Labor & Employment Law Daily Wrap Up, ATTORNEYS’ FEES—9th Cir.: PAGA plaintiff who settled individual claims permitted to seek attorney fees, (Oct 1, 2025)

By Jason Albright, J.D.

Among other things, she alleged that she was denied breaks and was required to use her personal phone for work purposes without reimbursement.

A California PAGA plaintiff who dismissed, without prejudice, her claims against Wal-Mart Associates, Inc. and Sam’s Club after an unsuccessful motion for class certification was entitled to seek attorney fees, pursuant to Hensley v. Eckerhart, 461 U.S. 424 (1983), under her California Section 998 agreement with the employer, for work performed on related items, the Ninth Circuit found. The district court abused its discretion, however, when it failed to provide a “concise but clear” explanation for its fee award (Alvarado v. Wal-Mart Associates, Inc., No. 23-3927 (9th Cir. Sept. 30, 2025)).

Sam’s. The plaintiff, who first began working for Sam’s Club in 2008, worked at its location in Glendora, California, for six weeks in 2019, during which time, she alleged, she was denied meal and rest breaks, was not paid for overtime hours, did not receive itemized wage statements, and was required to use her personal mobile phone for work purposes without reimbursement.

PAGA suit. She filed a complaint against Walmart in Los Angeles Superior Court for violations of California’s Labor Code, bringing the action in her individual capacity, as a member of a putative class, and in a representative capacity under PAGA.

Certification denied. Walmart removed the action to the Central District of California and moved to dismiss her complaint, asserting that she failed to allege sufficient facts to support a class action lawsuit. The district court dismissed her class-wide claims for meal break, rest break, and overtime violations, as well as her unfair business practices claim. She was left with her class-wide claim for business expense reimbursement, her individual claims, and her claim for civil penalties under PAGA.

After discovery, she moved to certify a class for the business expense reimbursement claim, and the district court denied certification because she failed to meet the commonality and predominance requirements pursuant to Fed. R. Civ. P. 23.

Section 998 offer. She proceeded to litigate her individual and PAGA claims, and Walmart defended the claims. The parties eventually held settlement discussions but were unable to reach an agreement, but roughly one month before trial, Walmart served an offer of settlement to her under California Code of Civil Procedure Section 998, “in full and complete settlement of the claims asserted by [the plaintiff] in her individual capacity.”

To release and dismiss her claims, the employer offered to pay her $22,000, exclusive of all attorneys’ fees and costs incurred up to the date of this offer. It offered that her counsel “may seek an award of reasonable fees and costs actually incurred as of the date of this Offer in pursuit of Plaintiff’s individual claims in this action and recoverable by law.” If the parties were unable to agree on the amount of such fees, the offer provided, it “will be determined by the Court consistent with the terms of this Offer....”

Settlement. She accepted Walmart’s offer, and the district court entered judgment in accordance with its terms, retaining jurisdiction to decide any motion for attorney fees and costs.

Motion for fees and costs. Because the parties could not agree on the fee amount, however, she filed a motion for attorney fees and costs: $591,044.25 in fees and $44,879.34 in costs. In her motion, she argued that she was entitled to recover fees and costs arising from her class and PAGA claims because they were “inextricably intertwined” with her individual claims, making an apportionment of fees unnecessary under Hensley.

Objection to fee request. Walmart objected to her fee request. Citing Hensley, it argued that, because of her limited success, she was not entitled to any fees or, in the alternative, should be awarded at most $22,000. Walmart did not argue that Section 998, or the parties’ agreement under it, completely barred the recovery or apportionment of fees under Hensley. Rather, Walmart assumed a Hensley analysis was proper but argued for apportionment of fees. Under Hensley, Walmart asserted, her individual claims were unrelated to her class and PAGA claims, and the district court was thus required to apportion her fee request to exclude any fees associated with her class and PAGA claims.

Plaintiff’s reply. In her reply, the employee maintained that her class claims were so intertwined with her individual claims that apportionment was unnecessary. “[I]n the spirit of compromise,” however, she reduced her fee request by attorney time spent on class certification proceedings and all legal assistants’ time. This resulted in a nearly 50 percent reduction in the request, to $297,799.

Decision below. The district court granted her motion, ultimately awarding her $297,799 in fees and $14,630 in costs.

Appeal. Walmart appealed to the Ninth Circuit, arguing that that the parties’ Section 998 agreement, by its terms, allowed her to seek fees only for work performed exclusively on her individual claims.

Hensley fees not precluded. The appeals court first found that the parties’ Section 998 agreement did not preclude Hensley fees. When an employee successfully enforces the California’s Labor Code against her employer, or successfully brings a PAGA action, the Ninth Circuit initially noted, she is entitled to reasonable attorney fees. If the employee achieves “limited success”—succeeding on some, but not all, of her claims—California courts apply the Hensley test to determine the appropriate fee award, and under Hensley, if a plaintiff “fail[s] to prevail on a claim that is distinct in all respects from [her] successful claims,” apportionment is proper: the district court must delineate fees arising from the plaintiff’s successful and unsuccessful claims and only award the former. A plaintiff, however, may recover fees for work performed on her unsuccessful claims if they “are so intertwined” with her successful claims “that it would be impracticable, if not impossible, to separate the attorney’s time into compensable and non-compensable units.”

The appeals court thus concluded that, under California law, the plaintiff was entitled to seek fees for her partially successful individual claims and, in accordance with Hensley, for her class and PAGA claims insofar as they are intertwined with her individual claims. Because a Section 998 agreement does not automatically alter the plaintiff’s entitlement to costs and fees, the Ninth Circuit noted, the availability of fees and costs under Hensley is the default, and Walmart thus had to point to specific language in the parties’ Section 998 agreement to displace it. This it failed to do.

The parties’ Section 998 agreement, the Ninth Circuit noted, permitted the plaintiff to seek “reasonable fees and costs actually incurred... in pursuit of Plaintiff’s individual claims in this action and recoverable by law,” and a plain reading of that language permitted her to seek and obtain any fees, “recoverable by law,” for her individual claims if, under California law, they are reasonable.

Not limited to “individual claims.” Walmart argued that the agreement’s plain language—specifically its repeated mention of “individual claims”—precluded an award of fees under Hensley altogether, but the court observed that the employer “misunderstands the point of the Hensley analysis.” Instead, “By awarding fees for ‘mixed work’—that is, work that advanced both unsuccessful and successful claims—the Hensley inquiry allows district courts to determine a fee award that is proportional to a plaintiff’s success, no matter how individual entries are labeled.” In short, concluded the court, fees awarded under Hensley are fees awarded for her individual claims and therefore plainly fall within the agreement’s terms.

No “concise but clear” explanation. Finally, although the plaintiff may seek—and the district court may award—fees for interrelated claims under Hensley, the Ninth Circuit noted, the district court “must explain how it came up with the amount.” Its explanation need not be elaborate, and it may be concise, “[b]ut if it is concise, it must be clear.” Here, the appeals court concluded that the district court’s decision was concise but not clear.

The district court’s fee award was defensible, said the Ninth Circuit, only if the district court made two conclusions: first, that under Hensley, the plaintiff’s class and PAGA claims are “related to” her individual claims and need not be apportioned; and second, that her limited success—the $22,000 she received for her individual claims—justified her $297,799 fee request in light of the scope of the original litigation. Based on the record, the Ninth Circuit found it unclear if the district court properly made those two determinations.

The judgment of the district court was thus vacated and remanded.

The case is No. 23-3927.

Judge: Desai, R.

Attorneys: Scott Tillett (Pine Tillett Pine) for Claudia Alvarado. Jack S. Sholkoff (Ogletree Deakins Nash Smoak & Stewart) for Wal-Mart Associates, Inc. and Sam's West Inc.

Companies: Wal-Mart Associates, Inc.; Sam's West Inc.

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