Court of Appeal holds Labor Code trumps CCP § 998 cost recovery for defendants: Chavez v. California Collision

In Chavez v. California Collision (2024) 107 Cal.App.5th 298, the Court of Appeal (First Appellate District, Division Three), held that Lab. Code §§ 1194 and 218.5 preclude cost awards to defendants under Code Civ. Proc. § 998.

Plaintiffs, three auto shop workers, sued Defendants for various wage and hour violations. Two of the plaintiffs agreed to settle, while the third plaintiff (Zarate) did not. At trial, the jury found for Zarate on two causes of action (failure to pay overtime and failure to provide rest breaks) but awarded less than the amount Defendant had offered for settlement. The trial court awarded costs to Defendants under Code Civ. Proc. § 998 while granting Plaintiffs’ motion for attorney’s fees only in part. Plaintiffs appealed.

The Court of Appeal affirmed in part and reversed in part. Plaintiffs argued that the trial court’s amended February 2023 judgment, which merely added a costs and fees award, was its “comprehensive final judgment,” not its September 2022 judgment. The Court of Appeal disagreed, citing Torres v. City of San Diego (2007) 154 Cal.App.4th 214, 222 in its finding that Plaintiffs’ challenge to the trial court’s interlocutory rulings was not timely. The court also found no error in the trial court’s partial award of attorney’s fees because Plaintiff’s counsel failed to properly segregate time entries, and the trial court was not required to follow the Laffey matrix or apply a lodestar multiplier. However, the Court of Appeal reversed the trial court’s award of costs to Defendants, agreeing with Plaintiffs that, under Cruz v. Fusion Buffet, Inc. (2020) 57 Cal.App.5th 221, Lab. Code §§ 1194 and 218.5 displace Code Civ. Proc. § 998. Section 1194 “makes no mention of prevailing employers” (Plancich v. United Parcel Service, Inc. (2011) 198 Cal.App.4th 308, 313, internal citations omitted), while Section 218.5 requires a finding of bad faith.

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