By Eden E. Anderson and Gerald L. Maatman, Jr.
Duane Morris Takeaways: On March 25, 2024, the California Court of Appeal for the Second District held in Gramajo v. Joe’s Pizza on Sunset, Inc., Case Nos. B322992/B323024 (Cal. App. Mar. 25, 2024), that awards of attorneys’ fees and costs to prevailing plaintiffs in actions for unpaid minimum or overtime wages are mandatory. Consequently, a trial court lacks discretion to deny fees and costs recovery, even when a plaintiff engages in bad faith litigation tactics and recovers a negligible amount. On a bright note, mandatory fee and cost awards must still be reasonable, and a trial court retains discretion to reduce the amount sought if it is unreasonable.
Case Background
Elinton Gramajo worked as a pizza delivery driver. He sued his employer for failing to pay him minimum and overtime wages, failing to provide meal and rest breaks, failing to reimburse business expenses, and other related claims. He sought a total recovery of $26,159.23. Coincidentally, that amount was just above the $25,000 jurisdictional threshold for an unlimited civil proceeding. After four years of litigation, the case proceeded to trial. A jury found in Gramajo’s favor, but only on his claims for unpaid minimum and overtime wages. The jury awarded him just $7,659.63.
Gramajo then sought to recover a whopping $296,920 in attorneys’ fees, and $26,932.84 in costs. The trial court denied any recovery. It found that Gramajo acted in bad faith by artificially inflating his damages claim to justify filing the case as an unlimited civil proceeding. As evidence of bad faith, the trial court highlighted that, although Gramajo sought $10,822.16 in unreimbursed expenses, he submitted no evidence at trial to support that claim. He also alleged an equitable claim for injunctive relief, but then never pursued that claim. Additionally, the trial court found that the case had been “severely over litigated” with Gramajo noticing 14 depositions and serving 15 sets of written discovery requests, while ultimately using just 12 exhibits at trial. Id. at 4.
The trial court’s denial of Gramajo’s motion for fees and costs was premised upon § 1033(a) of the California Code of Civil Procedure, which vests discretion in a trial court to deny attorneys’ fees and costs recovery when a plaintiff recovers less than the $25,000 jurisdictional minimum for an unlimited civil case. Gramajo appealed.
The Court of Appeal’s Decision
On appeal, the California Court of Appeal for the Second District reversed.
It held that § 1194(a) of the California Labor Code applied, and not § 1033(a) of the Code of Civil Procedure. Section 1194(a) of the Labor Code provides than a plaintiff who prevails in an action for unpaid minimum or overtime wages “is entitled to recover in a civil action . . . reasonable attorneys’ fees, and costs of suit.” The Court of Appeal reasoned that § 1194(a) mandates a fee award to a prevailing plaintiff who alleges unpaid minimum and/or overtime wages, and that it was more specific than § 1033(a) of the Code of Civil Procedure, and more recently enacted.
On a bright note, the Court of Appeal cautioned that its reversal “should not be read as license for attorneys litigating minimum and overtime wages cases to over-file their cases or request unreasonable and excessive cost awards free of consequence” and that § 1194(a) mandates only the recovery of a “reasonable fee and cost award.” Id. at 15. While remanding that issue to the trial court, the Court of Appeal highlighted an example of a fee award it deemed reasonable. It noted that, in Harrington v. Payroll Entertainment Services, Inc., 160 Cal.App.4th 590 (2008), the plaintiff recovered just $10,500 in unpaid overtime wages and was awarded attorneys’ fees of just $500.
Implications Of The Decision
While it is an unfortunate outcome that attorneys’ fees and costs awards in overtime and minimum wage cases are mandatory to a prevailing plaintiff, and not entirely discretionary, the silver lining in Gramajo is that a trial court at least retains discretion to award only what is reasonable.