Plancich v. UPS: Another Court Addresses Prevailing Defendant Costs in Wage Dispute

In Kirby v. Immoos Fire Protection, Inc. (blogged here), the Cal. Supreme Court will address the following issues:

1. Does Labor Code section 1194 apply to a cause of action alleging meal and rest period violations (Lab. Code 226.7) or may attorney's fees be awarded under Labor Code section 218.5?
2. Is our analysis affected by whether the claims for meal and rest periods are brought alone or are accompanied by claims for minimum wage and overtime?

In Plancich v. United Parcel Service, Inc. (8/11/11) --- Cal.App.4th ----, 2011 WL 3506066, the Fourth District Court of Appeal held that while Labor Code section 1194 gives a prevailing employee the right to recover attorney's fees and costs, it "does not contain express language excluding prevailing employers from recovering their costs. Slip op. at 3.

Accordingly, based on the plain meaning of the words of the statutes in question, section 1194 does not provide an “express” exception to the general rule permitting an employer, as a prevailing party, to recover costs under Code of Civil Procedure section 1032, subdivision (b), because section 1194 makes no mention of prevailing employers.

Ibid. To avoid this result, the plaintiff argued that Labor Code section 218.5, rather than section 1032, controlled. The Court responded to this argument:

Assuming, without deciding, that Plancich is correct and Labor Code section 218.5 controls the awarding of costs in suits brought for unpaid wages, then UPS should still be awarded its costs. UPS was the prevailing party in this action. In UPS's answer to Plancich's complaint, UPS requested that UPS “be awarded its reasonable costs and attorneys' fees.” Accordingly, UPS fulfilled the requirements for being awarded costs under Labor Code section 218.5, namely, it was the prevailing party and it requested costs be awarded at the initiation of the action. Accordingly, we are not persuaded by Plancich's argument.

Slip op. at 4. Finally, the Court distinguished Earley v. Superior Court (2000) 79 Cal.App.4th 1420, in which the Court held that a successful defendant cannot recover its attorney fees and costs in a minimum wage action under Labor Code section 1194.

We do not find the Earley opinion to be persuasive authority in this case, because the Earley opinion did not discuss the costs provision of section 1194 in relation to Code of Civil Procedure section 1032, subdivision (b). Rather, the opinion was focused on the issue of attorney's fees in section 1194, and how that provision related to Labor Code section 218.5, as well as issues related to absent class members.

Slip op. at 5. Having distinguished Earley, the Court again reasoned that section 1194 does not provide an express exception to section 1032.

Will the Supreme Court grant and hold Plancich pending its decision in Kirby? The Court already has one case on hold, In re. UPS Wage and Hour Cases (2/24/11) (blogged here). Perhaps Plancich will be grant-and-hold number two.

The opinion is available here.