Judge: Helen Zukin, Case: 19SMCV00394, Date: 2022-09-08 Tentative Ruling
Case Number: 19SMCV00394 Hearing Date: September 8, 2022 Dept: 207
Background
This case arises from an employment relationship where
Plaintiff Adrienne Doustkam (“Plaintiff”) was to recruit, pitch, and close
prospective clients eligible to receive California Enterprise Zone Tax Credits
(“EZT Credit”) for Defendants Tax Credit Group and Pejman J. Sage (collectively
“Defendants”). Plaintiff allegedly worked for more than ten months, was treated
as an employee, but Plaintiff argued Defendants improperly classified Plaintiff
as an independent contractor. Plaintiff further alleged Defendants failed to
pay minimum wage or overtime compensation.
After the employment relationship ended around January 2014,
Plaintiff filed a complaint with the California Labor Commissioner on October
27, 2016. The Labor Commissioner declined to exercise jurisdiction over the
matter on December 7, 2018. Three months later, Plaintiff filed the complaint
on February 26, 2019. Plaintiff then filed the operative second amended complaint
(“SAC”) on June 4, 2021.
On December 13, 2021, the Court granted Defendants’ motion
for summary adjudication on five of Plaintiff’s causes of action. On March 15,
2022, Plaintiff stipulated to entry of judgment dismissing, with prejudice, the
remaining causes of action asserted against Defendants. Following Plaintiff’s
dismissal of her remaining causes of action, Defendants filed a memorandum of
costs seeking to recover their litigation costs as a prevailing party.
Plaintiff brought a motion to tax those costs, which the Court granted in part
and denied in part, awarding Defendants certain costs as the prevailing
parties.
Defendants now bring a motion to collect $245,531 in
attorney’s fees incurred in defending Plaintiff’s claims, arguing they are
entitled to such an award under Labor Code § 218.5. Defendants have also filed
a second motion for attorney’s fees under Code Civ.
Proc. § 2033.420 to recover the attorney’s fees incurred in proving the truth
of a matter which Plaintiff did not admit to in response to requests for
admission propounded by Defendants. As Defendants’ motion under Code Civ. Proc.
§ 2033.420 is asserted in the alternative to their motion under Labor Code §
218.5, the Court will address the two motions together.
Legal Standard
Labor Code § 218.5(a) provides in pertinent part “In any
action brought for the nonpayment of wages, fringe benefits, or health and
welfare or pension fund contributions, the court shall award reasonable
attorney’s fees and costs to the prevailing party if any party to the action
requests attorney’s fees and costs upon the initiation of the action. However,
if the prevailing party in the court action is not an employee, attorney’s fees
and costs shall be awarded pursuant to this section only if the court finds
that the employee brought the court action in bad faith.”
The fee setting inquiry in California ordinarily begins with the
“lodestar” method, i.e., the number of hours reasonably expended multiplied by
the reasonable hourly rate. A computation of time spent on a case and the
reasonable value of that time is fundamental to a determination of an
appropriate attorneys’ fee award. The lodestar figure may then be adjusted,
based on factors specific to the case, in order to fix the fee at the fair market
value for the legal services provided. (Serrano v. Priest (1977) 20
Cal.3d 25, 49.) Such an approach anchors the trial court’s analysis to an
objective determination of the value of the attorney’s services, ensuring that
the amount awarded is not arbitrary. (Id., at p. 48, fn. 23.) After the
trial court has performed the lodestar calculations, it shall consider whether
the total award so calculated under all of the circumstances of the case is
more than a reasonable amount and, if so, shall reduce the section 1717 award
so that it is a reasonable figure. (PLCM Group v. Drexler (2000) 22
Cal.4th 1084, 1095-1096.)
As explained in Graciano v. Robinson Ford Sales, Inc.
(2006) 144 Cal.App.4th 140, 154:
“[T]he lodestar is the basic fee for comparable legal services in
the community; it may be adjusted by the court based on factors including, as
relevant herein, (1) the novelty and difficulty of the questions involved, (2)
the skill displayed in presenting them, (3) the extent to which the nature of
the litigation precluded other employment by the attorneys, (4) the contingent
nature of the fee award. [Citation.] The purpose of such adjustment is to fix a
fee at the fair market value for the particular action. In effect, the court
determines, retrospectively, whether the litigation involved a contingent risk
or required extraordinary legal skill justifying augmentation of the unadorned
lodestar in order to approximate the fair market rate for such services. . . .
This approach anchors the trial court's analysis to an objective determination
of the value of the attorney's services, ensuring that the amount awarded is
not arbitrary.” [Internal citations and internal quotation marks omitted.]
(Graciano v. Robinson Ford Sales, Inc. (2006) 144
Cal.App.4th 140.) “It is well established that the determination of what
constitutes reasonable attorney fees is committed to the discretion of the
trial court, whose decision cannot be reversed in the absence of an abuse of
discretion. [Citations.] The value of legal services performed in a case is a
matter in which the trial court has its own expertise. . . . The trial court
makes its determination after consideration of a number of factors, including
the nature of the litigation, its difficulty, the amount involved, the skill
required in its handling, the skill employed, the attention given, the success
or failure, and other circumstances in the case. [Citations.]” (Melnyk v.
Robledo (1976) 64 Cal.App.3d 618, 623624.)
No specific findings reflecting the
court’s calculations are required. The record need only show that the attorney
fees were awarded according to the “lodestar” or “touchstone” approach. The
court’s focus in evaluating the facts should be to provide a fee award
reasonably designed to completely compensate attorneys for the services
provided. The starting point for this determination is the attorney’s time
records. (Horsford v. Board of Trustees of Calif. State Univ.
(2005) 132 Cal.App.4th 359, 395-397 [verified time records entitled to credence
absent clear indication they are erroneous].) An experienced trial judge is in
a position to assess the value of the professional services rendered in his or
her court. (Id.; Serrano v. Priest (1977) 20 Cal.3d 25, 49; Wershba
v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 255.)
Analysis
1. Prevailing Party
Defendants argue they must be
deemed the “prevailing party” on all of Plaintiff’s causes of action as each of
those causes of action were either terminated in Defendants’ favor by motion
for summary adjudication or demurrer, or alternatively were voluntarily
dismissed with prejudice by Plaintiff. Plaintiff argues Defendants cannot be
deemed the prevailing party on any of the causes of action she voluntarily
dismissed with prejudice. She argues this voluntarily dismissal was not an
adjudication on the merits as her dismissal was motivated by a desire to
accelerate her appeal of the Court’s order granting Defendants’ motion for
summary adjudication.
The Court agrees with Defendants.
“A voluntary dismissal with prejudice is a final
determination on the merits.” (Adler v. Vaicius
(1993) 21 Cal.App.4th 1770, 1776.) “[W]hen a plaintiff dismisses an action
with prejudice, the defendant is considered the prevailing party.” (Krug v. Maschmeier
(2009) 172 Cal.App.4th 796, 802.) Where “an attorney fees statute does not
define prevailing party,” the Court utilizes a “practical approach” to
determine who is the prevailing party. (Castro v. Superior Court (2004) 116 Cal.App.4th 1010,
1018-1019.) “Under the practical approach, the court determines the prevailing
party by analyzing which party realized its litigation objectives.” (Id.
at 1019.)
The Court finds Defendants
realized their litigation objectives with respect to the causes of action which
were voluntarily dismissed with prejudice by Plaintiff. This is not a situation
where Plaintiff succeeded on central claims and dismissed superfluous or alternatively
pled claims because she had already accomplished her litigation objectives.
Rather, the Court granted summary adjudication in favor of Defendants on
certain central claims, and Plaintiff decided to dismiss her remaining claims
to hasten the appeal the Court’s ruling. As a result, Plaintiff recovered
nothing from Defendants on any of her claims, which means Defendants accomplished
their litigation objectives. The Court finds Defendants are the prevailing
parties on all of Plaintiff’s causes of action.
2. Recovery
of Attorney’s Fees Under Labor Code § 218.5
Labor Code § 218.5 allows an
employer to recover attorney’s fees “only if the court finds the employee
brought the court action in bad faith.” “The legislative history indicates the
Legislature intends employers to recover fees when they ‘defeat frivolous claims,’
which ‘would align the statute with the state and federal civil rights and
employment statutes.’ (Assem. Com. on Judiciary, Analysis of Sen. Bill No. 462
(2013-2014 Reg. Sess.) July 2, 2013, p. 4).” (Arave v. Merrill Lynch,
Pierce, Fenner & Smith, Inc. (2018) 18 Cal.App.5th 525, 545.) “A prevailing defendant, however, should not be awarded
attorneys' fees unless the court finds the action was objectively without
foundation, or the plaintiff continued to litigate after it clearly became so.”
(Williams v. Chino Valley Independent Fire Dist.,
(2015) 61 Cal.4th 97, 115.) Defendants concede they cannot recover
attorney’s fees on Plaintiff’s causes of action for overtime pay, failure to
provide wage statements, and unreimbursed business expenses. It is undisputed
that all of Plaintiff’s remaining causes of action were, at essence, claims for
nonpayment of wages which are governed by Labor Code 218.5.
In ruling on Plaintiff’s prior
motion to tax costs, the Court determined Plaintiff’s action was brought in bad
faith for purposes of Labor Code § 218.5. This finding as based on the findings
made by the Court in granting Defendants’ motion for summary adjudication, as
well as consideration of the additional facts asserted by Plaintiff purporting
to demonstrate the good faith basis for her claims.
In granting Defendants’ motion for
summary adjudication the Court found: (1) in her agreement with Defendants,
Plaintiff had agreed she would not receive a commission unless and until
Defendants were paid by the client signed by Plaintiff, (2) Plaintiff’s claims
for unpaid wages were based on Defendants’ alleged failure to pay advances against
commissions, (3) under established California law such advances are not wages,
(4) Plaintiff did not dispute Defendants’ evidence showing they had only
received payments for clients for which Plaintiff was paid commissions, and (5)
Plaintiff conceded she has no evidence that any of the
potential clients she procured signed agreements or whether clients actually
paid. The record further establishes Plaintiff took efforts to investigate the
status of these commission payments prior to filing suit and was told she would
receive commissions once Defendants received payments for those clients and was
informed the vast majority of clients she inquired about had simply never
signed with Defendants. For those nine clients
who had signed with Defendants, Plaintiff was told she would receive her
commission when Defendants received payment from those clients.
In reviewing the additional facts
purporting to show Plaintiff’s good faith basis for filing suit, the Court
found they did not support the conclusion urged by Plaintiff and in fact
supported a finding of bad faith. For example, fact 13 stated “Defendants
consistently told Plaintiff that she would be paid her commissions on the nine
enumerated accounts, once Defendants were paid by their clients.” Similarly,
fact 10 stated “Plaintiff formed the belief that Defendants never intended to,
and would never, pay Plaintiff the commissions that were due and owing to her”
simply because she had not received such payment by October 2016. These facts
indicate Plaintiff’s wage claims had no objective, factual basis but instead
were premised solely on her unsupported belief that Defendants must have been
withholding payments due to her because they had not paid her any such
commissions by October 2016 even though she apparently felt some commissions
must have been due to her.
The Court also rejected
Plaintiff’s assertion that in overruling Defendants’ demurrer on the basis of
the statute of limitations, the Court necessarily found a good faith basis for
those claims. The Court held Plaintiff may have sufficiently alleged the
doctrine of equitable tolling would save certain of her claims, but this alone
did not show those claims were brought with proper foundation. Even if
Plaintiff had timely brought her claims against Defendants, those claims would
still be objectively without foundation. Accordingly, Plaintiff’s success in
asserting equitable tolling at the pleading stage does not negate a finding of
“bad faith” under Labor Code § 218.5.
Plaintiff’s arguments here on the
question of bad faith seek to relitigate the Court’s prior orders on
Defendants’ motion for summary adjudication and Plaintiff’s motion to tax
costs. Having considered these arguments again, the Court finds no basis to
deviate from its prior finding that Plaintiff’s claims are deemed to be
asserted in bad faith under Labor Code § 218.5.
Plaintiff argues the Court is
imposing a rule which would require a litigant to possess all facts supporting
a cause of action before filing suit or risk being held to have brought an
action in bad faith. Plaintiff is mistaken. The Court’s finding of bad faith
under section 218.5 is not based on Plaintiff’s failure to secure all
supporting evidence and facts before filing suit, rather it is based on
Plaintiff’s failure to secure any evidence or factual support before filing
suit. As set forth above, the record here shows Plaintiff felt money was due to
her and asked Defendants for it. Defendants correctly responded that no such
money was owing to her, and Plaintiff proceeded to file this action anyway
without any basis for concluding Defendants were lying to her. For example,
Plaintiff does not claim she talked to any of her former clients to determine
if they had ultimately signed with Defendants or paid them for their services.
Plaintiff was not required to have all elements of her claim conclusively
established before filing suit, however she was required to have some sort of
objective foundation for her claims before filing or risk a finding of bad
faith under section 218.5. (Williams, supra, 61 Cal.4th at 115.)
As with Plaintiff’s motion to tax
Defendants’ costs, Plaintiff here has not demonstrated any such objective
foundation. For the reasons set forth above and in its prior rulings, the Court
again finds Plaintiff’s causes of action against Defendant are deemed to have
been raised in bad faith as the term is used in Labor Code § 218.5.
3. Hourly Rates
Plaintiff argues Defendants have
not sufficiently established the reasonableness of the hourly rates used by
Defendants’ counsel. Defendants seek to recover at the rate of $544.61 for work
performed by attorney Mark Share (“Share”), $300 for work performed by attorney
Martha Cohen (“Cohen”), and $250 for work performed by paralegal Valerie Durbin
(“Durbin”). The Court finds Defendants have sufficiently established the
reasonableness of the hourly rates for Share and Cohen. (Share Decl. at ¶13.)
However, the Court finds Defendants have not established the reasonableness of
the $250 per hour sought for paralegal Durbin. Defendants state only that
Durbin is a paralegal with a law degree. This alone is insufficient to
demonstrate $250 per hour is a reasonable rate for her services. Accordingly,
the Court in its discretion declines to award Defendants the $2,875 sought for
Durbin’s services.
4. Individual
Fees Claimed by Defendants
Plaintiff argues the Court must
reduce certain fees sought by Defendants. The Court discusses each of these in
turn.
Plaintiff contends Defendants’
counsel improperly billed in minimum increments of .25, which inflates the
billing on same, ministerial tasks. The Court agrees. For example, time entry
879377 bills .25 hours for calendaring a response date to discovery. Entry
881157 similarly bills .25 for calendaring a continued case management
conference. Plaintiff asserts there are 213 such entries, though she does not
identify them for the Court. On review of counsel’s billing records suggests
Plaintiff has counted every billing entry of .25 as improperly inflated. The
Court notes many of these entries concern review of substantive discovery
materials or filings and do not appear to be overinflated. The Court in its
discretion declines to eliminate all 213 of these entries from Defendants’
award as requested by Plaintiff and will instead reduce Defendants’ fee award
by $7.500 to account for billings inflated by the minimum billing unit used by
defense counsel.
Plaintiff argues several entries
are block-billed and must be disallowed. However, such block billing is not
objectionable per se. (Christian Research Institute v. Alnor (2008) 165
Cal.App.4th 1315, 1325.) Block billing may present difficulties where fees are
awarded with respect to a particular motion or event, and billing entries for
that work are intermingled with entries for non-recoverable work. Here, this is
an issue as Defendants concede they are not entitled to attorney’s fees
incurred on Plaintiff’s causes of action for overtime pay, failure to provide
wage statements, and unreimbursed business expenses. Defendants argue the fees
related to these causes of action were “minimal” and can be ignored by the
Court. Defendants do not provide the Court with any estimation of this minimal
time spent on these causes of action or put forth evidence from which the Court
can affirm the accuracy of this characterization. The Court in its discretion
will reduce Defendants’ fee award by $40,000 to account for the billings
incurred as a result of these causes of action to which Defendants are not
allowed to recover their fees.
Plaintiff points out a conflict
between a May 6, 2019, billing entry (881575) for drafting an answer to
Plaintiff’s complaint and a May 14, 2019, billing entry (881059) which bills
one hour of time for “start draft of answer.” The Court agreed the reference in
the May 14 motion for starting a draft answer is in conflict with the entry
from a week before purporting to be for work done to draft the answer. The
Court will thus omit the one hour billed on May 6 and reduce Defendants’ award
by $544.61 for one hour of time at Share’s blended hourly rate.
Plaintiff also challenges a series
of entries which reference Ziggy Sage and Mehrdad Nemanpour, who are not
parties to this action. Defendants offer no explanation of who these
individuals are or why they can recover billings related to these individuals
from Plaintiff. The Court will thus disallow the entries which reference these
individuals (879255, 899299, 911674, 919619, 920695,
925148, and 924977). These entries account for 2.25 hours of time billed by
Share, any the Court will reduce Defendants’ award by $1,225.37 to account for
this time at Share’s blended hourly rate.
Plaintiff alleges Defendants
should not recover for billings related to Plaintiff’s complaint with the Labor
Commissioner. The Court agrees and will reduce Defendants’ award by $136.15 to
account for the .25 billed to such work (882878).
The Court will also deduct the
time billed by Defendants’ counsel in connection with the motion for judgment
on the pleadings filed by Defendants in December 2021. In denying Defendants’
motion, the Court found it to simply be an untimely motion for reconsideration
of the demurrer which was previously overruled by the Court. The Court in its
discretion does not find the work done in connection with the motion for
judgment on the pleadings was reasonably necessary in the defense of
Plaintiff’s claims. The Court has calculated counsel’s billings on this work to
amount to 10.25 hours by Share and 10.5 hours by Cohen. The Court will reduce
Defendants’ award by $8,732.25 to account for this billing. The same is true
with respect to 1.5 hours, or $816.91, billed by Share to prepare a motion to
compel Plaintiff’s deposition which was never filed, and two hours ($1,089.22)
billed by Share to oppose an ex parte application which was granted by the
Court concerning Plaintiff’s request for additional pages in opposing
Defendants’ motion for summary adjudication.
The Court will deduct for .75
hours of time billed by Share for duplicative research regarding an attorney
acting as a deposition officer, amounting to $408.45.
Plaintiff challenges the 32 hours
billed by Defendants’ counsel in connection with a demurrer and motion to
strike as excessive. The Court agrees. Using Share’s blended hourly rate,
counsel’s billings on these filings totaled $10,809.20, which the Court will
reduce to $5,000 in Defendants’ award.
Plaintiff argues the 13.5 hours
billed for responding to Plaintiff’s motions in limine is excessive. The Court
agrees. Counsel’s billing on these motions totals approximately $5,000. The
Court in its discretion will reduce Defendants’ fee award by $2,500 to allow
Defendants to recover the reasonable cost in responding to those motions. The
Court makes similar findings with respect to Defendants’ motion for leave to
file and amended answer and Defendants’ trial brief. The Court finds the
amounts billed with respect to those filings are unreasonable and, in its
discretion, determines reductions of $3,500 in counsel’s billings are
appropriate as to each of these filings, further reducing Defendants’ award by
$7,000.
Plaintiff contends Defendants’
billing in connection with the motion for summary adjudication should be
reduced as Defendants ultimately withdrew the motion as to several causes of
action. The Court agrees and determines $10,000 to be a reasonable deduction in
Defendants’ fee award to account for work on the motion which was subsequently
mooted by Defendants withdrawal of certain causes of action from consideration
on the motion.
Plaintiff raises numerous other
challenges to individual entries in counsel’s billing statements. To the extent
those arguments are not discussed above, they are rejected by the Court in the
exercise of its discretion. The Court reviewed each of the entries challenged
by Plaintiff and found several which simply characterize Defendants’ billing as
unreasonable or unjustified without any supporting argument or explanation.
Plaintiff also raised several arguments based solely on speculation and
conjecture as to the amount of work required. For example, Plaintiff asserts at
several instances that Defendants likely “copy and pasted” filings without any
support for such a claim. At many points, Plaintiff simply characterizes
counsel’s work as duplicative if work was done on a single motion on more than
one day. Some of Plaintiff’s arguments are simply incorrect, as with the
assertion Defendant improperly billed for filing an informal discovery
conference statement in September 2020, a month after the conference itself
took place in August 2020. However, the Court’s docket clearly shows the
parties prepared and filed a joint statement in September 2020 in advance of an
informal discovery conference set for September 15, 2020.
5. Plaintiff’s
Ability to Pay
Plaintiff argues this Court must
consider her financial situation in determining Defendants’ fee award. However,
Defendants correctly point out Plaintiff’s authority on this subject all
concern litigation under the Fair Employment and Housing Act, under which an
award of attorney’s fees is discretionary, rather than mandatory as it is under
Labor Code § 218.5. The Court notes the Labor Code imposes no such requirement
on the Court to weigh Plaintiff’s ability to satisfy an award, and Plaintiff
cannot point the Court to any authority imposing such a requirement in ruling
on Defendants’ motion for attorney’s fees under Labor Code § 218.5.
6. Defendants’
Second Motion for Attorney’s Fees
As an alternative to their motion
for an award of attorney’s fees under Labor Code § 218.5, Defendants move under
Code Civ. Proc. § 2033.420 to recover the attorney’s fees incurred in proving
the truth of a matter which Plaintiff did not admit to in response to requests
for admission propounded by Defendants. The fees requested in this alternative
motion are entirely subsumed by the fees sought in connection with Defendants’
motion under Labor Code § 218.5. As the Court has granted Defendants’ motion
pursuant to Labor Code § 218.5, Defendants’ motion under Code Civ. Proc. §
2033.420 is DENIED as moot.
Conclusion
Defendants’
motion for an award of attorney’s fees pursuant to Labor Code § 218.5 is
GRANTED in part and DENIED in part. Defendants’ motion seeks $245,531 in
attorney’s fees. After consideration of the lodestar factors and
Defendant’s arguments set forth above, the Court finds deductions totaling
$88,637.16 are appropriate as set forth above. Accordingly, Defendants are
awarded $156,893.84 in attorney’s fees pursuant to Labor Code § 218.5.
Defendants’ motion for an award of attorney’s fees pursuant
to Code Civ. Proc. § 2033.420 is DENIED as moot.