Smith v. Rae-Venter Law Group, 29 Cal. 4th 345 (2002)

Following Timothy L. Smith’s resignation as an associate with the Rae-Venter Law Group (RVLG), he filed a claim with the Labor Commissioner and obtained an award for unpaid vacation pay, some miscellaneous deductions and expense reimbursements and statutory prejudgment interest. Smith also sought but failed to recover an unpaid bonus and waiting-time penalties. Smith appealed the Labor Commissioner’s award to the superior court where he did no better than he had before the Labor Commissioner except that he was awarded $230 more in prejudgment interest on his non-wage claims. Smith unsuccessfully appealed the superior court’s failure to award him waiting-time penalties, and RVLG successfully appealed the court’s denial of its request for attorney’s fees and costs under Labor Code § 98.2(c) on the ground that Smith had been “unsuccessful in the appeal” from the Labor Commissioner’s ruling. The Supreme Court affirmed the Court of Appeal’s judgment denying Smith waiting-time penalties on the ground that there was a good-faith dispute as to whether Smith was owed unpaid compensation. However, the Supreme Court reversed the judgment entered in favor of RVLG. The Court held while the Court of Appeal was correct in determining that Smith had not been successful in his appeal because he had failed to improve on the Labor Commissioner’s award, this rule would be applied only prospectively because Smith had reasonably relied on prior Court of Appeal precedent that was disapproved in this opinion.