Procedural Posture

Defendant employer appealed a judgment of the Superior Court of Alameda County (California), which found that the employer violated the Hayward Living Wage Ordinance (LWO) (Hayward Mun. Code, art. 14, § 2-14.010 et seq.), breached its city contracts, and committed labor law violations. The trial court awarded back wages and unpaid benefits, imposed statutory penalties, and awarded attorney fees and costs to plaintiff employees. The parties were represented by their own California small business attorney.

Overview

The employer did not pay the wages required by the LWO to employees whose work on city contracts was performed outside the city. The court held that the extraterritorial effects of the LWO did not violate Cal. Const., art. XI, § 7. The LWO was not unconstitutionally vague because it sufficiently indicated that it was applicable to all employees who worked on or under a service contract with the city. The LWO applied to those employees even when they performed other tasks. The trial court properly shifted the burden of proof to the employer because it was best able to determine which employees were covered. The contracts were sufficiently definite, and the employees were intended third party beneficiaries under Civ. Code, § 1559. The employees could recover penalties under Lab. Code, § 2699, subd. (g), because their amendment of their complaint to allege such claims after the statute granted them standing was not a retroactive application of the statute and related back to their original complaint. The violations were not willful under Lab. Code, § 203, because the employer had good faith arguments. Penalties were properly calculated under Lab. Code, §§ 223, 227.3, 210, 225.5.

Outcome

The court affirmed both the judgment and the postjudgment orders.

Procedural Posture

Appellant purchasers sought review of an order of the Court of Appeals (California), which affirmed a trial court order granting attorney fees to respondent sellers, after appellants voluntarily dismissed with prejudice their complaint against respondents, which sought damages and alleged various defects in the home purchased from respondents. Appellants contended that the award of fees was improper, under Cal. Civ. Code § 1717.

Overview

Appellant purchasers bought a home from respondent sellers. Appellants thereafter brought claims against respondents, seeking damages for various alleged defects in the home. Appellants then voluntarily dismissed their complaint with prejudice. Respondents filed a claim which sought payment of attorney fees as costs in defending appellants’ claims, pursuant to the language of the sales contract. The trial court granted the fees, the appeals court affirmed the trial court, and appellants sought further review of that determination. The court reversed and remanded and held that contractual attorney fee provisions were generally enforceable in voluntary pretrial dismissal cases except as barred by Cal. Civ. Code § 1717. Thus, respondents were entitled to recover as costs the amount they incurred in attorney fees to defend the tort claims asserted against them in this action; however, the court concluded that § 1717 barred the recovery of attorney fees incurred in the defense of the breach of contract claim.

Outcome

The court reversed the order awarding attorney fees to respondent sellers in part, and remanded. The court held that in voluntary pretrial dismissal cases, recovery of attorney fees was barred in defending contract claims, but not in defending tort or other on-contract claims. Thus, respondents were entitled to attorney fees for defending against appellant purchasers’ tort and non-contractual claims.