Quiles v. Parent, 3/27/17 CA4/3
Plaintiff filed a wrongful termination case in state court under the Fair labor Standards Act (FLSA), 29 USC s. 215(a). She claimed that her employer terminated her because she filed an FLSA wage and hour class action. The jury agreed and awarded her compensatory and punitive damages (reduced after the court’s remittitur), totaling just over $200,000. And then came the big boom: The court awarded almost $700,000 in attorney’s fees and $50,000 in costs, which the employer appealed. The employer paid the damages portion of the judgment ($200k plus interest), leaving only the attorney’s fees and other court costs as the target of its appeal. Despite the appeal, plaintiff sought to collect the award for attorney’s fees. Employer asked the trial court to stay collection of the judgment for attorney’s fees pending appeal, but the trial court denied the request. Employer asked the appellate court for help by filing a “petition for writ of supersedeas.” Held: Petition granted.
Here’s the law concerning stay of the enforcement of judgments pending appeal: Generally, an appeal stays the enforcement of judgment with one exception – an appeal does not automatically stay enforcement of money judgments. That exception is a mile-wide because most civil cases are about one thing: Money. In order to stay enforcement of a money judgment pending appeal, the appellant needs to post a bond. A bond is essentially a very expensive insurance policy that insures payment of the ultimate judgment.
The attorney’s fees and costs are part of the money judgment. So why did employer file this petition? Because Code of Civil Procedure 917.1 provides that “no undertaking shall be required pursuant to this section solely for costs awarded under Chapter 6 (commencing with section 1021) of Title 14.” For purposes of the CCP 1033.5 (which is within Chapter 6 of Title 14), attorney’s fees are costs. This explains the employer’s strategic move to pay off the damage portion of the award, leaving only fees and costs for appeal.
Here, the appellate court agreed with Ziello v. Superior Court (1999) 75 Cal.App.4th 651, which, under a pretty analogous fact pattern, held that an appeal of attorney’s fees only stays enforcement of the judgment for those fees.
The court asked whether an award of attorney’s fees is “solely for costs.” The court looked at CCP 1033.5, with its laundry lists of what it defines as “costs,” and that list includes attorney’s fees. And so the court essentially adopted a bright line rule – almost anything listed and permitted by section 1033.5 qualifies as “costs” for purposes of this issue. (Note that there are two exceptions in section 917.1: For example, an award of costs under Code of Civil Procedure section 998 are subject to a different rule, and the judgment creditor can enforce a judgment for those costs unless the appellant obtains a bond.)
A big practical note: While an appeal “solely of costs” stays enforcement of the money judgment without posting a bond, the trial court retains the discretion, under CCP 917.9, to require the appellant to post an undertaking as a condition of the stay of enforcement. That makes sense — The trial court may see something in the litigation conduct of the judgment debtor that causes it concern about its motives in filing the appeal. For example, a judgment debtor can use the 18 months that the appeal process takes to do “financial planning,” and potentially render the judgment uncollectible. And so, the appellate court went out of its way to say that its decision would not prevent plaintiff from asking the trial court to require the judgment creditor to post an undertaking as a condition of the stay.
Thus, any semblance of an employer’s practical victory on this issue may be very short lived.