Court Opinion

ID: 9907159
Source: CourtListenerOpinion
Date Created: 2023-12-05 20:02:45.896796+00
Date Added: 2024-06-11T09:56:29.871016
License: Public Domain

Filed 12/5/23 Schwade v. South Pasadena Rehabilitation Center CA2/2
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                        DIVISION TWO

PATRICIA SCHWADE,                                                   B318644

         Plaintiff and Appellant,                                   (Los Angeles County
                                                                    Super. Ct. No.
         v.                                                         BC694824)

SOUTH PASADENA
REHABILITATION CENTER, LLC
et al.,

         Defendants and Respondents.

     APPEAL from an order of the Superior Court of
Los Angeles County, Amy D. Hogue, Judge. Reversed.

     Matern Law Group, Matthew J. Matern, Kiran Prasad,
Mikael H. Stahle and Irina A. Kirnosova for Plaintiff and
Appellant.
     Munger, Tolles & Olson, Joseph D. Lee, Margaret G.
Maraschino and Jessica O. Laird for Defendants and
Respondents.

                ______________________________

       Plaintiff and appellant Patricia Schwade (Schwade)
brought this action against defendants and respondents South
Pasadena Rehabilitation Center, LLC; Brius Management Co.;
Brius, LLC; and Shlomo Rechnitz (collectively respondents)
alleging various Labor Code violations, including claims for the
nonpayment of wages (wage claims). Following a successful
motion for summary judgment, respondents sought to recover
their costs. Schwade moved to strike or tax those costs. The trial
court denied Schwade’s motion, and Schwade appeals.
       We agree with Schwade that the trial court erred. Under
Labor Code section 218.5, subdivision (a),1 respondents are
prohibited from recovering costs incurred defending Schwade’s
wage claims. Because Schwade’s wage claims are inextricably
intertwined with her nonwage claims, respondents are not
entitled to recover any costs. Accordingly, we reverse.
                          BACKGROUND
I. Schwade’s Claims Against Respondents
       In the operative first amended complaint, Schwade alleged
that she had been employed by numerous parties, including
respondents. She asserted individual and class claims under the
Labor Code against respondents for the failure to provide

1     All further statutory references are to the Labor Code
unless otherwise indicated.

                                2
required meal periods, failure to provide required rest periods,
failure to pay overtime wages, failure to pay minimum wages,
failure to pay timely wages during employment, failure to pay all
wages due to discharged and quitting employees, failure to
furnish accurate itemized wage statements, failure to maintain
required records, and failure to indemnify employees for
necessary expenditures incurred in discharge of duties. Schwade
also alleged unfair and unlawful business practices under the
Business and Professions Code.
II. Respondents’ Motion for Summary Judgment
      Respondents moved for summary judgment on the ground
that they were not Schwade’s employer. The trial court granted
the motion, finding it undisputed that respondents did not
employ Schwade. The court subsequently entered judgment in
respondents’ favor.2
III. Respondents’ Memorandum of Costs; Schwade’s Motion to
Strike or Tax Costs
      Respondents filed a memorandum of costs seeking a total of
$11,937.63. In response, Schwade moved to strike or tax
respondents’ costs. She argued, inter alia, that recovery of
respondents’ costs was barred under sections 218.5 and 1194.3
Respondents opposed the motion.

2     Schwade appealed from the judgment, and we affirmed.
(Schwade v. South Pasadena Rehabilitation Center LLC (Feb. 28,
2023, B314052) [nonpub. opn.].)

3      Section 1194, subdivision (a), allows a prevailing employee
to recover attorney fees and costs in actions for minimum wage
violations and unpaid overtime.

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IV. Trial Court’s Order
       After entertaining oral argument, the trial court denied
Schwade’s motion to strike or tax costs. The court found that
respondents’ claimed costs were facially proper, that statutory
exceptions did not bar respondents’ recovery of costs, and that
respondents had not waived their right to recover costs.
       The trial court addressed whether sections 218.5 and 1194
barred respondents from recovering their costs. It noted that two
of Schwade’s causes of action—failure to pay timely wages and
failure to pay all wages due—“were ‘for the nonpayment of wages’
within the meaning of section 218.5[.]” Finding “no evidence”
that the causes of action were brought in bad faith, the court
concluded that, under section 218.5, respondents could not
“recover costs incurred defending against” those claims.
       The trial court also found that respondents were barred
from recovering costs pursuant to section 1194 for another two of
Schwade’s causes of action—failure to provide overtime wages
and failure to provide minimum wages.
       But, the remaining six causes of action “were neither
‘actions[s] brought for the nonpayment of wages’ within the
meaning of section 218.5, nor actions to recover minimum wages
or overtime compensation within the meaning of section 1194.”
Thus, the trial court had to decide “how to award costs to a party
entitled to costs for some, but not all, of the claims on which it
prevailed.” To answer this question, the court turned to Cruz v.
Fusion Buffet, Inc. (2020) 57 Cal.App.5th 221, 235 (Cruz), which
addressed “[a] somewhat analogous situation . . . with attorney’s
fees”: “‘Where a plaintiff has alleged multiple causes of action
and is statutorily entitled to fees with respect to only one or fewer
than all of the claims,’ the trial court can ‘apportion’ the claimed

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fees between time spent litigating successful claims and time
spent litigating unsuccessful claims. [Citation.] A court need
not, however, apportion fees ‘between claims for which statutory
fees are available and those for which they are not’ if the claims
are ‘intertwined,’ that is, they ‘involve either common factual
issues or legal issues.’ [Citation.]”
       Ultimately, the trial court determined that all of Schwade’s
claims were intertwined. Because the claims were intertwined
and respondents were “entitled, under [Code of Civil Procedure
section 1032, subdivision (b)’s] general cost statute, to recover
their costs defending” the six causes of action for which costs
were not statutorily barred, the court denied Schwade’s motion to
strike or tax costs in its entirety.
V. Appeal
       Schwade timely appealed from the trial court’s order
denying her motion to strike or tax costs.
                            DISCUSSION
I. Standards of Review
       We generally review the denial of a motion to strike or tax
costs for abuse of discretion. (Coastline JX Holdings LLC v.
Bennett (2022) 80 Cal.App.5th 985, 1013.) The trial court’s
discretion, however, “is limited by the applicable legal principles.”
(People ex rel. Dept. of Corporations v. SpeeDee Oil Change
Systems, Inc. (1999) 20 Cal.4th 1135, 1144; see also People v.
Grimes (2016) 1 Cal.5th 698, 712, fn. 4 [abuse of discretion
standard of review “is not designed to insulate legal errors from
appellate review”].)
       “Interpreting a statute is . . . a matter of law, which we
review de novo. [Citation.]” (Chaaban v. Wet Seal, Inc. (2012)
203 Cal.App.4th 49, 52.) “The goal of statutory interpretation is

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to ‘ascertain the intent of the Legislature so as to effectuate the
law’s purpose. [Citation.]’ [Citation.] If a statute is clear and
unambiguous, the obvious meaning must ordinarily be accepted.
[Citation.]” (Broadcast Music, Inc. v. Structured Asset Sales, LLC
(2022) 75 Cal.App.5th 596, 604–605.)
II. Relevant Cost-Shifting Statutes
       Code of Civil Procedure section 1032, subdivision (b)—“the
general cost-recovery statute” (Murillo v. Fleetwood Enterprises,
Inc. (1998) 17 Cal.4th 985, 996)—“provides that civil defendants
are ‘entitled as a matter of right’ to recover their costs ‘[e]xcept as
otherwise expressly provided by statute.’” (Williams v. Chino
Valley Independent Fire Dist. (2015) 61 Cal.4th 97, 104.)
       Section 218.5 provides one such statutory prohibition to a
nonemployee-defendant’s recovery of costs. It provides, in
relevant part: “In any action brought for the nonpayment of
wages, fringe benefits, or health and welfare or pension fund
contributions, the court shall award reasonable attorney’s fees
and costs to the prevailing party if any party to the action
requests attorney’s fees and costs upon the initiation of the
action. However, if the prevailing party in the court action is not
an employee, attorney’s fees and costs shall be awarded pursuant
to this section only if the court finds that the employee brought
the court action in bad faith.” (§ 218.5, subd. (a).) Thus, in
actions for the nonpayment of wages, section 218.5 “prohibits a
prevailing party [alleged] employer from recovering attorney fees
[and costs] unless the trial court finds the employee brought the
wage claim in bad faith.” (Dane Elec Corp., USA v. Bodokh
(2019) 35 Cal.App.5th 761, 764 (Dane Elec).)

                                  6
III. Analysis
       There is no dispute that respondents were the prevailing
parties as to each cause of action asserted against them. (Code
Civ. Proc., § 1032, subd. (a)(4) [“‘[p]revailing party’ includes . . . a
defendant as against those plaintiffs who do not recover any
relief against that defendant”].) Thus, they are entitled to costs
under Code of Civil Procedure section 1032, subdivision (b),
unless another statute provides an express exception to this
entitlement. Section 218.5 does just that for two of Schwade’s
causes of action: failure to timely pay wages and failure to pay
all wages due. (See § 218.5, subd. (a) [“In any action brought for
the nonpayment of wages . . .”]; Kirby v. Immoos Fire Protection,
Inc. (2012) 53 Cal.4th 1244, 1256 [holding that “an ‘action
brought for nonpayment of wages’” within the meaning of
section 218.5 “is an action brought on account of nonpayment of
wages”].) As the trial court correctly found, respondents were not
entitled to recover costs for those two causes of action because
(1) they were not the “employee,” and (2) Schwade did not bring
this action in bad faith. (§ 218.5, subd. (a).)
       Although the trial court correctly determined that
section 218.5 prohibited respondents from recovering costs
incurred defending against Schwade’s wage claims, it
nevertheless concluded that it had the discretion to award
respondents all their claimed costs under Code of Civil Procedure
section 1032.
       In reaching this conclusion, the trial court relied on Cruz,
supra, 57 Cal.App.5th at page 235, which held: “Where a
plaintiff has alleged multiple causes of action and is statutorily
entitled to fees with respect to only one or fewer than all of the
claims, the trial court can apportion the attorney fees. [Citation.]

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However, . . . attorney fees need not be apportioned between
claims for which statutory fees are available and those for which
they are not where the claims involve either common factual
issues or legal issues. [Citations.]” (See also Reynolds Metals Co.
v. Alperson (1979) 25 Cal.3d 124, 129–130 [“Attorney’s fees need
not be apportioned when incurred for representation on an issue
common to both a cause of action in which fees are proper and
one in which they are not allowed”].)
       In other words, the trial court found all of Schwade’s claims
intertwined, applied Cruz, and then awarded respondents all of
their claimed costs.
       This was error; the trial court’s reliance upon Cruz was
misplaced because Cruz is readily distinguishable. In Cruz, the
Court of Appeal found no abuse of the trial court’s discretion in
declining to apportion an award of attorney fees to an employee-
plaintiff where claims for which fees were recoverable were
inextricably intertwined with claims for which there was no
statutory basis for fees. (Cruz, supra, 57 Cal.App.5th at pp. 235–
236.) Here, in contrast, the trial court awarded all claimed costs
to respondents, who are not the employee-plaintiff.
       This distinction is critical in light of the public policies at
stake. Dane Elec, supra, 35 Cal.App.5th 761 is instructive. In
that case, an employer prevailed on a complaint against an
employee to recover on a promissory note and defeated the
employee’s cross-complaint to recover allegedly unpaid wages.
(Id. at p. 764.) The trial court granted the employer’s “motion to
recover attorney fees based on an attorney fees provision in the
promissory note. The court found that [the employee] had not
brought the wage claim in bad faith and declined to award [the
employer] attorney fees incurred solely in connection with the

                                  8
wage claim. But the court awarded [the employer] attorney fees
incurred in defending [the employee’s] wage claim that were
inextricably intertwined with the contract claim.” (Ibid.)
       The Court of Appeal reversed the order granting the
employer’s motion for attorney fees. (Dane Elec, supra,
35 Cal.App.5th at p. 764.) It observed that, “[a]lthough
section 218.5[, subdivision ](a) is a two-way fee-shifting statute
[citation], it has the potential to become a one-way or unilateral
fee-shifting provision if . . . the trial court finds a plaintiff did not
bring the wage claim in bad faith. Courts have uniformly
recognized that such unilateral fee-shifting statutes ‘reflect a
considered legislative judgment that prevailing defendants
should not receive fees.’ [Citation.]” (Dane Elec, supra, at
p. 773.)4
       The Dane Elec court then turned to the legislative history
of section 218.5, subdivision (a), specifically the addition by
Senate Bill No. 462 (2013-2014 Reg. Sess.) of the sentence
permitting a prevailing nonemployee to recover attorney fees and
costs only upon a finding that the wage claim was brought in bad
faith. (Dane Elec, supra, 35 Cal.App.5th at p. 773.)5 The court

4      A “two-way” fee and cost-shifting statute awards attorney
fees and costs under delineated circumstances to either the
plaintiff or the defendant. In contrast, a “one-way” fee and cost-
shifting statute restricts the recovery of fees and costs to only one
side of a lawsuit.

5      “Prior to 2014, section 218.5 did not distinguish between
prevailing employers and employees. It was a true ‘two way’ fee
shifting statute that awarded fees to the winner, whether
employee or employer. [Citation.]” (USS-Posco Industries v.
Case (2016) 244 Cal.App.4th 197, 216.)

                                    9
quoted the following “analysis by the Assembly Committee on the
Judiciary set[ting] forth the following policy for the legislation:
‘This bill would clarify the existing two-way fee[-]shifting
provision of section 218.5 by expressly providing that where the
prevailing party is a non-employee (e.g., the employer), fees are to
be awarded upon a judicial finding that the employee brought the
action in bad faith. The reason for a higher standard of course is
that wage laws reflect a fundamental policy of the state, the
vindication of which is largely left to employees. The premise of
this bill is that the great expense and unpredictability of
exposure to attorney’s fees liability is likely to chill the pursuit of
potentially valid claims by employees of limited means, contrary
to the important policy objectives of the statutory scheme.’
[Citation.]” (Dane Elec, supra, at p. 773.) The court emphasized
that “[t]he policy expressed by the Assembly Committee on the
Judiciary—to encourage employees to effectively enforce the
wage laws—is described as both ‘fundamental’ and ‘important.’”
(Id. at p. 774.)
       Concluding “that to permit a prevailing defendant . . . to
recover attorney fees incurred in defending a wage claim, which
the trial court has determined not to have been brought in bad
faith, would frustrate the Legislature’s intent by turning a
unilateral fee-shifting statute into a reciprocal one[,]” the
Dane Elec court held “that unless the trial court finds the wage
claim was brought in bad faith, section 218.5[, subdivision ](a)[,]
prohibits, as a matter of law, an award of attorney fees to a
prevailing party for successfully defending a wage claim that
overlaps with claims subject to a contractual prevailing party
attorney fees provision.” (Dane Elec, supra, 35 Cal.App.5th at
p. 774.)

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       The Dane Elec court found further support in cases
concerning the interplay of other fee and cost-shifting statutes.
(See Dane Elec, supra, 35 Cal.App.5th at pp. 774–775; Roman v.
BRE Properties, Inc. (2015) 237 Cal.App.4th 1040, 1062 (Roman)
[“Government Code section 12965, subdivision (b)’s exception to
the mandatory award of litigation costs under [Code of Civil
Procedure] section 1032, subdivision (b), implements a clear
legislative goal of encouraging potentially meritorious [Fair
Employment and Housing Act (FEHA)] suits”]; Turner v.
Association of American Medical Colleges (2011) 193 Cal.App.4th
1047, 1054 (Turner) [“When the Legislature enacted the
unilateral, ‘prevailing plaintiff’ fee-shifting provisions in [Civil
Code] sections 52 and 54.3, it created an exception to [Civil Code]
section 55 by implication, prohibiting a fee award to a prevailing
defendant for the same hours devoted to defending claims under
[Civil Code] sections 52 and 54.3”].) “A fair reading of Turner and
Roman is that, when necessary to vindicate an express public
policy, a specific fee-shifting statute will control over a general
statutory provision awarding attorney fees or costs to a
prevailing party.” (Dane Elec, supra, at p. 775.)
       Following the reasoning of Dane Elec, we conclude that
section 218.5 controls over the general cost-recovery statute and
prohibits, as a matter of law, the cost award here to a
nonemployee prevailing party, where the wage and nonwage
claims are inextricably intertwined, and the trial court expressly
found no evidence that the wage claims had been brought in bad
faith. (See Dane Elec, supra, 35 Cal.App.5th at p. 775
[“section 218.5[, subdivision ](a), a specific fee-shifting statute
vindicating an express public policy, controls over general
statutes governing contract-based attorney fees”].) To hold

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otherwise would run counter to the legislative goal of
encouraging employees to bring potentially meritorious actions to
enforce wage laws. (See Dane Elec, supra, at pp. 773–774.)
        Contrary to respondents’ contention, this legislative intent
is still advanced in the instant case even though Schwade’s
claims were ultimately unsuccessful. We disagree with
respondents that the interpretation of section 218.5 adopted here
will “encourage[] meritless suits by plaintiffs against non-
employers.” Under the plain language of section 218.5, if a trial
court finds that a plaintiff has brought wage claims in bad faith,
the plaintiff is liable for the prevailing nonemployee-defendant’s
attorney fees and costs incurred in defending those claims.
        Respondents also argue that section 218.5’s exception to
the general cost-recovery statute is limited to Schwade’s wage-
related claims. As a general matter, we do not disagree. (See
Ramos v. Garcia (2016) 248 Cal.App.4th 778, 786 [“In the
application of section 218.5, subdivision (b), the term ‘any action’
refers to any cause of action”].) But here, because the wage
claims are inextricably intertwined with the nonwage claims,6
ordering Schwade to pay all of respondents’ claimed costs
necessarily charges her for costs incurred defending wage claims
not found to have been brought in bad faith. This is not
permitted under section 218.5.

6     Respondents concede that the claims are intertwined. In
the briefing below and on appeal, neither party has suggested
that costs for defending the wage claims can be divided from
those incurred defending the nonwage claims.

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      Because section 218.5 bars respondents’ recovery of costs in
this action, we need not address whether costs are also barred
under section 1194 or any other statute.
                          DISPOSITION
      The order is reversed. Schwade is entitled to her costs on
appeal.
      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

                               _____________________, Acting P. J.
                               ASHMANN-GERST

We concur:

________________________, J.
CHAVEZ

________________________, J.
HOFFSTADT

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