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Costs, Unavailable to Prevailing Employer as to Wage Claims, Barred as to All Claims—C.A.
Ashmann-Gerst Says Other Causes of Action Under Labor Code Were Inextricable Intertwined With Claim of Unpaid Wages
By a MetNews Staff Writer
The Court of Appeal for this district declared yesterday that costs were improperly imposed on a woman who unsuccessfully sued three entities and one individual for alleged Labor Code violations, losing on summary judgment because the defendants were determined not to have been her employers.
Under Labor Code §218.5(a), the court said in an unpublished decision, costs could not be awarded as to wage claims absent a finding that the action was brought by Patricia Schwade in bad faith, and Los Angeles Superior Court Judge Amy D. Hogue made no such finding. Hogue made no award in connection with Schwade’s causes of action for unpaid wages, but did award costs in connection with non-wage claims.
Sec. 218.5(a) provides:
“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.”
Hogue’s Ruling
Hogue found that “[s]tatutory exceptions” to the right of a prevailing party to obtain costs “do not completely bar Defendants from recovering costs.”
She reasoned:
“…Defendants are barred from recovering costs incurred defending, at most, four of the ten total claims on which they prevailed. Schwade’s claims for failure to provide (1) meal periods and (2) rest periods, (7) failure to provide wage statements, (8) failure to maintain records, (9) failure to reimburse business expenses, and (10) unfair competition were neither ‘actions[s] brought for the nonpayment of wages’ within the meaning of section 218.5 nor actions to recover minimum wages or overtime compensation within the meaning of section 1194.”
Ashmann-Gerst’s Opinion
In her opinion reversing the award of costs, Acting Presiding Justice Judith Ashmann-Gerst said:
“There is no dispute that respondents were the prevailing parties as to each cause of action asserted against them….Thus, they are entitled to costs under Code of Civil Procedure section 1032, subdivision (b), unless another statute provides an express exception to this entitlement. Section 218.5 does just that for two of Schwade’s causes of action: failure to timely pay wages and failure to pay all wages due…. As the trial court correctly found, respondents were not entitled to recover costs for those two causes of action because (1) they were not the ‘employee,’ and (2) Schwade did not bring this action in bad faith.”
She went on to say:
“[W]e conclude that section 218.5 controls over the general cost-recovery statute and prohibits, as a matter of law, the cost award here to a nonemployee prevailing party, where the wage and nonwage claims are inextricably intertwined, and the trial court expressly found no evidence that the wage claims had been brought in bad faith….To hold otherwise would run counter to the legislative goal of encouraging employees to bring potentially meritorious actions to enforce wage laws.”
The case is Schwade v. South Pasadena Rehabilitation Center, B318644.
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