Monday, April 30, 2012

Did the Good Guy Win? Who Gets the Award of Attorneys' Fees?

It is not uncommon in employment litigation for the plaintiff to receive very little and for the attorney to make out like a bandit!  I often describe the case of Ruiz Foods in a recent lawsuit.  The jury awarded the plaintiff $42,000 and his attorney $428,000. 

Apparently, Ok Chang didn't like her situation any better.  The jury awarded her $62,000.  Her attorney, Henry Lee, was awarded $300,000.  Ms. Chang substituted in as her own attorney in an attempt to collect the funds for herself.  Mr. Lee fought to have the funds paid to him.  (Henry M. Lee Law Corp. v. Super. Ct. (Chang) 2012 DJDAR 4763.) 

Ms. Chang filed a lawsuit alleging unpaid wages and overtime, waiting period penalties under Labor Code section 203, failure to provide an itemized statement, liquidated damages and prejudgment interest.  (Ms. Chang was awarded $30,000 for unpaid minimum wages.  That tells me that she could really use the $300,000 in attorneys' fees if she is working below minimum wage.)  The court awarded Chang $300,000 in attorneys' fees under Labor Code sections 1194(a) and 226(e).  Each of those statutes state that the employee is entitled to recover attorneys' fees for any wrong incurred. 

The Court of Appeal was asked to consider whether the fees awarded should go to the employee or to her attorney.  The court concluded that the money should go to the attorney as opposed to the employee.  The court relied on Flannery v. Prentice (2001) 26 Cal.4th 572, a case with the identical question about the Fair Employment and Housing Act.  In Flannery, the Supreme Court concluded that the term "party" does not necessarily mean just the litigant (employee) but could also apply to the litigant's attorney.  Moreover, chilling an attorney's ability to obtain fees will result in fewer cases being filed (and less justice being dispensed).  The Legislature intended to encourage lawyers to take cases of persons who could not otherwise afford to sue. 

Thus, the rule is that absent a contract otherwise determining the disposition of an attorneys' fees award, the fees go to the attorney. 

So, did the good guy win? 

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