Betancourt v. OS Restaurant Services, LLC ( 2022 )

Filed 8/25/22; Certified for Publication 9/12/22 (order attached)
Opinion following transfer from Supreme Court
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
RAQUEL BETANCOURT, B293625
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC629916)
v.
OS RESTAURANT SERVICES,
LLC et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Los
Angeles County. Deirdre H. Hill, Judge. Affirmed.
Raines Feldman, Lauren J. Katunich, Robert M. Shore and
Leticia M. Kimble for Defendants and Appellants.
Felahy Employment Lawyers, Allen Felahy; Yash Law
Group and Yashdeep Singh for Plaintiff and Respondent.
__________________________
SUMMARY
This case is before us on remand from the Supreme Court.
The Labor Code mandates an award of reasonable attorney
fees to the prevailing party in any action brought for the
nonpayment of wages, if any party requests attorney fees at the
initiation of the action. (Lab. Code, § 218.5, subd. (a).) (Further
statutory references are to the Labor Code unless otherwise
specified.) Here, the trial court awarded plaintiff $280,000 in
attorney fees under section 218.5, and the employer appealed the
award.
The only wage and hour claims alleged and litigated by the
parties were for rest break and meal period violations (§ 226.7),
and claims for penalties (waiting time penalties under
section 203 and wage statement violations under section 226)
based on the rest break and meal period violations. In our
original opinion, we held, following Kirby v. Immoos Fire
Protection, Inc. (2012) 53 Cal.4th 1244, 1255 (Kirby), that an
action brought for failure to provide rest breaks or meal periods
(§ 226.7) is not “an ‘action brought for the nonpayment of wages’ ”
within the meaning of section 218.5. (Kirby, at p. 1255.) We also
held that a plaintiff could not recover penalties for waiting time
and wage statement violations based on claims of rest break and
meal break violations, and so could not recover attorney fees
based on those penalties.
In Naranjo v. Spectrum Security Services, Inc. (2022)
13 Cal.5th 93 (Naranjo), the Supreme Court held otherwise. The
court concluded that “extra pay for missed breaks constitutes
‘wages’ that must be reported on statutorily required wage
statements during employment (Lab. Code, § 226) and paid
within statutory deadlines when an employee leaves the job (id.,
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§ 203).” (Naranjo, at p. 102; ibid. [the extra pay is “designed to
compensate for the unlawful deprivation of a guaranteed break,”
but “also compensates for the work the employee performed
during the break period”].) After issuance of its opinion, the
Supreme Court transferred this case to us with directions to
reconsider our opinion in light of Naranjo.
Having done so, we affirm the award of attorney fees.
FACTS
Defendants are OS Restaurant Services, LLC and Bloomin’
Brands, Inc. They are the owners or operators of a Fleming’s
Steakhouse & Wine Bar on Olympic Boulevard in Los Angeles.
Plaintiff Raquel Betancourt worked there as a server from 2008
through 2015.
1. The Complaint
In August 2016, plaintiff sued defendants. The complaint
alleged defendants regularly failed to give plaintiff her full
uninterrupted rest periods, and that defendants wrongfully
terminated plaintiff in retaliation for her making internal
complaints that defendants violated wage and hour laws and food
safety laws.
Plaintiff alleged she saw a chef using a vegetable cutting
board to prepare raw chicken, and reported the incident to her
manager, but defendants ignored her report. Three months later,
plaintiff informed Tiffany Yeargin, defendants’ senior human
resource business partner, that one of the chefs routinely used
vegetable cutting boards to prepare raw chicken, and that
employees were regularly denied their 10-minute rest periods.
Immediately following plaintiff’s complaints to
Ms. Yeargin, defendants’ managerial employees began to
retaliate by “highly scrutinizing Plaintiff’s performance” and
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singling her out for discipline for spurious reasons. Defendants
continued to prevent her from taking her 10-minute rest periods.
Ms. Yeargin ignored plaintiff’s complaints about the retaliatory
actions.
The complaint alleged that in December 2015, defendants
issued plaintiff a formal written reprimand “based upon false and
fabricated accusations of insubordination, which resulted in
Plaintiff’s suspension.” After that, plaintiff again informed
Ms. Yeargin of the retaliation and requested the reprimand be
removed from her employment record, but her request was
denied.
“[I]n further retaliation against Plaintiff for her
whistleblowing activities,” defendants terminated plaintiff’s
employment. “To date, Defendants have refused to pay Plaintiff
all wages earned and unpaid at the time of her termination;
including, without limitation, unpaid rest period premiums.”
Plaintiff alleged causes of action for retaliation and
wrongful termination because of her reports of rest break and
food safety violations. She also alleged she was entitled to
recover unpaid premium wages under section 226.7 for the rest
break violations; penalties, costs and attorney fees under
section 226 for failing to include rest break premiums on her
itemized wage statements; and waiting time penalties under
sections 201 through 203 for failure to pay all wages on
termination, “including, without limitation, unpaid premium
wages in lieu of rest periods.”
4
The prayer for relief requested attorney fees under
sections 218.5 and 226, Code of Civil Procedure section 1021.5,
“and any other applicable provisions of law.” 1
2. The Litigation
Defendants answered the complaint in October 2016.
Discovery ensued. Two days after the trial court issued a
tentative ruling on October 11, 2017, compelling plaintiff to
comply with discovery requests and awarding sanctions against
her, and one day after plaintiff produced more than 1,000
previously withheld documents, the parties settled the case.
About a month before the settlement, the parties had stipulated
the complaint could be amended to add a cause of action for meal
period violations.
3. The Settlement
The parties put the terms of their settlement agreement on
the record in open court on October 13, 2017. Defendants agreed
to waive plaintiff’s payment of sanctions and to pay plaintiff
$15,375 in full settlement of her claims for failure to provide meal
and rest periods under section 226.7, failure to provide accurate
itemized wage statements under section 226, failure to pay all
wages upon termination under sections 201 through 203, and
1 Section 218.5 states in 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.” (Id., subd. (a).)
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“any and all wage-and-hour-related causes of action that were or
could have been asserted in the complaint.” Plaintiff agreed to
dismiss with prejudice and without any payment her claims for
retaliation and wrongful termination. The parties agreed
plaintiff could later file a motion for attorney fees incurred only
on her wage and hour claims, “consistent with applicable law.”
4. Plaintiff’s Motion for Attorney Fees
Plaintiff then sought $580,794 in attorney fees (and costs of
more than $16,000), under sections 218.5 and 226. This consisted
of a lodestar amount of $387,196 and a multiplier of 1.5. No time
records were provided to the court, but plaintiff’s counsel said
869.6 hours were incurred by his firm at various hourly rates.
Plaintiff contended her wage and hour claims were “closely
intertwined” with her retaliation and wrongful termination
claims, so she was entitled to recover all of her fees and costs.
Defendants opposed the motion, contending that, among
other reasons, Kirby and its progeny dictate that a party cannot,
as a matter of law, recover attorney fees when she prevails only
on a claim for meal or rest break premium pay. Defendants also
contended plaintiff’s claims of retaliation and wrongful
termination were the crux of her case, and virtually all discovery
was focused on those claims. Defendants gave multiple examples
of discovery disputes requiring them to seek court intervention,
none of which was relevant to meal and rest break claims, and
many of which were directed at plaintiff’s claims for economic
damage flowing from her retaliation and wrongful termination
claims. Defendants referred to the court’s October 11, 2017
tentative ruling stating that plaintiff “has wrongfully withheld
documents” and that plaintiff and her counsel “have engaged in
repeated abuses of the discovery process for months.” Defense
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counsel’s declaration stated that on October 12, 2017, plaintiff
finally produced more than 1,100 probative documents that were
highly damaging to her case and credibility.
Defense counsel also attached plaintiff’s July 18, 2017
settlement demand. In that demand, plaintiff’s counsel valued
her case at $750,000. Of that total sum, plaintiff’s counsel valued
the rest break and the derivative wage statement and waiting
period penalty claims at less than $13,000.
Plaintiff came up with a new theory for recovery of all her
attorney fees in her reply to defendants’ opposition to the motion
for attorney fees. She asserted—for the first time—that
“[d]efendants’ own payroll and timekeeping records demonstrate
that Plaintiff was not paid for all hours worked; and that it was
part of Defendants’ timekeeping scheme to unilaterally
reduce/adjust Plaintiff’s timesheets in order to avoid paying
Plaintiff for all hours worked and all earned overtime.”
The declaration of plaintiff’s counsel attached copies of
defendants’ timekeeping spreadsheets and one of plaintiff’s wage
statements. Plaintiff’s counsel opined that his analysis of these
documents showed plaintiff “was shorted .49 total hours, and
virtually all of this is overtime.” Plaintiff’s counsel further
opined the timekeeping spreadsheets showed “unilateral
downward adjustments,” and “[t]here were 47.82 total hours lost
to ‘adjustments.’ ” Counsel did not state, in the reply papers or in
any subsequent filings, when he had performed this analysis, i.e.,
whether he performed the analysis before filing the motion for
attorney fees, or only after getting defendants’ opposition
asserting the focus of the litigation had been on the retaliation
and wrongful termination claims.
7
At the January 26, 2018 hearing on the motion for fees, the
court heard argument and continued the hearing for further
briefing. The parties filed additional briefs, declarations and
evidentiary objections. There were several more continuances
following further hearings on the motion.
In supplemental papers, plaintiff’s counsel reiterated
plaintiff’s position that all the time billed was inextricably
intertwined with her wage and hour claims. However, counsel
reexamined the billing “to identify discrete tasks to which I can
state with reasonable certainty were devotedly almost entirely to
the non-wage claims,” and stated he was able to identify
approximately 10 percent of the hours incurred by his firm that
were “devoted primarily to prosecution of the wrongful
termination/retaliation claims without regard to the underlying
wage issues.” Counsel reduced the fee request by 10 percent from
the lodestar of $387,196 to $348,476.40, and did not request a
lodestar multiplier. In later-filed supplemental papers, plaintiff
sought another $48,914 for work performed in litigating the fee
application since filing that motion, for a total of $397,390. No
time records were ever supplied.
Defendants continued to assert there was no evidence that
plaintiff raised, litigated, and expended attorney fees on any
theory of wage liability other than meal and rest breaks for which
attorney fees could not be awarded. Defense counsel’s
declaration also stated that plaintiff’s interpretation of the pay
records was wrong, because her counsel looked at the wrong
column for hours worked; and adjustments were made because of
failure to clock out at the end of a shift, as confirmed on other
time reports produced in discovery.
8
On July 13, 2018, without calling the case for hearing, the
court granted the motion for attorney fees in the amount of
$280,794 (and costs of $8,671.95) and set an order to show cause
regarding dismissal for August 31, 2018. The court ruled that,
although “some aspects” of plaintiff’s wage statement and waiting
penalty claims “are seemingly derivative of the Section 226.7
claim, Plaintiff has proffered evidence that establishes that
[those claims] were also premised on timekeeping and payroll
schemes . . . and Plaintiff is thusly entitled to attorneys’ fees
pursuant to Labor Code § 218.5. Further, the settlement
agreement is broad in scope and includes all wage and hour
claims.”
The court found counsel’s apportionment of 90 percent of
the work to the underlying wage issues “sufficient for
apportionment purposes,” citing counsel’s declaration quoted
above. The court found the number of hours incurred was
unreasonable, the hourly rates were high, and $280,794 was a
reasonable fee award. The court did not explain how it derived
that figure.
Plaintiff submitted a proposed judgment pursuant to the
terms of the settlement (Code Civ. Proc., § 664.6). Defendants
objected to the proposed judgment on the ground plaintiff did not
request fees for an eligible claim in her initial pleading, and
defendants were not given an opportunity to argue the attorney
fee motion before the court, although it had been continued for
hearing after defense counsel’s pregnancy leave ended.
The court overruled defendants’ objection and entered
judgment on August 31, 2018, in the principal sum of $15,375,
plus attorney fees of $280,794 and costs of $8,671.95.
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DISCUSSION
1. A Prefatory Note
We begin with an explanatory note. The trial court
apparently concluded (as we did in our original opinion) that to
the extent plaintiff’s wage statement and waiting penalty claims
were derivative of her rest break claims, they could not support
an attorney fee award. Instead, the trial court justified the
award by relying on evidence plaintiff proffered with her reply
papers, purporting to show that her wage statement and waiting
penalty claims “were also premised on timekeeping and payroll
schemes,” thus entitling plaintiff to fees on that basis. (Italics
added.) This justification was erroneous. As we held in our
original opinion, the trial court’s finding on “timekeeping and
payroll schemes” was not supported by the record. 2 Naranjo does
not affect our conclusion on that issue, but the timekeeping issue
is now beside the point. Naranjo’s holding that premium pay for
missed breaks constitutes wages and must be reported on wage
statements and paid within statutory deadlines when an
employee is discharged (Naranjo, supra, 13 Cal.5th at p. 102),
fully justifies the trial court’s attorney fee award under
section 218.5. And, of course, the court’s ruling must be affirmed
if it is correct on any theory.
2 We see no reason to repeat our discussion on that point. In
the trial court litigation, plaintiff made no claim for nonpayment
of wages other than the rest break and meal period claims and
the derivative penalties until filing her reply papers. We found
no evidence plaintiff’s counsel ever expended any attorney time
on “timekeeping and payroll schemes,” except in preparation of
the reply papers.
10
2. The Naranjo Decision
We need not discuss Naranjo in any detail, as its holding,
described at the outset, is clear: “extra pay for missed breaks
constitutes ‘wages’ that must be reported on statutorily required
wage statements during employment (Lab. Code, § 226) and paid
within statutory deadlines when an employee leaves the job (id.,
§ 203).” (Naranjo, supra, 13 Cal.5th at p. 102; see also id. at
p. 112 [“an employee suing for failure to pay wages by the
deadline established in [sections 201 and 202] is suing for
nonpayment of wages for purposes of an attorney fee award
under Labor Code section 218.5,” citing Kirby, supra, 53 Cal.4th
at p. 1256; Naranjo, at p. 117 [“missed-break premium pay
constitutes wages for purposes of Labor Code section 203, and so
waiting time penalties are available under that statute if the
premium pay is not timely paid”]; id. at p. 121 [“failure to report
premium pay for missed breaks can support monetary liability
under section 226 for failure to supply an accurate itemized
statement”].)
Here, plaintiff’s complaint sought penalties, costs and
attorney fees under section 226 for failing to include rest break
premiums on her itemized wage statements; and waiting time
penalties under sections 201 through 203 for failure to pay all
wages on termination. These were claims for nonpayment of
wages. Under section 218.5, the court must award the prevailing
party reasonable attorney fees and costs “[i]n any action brought
for the nonpayment of wages,” if any party requested fees and
costs at the beginning of the action (§ 218.5, subd. (a); see fn. 1),
as plaintiff did.
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3. Contentions and Conclusions
In defendants’ briefing in this case—before the Naranjo
decision—defendants contended the trial court erred in awarding
any attorney fees to plaintiff, because her complaint did not
allege any conduct that could serve as the legal basis for a fee
award under section 218.5; the parties’ settlement agreement
provided no other basis for a fee award because plaintiff was
entitled only to seek fees “consistent with applicable law”; and
there was no evidence that plaintiff’s counsel spent any time on
any claim for nonpayment of wages.
After Naranjo, none of defendants’ earlier arguments
supports reversal of the attorney fee order. Naranjo establishes a
clear legal basis for the award; the settlement agreement permits
an award “consistent with applicable law”; and there is evidence
of counsel time spent on claims for nonpayment of wages as
construed in Naranjo (beginning, as we have seen, with the
complaint). As Naranjo tells us, extra pay for missed breaks
“constitutes wages subject to the same timing and reporting rules
as other forms of compensation for work.” (Naranjo, supra,
13 Cal.5th at p. 102.) Indeed, defendants do not argue otherwise
in their supplemental brief.
Instead, defendants now offer two reasons why we should
again reverse the attorney fee award. Neither of them has merit.
First, defendants say plaintiff offered “no admissible
evidence” that a wage statement violation “occurred at all, and no
evidence that any conceivable violation was willful.” They
contend their “offer to compromise”—the settlement agreement—
is inadmissible “as evidence that Defendants were in fact liable
on those claims,” citing Evidence Code section 1152, subdivision
12
(a) (offer to compromise is inadmissible to prove liability). We are
not persuaded.
Defendants agreed to a stipulated settlement, paying
$15,375 “for full and final resolution” of plaintiff’s wage-and-hour
related claims, and “judgment pursuant to stipulation for entry of
judgment” was rendered in favor of plaintiff. Plaintiff was thus
the prevailing party, and section 218.5 requires the court to
“award reasonable attorney’s fees and costs to the prevailing
party . . . .” (Id., subd. (a).) The parties settled their dispute over
whether defendants were in fact liable for rest break violations,
wage statement violations and waiting time penalties, including
whether any wage statement violations were knowing and
willful, and defendants cannot now claim that, for an award of
attorney fees, plaintiff must prove her case.
Second, defendants contend that in the trial court plaintiff
“tacitly” abandoned “any wage-statement claim based on a rest-
break violation,” and expressly abandoned the claim in this court,
and that this constitutes a waiver which we should enforce. We
do not agree. While plaintiff came up with a new theory for
recovery of her attorney fees for which there was no substantial
evidence—claims of shortages in wages that were not based on
rest break violations—defendants cite no evidence she “expressly
abandoned” or waived the claim on appeal that wage statement
violations and waiting time penalties based on failure to pay for
rest breaks would also support her fee request. Plaintiff stated
more than once in her initial respondent’s brief that her causes of
action were not “solely derivative of [her] rest period cause of
action.” (Italics added.) That is not a waiver of her claims based
on rest break violations.
13
Defendants also argue that waiver is “particularly
appropriate in this case” because plaintiff succeeded in obtaining
the sizeable attorney fee award by making “a factual
representation to the trial court that 90% of her attorney time
was incurred litigating timekeeping theories.” That is a
distortion of counsel’s statement. Plaintiff throughout took the
position that all the time billed on her case, “including time
which pertained to her wrongful termination/retaliation claims,
has been inextricably intertwined with her wage & hour claims.”
She did not represent that 90 percent of her attorney time was
spent on timekeeping theories.
Finally, defendants say the record shows “the vast majority
of [plaintiff’s] attorney time was incurred litigating the wrongful
termination and retaliatory discharge claims that she
indisputably lost”; she should not be allowed to “rewrite history”
by arguing “that any significant amount of time was incurred
litigating her wage-statement claim”; and consequently, we
should enforce her “express waiver.” As we have said, there was
no “express waiver.” Moreover, plaintiff consistently took the
position that her unpaid wage claims were “inexorably
intertwined with the Whistleblower allegations inasmuch as she
contends that the complaints about wages were what led to her
termination.” Similarly, the trial court recounted plaintiff’s
argument that “the claims are intertwined because plaintiff had
to establish her wage and hour claims in order to establish the
reasonableness of reporting defendant’s unlawful practices and
policies.” And, the trial court expressly accepted the declaration
of plaintiff’s counsel that only about 10 percent of the time spent
“has been devoted primarily to prosecution of the wrongful
termination/retaliation claims without regard to the underlying
14
wage issues.” (Italics added.) We cannot substitute our judgment
on this point for that of the trial judge, who presided over this
case from the outset.
DISPOSITION
The judgment is affirmed. Plaintiff shall recover costs on
appeal.
GRIMES, J.
WE CONCUR:
STRATTON, P. J.
WILEY, J.
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Filed 9/12/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
RAQUEL BETANCOURT, B293625
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC629916)
v.
ORDER CERTIFYING OPINION
OS RESTAURANT SERVICES, LLC FOR PUBLICATION
et al.,
Defendants and Appellants.
THE COURT: *
The opinion in the above-entitled matter filed on August 25, 2022, was
not certified for publication in the Official Reports. For good cause, it now
appears that the opinion should be published in the Official Reports and it is
so ordered.
STRATTON, P. J. GRIMES, J. WILEY, J.
1