The Colorado Court of Appeals, on October 28, 2010, issued a favorable decision for employers regarding the conditions under which prevailing employers in wage claim cases may be awarded attorney fees. Carruthers v. Carrier Access Corp., Court of Appeals No. 09CA2138 (Colo. Ct. App. Oct. 28, 2010). Specifically, the Court ruled that attorney fee awards to prevailing employers under the Colorado Wage Claim Act, Colo. Rev. Stat. § 8-4-1-101 to -123 et seq., are not restricted to those cases in which the employee's wage claim is "frivolous," a standard used under many federal civil rights statutes.
In Carruthers, the plaintiff was unsuccessful at trial on his claim for about $210,000 in unpaid commissions, and the employer sought attorney fees of more than $140,000. The trial court awarded fees to the employer, but at a reduced amount, less than $94,000, without an explanation for the deduction. Later, the trial court further reduced the attorney fee award, without explanation, to $34,000. The Court of Appeals' ruling affirmed the trial court's exercise of discretion to award attorney fees to the employer, but remanded the case for specific findings as to the amount of "reasonable" attorney fees to be awarded.
This decision carries with it substantial history. Colorado's statutes requiring the payment of wages due and owing to employees, upon their separation from employment, have been amended repeatedly since they were first enacted, the most recent amendments taking place in 2007. With each amendment, the provisions regarding attorney fees have been changed. The key provision of the 2007 law, under review in this case, was Section 8-4-110(1), which states:
If, in any action, the employee fails to recover a greater sum than the amount tendered by the employer, the court may award the employer reasonable costs and attorney fees incurred in such action when, in any pleading or other court filing, the employee claims wages or compensation that exceed the greater of seven thousand five hundred dollars in wages or compensation or the jurisdictional limit for the small claims court, whether or not the case was filed in small claims court or whether or not the total amount sought in the action was within small claims court jurisdictional limits. . . .
Under many federal civil rights statutes, including Title VII of the 1964 Civil Rights Act, as amended, 42 U.S.C. § 2000e-5(k), similar language allowing an award of attorney fees to a prevailing employer, to be paid by the unsuccessful plaintiff, has been interpreted as being restricted to cases in which the plaintiff's claims were frivolous and groundless. See, e.g., Christianburg Garment Co. v. EEOC, 434 U.S. 412 (1978). The plaintiff in Carruthers argued that this same interpretation should be given to Section 8-4-110(1).
The Court of Appeals ruled that the policies that caused the U.S. Supreme Court in Christianburg to impose the "frivolous" requirement, do not apply to a dispute between an employee and a former employer. It also ruled that - despite substantial legislative history about how the attorney fee provisions of the Colorado Wage Claim Act should follow the attorney fee provisions of the civil rights laws - the unambiguous language of the state statute permits a district court to award attorney fees to a prevailing employer without absolute limitations or conditions such as the "frivolousness" requirement urged by the plaintiff.
Nevertheless, the "frivolousness" of a claim is one legitimate consideration when awarding attorney fees. When deciding whether fees should be awarded to a prevailing employer, the Court of Appeals ruled, a court should consider all relevant circumstances, including the following:
(1) the scope and history of the litigation;
(2) the ability of the employee to pay an award of fees;
(3) the relative hardship to the employee of an award of fees;
(4) the ability of the employer to absorb the fees it incurred;
(5) whether an award of fees will deter others from acting in similar circumstances;
(6) the relative merits of the parties' respective positions in the litigation;
(7) whether the employee's claim was frivolous, objectively unreasonable, or groundless;
(8) whether the employee acted in bad faith;
(9) whether the unsuccessful claim was based on a good faith attempt to resolve a significant legal question under the Wage Act; and
(10) the significance of the claim under the Wage Act in relation to the entire litigation.