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Judge Orders Plaintiff to Pay HP's Defense Fees in Employment Suit

August 4, 2014 | Posted in : Defense Fees / Costs, Expenses / Costs, Fee Entitlement / Recoverability, Fee Shifting, Prevailing Party Issues

A recent The Recorder story, “Breyer Sticks Named Plaintiff with HP’s Legal Bill in Employment Suit,” reports that a federal judge has ordered a former Hewlett-Packard Co. employee to reimburse the company for $165,000 in attorney fees and expenses in a rare reversal of typical fee-shifting dynamics.

James Purvis, who worked as an HP sales associate off and on between 2004 and 2008, was one of four named plaintiffs to accuse the company of failing to pay their earned commissions and bonuses.  The court granted summary judgment to HP in 2011, which opened plaintiffs up to a unique vulnerability under the California Labor Code.  Last week, U.S. District Judge Charles Breyer awarded HP $86,318 in costs and $79,316 in fees, all to be paid out of Purvis’ pocket.

The other three named plaintiffs in the case, all Colorado residents, escaped Breyer’s ruling.  The court dismissed their claims early on, ruling out-of-state employees were not protected by California labor law.  Breyer found Purvis solely liable as HP only sought fees for work done after he stepped into the case and the Colorado claims were dropped.

When plaintiffs filed their claims in 2009, it fell under a state law that allowed the prevailing party in certain wage nonpayment suits to receive attorney fees, regardless of whether the victor was the employer or an employee.  The Legislature amended that statute last August to specify that employees only will be held liable for fees if the court finds they filed a suit in bad faith.  That change took effect in January.

Breyer sided with HP in March, ordering fees and costs against Purvis without finding the plaintiff acted in bad faith.  Statutes generally do not operate retroactively, he ruled, and creating an exception in this case would be place an unfair burden on HP.  “Defendant became entitled to attorneys’ fees as soon as it prevailed on summary judgment in August 2011,” Breyer wrote.

Ruling July 24, Breyer awarded far less than the $855,000 sought by the defense.  Breyer agreed plaintiffs counsel appeared “to have unnecessarily multiplied the proceedings in this litigation.”  But he ruled the attorneys’ conduct fell short of punishment, and denied HP’s request for $141,614 in sanctions.

It’s rare a judge will order an employee to pay attorney fees in employment suits.  Few statutes even allow for that type of fee shifting, according to San Francisco employment attorney Kimberly Kralowec.  The ones that do generally, specify the employee only has to pay if he or she acted in bad faith.