SAN FRANCISCO—In a fight over $4,250 in penalties won by a former paralegal, a Northern California plaintiffs firm this week lost an appeal that has it facing a potential six-figure bill to cover the former employee’s attorneys fees.
The First District Court of Appeal on Wednesday actually trimmed the so-called waiting penalty that Danko Meredith P.C. owes former paralegal Taryn Nishiki by $2,000 to $2,250. However, the appellate court upheld an $86,160 in attorney fees award granted to Nishiki by the trial court and ordered the firm to pay her appellate costs and fees.
San Francisco Superior Judge Ethan Schulman, sitting pro tem on the First District, wrote that the firm had “only itself to blame” for running up attorneys fees in a case where it suffered “only a relatively modest loss.”
Nishiki’s lawyer, David Lyon of San Francisco, declined to comment Thursday, citing the possibility of a further defense appeal to the California Supreme Court.
The firm’s lawyer, Gary Simms of Davis, said that he and his clients were reviewing the decision and considering such a further appeal—especially on issues concerning the attorneys fees award.
The underlying case has its roots in Nishiki’s departure from Danko Meredith in 2014. Nishiki resigned via an email to the firm’s two partners, Mike Danko and Kristine Meredith, on Nov. 14, 2014. In her email she noted that her unpaid vacation needed to be paid within 72 hours of her notice of resignation.
As noted in Wednesday’s opinion: “When an employee resigns without notice, California law requires the employer to pay all wages within 72 hours. If the employer willfully fails to do so, the employee’s wages continue as a penalty from that due date until the wages are paid, for up to 30 days.”
When Nishiki resigned, she was owed $2,880.31 for unused vacation time. The firm mailed her a handwritten check within the allocated time. Although the check, signed by Meredith, had the correct number in the numeral box, she had written an amount $80 less on the line below. Nishiki informed the firm that her bank refused to accept the check but wasn’t issued a corrected check until Dec. 5.
Nishiki filed a complaint with the California Labor Commissioner after her departure, seeking unpaid vacation wages; $23,718.75 in rest period premiums; and waiting time penalties for the delay in receiving the $2,880.31 check totaling $7,500, or $250 per day for 30 days. The hearing officer with the state sided with the firm on the first two claims but found that Nishiki was due waiting penalties for 17 days—Nov. 18 through Dec. 5—and awarded her $4,250.
The firm appealed Nishiki’s award to the Alameda County Superior Court, where Judge Joseph Bergeron upheld the $4,250 award and awarded Nishiki her attorneys fees.
On appeal, the firm argued that the trial court should not have awarded Nishiki all of her attorneys fees since two of her claims failed. But the First District on Wednesday held that the applicable fee-shifting provision in Nishiki’s case was “a one-way provision allowing attorney fees only against a party who appeals an administrative award, in order to discourage such trial court actions.”
“Moreover, it warrants emphasis that it was defendant, not Nishiki, that chose to appeal and seek a trial de novo after suffering only a relatively modest loss before the commissioner, having defeated two other claims for which Nishiki sought considerably higher damages,” Schulman wrote “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.”
Simms, the firm’s lawyer, said Thursday the notion that employees can get their full attorneys fees paid even on claims that fail could give plaintiffs lawyers an incentive to lard illegitimate claims into complaints in hopes of a future fee payout.
“The law is clearly to the contrary in every context I’m aware of” outside employment law, Simms said. “I would think this would be a significant issue to the defense bar.”