Court of Appeal Decides Attorney Fee Issues - "Pellegrino II"

On January 28, 2010, the Court of Appeal issued its second decision in Pellegrino v. Robert Half Intern., Inc., 182 Cal.App.4th 278 (January 28, 2010) ("Pellegrino II"). Six former account executives sued their former employer for failure to pay overtime compensation and commissions, failure to meal periods and itemized wage statements, and violation of the Unfair Competition Law (UCL). The trial court entered judgment in favor of the employees. In Pellegrino I (discussed here) the Court of Appeal affirmed the decision on the merits.

In Pellegrino II, the Court considered the trial court's order awarding the employees $978,000 in attorney fees. The trial court arrived at that figure by: (1) reducing the lodestar by 15% to account for the time spent on the UCL claims; and (2) multiplying the adjusted lodestar by a 1.75 multiplier.

The employer appealed, and the Court of Appeal affirmed in part and reversed in part.

First, the trial court did not err by reducing the lodestar amount by 15 percent to reflect the parties' litigation of the unfair competition claims, because the legal and factual issues presented in the UCL claims "could not be more interrelated" with the issues presented by plaintiffs' wage and hour claims (for which attorney fees of course were available). Slip op. at 5.

Second, the record supported the trial court's application of a 1.75 multiplier to the reduced lodestar amount for attorney fees generated up until plaintiffs brought their motion for attorney fees, based on the factors set forth in Ketchum v. Moses (2001) 24 Cal.4th 1122. The Court explained:

The record supports the court's finding as to the novelty and difficulty of the questions at issue in this litigation. This case was vigorously litigated. Twelve motions for summary judgment were filed, which involved separate sets of facts unique to each plaintiff. The case involved complex issues of employment law including the enforceability of a contractually shortened statute of limitations provision contained in an employment agreement and the scope of the administrative exemption for each plaintiff in the context of RHI's business. Furthermore, RHI's classification of plaintiffs as exempt employees resulted in RHI not maintaining time and wage records, creating the difficult task of reconstructing records to determine the extent of the wages, penalties, and other damages owed to each plaintiff. Although RHI argues the issues presented in this case were not novel or difficult because no expert witness testified at trial, the record shows RHI designated two “liability” experts and had also retained a damages expert, each of whom were deposed by plaintiffs' counsel.

Slip op. at 7. The fact that the employees' counsel risked not being paid at all if the employees did not prevail also supported the enhancement. Slip op. at 7, citing Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1174.

Finally, the record did not support the application of a 1.75 multiplier to fees incurred in bringing the motion for attorney fees, citing Ketchum, supra, 24 Cal.4th at 1141, and Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 582-583 (a case most notable for its holding on the "catalyst" attorney fees). Slip op. at 9-10.

The Court reversed the amended judgment to the extent it applied a multiplier to fees incurred in bringing the attorney fees motion and otherwise affirmed.