In re Taco Bell Wage & Hour Actions
222 F. Supp. 3d 813
E.D. Cal.2016Background
- Plaintiffs brought a multi-class wage-and-hour action against Taco Bell alleging (1) late meal periods, (2) missed/short rest periods, and (3) underpaid meal premiums tied to an autopay payroll policy. Three classes were tried to a jury in Feb.–Mar. 2016.
- The jury found liability only for the Underpaid Meal Premium Class (payroll autopay policy of one-half hour premium for missed/short meal periods) and awarded $495,913.66; it found policies existed as to the Late Meal and Rest Period classes but that classwide liability was not proved for corporate Taco Bell non-exempt employees.
- Plaintiffs sought attorney fees under Cal. Code Civ. Proc. § 1021.5, costs, and incentive (service) awards for class representatives; defendants opposed on multiple grounds (timeliness, overstaffing/overbilling, limited success, and no authority to tax incentive awards against a defendant).
- The court concluded the lawsuit conferred a significant public benefit by prompting Taco Bell to change its autopay from one-half hour to one full hour of premium pay and therefore fee entitlement under §1021.5 was appropriate solely for the Underpaid Meal Premium Class claim.
- The court parsed and reduced the fee request for excessive/clerical billing, overstaffing/interoffice communications, time spent on unsuccessful/unrelated claims, unsupported firm time (Bisnar Chase), and applied local prevailing rates and a blended rate; it denied recovery of non-taxable costs and denied incentive awards.
- Final award: attorney fees of $1,156,821.12; costs request denied; incentive awards denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to fees under Cal. Code Civ. Proc. §1021.5 | Action vindicated important public wage rights and produced a significant public benefit (Taco Bell changed autopay policy); private enforcement necessary | Plaintiffs lacked public-interest focus; change was not caused by suit; insufficient benefit to a large class | Fees allowed under §1021.5 but limited to Underpaid Meal Premium Class; court finds timing and scale of violations support causation and significant benefit |
| Recoverable costs beyond §1920 in a diversity action | Plaintiffs sought state-law costs and various litigation expenses as costs associated with §1021.5 victory | Defendants argued federal law controls costs in diversity cases and §1920 limits taxable costs; other costs are not authorized | Denied: only costs recoverable are those taxable under 28 U.S.C. §1920 and properly presented; Plaintiffs' additional cost claims denied as untimely or unauthorized |
| Reasonableness of hours and rates (lodestar) | Requested hours and high "home-market" rates reflect time and skill across firms; seek multiplier | Defendants contend overstaffing, excessive/clerical billing, block billing, and limited success warrant substantial reductions; local Fresno market rates apply | Court reduced hours from ~12,877 to 4,016.74 (after progressive cuts for unsupported time, overhead, interoffice communications, and 50% reduction for unrelated claims), set reasonable local rates, used a $288 blended rate, and awarded $1,156,821.12; denied a multiplier |
| Incentive (service) awards to class reps taxed against defendant | Plaintiffs sought enhancement awards to class representatives for service | Defendants argued no statutory authority to tax incentive awards against defendant absent settlement or agreement | Denied: no statutory basis to award incentive payments against defendant where no settlement/common fund and no agreement to pay them |
Key Cases Cited
- Hensley v. Eckerhart, 461 U.S. 424 (fee-shifting/"American Rule" and lodestar guidance)
- Taniguchi v. Kan Pac. Saipan, Ltd., 566 U.S. 560 (limits on taxable costs under §1920)
- Graham v. Daimler-Chrysler Corp., 34 Cal.4th 553 (Cal. §1021.5 private-attorney-general doctrine standard)
- Ketchum v. Moses, 24 Cal.4th 1122 (lodestar approach and factors for fee enhancements under California law)
- Brinker Rest. Corp. v. Superior Court, 53 Cal.4th 1004 (meal-and-rest-period standards under California law)
- Whitley (In re Conservatorship of Whitley), 50 Cal.4th 1206 (necessity and financial burden prong of §1021.5)
- Chavez v. City of Los Angeles, 47 Cal.4th 970 (limited success reduces fee awards)
- Gonzalez v. City of Maywood, 729 F.3d 1196 (Ninth Circuit lodestar application and reduction methods)
- Gates v. Deukmejian, 987 F.2d 1392 (district court authority for across-the-board percentage cuts)