fees attempted to resolve the matter before resorting to litigation.

You can download the full text of Vasquez here in PDF or MS Word format. A modification of the opinion was published yesterday; the holding remains undisturbed.