Intervenor In PUC And Federal Court Proceedings Wins Grant Of Attorney’s Fees, But Not For Unsuccessful Subsequent Work Where It Took A 180 Degree Shift in Position That Was Unsuccessful

Second District, Division Eight Affirms PUC’s Decision Denying Substantial Backend Fees and a Multiplier to Intervenor.

            Because attorney’s fee issues are pervasive, we now have a post of interest to lawyers who practice before the California Public Utilities Commission (PUC).

            The Utility Reform Network (TURN) intervened in several PUC and federal court proceedings about rate freezes and “stranded” cost recoupment before and after California’s electricity crisis hit in summer 2000.  TURN sided with the PUC in these proceedings, and one of its accounting proposals was adopted in these proceedings.  In June 2002, PUC awarded TURN $573,335.70 in attorney’s fees and costs under the Intervenor Compensation Provisions of the Public Utilities Code, sections 1801-1808, 1812, with So. Cal. Edison challenging certain rulings about the federal work compensation to TURN via writ review  (the appellate mechanism for “appealing” PUC decisions).   In the prior decision of Southern Cal. Edison Co. v. PUC, 117 Cal.App.4^th 1039 (2004) (SCE), the Second Division, Division Eight affirmed the compensation to TURN, deciding that the PUC correctly decided that TURN was entitled to be compensated for PUC work in federal court proceedings related thereto.  However, the situation that the Division Eight would now review (and that is the subject of our post) was quite a different matter.

            Later, TURN shifted course dramatically, objecting to a settlement reached between PUC and So. Cal. Edison in a federal lawsuit filed in the wake of So. Cal.Edison’s threatened bankruptcy.  It lost its challenge on numerous procedural obstacles at both federal district and appellate court levels.  TURN also lost its state challenges before the California Supreme Court.  Undeterred by these losses, TURN sought compensation from the PUC for its work on the prior Division Eight case and the unsuccessful So. Cal. Edison settlement challenges.  TURN sought compensation at the rates charged by PG&E’s outside bankruptcy counsel in bankruptcy litigation and also requested a 1.5-2.0 multiplier. 

            Although asking for more than $1.9 million in compensation, PUC decided to award TURN $389,119.68 on the second fee request, refusing to compensate TURN for its unsuccessful challenges to the So. Cal. Edison settlement on the basis that this work provided “no substantial contribution” to a PUC action and also denying the multiplier enhancement request.  TURN then petitioned for writ review.

            Division Eight, in TURN v. PUC, Case No. B197857 (2d Dist., Div. 8 Aug. 29, 2008) (certified for publication), affirmed with one slight modification on the hourly rates allowable for the work of TURN’s outside counsel. 

            The Court of Appeal—in a 3-0 opinion by Acting Justice Egerton (sitting by assignment from the Los Angeles County Superior Court)—did not dispute that intervenors like TURN were entitled to fee compensation under Public Utilities Code section 1802(i), which provides that a customer intervenor must have made a “substantial contribution” to the PUC’s proceedings, as the PUC determines.  Section 1802(a) also provides that compensable activity includes work for obtaining judicial review following a PUC decision.  However, unlike SCE where TURN assisted the PUC in non-PUC proceedings related thereto, TURN made an illegal turn (sorry about the pun!) by pursing challenges to the settlement that were rejected by the PUC, two federal courts, and the California Supreme Court.  “In short, there was no error in the PUC’s determination that the intervenor compensation provisions do not require it to award compensation for any and all judicial proceedings that ensued after an intervenor’s contribution in an earlier stage of a PUC proceeding.”  (Slip Opn., at p. 14.) 

            However, Acting Justice Egerton was careful to delineate the scope of the appellate panel’s determination.  There was no intent to rule that a non-prevailing intervenor is never entitled to compensation; however, that depends on a case-by-case analysis.  “In the end, the critical factor is not whether the intervenor’s position is for or against the PUC’s position; it is whether the intervenor has assisted the PUC in carrying out its statutory mandate to regulate public utilities in the public interest.”  (Slip Opn., at p. 15.) 

            What Division Eight did reverse was the compensation to TURN’s outside counsel as unduly low as far as hourly rates were concerned.  Relying on Public Utilities Code section 1806, the appellate panel decided that TURN’s outside counsel could not be compensated at the same rate as TURN’s in-house counsel, because section 1806 mandates that compensation be based on the “market rates paid to persons of comparable training and experience who offer similar services.”  The Court of Appeal put it this way:  “Outside counsel experienced in federal trial and appellate litigation offer different services than do TURN’s in-house staff who are expert in administrative litigation before the PUC.”  (Slip Opn., at p. 17.)  The matter was remanded to recalculate compensation awarded to TURN’s outside counsel on the second fee request. 

            Last but not least, no error was made by the PUC in refusing TURN’s multiplier request—the matter was not exceptionally complex.