Arias v. Kardoulias: Trial Court Does Not Have Jurisdiction to Award Attorney Fees Against Employee Who Files Untimely Appeal of Labor Commissioner Award

In Arias v. Kardoulias (7/26/12) --- Cal.App.4th ---, the Court of Appeal held as follows: 

Labor Code section 98.2, subdivision (c) states that if a party files an appeal in the superior court seeking review of the California Labor Commissioner's (commissioner) decision and is “unsuccessful in the appeal,” the court shall determine the reasonable attorney fees and costs incurred by the other parties to the appeal and assess that amount as a cost upon the party filing the appeal.  “An employee is successful [on appeal] if the court awards an amount greater than zero.”  The commissioner awarded Rebecca C. Arias $6,319.69 in unpaid wages, but her untimely appeal to the superior court was dismissed on jurisdictional grounds.  The superior court considered Arias “unsuccessful on appeal,” and assessed $6,395 in attorney fees and costs against Arias, the party filing the appeal.   

In this case of first impression, we must determine whether the dismissal on jurisdictional grounds of an untimely appeal from the commissioner's decision is equivalent to an “award of zero” for purposes of assessing attorney fees and costs against an unsuccessful employee under section 98.2, subdivision (c).  Unlike a conventional case, when a party timely appeals the commissioner's decision, the superior court conducts a new trial on the merits of the employee's wage claim.  (§ 98.2, subd. (a).)  The statutory right to recover attorney fees under section 98.2, subdivision (c) depends upon success at trial.  Because the purpose behind this one-way fee-shifting provision is to discourage unmeritorious appeals, based upon the statutory language and the legislative intent, we hold that section 98.2, subdivision (c) does not become operative unless the superior court has jurisdiction to conduct a trial on the merits of the employee's wage claim.  We therefore reverse the attorney fees and costs assessed in this action.  

Slip op. at 2.  From the basis that the statutory intent to discourage unmeritorious appeals, the Court reasoned that an employee files an unmeritorious appeal "only if the superior court, upon a trial de novo, reaches the merits of the wage claim and concludes the employee has no right to recover unpaid wages."  Slip op. at 8.  That obviously does not happen if the trial court determines, as a preliminary matter, that the appeal was not timely.  Ibid.  As an illustration, in the case here, the plaintiff ended up with an enforceable judgment -- based on the Labor Commissioner's order, decision or award ("ODA") in the amount of $6,319.69.  Slip op. at 9.  

The opinion is available here.