Washington Court of Appeals Expands Possibility for Attorney’s Fees Claim Under Wage Statute as Separate Cause of Action

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In the recently published Reeves v. Mason County, Division III of the Washington Court of Appeals expanded the availability of a standalone suit to recover attorney’s fees accrued when an employee successfully recovered lost wages. If a separate suit solely to recover fees sounds unusual, first a discussion of how the Court got here:

First, in Int'l Ass'n of Fire Fighters, Local 46 v. City of Everett, 146 Wn.2d 29, 50, 42 P.3d 1265, 1275 (2002) the Washington Supreme Court held that, regardless of traditional labor arbitration fee sharing rules that provide that the union and the employer pays its own attorney fees, Washington’s wage statute (RCW 49.48.030) allows an award of attorney fees to a labor union that obtains a favorable wage recovery on behalf of its member employees in a grievance arbitration proceeding. Importantly, the Court held that the recovery for attorney’s fees could be sought through a later, separate court action.

Then, in Arnold v. City of Seattle, 185 Wn.2d 510, 531, 374 P.3d 111, 121 (2016), the same court held that an employee who recovers wages in an administrative proceeding can file a lawsuit to recover attorney fees, even when contrary to the underlying cause of action for lost wages. In this case, a plaintiff brought a claim for lost wages under a Seattle Municipal Code provision that explicitly provided, in the interest of efficiency, that either side may be represented by counsel at their own expense. The court found the state wage statute that provides for a fee award to an employee who successfully recovers wages preempted the local ordinance prohibiting a fee award, and thus the plaintiff could seek fees in a separate lawsuit.

Now, in Reeves, the Washington Court of Appeals has gone one step further, holding that a separate lawsuit for attorney’s fees can be filed even when the Administrative Law Judge (ALJ) in the underlying administrative action considers, and in fact awards attorney’s fees, if the first attorney’s fee award is not under RCW 49.48.030.

In Reeves, the plaintiff recovered $7,500 in lost wages and $32,745 in attorney fees in an administrative hearing. After appeals to the superior court by both sides and rehearing on remand, the plaintiff ultimately prevailed again. The plaintiff received the original wage award, but only received attorney’s fees related to the administrative hearing, with no award for the employee’s attorney fees on the appeals to the superior court.

Instead of seeking review of that decision within the allotted time frame, Reeves filed a lawsuit seeking attorney’s fees under RCW 49.48.030 four months later. The Superior Court granted summary judgment in Reeves’ favor, awarding attorney’s fees totaling $161,415.00. Mason County appealed.

On appeal, Mason County argued that the prior decision of the ALJ, who had explicitly considered the employee’s attorney fees request and awarded fees, and which the employee had not appealed, was a final judgment on the question (arguing the legal doctrines of collateral estoppel and res judicata). The Superior Court disagreed.

The primary concern of the Court was the public interest. The Court found that the “strong remedial purpose” of RCW 49.48.030 and the “strong policy” in favor of protecting workers were sufficient to overcome the contention that the decision by the ALJ was the final decision. Notably, the Court concluded that all the elements of the doctrine of res judicata (meaning the claim has already been adjudicated) were met, but that public policy precluded application here. The Court disregarded the fact that Reeves had failed to timely appeal the final ALJ’s order, holding that filing a lawsuit four months later was not, in the Court’s view, substantively different, nor did it prejudice Mason County. The COA also ignored that Reeves could have sought fees under RCW 49.48.030 in the prior administrative hearing, but did not do so, because filing the complaint got the same result. Although the Court referenced long-standing Washington precedent against piecemeal, duplicitous suits which split claims, the Court ignored these dictates in coming to its decision.

Ultimately, the Court of Appeals tacked on several hundred thousand in attorney’s fees beyond the $32,000 already awarded by the ALJ, in addition to the $7,500 in lost wages.

Takeaways for Employers

In case any employer needed a reminder, as this case shows, even if an employee’s wage claim is less than $10,000, the bigger risk is usually the employee’s attorney fees. That’s true when the fees are sought in the same lawsuit as the wages, and now we know that it is true even when the fees are sought in a separate action.

While administrative hearings typically are designed to lessen the burden and expense of protracted litigation, this ruling leaves open the possibility of a second lawsuit should a successful litigant feel that the attorney’s fees award was insufficient, particularly if that prior award was limited to a specific statute (e.g.: WLAD, ADA, etc). Worryingly, the Court acknowledged res judicata applied, but was overcome by a vaguely articulated public policy. It is possible that an administrative hearing that does include an analysis of RCW 49.48.030 could still result in a later lawsuit under the same statute.

As an ongoing concern, plaintiffs with strong wage claims may be disinclined to settle due to the potential to recover significant attorney’s fees that may dwarf the actual damages. When settlement is reached, it will be important that the document makes clear that the settlement also covers claims for attorney fees.

When wage claims are asserted in an administrative claim, to prevent, or at least defend against, separate claims for attorney fees, the issue of fees under RCW 49.48.030 should be raised in the administrative hearing and in any post-hearing briefing when fees are at issue. Should the claimant/plaintiff prevail in recovering lost wages, the employer will be in a much stronger position to defend against a later separate lawsuit.

Labor Issues

This ruling further expands the concern for management in labor arbitration scenarios. Unless a CBA specifically contains such a provision, a union can still bring a separate cause of action to recover attorney’s fees following an arbitration seeking, in whole or in part, lost wages, just as in Int'l Ass’n of Firefighters. This might now be true even if the arbitrator discussed the issue of fees, failed to consider RCW 49.48.030, and relied on traditional labor fee-sharing principles. Management should ensure that CBAs contain a provision confirming allocation of fees, and/or if fees are at issue, it is specifically raised under RCW 49.48.030 in the arbitration.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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