In Hockey v. Brighton Collectibles, LLC, the court (Justice Martin J. Tangeman) addressed an appeal of the granting of a motion to strike part of a cross-complaint.
Plaintiff Hockey is a model represented by a modeling agency, LA Models, Inc. Defendant Brighton hired Hockey in a contract negotiated with LA Models, Inc. The parties agreed to the price ($3,000) and that payment would be made to LA Models after receipt of an invoice. After the photoshoot, LA Models invoiced Brighton, and Brighton paid for the work.
Hockey then sued Brighton. She claimed that she was actually an employee of Brighton and was entitled to be paid at the end of the photoshoot (not after the invoice was issued). Hockey sued four other businesses for the same claims.
Under Cal. Lab Code, § 203, employees are entitled to be paid in full upon discharge. If the employer does not pay on the last day of work, the employee’s wages “continue as a penalty” until the payment is made, for up to 30 days.[1] These are known as “waiting time” penalties. The goal of this law is to encourage employers to promptly pay employees on their last day of work.[2]
Brighton filed a cross-complaint alleging that Hockey engaged in fraud by telling Brighton to pay LA Models upon receipt of an invoice when she intended to claim she was an employee and then sue for waiting time penalties. In other words, Hockey tricked Brighton so that she could seek waiting time penalties.
Hockey filed an anti-SLAPP motion to strike the cross-complaint. Defendants can file a special motion to strike claims that arise out of protected First Amendment activity, such as filing litigation. Unless the defendant can show the claim has merit, it will be stricken and the plaintiff will get an award of attorney fees.
Hockey argued the fraud claim arose from the filing of her complaint. The appellate court assumed this was the case, but found Brighton had provided evidence that would support a claim of fraud: (1) Hockey made a misrepresentation by telling Brighton to pay LA Models for her the photoshoot upon invoice rather than immediately, (2) Hockey knew her misrepresentation was false based upon her actions, (3) Hockey intended to induce Brighton to rely on her misrepresentation given that she instructed Brighton to pay LA Models, (4) Brighton justifiably relied on the misrepresentation because the instructions were consistent with industry practice, and (5) Brighton is damaged by being potentially subject to waiting time penalties and attorney fees in the present lawsuit.
The opinion is refreshingly short, and it appears that justice has been served. An employee should not be able to take advantage by misleading an employer into possibly breaking the law for their own benefit.
Because of the anti-SLAPP statute, it is very risky for a defendant to sue a plaintiff for anything related to the filing of a complaint. Litigation conduct is privileged. Under Cal Civ. Code, § 47(b), communications made as part of litigation or in anticipation of litigation are privileged.
Here, it is arguable that the court could conclude the fraud claim is not based solely on the representation as to who should be paid and how, but because Hockey filed the complaint. If no complaint was filed, there would be no claim. Except for a malicious prosecution claim (which would require defendant successfully defeating the claim on the merits), filing a complaint is privileged. The employer’s damages in the case necessarily required the plaintiff to file the complaint. The employer is not complaining about a false representation in the abstract, but the result of being sued. There is not a clear separation between the “fraud” and plaintiff’s filing of the complaint.
Also, Labor Code claims generally cannot be waived. For example, it does not matter if the employee says they want to work for less than the minimum wage, an employer must pay the minimum. Brighton’s claim is essentially arguing that an employee can be sued for tricking an employer into thinking they will not assert their rights under the Labor Code. If filing a claim amounts to a tort, then it seems equivalent to employee waiving their rights.
And Brighton’s “damages” of liability and attorney fees are questionable. If Hockey’s scheme was fraud, that is a potential affirmative defense to Hockey’s claims; so Brighton has no liability on the complaint.
Attorney fees as damages can also be a tricky issue. Generally, parties must pay their own attorney fees. Parties can be entitled to fees under a statute, contract, or as “damages” under the “tort of another” doctrine. Simply because attorney fees were caused by a tort does not make them recoverable. Imagine a construction defect case where every subcontractor (windows, framing, foundation, etc.) is named as a defendant, but it was really the architect’s plans that caused all of the problems. The construction companies could rightfully argue that because of the architect’s negligence, they all had to pay attorney fees to defense themselves. But courts do not allow the subcontractors to sue the architect for these damages. Generally, it is only when a defendant’s negligence causes the plaintiff to incur attorney fees in a separate action. For example, a title company promises an owner to record a deed but does not. Later the owner needs to hire an attorney to quiet title to the property. The attorney fees to establish title are recoverable, while the attorney fees to sue the title company are not. Here, the attorney fees are directly related to defending the same claim that is part of the fraudulent scheme.
This issues were not explored in the opinion. While Brighton threaded the needle in this case, I would not count on the same result in the absence of egregious behavior by Hockey.
[1] If the “daily wage” was $3,000, the potential penalties are 30 days x $3,000 = $90,000.
[2] Waiting time penalties are applied more expansively for anytime an employer has allegedly not paid an employee in full. Let’s say an employee claims to have worked overtime on several occasions but was not paid for overtime. At the time of the discharge the employer might not have known any overtime pay was due, so the employer paid what it believed was owed. Then two year later, the employee might file suit for the overtime and will also be able to claim they are entitled to 30 days of pay because they were not paid in full upon discharge.
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