Peralta et al v. Paramount Citrus Cooperative, Inc.

Filing 62

ORDER signed by District Judge Troy L. Nunley on 09/09/21 DENYING plaintiff's 58 Motion for Attorney Fees; each side shall bear its own costs and fees. (Benson, A.)

Case 1:15-cv-00263-TLN-JLT Document 62 Filed 09/10/21 Page 1 of 5
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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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Plaintiffs,

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No. 1:15-cv-00263-TLN-JLT

MARCELINA PERALTA and
RIGOBERTO MONJARAZ,

ORDER

v.
WONDERFUL CITRUS PACKING LLC,

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Defendants,

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This matter is before the Court on Plaintiffs’ Marcelina Peralta and Rigoberto Monjaraz

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(“Plaintiffs”) Motion for Attorney Fees. (ECF No. 58.) Defendant Wonderful Citrus Packing

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LLC (“Defendant”) filed an opposition. (ECF No. 59.) Plaintiffs filed a reply. (ECF No. 60.)

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For the reasons set forth below, the Court hereby DENIES Plaintiffs’ motion.

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Case 1:15-cv-00263-TLN-JLT Document 62 Filed 09/10/21 Page 2 of 5
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I.

FACTUAL AND PROCEDURAL BACKGROUND

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This wage and hour case arises from a dispute over Defendant’s failure to pay piece rate

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employees minimum wages under California law for time spent engaged in various non-piece

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work activities. (ECF No. 28 at 1–2.) Plaintiffs filed the operative Second Amended Complaint

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on December 17, 2015. (ECF No. 28.) On December 2, 2016, Defendant elected to make

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payments under California Labor Code § 226.2(b)(1)(B) (“§ 226.2”) to 27,351 agricultural

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workers, including Plaintiffs, which granted Defendant an affirmative defense against Plaintiffs’

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claims in this action.1 (ECF Nos. 48-4, 48-5.) Despite these payments, Plaintiffs moved for class

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certification on June 1, 2017. (See ECF No. 39.) The Court denied Plaintiffs’ motion on January

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3, 2019. (ECF No. 44.) Defendant filed an unopposed motion for summary judgment on its

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affirmative defense under § 226.2 on July 16, 2019. (ECF No. 48.) The Court granted

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Defendant’s motion and entered judgment on October 7, 2020. (ECF Nos. 52, 53.) Plaintiffs

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filed the instant motion for attorneys’ fees on November 4, 2020. (ECF No. 58.)

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II.

STANDARD OF LAW

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“An award of attorney’s fees incurred in a suit based on substantive state law is generally

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governed by state law.” Champion Produce, Inc. v. Ruby Robinson Co., Inc., 342 F.3d 1016,

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1024 (9th Cir. 2003); see also Klien v. City of Laguna Beach, 810 F.3d 693, 701 (9th Cir. 2016)

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(“[F]ederal courts apply state law for attorneys’ fees to state claims because of the Erie

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doctrine.”). Under the “American Rule,” parties to litigation must pay their own attorneys’ fees

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despite prevailing in the litigation. See Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of

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Heath and Human Res., 532 U.S. 598, 602 (2001) (stating the American Rule generally applies in

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the United States in both federal and state courts). California follows the American Rule

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generally but permits recovery of attorneys’ fees under specific statutes. See Cal. Code Civ. P. §

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After two California Courts of Appeals decisions in 2013 interpreted California law to
require employers to separately compensate employees paid on a piece rate basis for rest periods
at the applicable hourly minimum wage, the California Legislature provided employers a
statutory “safe harbor” from liability if they retroactively compensated employees. See Ben
Ebbink, AB 1513 Concurrence in Senate Amendments Analysis, 2015–2016 Leg., Reg. Sess., at
5 (2015); Bluford v. Safeway, 216 Cal. App. 4th 846 (2013); Gonzalez v. Downtown LA Motors
LP, 215 Cal. App. 4th 36 (2013).
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1021; Graham v. Daimler Chrysler Corp., 34 Cal. 4th 553, 565 (2004). In lawsuits to recover

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unpaid minimum wages, California Labor Code § 1194 permits a successful employee to recover

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reasonable attorneys’ fees and costs. See Cal. Lab. Code § 1194. To recover attorneys’ fees

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under the statute, the employee must be the “prevailing party.” See Earley v. Superior Court, 79

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Cal. App. 4th 1420, 1429 (2000).

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III.

ANALYSIS

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Plaintiffs contend they are entitled to costs in the amount of $1,932.06 and attorneys’ fees

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in the amount of $87,000 as the prevailing party. (ECF No. 58-1.) Specifically, Plaintiffs argue

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they are prevailing parties because Defendant exercised the safe harbor provision in § 226.2 by

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paying more than $2,325,700 to 27,351 agricultural workers “[i]n order to avoid all the liabilities

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threatened by this lawsuit.” (Id. at 1, 3.) Although ultimately disposed of on summary judgment,

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Plaintiffs contend they achieved their “principal litigation goal in substance” in the instant action

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when Defendant made these payments. (Id. at 1.)

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Defendant argues Plaintiffs are not the prevailing party because they failed to achieve

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class certification or succeed on any of their claims against Defendant. (ECF No. 59 at 1.)

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Rather, Defendant argues it is the prevailing party, and therefore entitled to its costs, because

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Defendant succeeded on all claims at summary judgment. (Id. at 5.) In the alternative, Defendant

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contends Plaintiffs’ attorneys’ fees are unreasonable. (Id. at 5–7.)

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A.

Prevailing Party

Plaintiffs may be entitled to attorneys’ fees even when they do not obtain favorable

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judgments if their lawsuits are the “catalyst” for actions by the defendant that provide sought-

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after relief. See Graham, 34 Cal. 4th at 565–68. “However, in order to justify a fee award, there

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must be a causal connection between the lawsuit and the relief obtained.” Westside Cmty. for

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Indep. Living, Inc. v. Obledo, 33 Cal. 3d 348, 353 (1983). Thus, when the defendant’s voluntary

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action is “induced by” or “clearly a result of” plaintiff’s legal action, plaintiffs may be entitled to

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a fee award absent judgment in their favor. Id. (citing Northington v. Davis, 23 Cal. 3d 955, 960

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n.2 (1979); Fletcher v. A.J. Indus., Inc., 266 Cal. App. 2d 313, 325 (1968)).

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Plaintiffs have failed to convince the Court that Defendant’s payments under § 226.2
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totaling approximately $2 million were “induced by” or “clearly a result of” the liabilities

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threatened by this lawsuit. Plaintiffs’ back pay totaled approximately $1,200. (ECF Nos. 48-7,

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48-8.) Had Defendant wanted to avoid the liabilities posed by Plaintiffs’ lawsuit as Plaintiffs

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assert, settlement would have been a far less expensive route than the safe harbor provision of §

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226.2. Further, Plaintiffs failed to achieve class certification. (See ECF No. 44.) They cannot

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now claim that failure resulted in the “recovery” of $2 million for 27,351 agricultural workers.

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(See ECF No. 58-1 at 1.) In sum, Plaintiffs have provided the Court with no evidence of a causal

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connection between the safe harbor payments and this action.

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Plaintiffs rely on two cases. Both are distinguishable. In Hsu v. Abbara, the California

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Supreme Court held that the “prevailing party” for the purpose of recovering attorney’s fees in a

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contract dispute should be determined by considering who got the upper hand in the litigation,

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regardless of final judgment. See Hsu v. Abbara, 9 Cal. 4th 863, 876 (1995). First, Plaintiffs

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provide no analysis as to why the contract interpretation at issue in Hsu should apply to the

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definition of “prevailing party” in an action to recover unpaid minimum wages. Second,

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assuming Hsu applies, the results of this case are not “purely good news for one party and bad

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news for the other.” Hsu, 9 Cal. 4th at 876. Plaintiffs “recovered” approximately $1,200 and

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Defendant avoided the significant liability inherent in class certification.

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Plaintiffs next rely on DeSaulles v. Cmty. Hosp. of Monterey Peninsula, 62 Cal. 4th 1140,

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1154 (2016), arguing there is “no meaningful difference between a plaintiff obtaining monetary

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relief through a settlement and a plaintiff obtaining monetary relief through receipt of a safe

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harbor payment” under § 226.2. (ECF No. 58-1 at 3.) However, a compromise agreement or a

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negotiated settlement typically involves a payment to the plaintiff in exchange for dropping the

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case. See DeSaulles, 62 Cal. 4th at 1156. Plaintiffs have failed to provide evidence of a similar

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exchange here. In other words, it is not clear to the Court what role Plaintiffs’ relatively low-

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exposure action had in Defendant’s decision to take advantage of a statutory safe harbor provision

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that involved payments to tens of thousands of employees.

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Therefore, the Court declines to label Plaintiffs the “prevailing party” in this action for the
purpose of recovering attorneys’ fees or costs of suit under § 1194. Because Plaintiffs did not
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Case 1:15-cv-00263-TLN-JLT Document 62 Filed 09/10/21 Page 5 of 5
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prevail in this action, they are not entitled to fees or costs. See Earley, 79 Cal. App. 4th at 1429.

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As such, the Court need not determine if Plaintiffs’ requested fee award is reasonable.

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B.

Defendant’s Costs

As mentioned, Defendant asserts it is the prevailing party in this action and therefore

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entitled to an award of its costs. (ECF No. 59 at 5.) The parties do not dispute § 1194 controls

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the award of costs. (See ECF No. 58-1 at 2; ECF No. 59 at 3.)

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“Because [§] 1194 provides only for a successful plaintiff to recover attorney fees and

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costs, it is a one-way fee shifting statute precluding an employer from collecting fees and costs

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even if the employer prevails on a minimum wage or overtime claim.” Ling v. P.F. Chang’s

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China Bistro, Inc., 245 Cal. App. 4th 1242, 1253 (2016). The weight of California authority

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supports this interpretation of § 1194. See Cruz v. Fusion Buffet, Inc., 57 Cal. App. 5th 221, 240–

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42 (2020); Ling, 245 Cal. App. 4th at 1253–55; Aleman v. AirTouch Cellular, 209 Cal. App. 4th

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556, 580 (2012); Earley, 79 Cal. App. 4th at 1425; but see Plancich v. United Parcel Service,

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Inc., 198 Cal. App. 4th 308, 314 (2011).

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Therefore, despite the judgment in Defendant’s favor, Defendant is unable to recover its

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costs under § 1194.

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IV.

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For the foregoing reasons, the Court hereby DENIES Plaintiffs’ Motion for Attorney Fees.

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CONCLUSION

(ECF No. 58.) Each side shall bear its own costs and fees.
IT IS SO ORDERED.
Date: September 9, 2021

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Troy L. Nunley
United States District Judge

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