Last week, I posted about contractual attorney fee provisions, and situations where a prevailing party could be awarded attorneys’ fees because of a provision in a contract. This week, the subject is the award of fees in civil rights, employment and public interest litigation. This is a long post, so I'm putting the rest of it after the jump. When all three posts are up, I'll probably try to incorporate them all into a white paper.
So as we often say, lots more after the jump.
While there are a number of applicable statutes, the one most frequently encountered is California’s “private attorney general” act, Code of Civil Procedure section 1021.5:
Upon motion, a court may award attorneys' fees to a successful party against one or more opposing parties in any actionwhich has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whetherpecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice
be paid out of the recovery, if any.
For starters, the person or entity seeking attorneys’ fees must be a successful party to the litigation. To be a “party,” the seeker of fees must have been a plaintiff, a defendant, an intervener, or somebody else who would ultimately be affected by judgment in the case. Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 570; City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43, 80; Savaglio v. Wal-Mart Stores, Inc. (2007) 149 Cal.App.4th 588. And the determination of “whether a party has been successful is measured by the resolution of the action, not an ancillary part of the litigation.” Consumer Cause, Inc. v. Mrs. Gooch's Natural Food Markets, Inc. (2005) 127 Cal.App.4th 387, 402.
Thus, in Savaglio, a newspaper that successfully filed a motion to force the unsealing of records in a wage and hour class action suit was neither a party (since it was neither plaintiff, defendant nor intervener) nor was it “successful,” as the point of the suit was the wage and hour claims, not the sealing or unsealing of records. And Consumer Cause holds that a successful objector to a class settlement is not entitled to fees, since his success is not “the objective of the lawsuit” (p. 402) but is “ancillary” to the objective of the suit.
To be successful, however, the party does not have to win the suit. California recognizes the “catalyst” theory, finding success when “the defendant changes its behavior substantially because of, and in the manner sought by, the litigation.” Graham v. DaimlerChrysler Corp., supra, 34 Cal.4th at 560. But the Supreme Court has adopted a significant limitation on the “catalyst” theory: “a plaintiff seeking attorney fees under a catalyst theory must first reasonably attempt to settle the matter short of litigation.” Id. at 577. Failure to do so bars recovery under the catalyst theory. Abouab v. City and County of San Francisco (2006) 141 Cal.App.4th 643.
But the catalyst theory doesn’t work if it isn’t the defendant that changes its behavior. Thus, in Marine Forests Society v. California Coastal Commission (2008) ___ Cal.App.4th ____ 2008 WL 570238, 08 Cal. Daily Op. Serv. 2609, the plaintiff sued the California Coastal Commission in a dispute over an experimental marine forest the plaintiff had planted, which the commission sought to have removed. The plaintiff contended that the appointment structure for the commission was Constitutionally unlawful, so that the commission was prohibited from issuing cease and desist orders. After much litigation, the legislature amended the appointment structure (replacing “at pleasure” appointments with fixed term appointments), curing the Constitutional defect. The court held that this was insufficient to support a fee award, as it was the legislature – not the defendant commission – that changed its behavior.
Also, the “successful” party can be a defendant. In Wal-Mart Real Estate Business Trust v. City Council of City of San Marcos (2005) 132 Cal.App.4th 614, the city rezoned land to allow Wal-Mart to build a second store. Drake and Walton, residents of the city, began an initiative campaign, obtaining enough signatures to place on the ballot an initiative to reverse the rezoning. Wal-Mart sued the city and Drake and Walton, alleging procedural irregularities in the collection of signatures. The city took no position, but asked for an advisory opinion on the claims of irregularity (something courts are normally loathe to give). Drake and Walton contended there was nothing wrong with the signature-gathering.
The trial court ruled it would not make a decision until after the election. The election went forward and the Drake / Walton initiative won. Wal-Mart did not pursue its suit. Drake and Walton sought attorneys’ fees, which the trial court denied. The Court of Appeal reversed: there is nothing in section 1021.5 that prevents a defendant from seeking fees in a proper case. Drake and Walton sought to have the election go forward unimpeded and stop the second Wal-Mart store, and were successful in both regards.
The case need not be a class action. But fees should not be awarded when the plaintiff is acting primarily in his own interest, either. Instead, “the court must determine both the significance of the benefit and the size of the class receiving benefit, from a realistic assessment, in light of all the pertinent circumstances of the gains which have resulted in the particular case.” Christward Ministry v. County of San Diego (1993) 13 Cal.App.4th 31. And in a proper case, fees can be awarded to a public entity for achieving a benefit for the public interest. County of Colusa v. California Wildlife Conservation Bd. (2006) 145 Cal.App.4th 637.
A plaintiff can sometimes meet the “necessity and financial burden” elements and recover fees even if he has a significant financial interest in the outcome of the suit. Fees may be recoverable
. . . when the cost of the claimant's legal victory transcends his personal interest, that is, when the necessity for pursuing the lawsuit placed a burden on the plaintiff ‘out of proportion to his individual stake in the matter.
Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 941.
On the other hand,
If the enforcement of the public interest is merely “coincidental to the attainment of ... personal goals” [citation] or is “self serving,” [citation], then this requirement is not met.
California Common Cause v. Duffy (1987) 200 Cal.App.3d 730, 750 – 51. This also means that defendant who successfully wins an enforcement action normally cannot recover fees, since it is primarily defending its own pecuniary interest in not having to pay fines. DiPirro v. Bondo Corp. (2007) 153 Cal.App.4th 150.
Fees are also awardable in employment cases brought under California’s Fair Employment and Housing Act (“FEHA”), Government Code section 12940 and following. Section 12965(b) provides that “in actions brought under this section, the court, in its discretion may award to the prevailing party reasonable attorney fees and costs.” However, all courts have held that the trial court in fact has very little discretion to deny fees to a successful plaintiff or to grant fees to a successful defendant. The court must exercise its discretion in a manner consistent with the goals of FEHA to remedy discrimination, and that means awarding fees to a prevailing plaintiff in almost all instances. Horsford v. Board Of Trustees Of California State University (2005) 132 Cal.App.4th 359. Meanwhile, most courts hold that a successful defendant should recover fees only if the action was “unreasonable, frivolous, meritless or vexatious.” Jersey v. John Muir Medical Center (2002) 97 Cal.App.4th 814, 831.
Once a determination is made that a prevailing party is entitled to fees, whether under the private attorney general statute or FEHA, courts are required to use the “lodestar adjustment method.” Ketchum v. Moses (2001) 24 Cal.4th 1122. First, a “lodestar” is calculated by multiplying the number of hours reasonably spent by a reasonable hourly rate. That rate should be based on the private market for comparable services in comparable cases. Serrano v. Priest (1977) 20 Cal.3d 25, 49. The lodestar should then be adjusted upward or downward based on such factors as contingent risk (the risk that counsel may not be paid at all), counsel’s extraordinary skill, the difficulty and complexity of the case, the results obtained and the preclusion of other work. Ketchum v. Moses, supra, 24 Cal.4th at 1132.
A question that arises frequently in FEHA litigation is this: what should the court do when the plaintiff was not successful on every claim? Under both state and federal law, the court should look at whether the successful and unsuccessful claims were “related.” If so, and if the plaintiff achieved a level of success that makes the hours reasonably expended a satisfactory basis for a fee award, then failing to succeed on every claim will not prevent plaintiffs’ counsel from fully recovering fees. Dang v. Cross (9th Cir. 2005) 422 F.3d 800, 812-13; Best v. California Apprenticeship Council (1987) 193 Cal.App.3d 1448, 1471-72.
How does one establish reasonable fees in the Los Angeles area for the purposes of calculating the lodestar? What evidence is required for the court to view?
Thanks.
Posted by: employment defendant | April 17, 2008 at 11:02 AM
IN A 12940 CASE WHERE THE PLAINTIFF HAS SERVED A 998 OFFER, DO ATTORNEY FEES AWARDED BY THE COURT DRAW INTEREST FROM THE DATE OF THE 998 OFFER?
Posted by: ROD TOOTHACRE | August 08, 2008 at 09:21 AM
How does one establish reasonable fees in the Los Angeles area for the purposes of calculating the lodestar? What evidence is required for the court to view?
Thanks.
Posted by: ROD | August 11, 2008 at 11:42 AM
N A 12940 CASE WHERE THE PLAINTIFF HAS SERVED A 998 OFFER, DO ATTORNEY FEES AWARDED BY THE COURT DRAW INTEREST FROM THE DATE OF THE 998 OFFER?
Posted by: ROD | August 11, 2008 at 11:44 AM