Eugene R. SANDERS et al., Plaintiffs and Respondents, v. CITY OF LOS ANGELES et al., Defendants and Appellants.
The City of Los Angeles and various Boards1 of the City (hereinafter collectively referred to as City) appeal from a decision of the superior court entered August 14, 1968, upon return of a peremptory writ of mandamus and further order which required City to provide prevailing wage and salary increases to city employee respondents (employees) for the period of July 1, 1962 to January 5, 1963, in compliance with the terms of a peremptory writ construed by this court in Sanders v. City of Los Angeles, 252 Cal.App.2d 488, 60 Cal.Rptr. 539 (hearing denied) and made mandatory by the terms of the City Charter (Civil No. 34282). City also appeals from orders predicated on the peremptory writ and further orders: (1) for interest at the legal rate on said increases; (2) fixing attorneys' fees at 25% of all recoveries and requiring City to withhold said sum and pay it to the attorneys representing said employees (Civil No. 34436).2
Section 425 of article XXXI of the Los Angeles City Charter, the terms of which are mandatory3 (Walker v. County of Los Angeles, 55 Cal.2d 626, 634, 639, 12 Cal.Rptr. 671, 361 P.2d 247), enacts into law a standard for salary increases to its employees known as the ‘prevailing wage’ doctrine. The charter provides that city employees are to be paid wages ‘in each instance of employment,’ where they can be ascertained, which are ‘at least equal to the prevailing salary or wage for the same quality of service rendered to private persons, firms or corporations under similar employment * * *.’ To determine prevailing wages, section 5.1 of Ordinance No. 89100, known as ‘The Salary Standardization Ordinance * * *’ requires that the City Administrative Officer (CAO) prepare an annual salary survey and, predicated upon such survey, make recommendations to the City Council to enable the Council to fix prevailing wages and salaries on July 1 of each year.4
In January and February of 1962, City completed its Twentieth Annual Joint Wage and Salary Survey as required by the above ordinance. Based on the survey, formulas followed continuously since 1945, and other appropriate administrative procedures, the CAO submitted ‘Salary Recommendations' to the City Council on April 10, 1962. The recommendations covered 10,367 employees. They were based on 16 ‘benchmark’ positions and included 563 classes, found to be comparable to private employment. After hearings conducted by the Personnel and Finance Committees of the City Council, the recommendations of the CAO for salary increases were adopted and enacted into an ordinance on July 16, 1962. On July 24, 1962, the Mayor vetoed the ordinance solely on the ground that funds were lacking to meet the increases provided by the ordinance (vetoed July ordinance).
In August 1962, despite the vetoed July ordinance, an identical ordinance was adopted (August ordinance). The August ordinance incorporated all of the recommendations the CAO had made for the vetoed July ordinance, which were evolved through formulas used since 1945 and predicated upon the same survey. The August ordinance became effective on January 6, 1963, and City employees received increases in accordance therewith.
On October 15, 1962, 13 City employees, seeking a declaration of their rights to the salary increases for the period of July 1, 1962 to January 5, 1963, filed a complaint and joined with it a petition for a peremptory writ of mandate to compel the City to provide such wage increases as were determined to be appropriate for the period in question in accordance with the terms of the City Charter and City Ordinance 89100. On April 29, 1963, the trial court held the employees were entitled to declaratory relief and issued a peremptory writ of mandate. The writ expressly stated that the wage-fixing authorities had not made the required ascertainment as of July 1, 1962, and ordered them to make the ascertainment and provide such additional salaries and wages as were ascertained, retroactive to July 1, 1962.5 The writ was made returnable July 8, 1963. No appeal was taken and the judgment and writ became final on June 25, 1963.
In response to the order issued in April 1963, City, primarily through the Personnel and Finance Committees of the City Council, conducted, as had been the custom, quasi-judicial, non-legislative, fact-finding hearings. In May 1963, a second recommendation was made by the CAO to City based upon the same survey data which, by use of formulas different from those theretofore continuously and traditionally used for the purpose of comparing wages and salaries between City Government and private employees, concluded that no wage or salary increases were due to any of the 10,637 employees for the six months in question. City made its return to the writ based on the CAO's second recommendation. Respondents objected and a full hearing was had. The trial court, on July 29, 1963, overruled the objections and discharged the writ, accepting City's position that no increases were required and that City had fully complied with its obligations. Employees, on August 30, 1963, appealed from the order dismissing the writ. (Sanders, supra.)
This court, in July 1967, in an opinion by Mr. Justice Shinn, reversed. The court said: ‘* * * the basis of comparison used by the City Administrative Officer [in his second recommendation to the City Council on the same facts] was unreasonable, inadequate and erroneous. Discarding the standard formula was arbitrary in the extreme and * * * was a clear violation of duty.’ (Sanders, 252 Cal.App.2d at 492, 60 Cal.Rptr. at 543.)
This court said: ‘In argument * * * in the trial court, * * * and * * * on the appeal, the City failed to meet squarely or attempt to justify the aboutface of the City Administrative Officer between 1962 when he recommended increases of more than $3,500,000.00 and in 1963 when he found, upon the basis of the same facts, that no increases were due.6
‘* * *.
‘The conclusion is inescapable that the City Administrative Officer declined to make use of the standard formula in order to convince the committees and the council that the action taken to grant increases for 1962–63 was a mistake and that no increases were then due.’ (Sanders, at 493, 60 Cal.Rptr. at 543.)
The ‘standard formula’ first evolved in 1945, to which Sanders referred, was an involved process of comparing public and private wages. These procedures traditionally and continuously followed from that time were used to compare the average or median wages of public jobs with similar private jobs in an effort to arrive at a fair and reasonable prevailing wage.
Speaking of the manner in which the 1962 survey had been re-interpreted in 1963 by the CAO and the City Council in its 1963 return to the writ, Justice Shinn said:
‘All the facts relevant to the question whether the defendants complied with the writ were established by documentary evidence. The city contends that the defendants acted in all respects within their discretionary authority. We cannot agree. They not only proceeded under a theory that inevitably led to a false conclusion adverse to the plaintiffs, but they ignored their own evidence which established, affirmatively, that in many of the city jobs salary increases were due. This was not merely an abuse of discretion. It was a flagrant breach of duty.’ (Sanders, at 494, 60 Cal.Rptr. at 543.)
‘As the advisor of the committees and the council and as the responsible official of the city, the City Administrative Officer failed utterly to perform his duties. This breach of duty occurred at the top, and polluted all the subsequent proceedings, which were based upon the representations and recommendations of the City Administrative Officer. Strange as it may see, the committees and the council were actually caused to believe that inequalities that were found to exist in 1962, did not, in fact, exist and that the city salaries, instead of being below those being paid in industry, to the extent of more than $3,500,000.00, were, at least, equal.’ (Sanders, at 493–494, 60 Cal.Rptr. at 543.)
The trial court was directed ‘to order all the defendants to comply with the writ of mandate, and * * * make any further appropriate orders to compel obedience to the writ.’ (Sanders, at 495, 60 Cal.Rptr. at 544.)
After remittitur, the trial court, on February 14, 1968, vacated the order discharging the writ and issued an order directing City to comply. Prior to issuance of the order directing compliance the attorneys for employees requested for the first time in the proceedings that the court fix attorneys' fees to which they were entitled in a class action. The order of the superior court directing compliance indicated that application for attorneys' fees had been made.
Pursuant to the order of the trial court, the Personnel and Finance Committees of the Council proceeded to conduct quasi-judicial, non-legislative fact-finding hearings as they had done in 1963. Recommendations from the CAO were again requested. Again using formulas different from those continuously and traditionally used to arrive at prevailing wages, the CAO, on March 19, 1968, using the same 1962 survey data, recommended increases to four benchmark classes consisting of 1,033 employees totalling $155,000. As heretofore pointed out the 1962 recommendations which resulted in the vetoed July ordinance, had included 10,367 employees at a total annual cost of $3,529,108.
The record is replete with documentary evidence submitted to the committees and much discussion and correspondence between committees and employees. The committees ignored the CAO's 1968 recommendations and, on April 30, 1968, recommended that the Council adopt the recommendations of the vetoed July ordinance.7 However, on June 24, 1968, the proposed new ordinance which embraced the substance of the vetoed July ordinance, failed for lack of a two-third's vote. On the same day, the council passed the ordinance providing increases in accordance with the CAO's 1968 recommendations.
City again made a return to the writ. Respondents again objected, asserting in substance that City's return had all the defects pointed out in the Shinn opinion. The trial court carefully reviewed all events from the inception of the litigation to the enactment of the 1968 ordinance. A thorough review and analysis was made of the methods and procedures used by the CAO in 1962, 1963 and 1968. The trial court found, ‘The substitute methods and formulas of comparison of salaries found in the report and recommendations of the City Administrative Officer of March 19, 1968, and which are the basis for the ordinance and resolutions returned to this Court as in compliance to its Peremptory Writ of Mandamus are inadequate, unfair, and improper and their use by Respondents is unreasonable, arbitrary and a breach of duty.’
The trial court concluded that City in its 1968 return to the writ did not satisfy the requisites of the writ and, on August 14, 1968, decreed: ‘It further appearing that the Court of Appeal has directed this Court to make * * * further appropriate orders to compel obedience to the Writ, Respondents and each of them are hereby commanded to proceed at once to provide the increases to salaries and wages for the period of July 1, 1962 to January 5, 1963, inclusive, that would have been provided by the Ordinance of July 16, 1962, had it been made effective as of July 1, 1962.'8
City first contends that the trial court had no power to decide the claim of the employees on its merits and to fix the prevailing wage for the period July 1, 1962 to January 5, 1963. City argues that the court's sole power was to remand the matter for further consideration to the wagefixing authorities, the City Council.
City, referring to section 5.1 of Ordinance 89100, admits that it ‘enunciates the policy of city to review salaries once each year * * *.’ City admits that the considerations for annual wage adjustments are ‘(1) the survey of prevailing salaries and wages in private emploment; (2) the salaries and wages being paid for com parable work by other governmental agencies * * * pursuant to subsection (a) of said Section 5.1 of the ordinance.
‘* * * [A]nnual salary recommendations are not designed solely to comply with the duty imposed by Section 425, and are not predicated solely on the salary survey * * *.’
City argues that the formulas used by the CAO in 1968 as the basis of his report were proper. It asserts that City may use any appropriate administrative procedure and is not required to use any one system for determining prevailing wages—that it is not confined to procedures contended for by the employees. City fortifies its position with illustrations of changes in types of employment, diminution of employees in some classes and increases in others, differences in bench marks, and other difficulties in applying the formulas contended for by employees and those which it asserts are more accurate. City does not claim that the CAO in 1968 used the procedures which had been continuously and traditionally used between 1945 and 1962 and which the CAO did use in 1962, the omission of which traditional procedure was held to be fatal in Sanders.
City asserts, however, that the CAO's salary recommendations of 1962 ‘* * * conclusively show that very little, if any, consideration was given to the preservation of the supposed salary relationships in the making of those recommendations. * * * [The] exhibit shows that there are many groups wherein the benchmark was recommended for an increase while other positions in the same group were recommended for no increase or for a different increase, and many groups wherein the benchmark was recommended for no increase while other positions in the same groups were recommended for substantial increases.’ Therefore, City contends the ‘traditional’ relationships did not exist.
That argument, if it be a fact, apparently did not disturb Justice Shinn, when he characterized the omission of procedures continuously and traditionally used: ‘* * * Not merely an abuse of discretion. It was a flagrant breach of duty.’ (Sanders, at 494, 60 Cal.Rptr. at 544.) More importantly, it did not disturb City when it enacted the August ordinance which followed the 1962 recommendations. Further, even if City is correct its contention, the order herein appealed from is not prospective and affects salary arrangements only for the period of July 1, 1962 to January 5, 1963.
In Sanders, this court concluded that City abused its discretion when it found that the employees were not entitled to increases for the period of July 1, 1962 to January 5, 1963, because of what we characterized as arbitrary and unreasonable action by City.
The order herein appealed from was made after evidence had been submitted on two conflicting points of view for the ascertainment of prevailing wages. The finding of the trial judge was based on abundant evidence and is consistent with a finding that City's procedures were inadequate and improper and their use ‘unreasonable, arbitrary, and a breach of duty.’ (Sanders, at 494, 60 Cal.Rptr. at 544.) The law requires a court to examine the record when the ‘* * * ‘action is fraudulent or so palpably unreasonable and arbitrary as to indicate an abuse of discretion as a matter of law.’' (Walker, 55 Cal.2d at 639, 12 Cal.Rptr. at 678, 361 P.2d at 254.)
The Council committees considering the matter in 1968, recognized a duty to provide retroactive wage increases as required by City's 1962 determination. The committees recommended that this be done and an ordinance was proposed to consummate the recommendation. The ordinance was passed by a majority but failed for lack of a two-thirds vote after the City Attorney warned that it was ‘incumbent upon this Council * * * that you take some action’ and read Code of Civil Procedure section 1097 concerning the penalties for failure to obey a writ of mandate, the Council passed the 1968 ordinance which incorporated the recommendations made in the 1968 report of the CAO.9
‘Prevailing wage’ provisions, such as section 425 of the Los Angeles City Charter, limit the discretion of the wage-fixing authority, which has the positive duty to set wages liberally and at least as high as prevailing salaries in the private sector. (Salker, at 635, 12 Cal.Rptr. 671, 361 P.2d 247; Goodrich v. City of Fresno, 74 Cal.App.2d 31, 36, 167 P.2d 784.) Generally, courts will not interfere with the determination of the local wage-fixing body unless it has acted fraudulently or patently unreasonably. (Walker, at 634, 12 Cal.Rptr. 671, 361 P.2d 247; City and County of S. F. v. Boyd, 22 Cal.2d 685, 690, 140 P.2d 666.) Where the trial court has determined that the wage-fixing body has acted unreasonably, the appellate court will examine the record to determine whether there was substantial evidence to support the trial court's finding. (Walker, at 636, the trial court's finding. (Walker, at 636, 12 Cal.Rptr. 671, 361 P.2d 247; Borders v. Anderson, 204 Cal.App.2d 401, 410, 22 Cal.Rptr. 243.)
The record in this litigation fairly supports the inference that City knowingly acted in an arbitrary, unfair and unreasonable manner when it adopted the 1968 ordinance and that it will not comply with the writ unless compelled to do so. (Walker, at 636, 12 Cal.Rptr. 671, 361 P.2d 247.)
We think that the trial court's action was legally and epuitably required and we affirm it.
The parties concede that the law is that the duty to fix prevailing wages imposed upon the City by charter and ordinance is mandatory. (Walker, at 629, 633, 638, 12 Cal.Rptr. 671, 361 P.2d 247.) The peremptory writ says specifically, ‘You, the City Council, and every other authority * * * may not consider the tax burden or the source of revenues in providing salaries and wages mandatory under section 425’ (fn. 5) City did pass the vetoed July ordinance as mandated by the charter. The veto predicated upon lack of money to fund the requirements of the ordinance, was contrary to the mandate of the charter and ordinance, the terms of the writ, and was arbitrary and abuse of discretion as a matter of law. In Walker, at 639, 12 Cal.Rptr. at 678, 361 P.2d at 254, the court holds that “an ordinance is invalid if the mandatory prerequisites to its enactment are not substantially observed.” The same should be extended to a veto. The Mayor's veto, contrary to the mandatory charter provisions, was a futile act and did not affect the ordinance validly enacted by the council. If this is a sound premise, and we believe it is, the vetoed July ordinance is a valid subsisting ordinance and City is indebted to its employees in accordance with its terms.
However, even if our conclusion is not sound, prevailing wages in accordance with the vetoed July ordinance are established as the law of the case. It is established that City has the mandatory duty to annually fix a prevailing wage. The scale of wages and salary to be fixed is undoubtedly subject to the exercise of a reasonable discretion predicated upon a study and analysis of a survey and the use of standard methods to arrive a result. The proper prevailing wage then becomes a question of fact. The record shows that City has, with respect to the prevailing wage here involved, made this ascertainment a number of times with disproportionate confusion. In 1963, the CAO recommended no increase although in 1962 the Council adopted the August ordinance which provided the increase in wages and salaries set out in the vetoed July ordinance. After the remittitur in Sanders, City proceeded in 1968 to make a study and again, omitting the application of the standard formulas, which was condemned in Sanders, proceeded in a manner substantially the same in all respects as it did in 1963. Sanders, in our opinion, established as the law of the case that the standard formulas used prior to 1962 must be used to establish the prevailing wages here involved. The omission of such standards is fatal. After remittitur the trial judge, guided by the language of Sanders, could do little else than to condemn, as he did, ‘substitute methods and formulas' to support the 1968 action of City as ‘* * * inadequate, unfair and improper and their use * * * a breach of duty.’
However, conceding arguendo that Sanders did not bind City to the use of formulas continuously used prior to 1962, and that City may use new formulas which it considers more accurate for making comparisons to arrive at a prevailing wage and that its function was to exercise legislative discretion in fixing a prevailing wage. (San Francisco Chamber of Commerce v. City and County of San Francisco (1969) 275 A.C.A. 553, 556, 79 Cal.Rptr. 915.) Nevertheless, in the exercise of such discretion whether formulas were generally used and acceptable in similar situations, whether they were fair and reasonable in the circumstances of this case, and whether City acted fairly and reasonably in the application of such new formulas, were questions of fact for the trial court.
City, in its 1968 return to the writ, may have made a showing which the trial court and this court would have been bound to accept. Instead its return was rejected by the trial court. City admits and the record shows that in 1963, the CAO abandoned procedures and formulas theretofore traditionally used. In the 1968 re-evaluation of the salary data, the CAO again used a variety of new procedures, different from those in use between 1945 to 1962, to show that retroactive pay was not required except for a limited few. The trial court noted the failure to use the formulas referred to in Sanders, compared the 1968 showing with the one made in 1963, noted the original recommendations in 1962 together with the ratification of those same 1962 recommendations in the August ordinance, and came to the conclusion, adopting the language in Walker, that City's action was done “arbitrarily and capriciously and was so palpably unreasonable as to demonstrate an abuse of discretion as a matter of law.” (Walker, 55 Cal.2d at 636, 12 Cal.Rptr. at 677, 361 P.2d at 253.)
In Walker, construing a similar provision on substantially similar facts, ‘* * * the court gave judgment that a peremptory writ of mandate issue requiring the board to ‘proceed at once to ascertain and declare the prevailing salary or wage as of July 1, 1958,’ and ‘in so doing that they adhere to their duties as declared by the Court under Section 47 of the Charter of the County of Los Angeles; and adopt an ordinance to pay to each person in the classified civil service of the County of Los Angeles found thereby to be receiving less than the prevailing salary or wage in his or her instance of employment a sum commencing on July 1, 1958, sufficient to make his or her salary or wage at least equal to said prevailing salary or wage in his or her instance of employment.’' (At 633, 12 Cal.Rptr. at 675, 361 P.2d at 251.)
The equivalent of this judgment was rendered by this court in Sanders, and after remittitur proceedings were instituted by the trial court to obtain compliance with the writ, City did not comply.
Neither the law nor equity will tolerate such conduct. On the record of this case it would appear to be futile to return the matter to the trial court for the purpose of requiring City to make a third return to the writ showing a fair and reasonable ascertainment of prevailing wages for the period in question. There should be an end to litigation. We have been cited to no case precisely in point and find none. We do not assume that we have the power to enact an ordinance. We think, however, that we can compel a city pay a debt.
In Petersen v. City of Vallejo, 259 Cal.App.2d 757, at 772, 66 Cal.Rptr. 776, at 785, the court says:
“‘Equity does not wait upon precedent which exactly squares with the facts in controversy, but will assert itself in those situations where right and justice would be defeated but for its intervention.’ [Citations.]” In Maxwell v. City of Santa Rosa, 53 Cal.2d 274, 1 Cal.Rptr. 334, 347 P.2d 678, the court held that an assessment levied by city, may be set aside if there is fraud, abuse of discretion or arbitrary action. In Berkeley High School Dist. v. Coit, 7 Cal.2d 132, 135, 59 P.2d 992, 993, the city treasurer was compelled to sign tax application notes even though a literal reading of the governing statute ‘only authorizes the issuance of such notes for the payment of obligations already incurred during the current fiscal year.’
We affirm the order in Civil No. 34282 requiring the City to proceed at once to provide the increases to salary and wages to employees for the period of July 1, 1962 to January 5, 1963, inclusive, that would have been effected by the vetoed July ordinance.
City also appeals (No. 34436) from orders after judgment made in respect of interest and attorneys' fees. City contends that the remittitur issued in Sanders confers no power to allow either, and since the trial court was bound and limited by the terms of the remittitur and neither interest nor attorneys' fees are specifically mentioned therein, the court has no jurisdiction with respect to either. (Van Diest v. Van Diest (1968) 266 Cal.App.2d 541, 545, 72 Cal.Rptr. 304.) City, however, submits no authority suggesting that the remittitur which empowered the court to make further appropriate orders to compel obedience to the writ did not implicitly include the authority to make orders on all issues not decided by the remittitur, and necessary to conclude the litigation.
In Sprague v. Ticonic National Bank (1939) 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184, a similar situation, the District Court had held itself bound by the terms of a previous remittitur from the Circuit Court of Appeals, which said nothing about an allowance of costs. The United States Supreme Court said at page 168, at page 780 of 59 S.Ct.:
‘Without considering the historic authority of a court of equity in such matters, the district court deemed itself powerless because foreclosed by the mandate in Ticonic Bank v. Sprague, [303 U.S. 406, 58 S.Ct. 612, 82 L.Ed. 926] supra. The general proposition which moved that Court—that it was bound to carry the mandate of the upper court into execution and could not consider the questions which the mandate laid at rest—is indisputable. * * * But that leaves us still to consider whether the immediate issue now in controversy was disposed of in the main litigation and therefore foreclosed by the mandate. While a mandate is controlling as to matters within its compass, on the remand [remittitur] a lower court is free as to other issues [citations]. Certainly the claim for ‘as between solicitor and client’ costs was not directly in issue in the original proceedings by Sprague. It was neither before the Circuit Court of Appeals nor before this Court. Its disposition, therefore, by the mandate of either Court could be implied only if a claim for such costs was necessarily implied in the claim in the original suit, and its failure to ask for such costs an implied waiver. These implications are repelled by the basis on which such costs are granted. They are not of a routine character like ordinary taxable costs; they are contingent upon the exigencies of equitable litigation, the final disposition of which in its entire process including appeal places such a claim in much better perspective than it would have an earlier stage.' (Emphasis added.)
The trial court in its order in respect of interest stated:
‘The Court holds that the present action in mandamus may support a judgment for interest, since it involves recovery upon a general underlying monetary obligation and is capable of being made certain by calculation.
‘Each salary or wage payment heretofore commanded to be provided for the period of July 1, 1962, to January 5, 1963, that would have been provided by the Ordinance of July 16, 1962, had it been made effective as of July 1, 1962, shall bear interest at the rate of seven (7%) per cent per annum from the date each such salary or wage increase would have accrued and therefore have become vested.
‘The respondents were prevented by law from paying certain increases in salaries and wages to certain employees, which respondents concede to be due and they have requested, and do hereby receive, permission from the Court to pay said increases. Respondents are excused from the payment of interest from February 14, 1968 to the date of this order.’
The court had jurisdiction to make the order.
Appellants next contend that prejudgment interest was improperly awarded because the amount owed was not certain or ascertainable prior to entry of judgment. (Sanders, 252 Cal.App.2d at 495, 60 Cal.Rptr. 539.)
Civil Code, section 3287(a) provides, in part: ‘Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day * * *.’ In Mass v. Board of Education, 61 Cal.2d 612, at page 624, 39 Cal.Rptr. 739, 394 P.2d 579, it was held, that section 3287 applied to the claims of a wrongfully discharged teacher. The court stated ‘An action upon contract or for declaratory relief will lie to determine a plaintiff's right to wrongfully withheld payments and can properly include interest as an element of damages; plaintiff should surely recover interest in a mandamus action which covers damages based on an identical monetary obligation.’ (Mass v. Board of Education, supra, at 626, 39 Cal.Rptr. at 749, 394 P.2d at 589.) In Benson v. City of Los Angeles, 60 Cal.2d 355, 366, 33 Cal.Rptr. 257, 264, 384 P.2d 649, 656, it was held that ‘* * * interest may be awarded in a contested action even though there is no specific prayer therefor.’ In Foley v. United States Paving Co., 262 Cal.App.2d 499, 68 Cal.Rptr. 780, the plaintiff had a contract under which he was to receive 20% of net profits as a bonus. Defendants, by increasing their own salaries, partially defeated the bonus. The court, in holding that plaintiff was entitled both to recover the sums wrongfully withheld and prejudgment interest saw no distinction between that case and Mass v. Board of Education, and found section 3287 to be ‘determinative of the issue.’ (Foley v. United States Paving Co., supra, at 507, 68 Cal.Rptr. 780.) That section is likewise determinative here. The trial court found that the amounts due the employees had been determined in 1962. Not only are the amounts due certain but, in fact, they have already been calculated. If by certainty, appellants are contending that they must know what is owed before the litigation begins, then it must be obvious that there would never be a situation to which the section applies since the parties are in court to determine that very issue.
The trial court properly ordered the appellants to pay interest from the date the salary increases were due, excepting the period from February 14, 1968 to October 23, 1968, during which time appellants were under court order not to distribute the funds pending determination of further issues in the litigation. (Civ.Code, § 3287.)
City also argues attorneys' fees are improperly allowed. This is a representative action. (Sanders, 252 Cal.App.2d at 488, 60 Cal.Rptr. 539.) On the original hearing the trial court found in pertinent part: ‘The issues * * * and the relief prayed for are all of general interest to all employees of * * * City * * * except the uniformed firemen and policemen * * *. There are approximately 28,000 individuals affected * * * it is impractical to bring * * * all * * * employees before the court * * * and therefore, * * * petitioners bring their action for themselves and for all other employees * * * with the exception noted above.’
However, although the complaint specifically alleges the representative nature of the proceeding, it does not request attorneys' fees. The findings and conclusions do not nor does the judgment in the original trial make provision for attorneys' fees. Attorneys for employees justify this omission on the ground that there was no fund created from which attorneys' fees could have been allowed.
After Sanders was decided on appeal, and the superior court, pursuant to the remittitur, re-set the case for further proceedings, the order to show cause directed to City made on or about February 14, 1968, contains the following language:
‘An Application for Allowance of Reasonable Attorneys' Fees From Common Fund has been submitted and filed with this Court. Hearing on the said application for attorneys' fees is hereby set for April 15, 1968 * * *.’
The hearings on this facet of the appeal took place on October 22, 1968, concurrently with and immediately after the hearing on the subject of interest.
During the hearing, exhibits were introduced to show actual notice to employees of counsels' request for fees. The notice consisted of a copy of El Pueblo, (Vol. 22, No. 2, dated February, 1968) and a newsletter dated February 15, 1968.11
It was stipulated that approximately 11,000 copies of El Pueblo were mailed to home addresses or distributed to approximately that many active and retired members of All City Employees Association (Association) and that the newsletter was sent to 180 directors of the Association and that each director was instructed to post the letter in his respective city department. No employees appeared on the April 15th, on October 22nd or at any time in the proceedings in opposition to the request for attorneys' fees.
Aside from extended discussions, evidence on the issue of attorneys' fees consisted of affidavits of attorneys as to the reasonable value of counsels' services and a series of letters exchanged between counsel and Association which in effect provided for their fees for the original hearing and the appeal which followed.
At one point in the discussions the trial court suggested:
‘The problem is not whether this is salvage or not. I think it is. If there hadn't been a City Employees Association, if there hadn't been diligent counsel retained by them it would have gone down the drain.
‘* * *.
‘These letters throw a new card in the deck. I think you ought to think about whether or not an application now is timely or if it is premature.’
During the noon recess on October 22nd, counsel for employees obtained a letter agreement, dated the same day, between themselves and Association, whereby it was agreed that counsel for employees would request and retain such fees as might be allowed by the court subject to a formula whereby fees theretofore paid to counsel by the Association would be returned to the Association, and providing further that in the event the court decided fees could not be awarded, that counsel would be paid a fixed amount for services in the proceedings which took place after remittitur and that fees for services on any appeal would be negotiated.
The letter of October 22nd was admitted by stipulation with the understanding that all employees of the Association did not benefit from the judgment of the trial court.
The resolution of the question centered upon whether the contract for compensation theretofore made eliminated the right or counsel to apply for fees from the fund recovered, or whether there was in fact an implicit agreement for contingent fees which was reflected and fortified in the letter agreement with Association, made on the day of the hearing. The trial court implicitly determined that payment from the fund was contemplated for all services rendered. There is no specific finding to that effect.
The trial court's order recites: ‘* * * [A]nd it further appearing that this Court should exercise its general equitable power to award fees to counsel, who have conferred benefits upon a class, which, but for their efforts, would have probably been lost, and this being a proper case for surcharging a common fund with the expenses of its recovery, respondents are hereby ordered to deduct and pay over to the firm of Lemaire, Mohi, Morales and Dumas twenty-five (25%) per cent of the recovery, including interest, of each person who receives a retroactive pay increase by reason of the instant litigation, including those increases which respondents concede to be due, subject, however, to a retention of $1,400.00 by respondents for the administrative cost of making and paying the above percentage deduction.’
In support of the foregoing order, it must be assumed, since there was adequate evidence of notice and no employee opposition, that the court found actual notice had been given to employees of the fee application, even though there is no specific finding of that fact.
There is authority sustaining a joint retainer-contingent fee arrangement. George D. Hornstein, in an exhaustive article on the subject of ‘The ‘Salvage’ Factor in Counsel fee Awards,' 69 Harv.L.Rev. 658, states at page 659, citing respectable authority therefor: ‘In most class suits the attorney agrees to look for his fees only to the fund recovered. In the less frequent situation where the attorney receives some retainer from the individual complainant, it is often accompanied by an agreement that this sum will be reimbursed to the latter out of the counsel fee awarded in the event of success. * * * The crucial factor is success, since the court makes an award only when the litigation is successful.’
However, we have all the letters before us and since they are not affected by extrinsic evidence, they show, in our opinion, that a firm contract was made between counsel and Association for the first hearing and the first appeal and a contingent arrangement for all proceedings thereafter.
The trial court had before it affidavits as to the value of services rendered and predicated thereon and its own expert knowledge, allowed 25% of the recovery. The fee fixed by the court was based upon services rendered from before the actual inception of the litigation, and was not limited to services after the remittitur. In our opinion, the award of fees must be limited to services rendered in the hearing after remittitur and such prospective proceedings of which this appeal is a part.
This court has the power to fix attorneys' fees. (Code of Civ.Proc. § 909; Rule 23(a), Cal.Rules of Court; Kirk v. Culley, 202 Cal. 501, 507, 508–510, 261 P. 994; Boller v. Signal Oil & Gas Co., 230 Cal.App.2d 648, 656, 41 Cal.Rptr. 206; Kyne v. Kyne, 74 Cal.App.2d 563, 572, 169 P.2d 272.)
To return the case to the trial court, with our construction of the contractual arrangement between the parties as to fees, will result in delays and mounting costs to all the litigants. We think there should be an end to this litigation.
The record shows substantial amount of meticulous labor. The trial judge remarked, and we agree ‘[I]f there hadn't been diligent counsel * * * it [recovery] would have gone down the drain.’ In fixing fees, we have in mind the principles enunciated by Hornstein in the Harvard Law Review article hereinbefore referred to, at page 681:
‘The nature and circumstances of each individual case should determine a fair and reasonable fee. The problem becomes more difficult where a fee is not negotiated between the interested parties, but must be fixed by a court after the event. Yet the issue is still economic—the price for a service. An attorney's services comprise learning, acumen, and technical skill, the value of which cannot be measured like a ton of coal. Add further public policy considerations which require ‘a flavor of generosity’ and yet the avoidance of ‘vicarious generosity,’ and one begins to appreciate the court's dilemma.'
Taking all factors into consideration, we feel that seven and one-half (7 1/2%) per cent of the recovery, less all fractional breakage which shall be computed in favor of each employee involved, and less the sum of $1,400 herein stipulated as the reasonable cost to City in making the computations involved, is fair and reasonable compensation, and we so hold.
City contends that the order to withhold fees from the fund due employees and pay the same directly to their attorneys is in effect an order to City Controller who is not a party to this litigation, and that the terms of section 710 of the Code of Civil Procedure are mandatory. (Miller v. Superior Court (1968) 69 Cal.2d 14, 69 Cal.Rptr. 583, 442 P.2d 663.) The order, City argues, does in effect disregard the provisions of section 710 and is therefore a void order.
At the hearing on the subject, the city attorney took a different position. He stated: ‘If the Court of Appeals upholds your Honor's decision the attorneys have a very simple remedy. They file an abstract of judgment. They file appropriate affidavits under section 710, pay the appropriate fee to the city controller and we will withhold that amount that is due the attorneys from the next pay checks of the individuals.’
We agree with the quoted statement of the City Attorney if Code of Civil Procedure, section 710 does apply.
However, the fund here in question is one which the employees would not have had except for the mandate of a court of equity obtained through the efforts of counsel for the employees, and it seems clear that in representative actions such as the one at bench, the court which by its judgment creates the fund, has the inherent power to charge it with a lien for the fees of counsel who actively worked for its creation.
In our opinion, section 710 in the spirit of or the literal terms of that legislation, has no application to the situation at bench.
The order in Civil No. 34282 is affirmed.
The order in Civil No. 34436 in respect of interest is affirmed.
The order in Civil No. 34436 in respect of attorneys' fees is modified, so as to fix fees at 7 1/2% and to give the benefit of all breakage in making attorney fee deductions from salary and wages to each employee. The total difference of such deduction plus the $1,400 already allowed to City shall be made from the fee allowed to attorneys. As so modified, the order in respect of attorneys' fees is affirmed.
Respondents to recover costs on appeal.
1. Council of the City of Los Angeles, Board of Recreation and Park Commissioners of the City of Los Angeles, Board of Library Commissioners of the City of Los Angeles, Board of Administration of the City Employees' Retirement System and Board of Pension Commissioners of the City of Los Angeles.
2. The appeals are consolidated by stipulation.
3. One of the conclusions of law upon which the writ is predicated states ‘This is a proper representative suit brought by petitioners on behalf of all of the officers and employees of the City of Los Angeles under the salary fixing jurisdiction of the Council of the City of Los Angeles and of the named boards and commissions, except only it is not brought on behalf of the uniformed members of the fire and police departments.’
4. Uniformed personnel are governed by section 33 of the City Charter and by Ordinance 89935 which presents a substantially different plan for fixing of salaries.
5. In pertinent part the writ commanded: ‘You, the City Council, and every other authority authorized to fix salaries or wages of persons in the City's employ, named in this proceeding, may not consider the tax burden or the source of revenues in providing salaries and wages mandatory under Section 425.‘Once having ascertained such prevailing salaries and wages, you and each of you shall provide additional salaries or wages to each person for whom you are authorized to fix a salary or wage in the employ of the City of Los Angeles where additional salaries or wages are necessary so as to provide a salary or wage at least equal to the prevailing salary or wage for the same quality of service rendered to private persons, firms or corporations under similar employment in case such salary or wage can be ascertained, retroactive to July 1, 1962.’
6. The original recommendations of the CAO which resulted in the vetoed July ordinance was for a total of $3,529,108 and covered 10,367 employees for a full fiscal year. When the August ordinance was adopted, effective January 6, 1963, the CAO's recommendations were acted upon. The present action, as pointed out, is for the period of time from July 1, 1962 to January 5, 1963, and seeks to recover the remaining 1.8 million.
7. The Joint Report states: “Therefore, your Committees believe that the adoption of the salary increases recommended in the City Administrative Officer's 1962 Annual Salary Recommendations will be fair and adequate to the City and its employees and the readoption of the 1962 Annual Salary Recommendations will eliminate all further controversy over the matter of what constituted an adequate wage for the period involved.“Therefore, your Committees RECOMMEND that the City Attorney be instructed to prepare an ordinance which will provide to each employee who during the period of July 1, 1962 to January 5, 1963, inclusive, occupied a position in any of the classes in the city service for which the City Council previously provided salary increases in the ordinance which it adopted on July 16, 1962, and which was vetoed by the Mayor, further compensation at a rate equal to the difference between that which said employees were entitled to receive pursuant to the provisions of Ordinance No. 89,100 and that which they would have received had the aforementioned ordinance become effective.”
8. ‘* * * [T]he court shall make any further appropriate orders to compel obedience to the writ.’ (Sanders, at 495, 60 Cal.Rptr. at 544.)
9. Illustrative of councilmanic statements in the record are:One councilman asserted ‘The City Attorney, at least, did not convince me that that would stand up in court. He hoped it would, that he could fight the case on that basis. Therefore, I had to go back to the original thinking of the City Council, who acted in good faith when they adopted the payroll ordinance that they did, and sent it to the Mayor, * * *.‘The intent, seemingly, was that the Council then felt that the increase was justified; that it was right, based on the CAO's report, and the then Personnel Committee's report, and that the Mayor did not, in his message, state that this was a misapplication of thinking. He rejected it for another reason.’Another councilman stated at the time ‘In all my experience, I have never seen anything so unfair to the City employees. I again state that I served on this Committee, that what we did was establish a prevailing wage. Those employees were entitled to that wage by every consideration.’
11. The item in El Pueblo, an employee house publication, was a follows: ‘Also to be considered on April 15 is the matter of legal fees to be paid to that law firm for their services in bringing the class action on behalf of the city employees.’The news letter contained the following item:‘The City employees are represented by the law firm of Lemaire, Mohi, Morales and Dumas which successfully brought the class action. Also to be considered on April 15th, is the matter of legal fees to be paid to that law firm for their services in bringing the class action on behalf of the City employees.’
ROTH, Presiding Justice.
FLEMING and WRIGHT, JJ., concur.