Monday, April 30, 2012

California Supreme Court Splits the Baby on Fee Issue: Kirby v. Immoos Fire Protection, Inc

On April 30, 2012, the California Supreme Court issued its ruling in Kirby v. Immoos Fire Protection, Inc, __ Cal. 4th __ (2012), concluding 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:
We 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. 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. We accordingly reverse the judgment of the Court of Appeal on this claim and affirm the judgment on plaintiffs‟ other claims.
Slip Opinion, at 2.

As held by the Court, “the most plausible inference to be drawn from [the relevant legislative] history is that the Legislature intended section 226.7 claims to be governed by the default American rule that each side must cover its own attorney’s fees.”  See id., at 17. 

IMPORTANT NOTE: It is important to highlight that the Court’s ruling will not preclude the recovery of attorneys fees by plaintiff’s counsel pursuing break claims on a class-wide basis.  Although “[t]he general rule is that a party is entitled to an award of attorney fees if there is specific authorization therefor by statute or private agreement…[,][t]here are… three well-established equitable exceptions to the general rule, known as the common fund, substantial benefit, and private attorney general theories.”  See Consumers Lobby Against Monopolies v. Public Utilities Com., 25 Cal. 3d 891, 906 (1979) (citing Serrano v. Priest, 20 Cal. 3d 25 (1977)).  Any of these doctrines may be asserted by a prevailing plaintiff in the class context to justify an award of fees. 

Thus, as the Court of Appeal's opinion (which upheld an award of attorney's fees to the employer)  stood to forclose employees from even attempting to bring a break claim in the first instance (due to the chilling impact of having to pay the employer's attorneys fees), the Kirby decision is unquestionably a positive ruling for employees.

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