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Ninth Circuit Vacates $312,429 Fee Award Against Walmart
Opinion Says Judge Failed to Explain Ruling, Requiring Remand
By a MetNews Staff Writer
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ANDRÉ BIROTTE District Court judge |
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The Ninth U.S. Circuit Court of Appeals yesterday vacated an attorney fee and cost award of $312,429 to a plaintiff who settled a wage-and-hour dispute with Walmart for $22,000, saying that District Court Judge André Birotte Jr. of the Central District of California failed to set forth a sufficient analysis as to how that number was reached.
Yesterday’s opinion declared that the settlement agreement, which Walmart contends limited fees to time spent defending against the plaintiffs’ personal claims, was so worded as to leave open the possibility that a judge would allow for the recovery of some of the hours dedicated to dismissed putative class matters. It did so, the Ninth Circuit said, by providing that the party may seek an award that includes costs incurred “in pursuit of…individual claims and recoverable by law.”
Circuit Judge Roopali H. Desai, writing for the court, said that inclusion of “recoverable by law” language allowed the court to consider work relating to class issues on which the plaintiff did not prevail based on the 1983 U.S. Supreme Court decision in Hensley v. Eckhart which established that a party who experiences limited success may recover fees for professional hours expended on related, unsuccessful claims. She wrote:
“Far from rendering the term ‘individual claims’ superfluous, our interpretation gives the term its full import. To hold otherwise would not only gut the agreement of its plain meaning under California law but would also require us to find that [the plaintiff] waived her right to seek fees to which she is otherwise entitled—without any express language saying as much. This we cannot do.”
However, Desai said that Birotte abused his discretion by failing to provide a “concise but clear” analysis of what portion of the attorneys’ work related to the plaintiff’s individual claims.
Labor Violations
The question of fees arose after the plaintiff, Claudia Alvarado, filed a complaint against Wal-Mart Associates Inc. and an affiliated party in Los Angeles Superior Court on Jan. 22, 2020, asserting individual, putative class, and Private Attorneys General Act (“PAGA”) claims for purported violations of the Labor Code. Walmart removed the matter to federal court five days later.
After all putative class-wide claims were dismissed with prejudice, Alvarado unsuccessfully moved to certify a class for a single business expense reimbursement claim. In February 2023, approximately one month before the scheduled trial date on her remaining individual and PAGA wage claims, Walmart served an offer of settlement on Alvarado under Code of Civil Procedure §998.
Under the proposal, Walmart offered to pay $22,000 in exchange for the “full and complete settlement of the claims asserted by the plaintiff in her individual capacity” and the release of any representative causes of action under PAGA.
Alvarado accepted the offer, and judgment was entered in accordance with its terms. Birotte reserved jurisdiction “to decide any motion for an award of reasonable attorney fees.”
Such a motion was filed a few months later. Alvarado initially requested $591,044.25 in fees and $44,879.34 in costs based on work performed by her attorneys, Matthew J. Matern and Mikael H. Stahle of the Manhattan Beach firm Matern Law Group PC, arguing that she was entitled to recover for time relating to her putative class and PAGA claims because they were “inextricably intertwined” with her individual causes of action.
Spirit of Compromise
After Walmart objected, Alvarado replied that “in the spirit of compromise,” she would reduce her fee request by eliminating time spent on class certification proceedings and removing any hours attributable to legal assistants. Following the revised request, Birotte granted Alvarado’s motion and awarded the plaintiff fees of $297,799 plus costs in the amount of $14,630, saying:
“[W]hile the initial motion and its opposition called on the Court to determine whether attorney fees for any labor related to the class action were warranted, Plaintiff has since filed a reply with an offer to deduct attorney time spent on the class certification proceedings…and to forego the entirety of the legal assistants’ time. Thus, an analysis regarding apportionment is moot.”
Sec. 998 Agreement
Noting that “[w]hen parties settle under section 998, they may limit or expand recoverable costs and fees by the express terms of their agreement,” Desai remarked:
“The parties agree that Alvarado’s entitlement to fees is controlled by the…agreement. They also agree that Alvarado experienced ‘limited success’….But the parties dispute whether their section 998 agreement prevents the plaintiff from recovering fees for work performed on unsuccessful claims that are closely related to her successful claims. It does not.”
She explained that “[w]hen the claims are so related as to render apportionment impracticable, the court has discretion to determine whether the plaintiff’s limited success justifies a fee award” under Hensley, and opined:
“Under California law, Alvarado is…entitled to seek fees for her partially successful individual claims and…for her class and PAGA claims insofar as they are intertwined with her individual claims….[T]he availability of fees and costs under Hensley is the default, and Walmart must point to specific language in the parties’ section 998 agreement to displace it.”
Plain Language
Rejecting Walmart’s assertion that the agreement’s plain language—by referencing Alvarado’s individual claims—precludes an award of fees relating to any work performed on the plaintiff’s other, unsuccessful causes of action, the jurist commented:
“Walmart misunderstands the point of the Hensley analysis. If performed correctly, the…analysis does not award fees for unsuccessful claims. Instead, it ensures that counsel is appropriately compensated for successful claims….By awarding fees for ‘mixed work’—that is, work that advanced both unsuccessful and successful claims—the Hensley inquiry allows district courts to determine a fee award that is proportional to a plaintiff’s success, no matter how individual entries are labeled.”
Adding that Birotte’s “decision is concise, but it is not clear,” she said:
“Alvarado’s fee award is defensible only if the district court made two conclusions: First, that…her class and PAGA claims are ‘related to’ her individual claims and need not be apportioned. And second, that her limited success—the $22,000 she received for her individual claims—justified her $297,799 fee request in light of the scope of the original litigation….[I]t is unclear if the district court properly made these determinations….Despite the…statement that ‘apportionment is moot,’ the parties’…continued litigation over Alvarado’s revised fee request demonstrates otherwise.”
Desai declared:
“Because we cannot discern how the district court exercised its discretion, we cannot determine whether it was appropriate, inappropriate, or exercised at all. We therefore vacate and remand Alvarado’s fee award for reconsideration by the district court.”
Circuit Judges Eric D. Miller and Kenneth K. Lee joined in yesterday’s opinion.
Birotte is a former U.S. attorney for the Central District of California.
The case is Alvarado v. Wal-Mart Associates Inc., 23-3927.
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