Royal Pacific Funding v. ArnesonAnnotate this Case
Linda Arneson worked for Pacific Mortgage, and received both salary and commission. After she left Pacific in February 2013, she claimed she was owed commissions for, among other things, certain work done by a fellow employee as part of her team. Representing herself, she filed a wage claim with the state Labor Commissioner, and, in October 2013, obtained an award of approximately $29,500. Appealed, and filed a bond guaranteeing Arneson's award. The appeal prompted Arneson to seek legal counsel in mid-December 2013. Her counsel substituted into the case on January 10, and six days later the court scheduled a pretrial conference for early March 2014, and the appeal itself for late March. In early February, Arneson's new counsel served Pacific notice that Arneson was reserving the right to present claims beyond just unpaid commissions at the scheduled hearing on the appeal, such as violations of various Labor Code sections and even fraud and negligent misrepresentation. Pacific withdrew its appeal with prejudice. Pacific then paid the Labor Commission award, plus accrued interest. At issue before the Court of Appeal was the matter of counsel's claim for attorney fees. In early March 2014, Arneson's counsel filed a motion for attorney fees and costs. The trial court denied all fees to Arneson on the theory that there must be a court award under Labor Code section 98.2 before a party can collect its fees. And since Pacific had withdrawn its appeal, no fees could be awarded. "In adding the 'employee-is-successful' sentence in 2003, the Legislature certainly never intended to give employers a chance to whipsaw employees by filing section 98.2 appeals and then withdrawing them. Such a reading of the statute turns the basic purpose of the 2003 amendment on its head. It incentivizes employers to file frivolous appeals and then withdraw them at the last minute so as to inflict gratuitous legal costs on an employee who has been otherwise successful at the Labor Commission level." The order denying fees was reversed, and the matter remanded for the trial court to ascertain the reasonable fees incurred by Arneson to defend employer Pacific's aborted appeal.