Attorney’s fees for both sides?

Can an employee and employer both recover costs and attorney’s fees in the same case?

The Second District Court of Appeal recently considered whether awards of costs and attorney’s fees to both sides in an employee-employer dispute are proper. To resolve this question, the appellate court in Sharif v. Mehusa, Inc. (Cal. App. 2nd Dist., October 14, 2015) 2015 Cal. App. LEXIS 897 had to determine whether there can be more than one “prevailing party”—the criteria for recovering costs and attorney’s fees—in one case.

In this case, Ms. Sharif sued her employer for unpaid overtime, unpaid wages, and for unequal pay based on sex. The jury found in her favor for the unequal pay claim and awarded her $26,300, but also found in favor of the employer for the unpaid overtime and wages claims. Both parties sought awards of costs and attorney’s fees. The trial court ordered that Ms. Sharif recover her costs and attorney’s fees for the unequal pay claim and that the employer recover its costs and attorney’s fees for the unpaid wages claim.

On appeal, Ms. Sharif contended that she was the sole prevailing party in the case, and, consequently, the trial court should not have awarded the employer any costs or attorney’s fees. Ms. Sharif relied on a law (Code of Civil Procedure section 1032(a)(4)) that defines prevailing party as the party with a net monetary recovery.

The court of appeal affirmed that Ms. Sharif was the prevailing party for the unequal pay claim, and, therefore, entitled to costs and attorney’s fees related to that claim. That, however, did not end the analysis.

The appellate court turned to the unpaid wages claim. It reviewed a law (Labor Code section 218.5) that provided for attorney’s fees to whichever party won an unpaid wages claim. (On January 1, 2014, after judgment was entered in this case, the law changed: an employer can only recover its attorney’s fees if the court finds that the employee’s claim was brought in bad faith.) It also discussed prior decisions for the principle that the prevailing party is the one who wins on a “practical level,” such as by realizing its litigation objectives. Applying this framework to the case, the court of appeal concluded that the employer was the prevailing party for the unpaid wages claim because the jury found in its favor and awarded Ms. Sharif nothing.

Because the attorney’s fees laws for the two claims have different standards, there were two prevailing parties in the same case. Ms. Sharif for the unequal pay claim as the party with the net monetary recovery, and the employer for the unpaid wages claim as the party who won the dispute. Similarly, the costs awards were governed by two different laws. Ms. Sharif was entitled to costs under the Code of Civil Procedure (net monetary recovery). The employer, on the other hand, was entitled to its costs under Labor Code section 218.5, which provides for both attorney’s fees and costs to the prevailing party.

This case highlights the importance of assessing the risks and rewards in a case by considering the criteria for recovering costs and attorney’s fees for each claim.

Posted by deanroyerlaw