USS-POSCO Indus. v. Case, 197 Cal. Rptr. 3d 791 (Cal. Ct. App. 2016)

Floyd Case voluntarily enrolled in a three-year, employer-sponsored educational program. Case agreed in writing that if he quit his job within 30 months of completing the program, he would reimburse his employer (UPI) a prorated portion of the program costs. Two months after completing the program, Case went to work for another employer. When Case refused to reimburse UPI, the company sued him for breach of contract and unjust enrichment. In response, Case cross-complained against UPI, asserting a putative class action in which he claimed the reimbursement agreement was unenforceable and that it violated the Labor Code. The trial court granted UPI’s motion for summary judgment on its own claims and on Case’s cross-complaint, holding that the reimbursement agreement was valid and not unlawful under any theory Case had raised. The trial court also granted UPI $80,000 in prevailing party attorney’s fees pursuant to Labor Code § 218.5. The Court of Appeal affirmed summary judgment in favor of UPI, rejecting Case’s claims that the agreement violated the California Labor Code, California Business & Professions Code § 16600 (invalidating contracts that restrain someone from engaging in a lawful profession, trade or business), the National Labor Relations Act (prohibiting direct bargaining with an employee) and contractual consideration and adhesion principles. However, the Court of Appeal reversed the award to UPI of reimbursement of its attorney’s fees based upon a 2014 amendment to Section 218.5.