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An Attorney’s Fees Award Against You Could Multiply Your Costs of Litigation

August 13, 2018

Posted in Employment Law

Attorneys see it all the time. A client gets very wrapped up and feels wronged about an accusation which mutates into a legal action. Whether you think your business wants to sue a party, or is being sued, you need to step back and think about the possible costs and benefits of proceeding or settling. The choice to get into a legal fight could end up costing your business far more than the value of the original dispute.

A cautionary tale concerning unpaid vacation time comes from The Recorder and the party in question, ironically enough, is a northern California law firm. Taryn Nishiki was a paralegal for the personal injury firm of Danko Meredith. She resigned without advanced notice in 2014. In an email to the firm she stated that she was owed unpaid vacation time, which, under California law, needed to be paid within 72 hours or the employer would need to pay penalties.

Under state law if the employer willfully fails to pay within that period employee’s wages continue as a penalty from that deadline until the wages are paid, for up to thirty 30 days. Nishiki was owed $2,880.31 for unused vacation time. The firm mailed her a handwritten check within the 72 hours but made a mistake when it was written. The correct amount was in the numeral box but the actual written description on the check was $80 short. Nishiki tried to cash the check but her bank refused. It wasn’t corrected until another check came 17 days beyond the statutory period.

Nishiki filed a complaint with the California Labor Commissioner seeking,

  • Unpaid vacation wages,
  • $23,718.75 in rest period premiums, and,
  • Waiting time penalties for the delay in getting the right payment totaling $7,500, or $250 per day for 30 days.

The hearing officer mostly sided with Danko Meredith. The officer ruled for the firm on the first two claims but found that the complainant was due waiting penalties for 17 days and awarded her $4,250. The law firm appealed to the Alameda County Superior Court, where the judge upheld the $4,250 award and, more importantly, awarded Nishiki attorneys fees. The ex-employer appealed again.

The firm argued to the state’s First District Court of Appeal the trial court shouldn’t have awarded Nishiki all of her claimed attorneys fees because two of her claims failed. In a small victory the appellate court cut the waiting penalty by $2,000. In a major loss the appellate court upheld an $86,160 attorney fees award granted to Nishiki by the trial court and ordered the firm to pay her attorneys fees and costs for the appeal as well.

It stated the applicable fee-shifting statutory provision in the case is “a one-way provision allowing attorney fees only against a party who appeals an administrative award, in order to discourage such trial court actions.”

The court pointed out it was the law firm, not their former paralegal, who appealed the decision, seeking a trial over a $4,250 loss. The fact the firm defeated two other, much higher claims wasn’t enough to avoid the award. The decision states, “If Nishiki consequently was required to incur substantial attorney fees to retry the entire case, including issues on which she did not prevail before the commissioner, defendant has only itself to blame.”

The firm hired an outside attorney for the case who told The Reporter he and his clients were reviewing the decision and, potentially unafraid of throwing good money after bad, is considering yet another appeal of a case that started over $2,880.31 in unpaid vacation time and a check that wasn’t written correctly.

The $86,160 is only the beginning for Danko Meredith. They were also ordered to pay for Nishiki’s attorneys costs and fees for challenging the trial decision to the First District Court of Appeal plus they need to pay for their own attorneys fees and costs. The total outlay for Danko Meredith could be in the range of $150,000 to $200,000, maybe more.

Litigation can be like a bar fight. You may feel you need to teach the other person a lesson and you think, maybe, you’ll get a black eye. What may actually happen is you’ll end up on the floor with an EMT checking for your pulse. You need to act wisely when it comes to deciding what’s worth litigating and what’s not because things may go really bad for you.

If you have any questions about your company’s obligation to reimburse employee unpaid vacation time or business litigation in general, contact our office. We can discuss what you want to do, how applicable laws have been interpreted and how to protect your legal rights and interests.