Ling v. P.F. Chang's China Bistro, Inc.
245 Cal. App. 4th 1242
| Cal. Ct. App. | 2016Background
- Cynthia Ling, a former P.F. Chang’s floor manager, sued for unpaid overtime (Lab. Code §510), waiting-time penalties (§203), and meal/rest period premiums (§226.7). The parties had agreed to final, binding arbitration.
- A JAMS arbitrator found Ling nonexempt only for a limited training period, awarded her a small recovery for missed trainee meal periods and waiting-time penalties, but found defendant prevailing on the central exemption/overtime issue.
- In October 2011 the arbitrator awarded defendant costs and $212,685 in attorney’s fees, reasoning the meal-period claim (for which fees were sought under Code Civ. Proc. §218.5) was ‘‘factually inextricably intertwined’’ with the overtime claim.
- Ling petitioned to vacate; the trial court ruled the arbitrator exceeded his power by awarding employer fees that effectively punished Ling for pursuing an overtime claim protected by the one-way fee-shifting policy in Labor Code §1194, corrected the award under Code Civ. Proc. §1286.6 and remanded to the arbitrator to evaluate Ling’s fees and costs.
- On remand the arbitrator, relying on the California Supreme Court’s decision in Kirby (decided after the initial award), denied Ling attorney’s fees for the §226.7 claim (holding the American rule governs), but awarded her costs as the party with a net monetary recovery.
- The trial court confirmed the arbitration awards with two clarifications (Ling deemed prevailing and entitled to costs; no fees or costs shall be awarded against Ling) but later awarded Ling attorney’s fees for her first vacatur petition; the appellate decision affirms confirmation, vacates the post-judgment fee award for the vacatur petition, and explains the legal bases.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Did the arbitrator exceed powers by awarding attorney’s fees to employer for defending claims inextricably intertwined with Ling’s overtime claim? | Ling: §1194 is a one-way fee-shifting statute; awarding employer fees that defeat an overtime claim violates public policy and §1194. | P.F. Chang’s: Arbitrator properly exercised discretion; intertwined-fees permissible under Reynolds and prevailing-party rules. | Held: Arbitrator exceeded power; fee award contravened §1194 public policy and was correctable. |
| 2. Was correction + remand (instead of vacatur) a proper remedy? | Ling: court should have vacated the whole award. | P.F. Chang’s: award should be confirmed in full. | Held: Correction under §1286.6 and remand (DiMarco/Jones) were appropriate because the error did not affect merits of substantive rulings. |
| 3. On remand, could arbitrator apply intervening Supreme Court precedent (Kirby) to deny fees for §226.7 claim? | Ling: remand required arbitrator to award fees; Kirby cannot override remand direction. | P.F. Chang’s: arbitrator may apply binding Supreme Court law; Kirby governs and precludes fees for §226.7. | Held: Arbitrator did not exceed authority; Kirby applied and bars fees for §226.7; denial of fees upheld. |
| 4. Was the trial court authorized to award Ling attorney’s fees for her petition to vacate the arbitration award? | Ling: entitled to fees for prevailing on vacatur petition (invoking §218.5 or other authority). | P.F. Chang’s: no statutory or contractual basis to award fees for vacatur proceeding. | Held: Fee award for vacatur petition lacked statutory or contractual authorization and is vacated. |
Key Cases Cited
- Moncharsh v. Heily & Blase, 3 Cal.4th 1 (arbitral awards are final except where statutory vacatur/correction grounds exist)
- Earley v. Superior Court, 79 Cal.App.4th 1420 (§1194 creates one-way fee-shifting for overtime claims; employers cannot recover fees)
- Kirby v. Immoos Fire Prot., Inc., 53 Cal.4th 1244 (California Supreme Court: §226.7 meal/rest claims governed by American rule; no statutory fee-shifting)
- Reynolds Metals Co. v. Alperson, 25 Cal.3d 124 (fees for work on issues common to fee-eligible and non-fee claims need not be apportioned)
- DiMarco v. Chaney, 31 Cal.App.4th 1809 (remand to arbitrator appropriate to determine fee amounts after court corrects award)
- Jones v. Humanscale Corp., 130 Cal.App.4th 401 (court should correct unlawful fee awards rather than vacate entire arbitration award)
- Michell v. Olick, 49 Cal.App.4th 1194 (costs under Code Civ. Proc. §1032 awarded to party with net monetary recovery)
- Richey v. AutoNation, 60 Cal.4th 909 (arbitrator exceeds powers when award violates explicit statutory public policy)
- Armendariz v. Foundation Health Psychcare Servs., Inc., 24 Cal.4th 83 (employee statutory protections are incorporated into arbitration agreements and cannot be waived)