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Arbitrator Exceeded Authority in Denying Statutorily Mandated Attorney Fees—C.A.
By a MetNews Staff Writer
Div. Three of the Fourth District Court of Appeal has held that an arbitrator exceeded his authority by not awarding statutorily mandated attorney fees to a plaintiff who prevailed on his claim against his employer for failure to issue accurate itemized wage statements as required by Labor Code §226(a).
The arbitrator ordered each party to pay its own costs, despite statutory language mandating the payment of attorney fees and the plaintiff having sought attorney fees “pursuant to all applicable statutes” in his prayer for relief.
Justice Joanne Motoike authored the unpublished opinion, filed Wednesday, ordering the vacatur of the judgment by Riverside Superior Court Judge Angel M. Bermudez confirming the arbitration award. Acting Presiding Justice Thomas M. Goethals and Justice Martha K. Gooding joined in the opinion.
Appealing the confirmation was plaintiff Biagio Sanzone, who was previously employed as finance director of DCH Korean Imports, LLC. He signed a contract with DCH, agreeing to arbitrate any disputes with his employer in accordance with the Federal Arbitration Act and the California Arbitration Act (“CAA”).
In February 2021, Sanzone asserted causes of action against DCH for wrongful termination, retaliation, and various violations of the Labor Code, including §226(a). The parties agreed to arbitrate the matter.
The arbitrator, retired Orange Superior Court Judge David C. Velazquez of Judicate West, found in favor of Sanzone as to the §226(a) itemization claim but declined to issue attorney fees pursuant to §226(e)(1) which provides:
“An employee suffering injury as a result of a knowing and intentional failure by an employer to comply with subdivision (a) is entitled to recover…damages…not to exceed an aggregate penalty of four thousand dollars ($4,000), and is entitled to an award of costs and reasonable attorney’s fees.” Bermudez confirmed the arbitration award, saying:
“On the issue of Fees, it was within the arbitrator’s powers to determine the issue of fees and costs….Thus, the arbitrator did not exceed his authority. The arbitrator simply said no.”
Motoike acknowledged that judicial review of arbitration awards is extremely limited but pointed out that the CAA provides that a court may vacate an award if the arbitrator exceeded his powers and the award cannot be corrected without affecting the merits of the decision.
Finding that Velazquez’s order contravened §226(e), the jurist wrote:
“Here, the arbitrator found DCH violated Labor Code section 226, subdivision (a), and awarded a statutory penalty of $4,000….The arbitrator appears to have misconstrued or ignored this mandatory, one-way fee-shifting provision. Instead, he ordered the parties to pay for their own attorney fees. This legal error prevented Sanzone, who was subject to a mandatory employment arbitration agreement, from receiving a review on the merits of the amount of attorney fees and costs to which he was entitled.”
She continued:
“Here, the issue of attorney fees and costs under Labor Code section 226, subdivision (e)(1) was submitted to the arbitrator for decision. Sanzone’s first amended complaint requested fees under Labor Code section 226, subdivision (e)(1). As the issue was submitted to the arbitrator for decision, it was part of the merits of the case, and the arbitrator should have afforded Sanzone an opportunity to be heard.”
Motoike concluded that “we find the arbitrator exceeded his powers by issuing an award violating Sanzone’s unwaivable statutory right to attorney fees and costs under Labor Code section 226, subdivision (e)(1)” and the award cannot be corrected without affecting the merits of the decision.
The case is Sanzone v. DCH Korean Imports, G063483.
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