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Attorney Fees Class Action Defense Cases-Harrington v. Payroll Entertainment: California State Court Holds Plaintiff Lawyers Who Filed Labor Law Class Action Deserved Only $500 In Fees Because Class Action Complaint Was Not Viable

Lawyers who Filed Putative Class Action Alleging State Labor Law Claims but Failed to Secure Class Action Certification were Entitled to Reasonable Attorney Fees as a Matter of Right under Settlement of Individual Claim Declaring Plaintiff “Prevailing Party” but Reasonable Fee Award for Filing a Frivolous Class Action Based on a $44 Overtime Claim Warranted only $500 in Attorney Fes California State Court Holds

Plaintiff, an off-duty police officer, filed a class action against Payroll Entertainment Services alleging violations of California’s labor laws; specifically, the class action alleged that Payroll would hire retired and off-duty police officers to provide “traffic and crowd control services,” and that Payroll underpaid him after he worked a single 14-hour day. Harrington v. Payroll Entertainment Servs., Inc., ___ Cal.App.4th ___, 72 Cal.Rptr.3d 922 (Cal.App. 2008) [Slip Opn., at 2]. Plaintiff alleged to have filed the class action complaint on behalf of all retired and off-duty police officers who had worked for Payroll Entertainment, id. In response to plaintiff’s motion to certify the litigation as a class action, defense attorneys acknowledged the error in calculating plaintiff’s pay, but explained that Payroll Entertainment “had based its wage calculations on a memorandum issued by the Los Angeles Police Protective League without realizing that the formula set out in the memo violated California’s overtime wage laws,” id. The defense argued further that class action treatment was unnecessary because it had hired only 16 officers for the event in question and that the amount at stake was only $714. Id. The trial court denied the class action certification motion; specifically, the trial court found that plaintiff had failed to establish numerosity, typicality or superiority to support class action treatment. Id., at 4. The litigation proceeded as to plaintiff’s individual claim, settling shortly before trial for $10,500. Id., at 2-3. Plaintiff’s lawyers sought attorney fees but the trial court denied the motion, id., at 3. Plaintiff appealed. The appellate court reversed but awarded plaintiff’s lawyers only $500.

As part of the settlement, in addition to its monetary payment, Payroll Entertainment agreed that plaintiff was a “prevailing party” for purposes of recovering attorney fees and that the trial court would determine the amount of fees that were reasonably incurred by plaintiff. Harrington, at 3. Plaintiff’s lawyers filed a motion requesting $46,000 in attorney fees; in opposition, defense attorneys argued that plaintiff should not be awarded any attorney fees. Id. The trial court’s rationale is set forth in detail at pages 3 through 6 of the appellate court’s slip opinion. In pertinent part, the trial court found that plaintiff had retained counsel and filed suit to recover $44, id., at 5. The Court of Appeal quoted the following language from the trial court’s order at page 5:

“Ultimately, this Court must conclude that a a demand for attorneys’ fees in excess of four times the amount recovered is unreasonable and excessive. While [Harrington] and his attorneys no doubt had hopes of turning this case into a major class action, that did not occur because neither the facts nor law supported such a result. The real dispute here was between a payroll company and a one day employee of a movie production company who was not paid $44 in overtime and whose pay stub was technically deficiency. For these transgressions, [Harrington] has been paid a windfall of $10,500 which can and should be shared with his many attorneys. To award an additional amount of money for attorneys’ fees would be confiscatory and unfair.”

The appellate agreed with plaintiff that, under the three California Labor Codes at issue in this case, as the prevailing party he was entitled to attorney fees as a matter of right. Harrington, at 6. It noted, however, that “the most that Harrington is entitled to is his reasonable fee.” Id., at 7. On this point, the Court explained at page 7: “It is as plain to use as it was to the trial court that, from the outset, this was a dispute about $44.63 and that it was not viable as a class action. It is equally [plain that Harrington was underpaid as the result of an honest mistake made in reliance on a formula provided by his union, not based on any willful or knowingly wrongful conduct by [Payroll Entertainment]…. At the risk of understatement, there is no way on earth this case justified the hours purportedly billed by Harrington’s lawyers.” The Court of Appeal did not remand the matter but, rather, held “the trial court could not reasonably award an amount in excess of $500” and, accordingly, set the attorney fee award at that amount. Id.

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