Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, Ct. No. BC 395567, Malcolm H. Mackey, Judge.
Furutani & Peters and John A. Furutani for Plaintiff and Appellant.
Paul, Hastings, Janofsky & Walker, E. Jeffrey Grube, Elizabeth A. Brown, Sandra N. Benjamin and Katherine C. Huibonhoa for Defendant and Respondent.
FLIER, J.
Edward Morley appeals from a judgment in favor of his former employer, respondent United Parcel Service, Inc. (UPS). In a bifurcated trial, the court found Morley knowingly and voluntarily released all his claims against UPS and granted judgment for UPS on Morley’s complaint. The court also found for UPS on its cross-complaint for breach of contract. Morley contends that his claims for statutory overtime, meal and break compensation cannot be released as a matter of law and that the attorney fees awarded UPS are excessive. We affirm the judgment.
FACTS
Morley worked for UPS from April 1987 until May 2007, when his employment was terminated. From February 1992 to his termination, Morley worked as a fulltime supervisor for UPS.
In 2004, Morley filled out a class member information form for a class action against UPS (the Marlo action) brought on behalf of fulltime UPS supervisors based on their alleged misclassification as exempt employees. He listed the hours he claimed to have worked and the meals and breaks he claimed to have missed at UPS from 1999 to 2004. Morley submitted this form to class counsel, who is also his current counsel, and he understood the completed form would be submitted to UPS for the Marlo action.
The Marlo action was filed against UPS in May 2003 in the United States District Court for the Central District of California. (Marlo v. United Parcel Service, Inc. (C.D. Cal. May 5, 2009, CV 03-4336 DDP) 2009 U.S.Dist. Lexis 41948.) The plaintiff class in Marlo sought overtime and meal and rest period premiums for fulltime supervisors. In August 2005, the district court granted UPS a summary judgment in the class action; however, in October 2007, the Ninth Circuit reversed the judgment and ordered the class action to be reopened. (Marlo v. United Parcel Service, Inc. (9th Cir. 2007) 254 Fed.Appx. 568.)
After his termination, Morley took advantage of UPS’s internal employee dispute resolution process. During this process, Morley met with UPS employee relations manager Christine Castaldi. Castaldi mentioned to Morley the possibility of a transitional package consisting of a separation agreement and general release. Castaldi told Morley UPS could provide him with severance pay and outplacement services in exchange for a release of any and all claims, known and unknown, against UPS. Castaldi also explained that if he signed the settlement agreement he could not sue UPS.
Later, Morley met with UPS’s regional employee relations manager, George Gibbs. In October 2007, about five months after Morley’s termination, Gibbs sent Morley a proposed separation agreement and general release. Morley replied by letter, advising Gibbs he would not accept a general release. Morley also indicated he had taken UPS’s advice to consult legal counsel, and counsel had advised him to proceed with litigation if he did not receive a satisfactory resolution in seven to 10 business days.
Morley also sent a followup email to Gibbs, stating again he would not accept a general release, and requested mediation, the next step in the dispute resolution process. He selected JAMS (Judicial Arbitration and Mediation Service) as the mediation service, and the parties agreed upon a mediator.
In January 2008, mediation took place with Morley, Gibbs and Castaldi participating. During the mediation, the parties reached an agreement on a dollar amount for settlement. UPS also presented to Morley a draft written settlement agreement that included a general release. Castaldi sat in a room with Morley, and she read the entire proposed settlement agreement out loud to him. She reminded Morley UPS was encouraging him to seek counsel and informed him he had seven days to revoke the agreement after signing it. Morley said he would rather just get it over with, even though section 5 of the proposed agreement gave him 21 days to consider and review the agreement before singing. Morley read and initialed each page, and then he signed the settlement agreement at the end.
Directly above the signature line in the settlement agreement appeared, in capital letters, the following language: “TAKE THIS AGREEMENT HOME, READ IT, AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE SIGNING IT: IT INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS. IF YOU WISH, YOU SHOULD TAKE ADVANTAGE OF THE FULL CONSIDERATION PERIOD AFFORDED BY SECTION 5 AND YOU SHOULD CONSULT YOUR ATTORNEY.” Morley understood the meaning of the provision when he signed the settlement agreement.
The January 23, 2008 settlement agreement included a general release in which Morley agreed to “irrevocably and unconditionally” release any and all claims he may have against UPS. The agreement also included Morley’s promise never to file or prosecute a lawsuit or complaint based on his released claims.
The general release stated: “I understand and agree that I am releasing all known and unknown claims, promises, causes of action, or similar rights of any type that I may have....” The release further indicated: “I understand that I am releasing Claims that I may not know about. That is my knowing and voluntary intent, even though I recognize that someday I may learn that some or all of the facts I currently believe to be true are untrue and even though I might then regret having signed this Release.”
In exchange for the promises and releases contained in the settlement agreement, Morley agreed to accept from UPS the sum of $25,000, of which $15,000 represented settlement of “any wage-related claim, back pay, and front pay” and $10,000 “for all other types of relief.”
UPS paid Morley $25,000 as agreed in the settlement and provided him with outplacement services as contracted.
PROCEDURAL HISTORY
In August 2008, Morley filed a complaint against UPS alleging claims for failure to pay overtime compensation, failure to provide meal and rest breaks, failure to keep, maintain and furnish accurate wage statements and time records, conversion, and unfair competition. UPS answered the complaint, asserting Morley’s general release as an affirmative defense. UPS also filed a cross-complaint for breach of contract alleging Morley breached the settlement agreement in filing this lawsuit.
At trial, the case was bifurcated into two phases. The first phase was tried to the court on the issue of the release. The second phase, if necessary, was to be before a jury on Morley’s claims. At the close of the first phase, however, the trial court granted judgment for UPS on Morley’s complaint. The court found that Morley had released all of his statutory claims in signing the release. UPS immediately moved for, and the court granted, judgment for UPS on its cross-complaint for breach of contract against Morley.
Morley, the court found, clearly and unambiguously released his wage claims in a “detailed” general release and “agreed unconditionally to release all claims, specifically including wage[, ] hours [and] separate claims of employment.” Regardless whether Morley had actual knowledge of the status of the Marlo action, the court found there was a bona fide dispute as to whether he was an exempt employee because he had previously submitted claims for wage and overtime benefits with respect to the Marlo action.
The court therefore entered judgment for UPS on both the complaint and cross-complaint.
The clerk’s minutes stated: “The Court finds that the Plaintiff signed a General Release and agreed unconditionally to release all claims. The Court finds that it was a detailed Release. The Court finds that the Release contained ‘all known and unknown’ claims. The Court... finds the Release valid....”
Later, upon motion, the trial court granted UPS its attorney fees under the provisions of the parties’ settlement agreement.
UPS requested attorney fees in total amount of approximately $166,000, about $139,000 of which UPS incurred after sending Morley a letter asking him to dismiss his suit in light of the general release. The court awarded UPS reduced attorney fees of about $139,000 and approximately $17,000 in costs.
Morley timely appealed the judgment including the award of attorney fees.
STANDARD OF REVIEW
We review pure questions of law de novo. (Earley v. Superior Court (2000) 79 Cal.App.4th 1420, 1426 (Earley).) Questions of public policy and statutory interpretation are also subject to our independent review. (Ibid.) We review factual findings of the trier of fact for substantial evidence. (Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 475, 500-501.) When we review for substantial evidence, our review begins and ends with the determination whether, based on the entire record, there is substantial evidence, contradicted or uncontradicted, to support the trial court’s factual determinations. (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874.)
The interpretation of contracts is a judicial function unless the interpretation turns upon the credibility of extrinsic evidence. (Plaza Home Mortgage, Inc. v. North American Title Co., Inc. (2010) 184 Cal.App.4th 130, 135.)
The trial court’s award of attorney fees is reviewed under the abuse of discretion standard. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 894.) Whether attorney fees may be awarded is a matter of statutory interpretation and an issue of law reviewed de novo. (See Earley, supra, 79 Cal.App.4th at p. 1426.)
DISCUSSION
1. Release of Past Wage Claims
It is well established in California that parties may settle bona fide disputes over past wages, including overtime wages. (Chindarah v. Pick Up Stix, Inc. (2009) 171 Cal.App.4th 796, 803 (Chindarah) [“there is no statute providing that an employee cannot release his claim to past overtime wages as part of a settlement of a bona fide dispute over those wages”]; see also Reid v. Overland Machined Products (1961) 55 Cal.2d 203, 207 (Reid) [“[I]n a dispute over wages the employer may not withhold wages concededly due to coerce settlement of the disputed balance. [¶] An employer and employee may of course compromise a bona fide dispute over wages but such a compromise is binding only if it is made after the wages concededly due have been unconditionally paid”]; Nordstrom Com. Cases (2010) 186 Cal.App.4th 576, 590 (Nordstrom) [“Employees may release claims for disputed wages and may negotiate the consideration they are willing to accept in exchange”]; see Chin, et al., Cal. Practice Guide: Employment Litigation (The Rutter Group 2009) ¶ 11:470, p. 11-72.8.)
In Watkins v. Wachovia Corp. (2009) 172 Cal.App.4th 1576 (Watkins), the court held that disputed wages can validly be released under factual circumstances nearly identical to the facts at bar. In that case, a former employee executed a release of all claims in exchange for enhanced severance benefits. (Id. at p. 1587.) She nevertheless sued, claiming Labor Code section 206.5 “prohibit[ed] the release of any claim for unpaid wages unless payment in full of all claimed wages is made.” (172 Cal.App.4th at p. 1586.)
All further statutory references are to the Labor Code unless otherwise indicated. Section 206.5, subdivision (a) states: “An employer shall not require the execution of a release of a claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of those wages has been made. A release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee.”
Writing for the panel of Division Three of this appellate district, Justice Croskey squarely rejected the argument, saying: “section 206.5 simply prohibits employers from coercing settlements by withholding wages concededly due. In other words, wages are not considered ‘due’ and unreleasable under... section 206.5, unless they are required to be paid under... section 206. When a bona fide dispute exists, the disputed amounts are not ‘due, ’ and the bona fide dispute can be voluntarily settled with a release and a payment even if the payment is for an amount less than the total wages claimed by the employee.” (Watkins, supra, 172 Cal.App.4th at p. 1587, citing Chindarah, supra, 171 Cal.App.4th 796.) The plaintiff’s belief in Watkins that she was entitled to additional compensation was held sufficient to establish a bona fide wage dispute. (Watkins, supra, at p. 1587.)
Section 206, subdivision (a) provides: “In case of a dispute over wages, the employer shall pay, without condition and within the time set by this article, all wages, or parts thereof, conceded by him to be due, leaving to the employee all remedies he might otherwise be entitled to as to any balance claimed.”
As with the plaintiff in Watkins, Morley is a former employee who executed a general release of all claims, known and unknown, in exchange for a monetary settlement. Before entering the settlement, Morley believed he was entitled to additional compensation, and he had filled out a class member information form listing the overtime hours he claimed to have worked and the meals and breaks he claimed to have missed. At the time of the mediation, the evidence indicates UPS had paid Morley all amounts it conceded was due to him. Gibbs testified he had no reason to believe at the mediation that UPS owed Morley anything. Castaldi testified she personally believed prior to engaging in the employee dispute resolution process with Morley that UPS had paid all the money it conceded it owed him. Well before the mediation, she had followed up a series of emails to make sure that Morley had been paid and testified that from the company’s perspective UPS had paid Morley all money it owed him. Based on this substantial evidence, the trial court expressly found a bona fide wage dispute existed between the parties at the time of their settlement agreement.
Morley contends that section 1194 renders unwaivable the right to receive statutory minimum wage and overtime pay. He argues section 219, subdivision (a) states that “no provision of this article can in any way be contravened or set aside by a private agreement, whether written, oral, or implied.” He asserts that compensation for overtime and missed meal and rest periods cannot be waived by private agreement because the public policy concerns inherent in these statutory provisions go well beyond the concerns of private parties.
Section 1194, subdivision (a) provides: “Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney’s fees, and costs of suit.”
The cases on which Morley relies do not compel that conclusion. Gentry v. Superior Court (2007) 42 Cal.4th 443, 456-457, and Valles v. Ivy Hill Corp. (9th Cir. 2005) 410 F.3d 1071, 1082, involved waivers of prospective wage and hour claims, not settlement of existing wage disputes as is the case here. Franco v. Athens Disposal Co., Inc. (2009) 171 Cal.App.4th 1277, 1284, did not concern a release of past claims as here but dealt with the validity of a class arbitration waiver for prospective violations of meal and rest period laws. (See Nordstrom, supra, 186 Cal.App.4th at p. 589 [Franco “stands only for the proposition that an individual arbitration agreement is invalid to the extent it purports to prevent an employee plaintiff from acting in a private attorney general capacity”].)
Here, the claims Morley seeks to assert arose months before the parties entered into the settlement agreement. The agreement did not purport to settle future wage claims and did not purport to include a class arbitration waiver for prospective overtime, meal or rest period violations. Indeed, Morley’s employment had terminated long before the parties entered into the settlement agreement.
We find more helpful the court’s discussion in Chindarah: “[W]e recognize that ‘the statutory right to receive overtime pay embodied in section 1194 is unwaivable.’ [Citation.] But there is no statute providing that an employee cannot release his claim to past overtime wages as part of a settlement of a bona fide dispute over those wages.” (Chindarah, supra, 171 Cal.App.4th at p. 803.) As in Chindarah, the settlement agreement in which Morley “irrevocably and unconditionally” released UPS of all past claims is valid and enforceable.
Morley asserts that the situation in this case is “drastically” different from Chindarah because the release here did not specifically address unpaid overtime claims and the three persons who negotiated the release (Morley, Gibbs and Castaldi) were unaware that Morley allegedly had unpaid overtime claims due to the federal court’s revival of the supposedly moribund Marlo action. However, Morley admittedly had knowledge of the existence of the Marlo action and had filled out and submitted a class member information form to class counsel for ultimate transmittal to UPS. That he claims to have been unaware of the current status of the class action when he executed the release is irrelevant as he knew the matter had been in dispute. Regardless of actual knowledge, a litigant is deemed to know the status of his or her case and has an obligation to ascertain same in contemplation of giving a release. As there was no final judgment in the Marlo action, a bona fide dispute still existed regarding overtime, meal and break compensation. In any case, Morley gave UPS a release of “all known and unknown claims, promises, causes of action, or similar rights of any type, ” so it did not matter whether the negotiating parties were actually aware of any specific claim. (Italics added.) Moreover, the testimony of Gibbs and Castaldi and the language of the release itself established that UPS required, and Morley gave, a general release, including claims arising from “any federal, state, or local laws... governing the payment of wages or benefits, governing working conditions, restricting an employer’s right to terminate employees, or otherwise regulating employment.”
Morley claims the release was in violation of section 206.5 because UPS refused to pay his unpaid vacation and penalties unless he signed the release. However, it is clear that wages subject to a bona fide dispute are properly subject to a compromise and release without violating section 206.5. (Reid, supra, 55 Cal.2d at p. 207 [compromise of bona fide dispute of wages binding after wages concededly due are unconditionally paid]; see also Watkins, supra, 172 Cal.App.4th at p. 1587 [release of wage claims contained in severance agreement valid]; Chindarah, supra, 171 Cal.App.4th at p. 803 [release of overtime claims obtained on settlement of disputed wage claim enforceable].) Viewing the evidence in the light most favorable to the judgment, UPS unconditionally paid Morley all amounts it conceded were due before entering the settlement agreement. Even if UPS was mistaken in its belief that nothing more was due Morley, whether the nonpayment of wages was the result of a good faith belief is a question of fact, which the trial court decided adversely to Morley. (See Barnhill v. Robert Saunders & Co. (1981) 125 Cal.App.3d 1, 8-9; see also Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1201.)
Accordingly, the trial court properly found that Morley validly released his wage claims.
2. Attorney Fee Award
Generally, a party may recover attorney fees only when they are authorized by statute, law or agreement. (Santisas v. Goodin (1998) 17 Cal.4th 599, 606.) Morley contends the trial court erred in awarding attorney fees arguing they were unfounded and excessive. We disagree.
Although Morley mentions “costs” in a heading in his opening brief, Morley failed to raise any issue with respect to the award of costs. Any error in this regard therefore is deemed waived. (EnPalm, LLC v. Teitler (2008) 162 Cal.App.4th 770, 775 [issue unsupported by argument, discussion, analysis or citation to record deemed waived]; Stoll v. Shuff (1994) 22 Cal.App.4th 22, 25, fn. 1 [passing reference to issue in opening brief footnote deemed not “serious effort to raise” issue on appeal and waived].)
In the settlement agreement, Morley agreed “to pay the reasonable attorneys’ fees and any damages” UPS may incur as a result of his breach of any promise in the agreement. He also agreed that if he did not prevail in an action to challenge the agreement or an action against UPS based upon a claim covered by the release, “I shall pay to the Company and/or the appropriate Released Party all their... attorneys’ fees incurred in their defense of my action.” (See Civ. Code, § 3300 [measure of breach of contract damages is amount that will compensate aggrieved party of “all the detriment proximately caused thereby”].)
The provisions of the settlement agreement are clear and unambiguous in providing UPS recovery for attorney fees in the event Morley failed to prevail in any action he might bring based upon a claim covered by the release. All of the causes of action asserted in the complaint were based upon claims covered by the release. UPS incurred such fees from the inception of Morley’s action, not just from the time it asserted the cross-complaint for breach of the settlement agreement. The trial court did not abuse its discretion in awarding UPS its fees over the pendency of the entire action, not only the period following the cross-complaint.
Morley cites Earley, supra, 79 Cal.App.4th at page 1429, in arguing section 1194 does not allow attorney fees for prevailing employers in overtime cases. Earley harmonized section 218.5, which allows for a bilateral award of attorney fees to the “prevailing party” in an action for nonpayment of wages or fringe benefits, and section 1194, which provides for recovery of attorney fees to a successful employee (while granting no similar right to a successful employer) in an action to recover unpaid minimum or overtime wage claims. (79 Cal.App.4th at p. 1425.) The court explained the Legislature intended to give special treatment to overtime compensation claims successfully brought by an employee, while granting no similar right for a successful employer in defending such claims. (Id. at p. 1428.) Thus, “[t]he only reasonable interpretation which would avoid nullification of section 1194 would be one which bars employers from relying on section 218.5 to recover fees in any action for minimum wages or overtime compensation.” (79 Cal.App.4th at p. 1430, italics omitted.)
In the present case, UPS did not seek attorney fees as a prevailing party under either section 218.5 or section 1194. Rather, it sought fees under the unambiguous contractual provision in the parties’ settlement agreement, Code of Civil Procedure section 1033.5, subdivision (a)(10) and Civil Code section 1717.
UPS expressly raised the contractually agreed upon release as an affirmative defense in its answer to the complaint, and therefore the issue was squarely before the court at the inception of UPS’s appearance in the case. Civil Code section 1717 provides in any action upon a contract, in which the contract stipulates that attorney fees incurred to enforce the contract shall be awarded either to one of the parties or to the prevailing party, the prevailing party “shall be entitled to reasonable attorney’s fees in addition to other costs.” (Civ. Code, § 1717, subd. (a).) In the settlement agreement, Morley agreed “to pay the reasonable attorneys’ fees and any damages Released Parties may incur as a result of my breaching a promise I made in this Agreement (such as by suing a Released Party over a released Claim)....” (Italics added.) UPS therefore was entitled to reasonable attorney fees as Morley sued UPS over a claim the court found he had released. Section 1717 mandated an award of reasonable attorney fees to UPS as the prevailing party. The court did not err in ruling UPS to be entitled to its reasonable attorney fees.
We also conclude the trial court did not abuse its discretion in the amount of attorney fees it awarded. The trial court has broad authority to determine the amount of a reasonable fee. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095 (Drexler).) “‘The “experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong”’ meaning that it abused its discretion.” (Ibid.; see also Serrano v. Priest (1977) 20 Cal.3d 25, 49.) We will interfere with the trial court’s determination of a reasonable attorney fee “only where there has been a manifest abuse of discretion.” (Fed-Mart Corp. v. Pell Enterprises, Inc. (1980) 111 Cal.App.3d 215, 228.)
A court awarding reasonable attorney fees ordinarily begins with the “lodestar, ” the number of hours reasonably expended multiplied by the reasonable hourly rate. (Drexler, supra, 22 Cal.4th at p. 1095.) The reasonable hourly rate is that prevailing in the community for similar work. (Ibid.) The court may adjust the lodestar figure giving consideration to factors specific to the case at hand to achieve a fee “at the fair market value for the legal services provided.” (Ibid.)
In the present case, UPS requested fees of about $166,000, explaining that about $139,000 was the amount it incurred after it sent a letter request that Morley dismiss his suit in light of the release. UPS supported this request with a declaration of counsel detailing the amount of time spent, a description of services rendered, the persons who rendered service and their billing rates. From this lodestar, the trial court subtracted about $27,000, representing the fees incurred prior to UPS’s letter demand on Morley. This case had a complex and contentious history, including two removals to the federal court, extensive discovery and numerous motions. The court observed UPS had fully justified and documented the fee request, and the record substantiates this finding.
We find no abuse of discretion in the court’s attorney fee award.
DISPOSITION
The judgment is affirmed. UPS is to recover costs on appeal.
We concur: BIGELOW, P. J.RUBIN, J.
The release contained three carve-outs, none wage-related, namely: (1) Morley’s right to enforce the agreement, (2) his right to claim unemployment benefits, and (3) any rights or claims that may arise or accrue after he signed the agreement.
The settlement agreement provided examples of the claims being released, including, but not limited to, “Claims that in any way relate to my employment with the Company..., or the termination of that employment, such as Claims for compensation bonuses, commissions, lost wages, or unused accrued vacation or sick pay.”
The agreement contained a standard integration clause, in which Morley acknowledged: “This is the entire agreement between me and the Company....”