CALIFORNIA ATTORNEY'S FEES

Costs: Does FRCP 41(d) Allow For Recovery Of Attorney’s Fees As Costs When Plaintiff Previously Dismissed An Action Based On Claims Against The Same Defendant In A District Court?

Answer: Courts Are Split – Some Say No, Some Yes In The Court’s Discretion, And Others Say Yes If The Claims In The Original Suit Allowed For Fee Recovery.

            Federal Rule of Civil Procedure 41(d) provides: “If a plaintiff who previously dismissed an action in any court files an action based on or including the same claim against the same defendant, the court … may order the plaintiff to pay all or part of the costs of that previous action.”

            Fair enough, but then the real meaning of “costs” takes significance—does that include attorney’s fees? Well, the answer to the question at the federal appellate level is not uniform at all.

            Horowitz v. 148 South Emerson Associates, LLC, 888 F.3d 13, 24-26 (2d Cir. 2018) has a nice discussion on the issue. It nicely summarized the different approaches on the issue: (1) the Sixth Circuit says “no, never;” (2) the Eighth and Tenth Circuit have said “yes, in the discretion of the district court;” and (3) the Fourth, Fifth, and Seventh Circuits have on a hybrid approach basis said “yes, narrowly, but only if the statute serving as the basis for the original suit itself allows for fees recovery.” Horowitz itself lined with approach (2), which allows a district court to award fees under FRCP 41(d) in its discretion.

Consumer Statutes, Costs, Reasonableness Of Fees: 4/2 DCA Reverses Fee Award Under Song-Beverly Act Where Trial Judge Seemed To Base Award On Proportionality Of Fees To Modest Damages Award

Also, Denial Of Trial Transcript Expenses Reversed Because They Were Compensable Under Song-Beverly Act Costs/Fee-Shifting Provision.

            Although occurring in the civil rights context, we foresaw in our December 20, 2015 post on Kerkeles v. City of San Jose, 243 Cal.App.4^th 88, 102-104 (2015) that it would have much more significance in other substantive areas. Our prophecy has been borne out in a recent decision arising under Song-Beverly Act’s “lemon law.”

            Warren v. Kia Motors America, Inc., Case No. E068348 (4^th Dist., Div. 2 Dec. 12, 2018) (published) involved a situation where a plaintiff won a compensatory jury verdict of $17,455.57 in a “lemon law” case against defendant. (As an aside, the defendant made an invalid CCP § 998 offer of $12,500—and maybe more, but that was what rendered it ambiguous—plus $5,000 in fees, an offer which was rejected.) Then, plaintiff moved to recover attorney’s fees and expenses under the lemon law fees/costs-shifting statute, Civil Code section 1794(d). Plaintiff sought $526,582.89 in fees (a $351,055.26 lodestar plus a positive 1.5 multiplier) and $40,151.11 in costs ($5,882 being trial transcripts ordered by plaintiff’s attorneys). The lower court awarded plaintiff $115,848.24 in fees, applying a negative 33% multiplier, and $24,436.65 in costs (denying prejudgment interest and striking the trial transcript expenses).

            Plaintiff appealed, obtaining relief on appeal.

            With respect to costs, prejudgment interest was properly denied but it was error not to grant the $5,882 in trial transcripts. Even if this item was not allowable under the CCP routine costs provisions, Civil Code section 1794(d) defines “expenses” more broadly such that these costs were recoverable.

            That brought the Court of Appeal to the fees issue. Although not taking issue with a lot of the lower court’s reasoning, the appellate court found a flaw because it appeared that the trial judge was trying to make the fee award proportional to the modest compensatory award—something which was antithetical to the consumer statute at play with respect to a fees award. Given that a one-third discount was applied, Kerkeles required a more particularized explanation for this specific reduction. Also, the reviewing court rejected the idea that plaintiff’s consumer attorney’s fees must be compared to defense fees as far as hourly rates given the difference in billing arrangements and expertise. Reversed and remanded for a “re-do” and an award of trial transcript costs.

Employment, Costs: Appellate Court Directive That “The Parties To Bear Their Own Costs On Appeal” Does Not Preclude Award Of Appellate Fees

Directive Only Deals With Appellate Routine Costs, With Berman Hearing Fee-Shifting Provision Allowing For Recovery Of Appellate Fees For Prevailing Party Work.

            This case deals with a Berman hearing—an employee’s hearing before the California Labor Commissioner for unpaid wages. Employers gripe because, if a de novo trial is sought in the superior court, they must post an undertaking for the full amount of the award within a short time, they bear responsibility for de novo trial and potential appeals fees should they lose, and the employee can raise other claims not strictly within the Labor Commissioner demand. Well, this case also shows the risk of appealing an adverse Labor Commissioner award in employee’s favor—escalating fees of an astronomical nature. The whole dispute was over a “short” $300 difference in unpaid wages (we are not kidding) with employer fighting all along the way and eventually being assessed with attorney’s fees totaling $88,785, not to mention other statutory penalties and interest. (The appellate fee award of $57,420 was nearly 200 times the $300 amount.) Employers and their counsel need to pay attention to the result here, even though it was unpublished.

            In Stratton v. Beck, Case No. B287001 (2d Dist., Div. 4 Dec. 7, 2018) (unpublished), employee challenged a $300 “short” wage payment by an employer, winning $6,060.96 in the unpaid wages, liquidated damages, interest, and statutory penalties before the Labor Commissioner. Employer appealed and requested a trial de novo in the superior court, and the situation only got worse. The trial court awarded employee $6,778.85 plus $31,365 in attorney’s fees, with the fee determination affirmed in a prior published appellate decision. In doing so, the appellate court directed the parties “to bear their own costs of appeal in the interest of justice.” Employee then filed a motion to recoup appellate attorney’s fees, seeking a lodestar of $57,420 plus a 2.0 positive multiplier. The lower court granted an additional award of appellate fees of $57,420, the lodestar (but with no positive multiplier enhancement).

            Employer appealed the appellate fee award, with no change in result. He first argued that the prior appellate directive of “bearing own costs” means no fees could be awarded, but this was doomed because: (1) appellate fees under the Berman hearing fee shifting provision (Labor Code section 98.2(c)) are authorized for appellate work (Eicher v. Advanced Business Integrators, Inc., 151 Cal.App.4^th 1363, 1384 (2007); Nishiki v. Danko Meredith, APC, 25 Cal.App.5^th 883, 899-900 (2018)); and (2) CRC 8.278(d)(2) expressly provides costs do not include attorney’s fees with respect to appellate costs language—which is different than trial court “costs” language (Butler-Rupp v. Lourdeaux, 154 Cal.App.4^th 918, 925 (2007), found to be indistinguishable with respect to resolving this appellate cause).

            Although arguing that the lower court has discretion to deny fees to a matter which could have been a limited civil matter, employer’s problem was that he did not bring this issue up such that it was waived. As far as the amount of the award, the lower court did deny the multiplier request, so no abuse of discretion was shown; $300 became $89K-plus!

Costs, Probate, Section 998: Insurance Company Controlling Litigation Is De Facto Party Under Probate Code, Liable For Litigation Costs Under Rejected CCP § 998 Offer

Because Insurance Company Controls The Litigation, Court Looks Past "Legal Fiction" That Decedent's Estate Is The Party.

        Amanda Meleski was injured when Albert Hotlen ran a red light and collided with her vehicle. But by the time Mr. Hotlen could be served with a summons, he was dead. However, Mr. Hotlen had purchased a $100,000 policy from Allstate. Ms. Meleski offered to settle with Allstate for one dollar less than policy limits, to wit, for $99,999. Allstate rejected the offer, went to trial, and took a hit from the jury for $180,613.86. Ms. Meleski then sought to recover expert witness fees and other litigation costs, in the amount of $66,017.08, pursuant to section 998, having done better at trial than the offer that Allstate rejected. However, the trial court held that her recovery against Allstate was limited by the policy limit of $100,000. She appealed. Meleski v. Estate of Hotlen, Case No. C080023 (3rd Dist. Nov. 29, 2018) (published).   

        The appellate court refused to ignore the reality that Allstate controlled the litigation, adding: "Moreover, we find it manifestly unfair that section 998 could be employed by Allstate to recover costs from the plaintiff (which costs it would have no obligation to pay to the estate), but Allstate would have no corresponding responsibility to pay costs merely because it is not the named party." The Third District reversed the order denying an award of costs from Allstate, modifying the award to add $66,017.08 to the $100,000 in damages.

Costs: Losing Party Properly Saddled With Opposing Expert Review Costs And With Trial Technician/Exhibit Preparation Expenses For Visually Displaying Evidence At Trial

About $23,750 In Non-Taxed Costs Were At Issue.

            In Tsang v. Engelberg, Case No. A146379 (1^st Dist., Div. 3 Nov. 19, 2018) (unpublished), a losing plaintiff was not happy when the lower court denied her motion to tax costs to the winning party for about $23,750, which included review time by a medical/psychiatric expert and for trial technician/exhibit preparation expenses by outside persons visually displaying evidence at trial and operating the equipment during trial.

            The appellate court affirmed the lower’s court refusal to tax these costs.

            With respect to the expert review of documents to support his opinion, there was no abuse of discretion in awarding expenses for this time given it was necessary to develop the witness’s expert opinions. On the “trial technician” costs to visually display certain evidence and exhibits, American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton, 96 Cal.App.4^th 1017, 1057 (2002) was found persuasive in allowing for recovery of these expenses. It contrasted this to more mundane documents control and database charges which were found not recoverable in Science Applications Internat. Corp. vo Superior Court, 39 Cal.App.4^th 1095, 1104-1105 (1995).

Costs: $4,200 In Deposition Costs For Percipient “Higher Up” Witnesses No Abuse Of Discretion For Plaintiff Winning $587,000 In Damages After Bench Trial

Whether Costs Are Reasonable And Necessary Happen To Be Discretionary Calls Entrusted To The Trial Judge.

            Deposition related costs are allowable, CCP § 1033.5(a)(3)(A), but—as with all costs—must be reasonably necessary to the underlying litigation in the case, Bender v. County of Los Angeles, 217 Cal.App.4^th 968, 989-990 (2013). In Xeo International, Ltd. v. Fantasia Distribution, Inc., Case No. G055170 (4^th Dist., Div. 3 Nov 6, 2018) (unpublished), the two sides once had a business relationship, which soured, in the electronic cigarette and electronic hookah industry. Plaintiff won $587,000 in compensatory damages and fended off cross-claims by defendant. During the litigation, plaintiff took the depositions of three defense “higher ups” who were involved in percipient business discussions relating to the dispute. The lower court awarded deposition related costs of about $4,200. The defense challenge to the costs on appeal was not persuasive given that the necessity and reasonableness are questions entrusted to the discretion of the lower court. In this instance, it did not matter that one of the deponents was not called as a witness to trial, because litigants never know who may need to be called and the proof might be established through other witnesses. (Chaaban v. Wet Seal, Inc., 203 Cal.App.4^th 49, 57 (2012) [recovery of deposition costs does not depend on whether the deponent ultimately testifies at trial]; Lindy v. McChesney, 141 Cal. 351, 353 (1903) [it is frequently proper and necessary to take depositions, even though it may not be necessary to use the deponents’ testimony].) Justice Ikola authored the 3-0 affirming opinion.

Costs, Private Attorney General: 4/3 DCA Affirms $409,000 Fee Recovery And Additional Costs Recovery Even Though CEQA Petitioners Only Prevailed On One Out Of Close To Thirty Issues

Clarification Of Success Facto Under CCP § 1021.5 Is Sorely Needed In This Area.

            Our local 4/3 DCA in Protect Our Homes And Hills v. County of Orange (Yorba Linda Estates), Case No. G054631 (4^th Dist., Div. 3 Oct. 25, 2018) (unpublished) was an appeal from a situation where CEQA petitioners “partially” prevailed in an action—winning one greenhouse emission issue out of close to 30 issues raised—and with the lower court awarding them $409,000 in fees under the private attorney general statute and additional costs. Developer was not happy and appealed, but the appellate court affirmed in a panel decision authored by Justice Thompson.

            In the court below, the trial judge found that an award of pre-administrative hearing petition work—which he did allow—was faced with a split in authority between Beach Colony II v. California Coastal Comm’n, 166 Cal.App.3d 106 (1985) (no) and Edna Valley Watch v. County of San Luis Obispo, 197 Cal.App.4^th 1312, 1317 (2011) (yes). The appellate court sidestepped the conflict by finding that the rulings in these cases were dicta or distinguishable. Instead, it found that the Public Records Act was not administrative proceeding work but directly related to the CEQA litigation.

            The reviewing court then had to face whether administrative record preparation work had to be claimed through a costs memorandum, or could be raised instead through a fee motion. The appellate court concluded that it could be done by either method under CCP § 1094.5, and that the developer faced no prejudice by it being raised through a fee motion.

            Developer also challenged that the A/R costs were unjustified because developer/City had to do them because CEQA petitioners were recalcitrant. Although not really disagreeing, the reviewing court found that trial judges on a “case-by-case review” could determine if costs should be awarded even if the 60-day deadline for certification record had been or was close to blown by CEQA petitioners.

            Finally, that brought the court to the lack of success issue. Even though CEQA petitioners only prevailed on one issue, the appellate court found that the possible qualitative value of the greenhouse issue allowed the lower court discretion to award substantial fees even though losing other issues which were not found to be frivolous in nature.

            BLOG OBSERVATION—Co-contributor Mike was the lead appellate attorney on the case and has no “sour grapes” with the opinion, although he does disagree with some of the determinations. The most glaring one is that there needs to be clarification on what constitutes success in CEQA litigation when petitioners lose a huge amount of their issues. No “frivolousness” benchmark determines success, such that allowing trial judges to use this test means CEQA petitioners have no incentive to not adopt a “kitchen sink” approach to raising issues.   There is a good “issue by issue” test enunciated in the SOURCE state court case, which builds on federal Sierra Club cases on this contention. This success argument needs to be clarified given that some intermediary appellate decisions have admitted that the distinction between “claims,” “issues,” and “theories” in this area is confusing at best and has no elucidating analytics.

Class Action, Costs, Lodestar, Reasonableness Of Fees, Section 998: Trial Judge Properly Awarded Class $333,000 In Attorney’s Fees Out Of Requested $780,845.62

However, Lower Court Did Properly Award Voluntary Mediation Expenses And Expert Fees Incurred By The Class After Rejection Of A CCP § 998 Offer.

            In Diaz v. Grill Concepts Service, Inc., Case No. B284146 (2d Dist., Div. 2 Oct. 19, 2018) (unpublished), former restaurant employees of a Daily Grill brought a class action for being paid less than a “living wage” and eventually won a judgment of $300,751.31 after restaurant admitted a major degree of liability. The trial judge awarded the class $9,775 in voluntary mediation expenses and $7,497.80 in expert witness fees incurred by the class after restaurant rejected a CCP § 998 offer of $499,999 inclusive of fees and costs. The class moved to recoup $780,845.62 in attorney’s fees (which included a 1.5 multiplier) under CCP § 1021.5 and Labor Code § 218.5. However, the lower court only awarded $333,000 in fees, after reducing for duplication and block billing, consisting of a $222,000 lodestar augmented by a 1.5 multiplier. As a cross-check, the lower court found the fees reasonable because they equaled 71% of the benefits obtained by the class (which was well above a 33% contingency threshold).

            The restaurant appealed the costs awards, while the class appealed the fee award.

            Nothing changed on appeal.

          The lower court had discretion to determine the voluntary mediation expenses were “reasonably necessary” to the litigation, and no discretion was abused in this case. With respect to the expert witness fees, restaurant did reject a 998 offer which did not outstrip the judgment plus total fees and costs awarded (given the wording of the 998 offer). The fact that the 998 offer was structured as a firm number plus future fees/costs did not make the offer uncertain, given there is some “estimation uncertainty” always present in such offers. (Elite Show Services, Inc. v. Staffpro, Inc., 119 Cal.App.4^th 263, 266-270 (2004).)

            That shifted attention to the class fee award. Here is what the appellate court had to say in affirming the lower court’s ruling:

• The lower court did not have to accept, carte blanche, the requested fees numbers by a fee applicant, with the court making sufficiently clear why it made certain reductions based on duplication, block billing, and unreasonable hourly rates;
• Although opposing counsel’s work effort can be probative, it was not error to fail to compare defense work to the class work because the opposition work was not reviewed by the lower court for duplication, inefficiencies, and block billing;
• Use of a “blended rate” for class counsel is not per se impermissible and was not so in this case;
• Class counsel’s use of declarations from fellow “friends” did not have to be automatically credited but could be discounted based on bias; and
• Although the lower court “cross-checked” by the class benefits (not including the fee recovery), no sole methodology is proper; but, in any case, even if the benefits plus fee recovery was used, the fee recovery was still 41% of the total recovery—well above a 33% contingency or percentage-of-recovery measure.

Costs: Ship Vessel Owner’s Premiums For An Undertaking To Release Ship Under Custody Not Recoverable Under 28 U.S.C. § 1920 Or Other Statutory Authority

W.D. Wash. Local Rule To The Contrary Required Reversal Of Premium Costs To Prevailing Ship Vessel Owner.

            Bunker Holdings Ltd. v. Yang Ming Liberia Corp., No. 16-355539 (9th Cir. Oct. 11, 2018) (published) was a situation where a prevailing ship vessel owner in an admiralty/maritime case was awarded costs, under a W.D. Wash. Local rule, for premiums of an undertaking to keep in place a letter of undertaking that enabled the owner to secure release of the vessel (which had been arrested at the outset). The problem was that nothing in 28 U.S.C. § 1920 or any other statute allowed recovery for such costs, such that the local rule was unauthorized in nature. The Ninth Circuit did observe that this result was undesirable, but legislative action or SCOTUS action for admiralty/maritime cases was necessary to amend the governing statutes.

            BLOG OBSERVATION—The conclusion in this case is consistent with California state court cases which nullify superior court local rules or Judicial Council Rules of Court which are contrary to express contrary statutes.

Costs: Trial Judge’s Categorical Rejection Of Taxing Deposition and Trial/Other Travel Costs By Texas Counsel In California Case Required Reversal And A Restudy

Reimbursement Of Certain Expenses For Out-Of-State Counsel Can Be Entertained If Reasonably Necessary To The Litigation.

            Legendary Investors Group No. 1 f. Niemann, Case Nos. B281915 et al. (2d Dist., Div. 4 Oct. 9, 2018) (unpublished) was a situation in which the trial judge denied out-of-state (Texas) counsel’s costs for travel to deposition and trial/other proceedings (to the tune of over $74,000) in a Los Angeles action under the apparent perspective that these categorical costs were impermissible under the routine costs statute.

            Wrong, said the Court of Appeal, leading to a reversal and a remand. Code of Civil Procedure section 1033.5, subdivision (a)(3) does not limit reimbursement for deposition travel to travel by attorneys practicing in the court’s jurisdiction. (See, e.g., Thon v. Thompson, 29 Cal.App.4^th 1546, 1548 (1994); Chaaban v. Wet Seal, Inc., 203 Cal.App.4th 49, 59–60 (2012) [travel by California lawyers to out-of-state depositions]; Howard v. American National Fire Ins. Co., 187 Cal.App.4th 498, 541 (2010) [allowed meal expenses by out-of-state attorneys who traveled to depositions]; Seever v. Copley Press, Inc., 141 Cal.App.4^th 1550, 1560 (2006) [mileage expenses for San Diego attorneys driving to depositions in Los Angeles].) The same result attended to other expenses as long as they were reasonable and necessary to the litigation. So, the matter got remanded, although the appellate court put no strictures on how the trial judge should rule.

Allocation, Costs: Defendant Independent Insurance Adjustor Properly Awarded $8,148.47 In Routine Costs

Although Adjustor Was Represented Jointly With Two Nonprevailing Defendants, Costs Were Carefully Apportioned By Lower Court In Fashioning Costs Award.

            In Owens v. Bynum, Case No. A152090 (1^st Dist., Div. 3 Sept. 25, 2018) (unpublished), defendant independent insurance adjustor was awarded costs of $8,148.47 in routine costs against plaintiff after defendant won a demurrer and summary adjudication disposing of the case against him.   Two other nonprevailing defendants, represented by the same counsel as independent adjustor, settled. Adjustor sought $14,678.47 in costs but the trial court carefully apportioned costs, allocating some of the claimed ones to the settling defendants so that $8,148.47 were awarded to adjustor and against plaintiff.

            Plaintiff’s appeal of the costs award was unsuccessful.

            The appellate court rejected the contention that the costs were not “incurred” because the settling defendants might have paid adjustor’s costs. Nothing in CCP § 1033.5(c)(1) requires that the prevailing party must have personally incurred the obligations. (Litt v. Eisenhower Medical Center, 237 Cal.App.4^th 1217, 1222 (2015).) Otherwise, the apportionment by the trial court was fair given that the case was resolved against adjustor and the other defendants such that there was no double dip specter, which distinguished the award in this case from the result in Fennessy v. Deleuw-Cather Corp., 218 Cal.App.4^th3d 1192, 1196 (1990). Finally, plaintiff misunderstood that the costs did not have to be incurred solely for the benefit of the prevailing defendant, simply reasonably necessary to that litigant’s conduct in the litigation.   (Charton v. Harkey, 247 Cal.App.4^th 730, 744 (2016).)

Costs, Special Fee Shifting Statute: Prevailing Defendant In Civil Harassment Proceeding After Dismissal Of Petition For Restraining Orders Entitled To Claim Attorney’s Fees Through A Cost Memorandum

Costs Memorandum Or Fee Motion Were Proper Methods To Request Fee Recovery Under CCP § 527.6.

            In Tardaguila v. Conley, Case No. B279316 (2d Dist., Div. 2 Aug. 29, 2018) (unpublished), prevailing defendant was awarded $8,956.34 in attorney’s fees after plaintiff dismissed her petition for civil harassment restraining orders against defendant. Fees are allowable to the prevailing party under CCP § 527.6(s). Defendant claimed them through a costs memorandum, attaching redacted attorney billing records. The trial judge did strike expert witness expenses but did award $8,956.34 (out of a requested $9,996.34) in statutory attorney’s fees to defendant.

            Plaintiff appealed, claiming that a costs memorandum was an improper vehicle to seek fees, requiring a notice motion instead. The appellate court disagreed. Either way was acceptable. CCP § 1033.5 provides that allowable statutory fees are an allowable cost and may be fixed either by a noticed motion or upon application supported by affidavit made concurrently with a claim for other costs, with the costs memorandum satisfying that last option.

Costs, Section 998: Inability To Pay Does Not Prevent An Award Of Routine CCP § 1032 Costs, While Trial Judge’s Wholesale Denial Of Costs Required Evaluation Of Whether “Walkaway” CCP § 998 Offer Was In Good Faith

On Remand, Financial Condition Of Rejecting Offeree Can Be Considered In The Costs-Shifting Proceeding.

            LAOSD Asbestos Cases (Alfaro v. Colgate-Palmolive Co.), Case No. B281022 (2d Dist., Div. 4 Aug. 8, 2018) (published) involved the results of a costs-shifting proceeding in a case where a plaintiff lost her tort case in which she alleged developing mesothelioma as a result of exposure to asbestos contained in talcum powder products. (Talc cases, which have had varying results, are quite high on the trial and appellate radar screens right now.) Defendant Colgate moved to recover routine costs under CCP § 1032 and expert witness expenses under CCP § 998 after plaintiff rejected a pretrial settlement “walkaway” offer (dismissal of the suit in exchange for a waiver of costs). Given that talc cases are expert intensive, Colgate requested $311,543.86 in costs, consisting mainly of over $115,000 in expert witness fees and of over $140,000 in trial travel/lodging costs. The trial judge, based upon some submissions by plaintiff that she could not afford a hefty costs award, denied costs altogether because she did not have the ability to pay and that was an unjust “due process” violation under the circumstances.

            The 2/4 DCA reversed. It found, instead, that CCP § 1032 has no language indicating that ability to pay should be considered when it comes to awarding routine costs under section 1032, such that a reversal was necessary. Beyond that, although financial condition is a factor to consider in determining whether CCP § 998 should be awarded against a party in the lower court’s discretion, the trial judge refused to make a finding whether the offer was in good faith and the financial condition proof was somewhat sketchy such that a remand was directed to be had in this particular matter.

            BLOG OBSERVATION—One of Colgate’s successful attorneys on appeal is Louis C. Klein, an attorney at Foley & Mansfield, with whom both co-contributors Mike and Marc have worked (and Mike still does). Congratulations, Lou!

Allocation, Consumer Statutes, Costs: Consumer Plaintiff’s Win Against Car Assignee Did Require Remand Of Attorney’s Fees Decision To Allocate To The One Prevailing Claim Against Appealing Defendant And Required Rev. Of Expert Witness Fees As Costs

Appealing Defendant Picked Its Spots On Appeal, Awarded As Being Selective!

            This next case is an illustration where a non-prevailing defendant on peripheral claims appealed selectively on an adverse attorney’s fees and costs award, handsomely awarded by being discreet in what it appealed.

            In Ajis v. Foreman Financial, Inc., Case No. B280208 (2d Dist., Div. 1 July 31, 2018) (unpublished), a much more peripheral defendant sued as an assignee of a vehicle sales contract did some nice things on appeal which we commend to all of your readers in these types of limited situations.

            What happened here was that an assignee of a vehicle sales contract got caught up in various consumer and debt statute collection statutes mainly targeted against the assignor, but some of the debt collection statutes pointed at assignee even though assignee sought to unwind the whole assignment. Eventually, after a lot of litigation, a trial court (after a bench trial) entered most claims against the assignor but did enter one claim against assignee under the state Rosenthal Act even though the loan was not really finalized. The signed judgment reflected the limited recovery against assignee, with assignee liable for $800 in damages on the Rosenthal Act claim.  But, then, the real battle. Plaintiff sought $7,400 in expert witnesses’ fees and a little shy of $98,000 in attorney’s fees.

            Assignee opposed the motion that no recovery was allowable for expert witness costs and that it could only be liable for the Rosenthal Act reasonable attorney’s fees. The lower court found everything was interrelated, granting the expert witness fees and $ 89,437.50 in fees against assignee.

            Assignee appealed, prevailing in most respects. But, it did pick its spots carefully.

            The judgment against appealing assignee confirmed that it was only liable on the Rosenthal Act claim, with assignor liable on the car merchantability and related claims. With this conclusion, it was an abuse of discretion to not apportion fees against appealing defendant only as to the Rosenthal Act claim.   Apportionment was possible based on the billing submitted by plaintiff fee claimant. With respect to expert witness fees, nothing in the Rosenthal Act defines expert witness fees as costs such that they were not recoverable. (Civ. Code, § 1788.30(c). So, the expert witness costs award went POOF! and the fee award was reversed with apportionment directions—but because, in our view, appellant carefully selected its points for review which ultimately won.

Costs: Costs Request Filed Before Judicial Referee Properly Preserved The Issue, Even Though No Costs Memorandum Filed With Superior Court

Parties’ Choice Of Judicial Reference Prevailed.

           In Fitness International, LLC v. Monterey Property Associates Anaheim, LLC, Case No. D071910 (4^th Dist., Div. 1 July 25, 2018) (unpublished), the appellate court sustained a determination that the parties’ judicial reference stipulation was broad such that it allowed a costs request to be filed before the referee, dispending with the need to file a separate costs memorandum at the superior court level by the prevailing party. (Code Civ. Proc., § 664(a).)

Costs: Winning CEQA District Properly Awarded $21,160.46 As Costs For Preparation Of Certified Administrative Record Where District Took Over Efforts Due To Petitioner’s Delay

Award Was Reduced From $38,836.54 Request.

            After a CEQA petitioner lost a writ proceeding, respondent District sought to recoup a total of $38,836.54 in costs for preparing the certified administrative record, in timely fashion, based on delays on the part of the petitioner initially electing to prepare the record. The trial judge granted the costs request, reducing it down to $21,160.46.

            Petitioner’s appeal of the costs award in LandWatch San Luis Obispo County v. Cambria Community Services Dist., Case No. B281823 (2d Dist., Div. 6 June 28, 2018) (unpublished) did not change things. The main reason was that the record showed District acted properly in preparing the record, implicitly based on LandWatch’s unreasonable delays based on the 60-day record certification deadline faced by the agency.   (Coalition for Adequate Review v. City and County of San Francisco, 229 Cal.App.4^th 1043, 1055 (2014).) With respect to some specific items, the appellate court agreed that CourtCall fees to Orange County counsel for an appearance was a justifiable charge, not akin to a simple telephonic expense.

Allocation/Civil Rights/Costs/Reasonableness Of Fees: $158,880.50 Fee Award To Unruh Act Plntf Remanded For Review To Exclude Fees For A Co-Defendant’s Work, Limited Success In Light Of injunctive Modification, And Elimination Of Clerical Work Billing

Costs Award Affirmed, But Fee Award Remanded For A Further Re-Do.

             In Hernandez v. Starbucks Coffee Co., Case Nos. H042848/H043393 (6^th Dist. June 20, 2018) (unpublished), plaintiff successfully sued Starbucks for Unruh Act accessibility barrier discrimination at a San Jose store. Plaintiff was awarded statutory damages of $4,000 (although not winning all accessibility claims) and $158,880.50 in attorney’s fees (out of a requested $170,880.50) and a majority of its $8,260.39 in costs. Starbucks appealed.

            It raised a litany of challenges to both awards. A few resonated so as to require a remand.

            The appellate court found that costs associated with an unsuccessful summary judgment motion and oversized copies/scans of exhibits were properly found to be necessary to the litigation or useful to the trier of fact.

         With respect to fees, here is how things panned out:

• Given that the appellate court modified a permanent injunction, the matter had to be remanded to see if the “limited success” factor made a difference in the amount of the fee award;
• The fee award had to be reduced by $12,210 for work attributable to another settling defendant (with Starbucks doing a good job of identifying the work precisely, so that the appellate court itself could order this reduction);
• No apportionment was required because overlapping facts and legal theories were involved against Starbucks and the other defendant sued on a joint and several basis;
• No reduction was necessary for block billing because the legal descriptions were sufficient to identify the nature of the work;
• No reduction was required for interoffice conferencing, rejecting the notion that anything over 4% of total billings is per se unreasonable; and
• Reductions on remand did need to be made for purely clerical tasks.

Costs: Corporate Directors/Officers Testifying For Defendant Corporation, If Not Named Personally In A Lawsuit, Can Obtain Witness Fees From Nonprevailing Parties For 30(b)(6) Or Other Depositions

S.D. Cal. Local Rule So Allowed.

            In Stevens v. CoreLogic, Inc., No. 16-56089 (9^th Cir. June 20, 2018) (published), defendant won summary judgment in a case where plaintiff photographers alleged CoreLogic removed copyright management information from photographs and distributed them in such a state in violation of 17 U.S.C. § 1202(b)(1)-(3). CoreLogic filed a Bill of Costs seeking recovery of witness fees for its corporate employees’ attendances at 30(b)(6) and other depositions to support the corporate defendant’s position. The district judge allowed the fees as costs. Photographers appealed, but the Ninth Circuit affirmed. Although generally parties cannot recover witness fees for their own attendance, witness fee expenses to corporate directors/officers are allowable if no recovery is sought against officers individually. Southern District of California Local Rule 54.1(b)(4)(c) does allow for recoverability of such costs “if [the corporate officers] are not parties in their individual capacities.”

Costs, Special Fee Shifting Statute: Superior Court Properly Awarded General CCP § 1032 Prevailing Party Dismissal Routine Costs Totaling $1,010 In Dismissed, Transferred Small Claims Action

Appellant Argued Small Claims Special Statutory Prohibition Applied, But It Did Not.

            We once in a long while get a case involving a small claims matter, which the next case happens to be. These matters, in the fees and costs area, usually focus on whether general CCP routine costs provisions prevail or whether special small claims prohibitions apply.

            Geng v. Zhu, Case No. B280207 (2d Dist., Div. 8 May 29, 2018) (unpublished) is a situation where two parties (Zhu and Yan, respondents in the appeal) sued Geng (appellant in the appeal) in the small claims court, with Ms. Geng filing an unlimited jurisdiction civil case which moved the small claims case to the general jurisdiction court. After the small claims case was transferred, Ms. Geng voluntarily dismissed her general jurisdiction case against Zhu and Yan. After the dismissal was filed, Zhu and Yan sought $950 in filing/motion fees, $60 for service of process, and $15,606.25 in attorney’s fees. Ms. Geng moved to tax costs and opposed the fees motion. The trial court entered judgment in favor of Zhu and Yan for the first two items, totaling $1,010. Ms. Geng appealed.

            The question posed by the appeal was whether the general CCP § 1032 general costs statute controlled or whether CCP § 116.390(e) (a provision addressing allocation of costs when a small claims case is transferred to another court) controlled. Section 116.390(e) provides that if a small claims case is transferred, and the unlimited jurisdiction court “rules against the plaintiff in the action filed in that court, the court may award to the defendant in that action the costs incurred as a consequence of the transfer, including attorney’s fees and filing fees.”

            The trial court’s award was proper, because defendants prevailed in the general jurisdiction case based on the dismissal by Ms. Geng. (Code Civ. Proc., § 1032(a)(4), (b).) The general jurisdiction did not issue any ruling in the transferred small claims action such that the more particular section 116.390(e) did not apply.  

Costs, Section 998: Deposition Transcripts Ordered And Jury Fees Posted By Separate Defendants Are Awardable As Routine Costs.

Expert Witness Fee Requests Did Not Have To Be Scaled Down Due To Plaintiff’s Financial Condition.

            On the merits, Alexander v. Scripps Memorial Hospital La Jolla, Case No. D071001 (May 11, 2018 partially published; costs discussion not published) is a wrenching decision on a patient’s health care directives conflicting with providers’ opinions that the requested health care would be ineffective/harmful to the patient. The providers would not follow the directives, and they prevailed in a lawsuit over the conflict. The trial judge awarded about $160,000 in routine costs (including expert witness fees) based on the CCP routine costs provisions and a successful defense 998 offer.

            Except for a minor deduction of expert witness fees for one defendant, the costs award was affirmed on appeal. It was allowable to award costs for each defendant ordering its/his own deposition transcript and posting separate jury fees. The 998 offer to waive costs in return for a dismissal was not unreasonable and had value given that the case was expert intensive and plaintiff was on notice that costs could be substantial if the defense prevailed. It was also no abuse of discretion to scale down the expert witness fees (which were not that high per expert) for plaintiff’s financial situation given the fact that plaintiff was on notice that the defense costs could be quite high.

Costs, Employment, Reasonableness Of Fees: FEHA Award Of $44,437.50 In Attorney’s Fees And $3,411.37 In Costs Was Largely No Abuse of Discretion

Appellate Court Did Modify Judgment To Exclude UPS Services And Copy Of Amended Summons Expense Recoupment As Routine Costs.

            In Lepe v. Luft Enterprises, Case No. E067382 (4^th Dist., Div. 2 May 10, 2018) (unpublished), three plaintiffs won wage/hour awards against the defendant to the tune of $140,016. They then moved for fees and costs under FEHA as the prevailing parties. They requested $66,656.65 in fees and were awarded $44,437.50. The trial judge did award all of the requested costs of $3,411.37.

            Nothing changed much after the defense appeal was decided.

            The 4/2 DCA determined that the filing of the fee motion before judgment, although premature, did not retard its timeliness. As far as the reasonableness of the fees awarded, the defense failure to make specific challenges basically forfeited the argument. The trial judge did reduce the hourly rate claimed from $450 to $300, which showed discretion was exercised. Finally, with respect to costs, the appellate panel struck $130.96 from the judgment for inclusion of prohibited UPS and copy of amended summon expenses (CCP § 1033.5(b)(3)), although it did find that recovery of CourtCall and First Legal Same Day Filing services were proper.

Costs, Employment: Losing Plaintiff Properly Not Saddled With Routine Costs After Losing Age Discrimination Claim

Replacement By Younger Person Another Indicator To Prevent Routine Costs Award Under The Circumstances.

             By now, our readers will know that plaintiffs losing FEHA claims generally, unless the facts are austere, avoid attorney’s fees or costs even though they ultimately lost at pleading, summary judgment, or trial stages. (To be fair, only a general observation, but one we have seen it to be true over the last 10 years of blogging on fee issues.) The next case gives further credence to our general observation.

             In Brady v. Walt Disney Pictures, Case Nos. B275515/B27111 (2d Dist., Div. 1 May 9, 2018) (unpublished), plaintiff lost an age discrimination case against Disney in a summary judgment proceeding. The trial judge, however, did not grant Disney routine costs. That determination was affirmed on appeal. The reason was that the Williams case [our Leading Case No. 16] does not usually allow for fees or costs award unless losing plaintiff’s case was frivolous, unreasonable, or groundless either at the pleading or further prosecution stages. None of that occurred here. While the age discrimination case was not particularly strong, the case was not bereft of all proof, with replacement by a younger person being an indicator of age discrimination (a fact here)—so, in the end, no costs assessed against plaintiff.

Costs, Section 998: Plaintiff Obtaining Judgment In Landscaping Dispute Did Not Favorably Obtain It For 998 Costs-Shifting Purposes

Court-Ordered Mediation Costs Are Discretionary Costs Item For Award Purposes.

             Hariri v. Clark, Case No. A149402 (1^st Dist., Div. 2 May 8, 2018) (unpublished) is an interesting case showing how a CCP § 998 offer involving largely non-monetary features may not give rise to cost shifting based on the results actually obtained.

             What happened here was that plaintiff sued defendant neighbors for landscaping obstruction, with the trial judge issuing an injunction requiring defendants to trim or remove certain vegetation. (The certain emphasis obviously will be important for the end result.) Plaintiff made a CCP § 998 settlement offer and sought to recovery expert witness fees of $32,540.50 and costs for an unsuccessful mediation. The trial judge denied all of these costs requests, prompting an appeal by plaintiff.

             Nothing changed on appeal.

            The problem here was that the judgment awarded to plaintiff versus the request for landscaping requests in the litigation did not line up, with the appellate chart charting what relief was requested and judgment obtained to show that no one necessarily obtained a favorable result as far as landscaping results. That shifted concerns to the mediation costs; although the mediation was court-ordered, the lower court still had discretion to reimburse these costs, such that the decision to deny was no abuse of discretion.

Class Action/Costs/Section 998: CSU Student Class Representatives Properly Assessed With Some Mandatory Costs After Class Action Loss Under CCP § 998, But Denial Of Expert Witness Fees To Defense Was Proper Given The Differences In Damages Among Subcla

End Result Was Four Class Representatives Were Hit With Routine Costs Of $123,134.94.

            Class action practitioners should read this next post on how CCP § 998 costs shifting can result in routine costs exposure to class representatives, especially where “pocketbook” financial evidence is not properly presented.

            In Keller v. Bd. of Trustees, Cal. State University (CSU), Case Nos. A147029/A147941 (1^st Dist., Div. 2 Apr. 19, 2018) (unpublished), plaintiff students, in an eventually certified subclass, lost an action where they sued for non-resident tuition fee increases by CSU.  CSU then sought $477,613.25 in routine costs, $329,981.44 of which happened to be expert witness fees after plaintiffs rejected a CCP § 998 offer by CSU.  The trial court refused to award the expert witness fees, reducing the costs request somewhat to eventually award $123,134.94 against four named class representatives.  Cross-appeals by both sides did not change the result on appeal.

            With respect to the $123,134.94 award against the class representatives, the appellate court found that the routine costs were mandatory in nature and the trial judge was not out of bounds to reject that there was unfairness to the representatives, especially given the lack of specific proof that they would be financially distressed by the award.  Here is what the appellate court said: “Plaintiffs have failed to provide authority that a court abuses its discretion in refusing to limit recoverable costs in a class action to either the named plaintiffs’ maximum potential recovery or to the amount of costs incurred defending against individual claims. In refusing to require absent class members to shoulder a proportionate share of costs, California authority has recognized that it may be appropriate to hold class representatives responsible for costs that may outstrip their personal potential recovery. “‘While imposition of the entire cost burden on the named plaintiffs may have a chilling effect on the willingness of plaintiffs to bring class action suits, this effect easily may be outweighed by the potential recovery. All potential litigants [i.e., the representative plaintiffs] must weigh costs of suit against likelihood of success and possible recovery before deciding to file suit. Those who choose to take the risks of litigation should be the ones who bear the cost when they are unsuccessful, not those who did not make the choice.’ (Van de Kamp v. Bank of America, [(1988)] 204 Cal.App.3d [819,] 869.)” (Earley v. Superior Court (2000) 79 Cal.App.4th 1420, 1433– 1434.) Plaintiffs’ arguments to the contrary are more properly addressed to the Legislature.”  [Keep in mind this award had no relationship to the rejected 998 offer.]

            Concern then shifted to CSU’s cross-appeal challenging the failure to award it expert witness fees based on the 998 offer.  The lower court did not err in declining expert witness fees because the plaintiff subclass members had different damages such that it was impossible to evaluate the defense offer on this specific issue—the offer was invalid based on the failure to apportion.

Costs: California Agency Awarded Routine Costs As Prevailing Party Defended Most Of Them As Proper On Appeal

However, Trial and Appellate Rulings Offer Some Good Pointers On Agency Case Costs, Attempted Service Of Process On Two Addresses, Sheriff Travel Costs To Sign Depositions, And Ways To Have Deponents Sign Depositions Without Traveling To Court Reporter Office.

            We hope over the years that some of our posts have offered practice pointers, which we constantly learn from posting on California published and unpublished decisions.  Although it primarily affirmed an award of routine costs to the California Department of Food and Agriculture as a prevailing party in a discrimination case, Whitaker v. Cal. Dept. of Food and Agriculture, Case No. E064923 (4^th Dist., Div. 2 Apr. 6, 2018) (unpublished) did provide us some pointers which we share with our readers.

            First, the government claimed $40 for demurrer continuance fees.  But the appellate court found this was not reasonable and necessary to the litigation such that it had to be stricken.  The reason?  Government agencies are exempt from bearing such fees; simply because they paid it did not detract from the fact it was not necessary given the agency’s exempt status.

            Second, the appellate court affirmed that the trial court did not err by finding a process server going to two addresses for service of process was reasonable under the circumstances.

            Third, the daily witness fee for a subpoenaed sheriff’s deputy is $275, but can be allocated to a party or reimbursed depending on if the actual cost to the sheriff’s department is higher or lower.  (Gov. Code, § 68096.1.)  Generally, unless the parties stipulate otherwise, a deponent has to return to the court reporter’s office to proofread or sign a deposition transcript.  (In Southern California, attorneys routinely stipulate to relieve the court reporter of custody duties so that the deposition transcript is sent to attorneys and a proofreading/signing schedule is settled upon.  However, we have talked to California attorneys who indicate that many attorneys in Northern and Central California will not stipulate in line with what Southern California attorneys routinely do.)  However, there is an alternative procedure:  the deponent may approve or refuse to approve the transcript via a certified or registered letter sent to the reporter within 30 days.  (CCP § 2025.520(c), (f))—so, that is something to keep in mind if the Southern California stipulation procedure is not agreed to by attorneys from other areas of the state.  However, here the state agency requested costs for sheriff deputies to go down to the local court reporter and sign their deposition transcript.  Was this compensable?  You betcha, said both the trial and appellate courts.  In this instance, the deputies needed to travel down to expedite a transcript to be used by the agency in a summary judgment proceeding, such that it was reasonable and necessary.  Arguably, it was an expressly allowable cost as part of the transcription process.  However, beyond that, it certainly was within the lower court’s discretion to rule that it was reasonable and necessary under the routine costs discretionary provision. 

Arbitration/Costs: Subsequently Confirmed Judgment Involving Costs Award Separate From Prior Merits Judgment Did Not Violate “One Final Judgment” Rule

 

Appellate Court Found Incremental Award Process Appropriate Under The Circumstances.

            In EHM Productions, Inc. v. Starline Tours of Hollywood, Inc., Case No. B281594 (2d Dist., Divl 2 Mar. 28, 2018) (published), respondent in an arbitration obtained an arbitration award requiring appellant to defend respondent in a lawsuit brought by appellant’s bus drivers, which arbitration award was confirmed as a judgment.  While the petition to confirm the merits award as a judgment was pending, a JAMS appellate panel decided that appellant owed respondent $41,429.92 in arbitration costs, an award which was separately confirmed by the superior court as a judgment.

            On appeal, appellant argued that the entry of two judgments resulting from the same arbitration violated the “one final judgment” rule.  The appellate court said “naught.”  Instead, it found that an incremental award process is appropriate where not all of the issues were resolved at the time of the initial partial arbitration award.  (Cf. Hightower v. Superior Court, 86 Cal.App.4^th 1415, 1434 (2001).)  With respect to a waiver/estoppel argument, this was rejected based on the conclusion that a winning party necessarily does not need to submit costs simultaneously for adjudication with the substantive arbitration award given no one knows who won or lost (or partially did so). 

Costs, Fee Clause Interpretation, Section 1717: Successful Attorneys On Contract Claim Properly Granted Fees; Successful Plaintiff On Tort Claims Properly Denied Fees; And Plaintiff Improperly Denied Costs As Prevailing Party With Net Judgment In Malpra

Many Cross-Over Fees And Costs Issues Considered By Appellate Court In This One.

            In Davidson v. Southwick, Case No. E066978 (4^th Dist., Div. 2 Mar. 26, 2018) (unpublished), plaintiff client successfully won a malpractice action based on various torts but lost a contract claim against certain attorney parties, winning a compensatory jury verdict of $48,382.93.  On appeal, that judgment was reversed down to $4,804 on causation grounds.  The trial judge denied client any fees and costs, while awarding fees to the attorney parties under the retainer agreement and Civil Code section 1717.

            Plaintiff’s appeal of these rulings resulted in an appellate determination that she should have been awarded costs.

            With respect to the fee awards, the operative retainer agreement fee provision was narrow in scope, applying only to “an action or proceeding to enforce any provision of this [Retainer] Agreement.”  Because of this narrow breadth, client’s wins on tort claims were not “on the contract” under section 1717 (justifying a denial of fees), contrasted with attorneys’ winning on the contract claim so as to be entitled to fees (although the trial judge only awarded $10,000 out of a requested $77,800, apportioning fees such that the award only related to contractual work).

            However, plaintiff did win on the argument she was erroneously denied routine costs.  She was the prevailing party as far as a “net judgment,” and had filed a memorandum of costs (which, even if premature, was a procedural irregularity causing no prejudice to the other side).  Plaintiff was not entitled to expert witness fees in connection with her fee motion, because expert fees of this nature are not recognized as allowable costs.

Costs/Discovery: Expenses For Activities Associated With Production Of Electronically Stored Documents Properly Awarded As Discretionary Costs Under CCP § 1033.5(c)

$150,449.49 Was Costs Award To The Successful Defendant.

            Litigators at both the federal and state levels are fully aware of the expense which has been added to litigation based on having to produce electronically documents/information in cases (also known as “ESI”).  The next opinion demonstrates that ESI expenses can be recouped by a successful party as being “reasonable and necessary” to the litigation under the discretionary costs provision contained in CCP § 1033.5(c).

            In Dremak v. Urban Outfitters, Inc., Case No. D071308 (4^th Dist., Div. 1 Mar. 23, 2018) (unpublished), three plaintiff consumers, on behalf of a certified class, lost a consumer ZIP code sales information case against Urban Outfitters, with the trial judge awarding the defense $150,449.49 in defense costs—a lot of which were associated with expenses incurred to produce electronically stored documents in response to plaintiffs’ discovery requests.

            The 4/1 DCA found this award was no abuse of discretion.  Given that activities associated with e-discovery analytics and database searches are “reasonable and necessary” to the conduct of the litigation under CCP § 1033.5(c), the defense correctly was allowed to recoup these costs against the unsuccessful plaintiffs. 

Costs/Intellectual Property: Ninth Circuit, In 2-1 Opinion, Affirms Denial Of Costs To Successful Defendants/Counterclaimants And Apportionment Of Costs Between Two Sides In Well-Publicized Case Involving Copyright Infringement Dispute

Dispute Involved Pharrell Williams’ “Blurred Lines” And Marvin Gaye’s “Got To Give It Up.”

            The Ninth Circuit in Williams v. Gaye, Case Nos. 15-56880 et al. (9^th Cir. Mar. 21, 2018) (published) faced having to resolve an appeal of the case by which Pharrell Williams’ 2013 song “Blurred Lines” was found to have infringed defendants’ copyright in Marvin Gaye’s 1977 song “Got To Give It Up.”  (The case involved claims and counterclaims among affiliated parties, with the Gaye side losing a counterclaim alleging that Thicke’s “Love After War” infringed Gaye’s “After The Dance.”)  After the merits battle below, the district court denied defendants/counterclaimants’ (Gaye side’s) request for attorney’s fees and apportioned costs among the parties based on their respective victories with respect to the “Blurred Line” and  “Love After War” claims.  The Ninth Circuit affirmed most of the results below, in a 2-1 opinion drawing a dissent by Circuit Judge Nguyen (who found no similarities as a matter of law between “Blurred Lines” and “Got To Give It Up”).

           The fees and costs rulings were affirmed on appeal.  The district court did not abuse its discretion in denying fees under section 505 of the Copyright Act because the record showed consideration for these factors:  objective reasonableness of the defense litigation positions; degree of success obtained; the purposes of the Copyright Act; the chilling effect of fees; motivation; frivolousness; factual and legal unreasonableness; compensation; and deterrence.

            With respect to apportioning costs, this was reasonable given the fact that both sides had victories when the “Love After War” result factored into the mix. 

Costs/Prevailing Party: Parsons Was Prevailing Party In Qui Tam Action So As To Be Entitled To Routine And Expert Witness Costs Awardable Against MTA

Prior Settlement Agreement Between Parties Did Not Preclude Later Costs Award.

            In L.A. County MTA v. Parsons-Dillingham Metro Rail, Case No. B265863 (2d Dist., Div. 7 Feb. 26, 2018) (unpublished), Parsons was the prevailing party under a false claims count in a qui tam action.  Earlier, Parsons and MTA had reached a settlement agreement by which Parsons allowed certain credits to MTA after foregoing certain claims, with the agreement specifying that the compromise terms did not impede any repercussions in further proceedings between the parties.  After Parsons won, the trial court awarded it $60,185.07 in routine costs and $249,473.50 in expert witness fees after a CCP § 998 offer was rejected, with the award against MTA.

            MTA’s appeal of the costs award did not result in any change of circumstance. 

            The appellate court determined that the prior settlement agreement “credit” by Parsons did not have to offset against the costs award against MTA, because nothing in the settlement agreement so stated and the “no impact on further proceedings” language demonstrated that this was not the case.  (DeSaulles v. Community Hospital of Monterey Peninsula, 62 Cal.4^th 1140 (2016) [our Leading Case No. 19].  Although arguing that Parsons’ costs were not apportioned only to the false claims count, Parsons had done so such that the amount of the award was proper.

Costs: Clerk’s Premature Entry Of Costs Award Stricken As A Matter Of Law

Procedural Requirements Did Guide This Result.

            In Fichter v. Byrd, Case No. B270418 (2d Dist., Div. 4 Feb. 27, 2018) (unpublished), the appellate court, as a matter of law, decided to strike a $729.11 costs award to prevailing plaintiffs through a clerk’s entry on plaintiffs’ judgment.  The reason?  Costs were awarded before the time to file a motion to tax costs expired such that the clerk’s entry of them in the judgment was a nullity. 

Costs: Attorney’s Fees Not Recoverable Under Federal Rule Of Appellate Procedure 39 Even When Underlying Federal Fee-Shifting Statute Defines Costs As Including Fees

Second Circuit Court Of Appeals Decides Issue In Civil Rights Context.

            In Hines v. City of Albany, 862 F.3d 215 (2d Cir. 2017), the Second Circuit decided that appellate attorney’s fees for a successful civil rights plaintiff were not recoverable under Federal Rule of Appellate Procedure 39 as costs, even where an underlying fee-shifting statute defines “costs” as inclusive of attorney’s fees.  However, there was hope:  this does not prevent the plaintiff from seeking the fees under a conventional fee motion.  Rather, they could not be recouped as appellate “costs.”

            BLOG OBSERVATION—The Ninth Circuit agrees that attorney’s fees cannot be recovered as costs under FRAP 39.  (See Family PAC v. Ferguson, 745 F.3d 1261, 1269 (9^th Cir. 2014).)

Costs: Plaintiff Winning In An Arbitration But Dismissing Renewed Litigation Against Various Defendants, Liable For Routine Costs Of $51,343.66

No Exceptions Applied, Including DeSaulles Exception.

            Although occurring in a somewhat convoluted procedural context, Brewer v. Balda Investments USA, Case No. G054349 (4^th Dist., Div. 3 Jan. 30, 2018) (unpublished) reminds us that routine costs awards are governed by structural statutes which may be automatic when dismissals are involved, with the exceptions being few and far between.

            Plaintiff won an arbitration proceeding, being awarded damages, arbitration fees, and arbitration costs, an arbitration award confirmed in the superior court.  However, plaintiff had sued multiple parties, which brought demurrers or a motion to quash, with plaintiff dismissing the judicial action in entirety without prejudice after winning the arbitration.  The defendants then sought to recover routine costs of $51,343.66, a request granted by the trial judge and affirmed on appeal.

            Plaintiff failed to appreciate that routine costs are mandatory upon a dismissal unless some exception applies.  He argued that the exception in DeSaulles v. Community Hospital of Monterey Peninsula, 62 Cal.4^th 1140 (2016) [our Leading Case No. 19] applied, but it did not because there was no monetary settlement agreement triggering the dismissal of plaintiff’s complaint. 

            Acting Presiding Justice Fybel authored the 3-0 panel on behalf of the 4/3 DCA panel.

Costs/Employment: Several California District Judges Deny Recovery Of Routine Costs To Prevailing Defendants In Wage/Hour Cases

Financial Disparity Is One Of The Big Factors Weighed.

            So you represented defendants which/who successfully obtained summary judgment in a plaintiffs’ wage/hour class action case.  You move for recovery of routine costs under Federal Rule of Civil Procedure and 28 U.S.C. § 1920.  Question is:   Will you get them?  Maybe not.

            The reason is that district judges have discretion to deny an award of costs to prevailing defendants if such an award would be inequitable in nature.  (Stanley v. Univ. of So. Cal., 178 F.3d 1069, 1079-1080 (9^th Cir. 1999).)  Among the factors to be examined are whether the losing party has limited financial resources; there is a great economic disparity between the parties; the losing party’s case presented an issue of substantial public importance; imposing costs would chill future civil rights litigants; the issues in the case were close, difficult, or of first impression; the prevailing party’s recovery was nominal; and the losing party litigated in good faith.  (Ass’n of Mexican-American Educators v. California, 231 F.3d 572, 592 (9^th Cir. 2000).)

            Two district judges in California used these factors to deny imposing recovery of routine costs on plaintiff cosmetology students suing in class actions where the basis of the suit was that they were employees based on services provided in the cosmetology school’s clinic which is designed to replicate the saloon experience provided to paying clients once they become licensed.  Although granting summary judgment on the merits to the involved cosmetology schools and affiliated defendants, District Judge Fischer in Gerard v. John Paul Mitchell Systems and District Judge Chhabria in Benjamin v. B & H Education, Inc. denied defense requests for recovery of routine costs based on the factors set forth above, especially giving weight to the limited financial resources of the plaintiffs.

            We also can report that the Ninth Circuit recently resolved the merits issues, finding cosmetology students were not employees under FLSA or California state wage/hour statutes.(See Benjamin v. B & H Education, Inc., 2017 U.S. App. LEXIS 25672 (9^th Cir. Dec. 19, 2017).) 

Costs/Deadlines: Litigant Winning On Appeal Properly Awarded Fees And Costs

Motion For Appellate Fees And Costs Was Timely Filed After Skipping Labor Day Holiday.

            In a case which has spawned third and fourth appeals, the Second District, Division 7 likely reached the end of a litigation saga in Kenne v. Stennis, Case Nos. B259635/B262175 (2d Dist., Div. 7 Dec. 27, 2017) (unpublished).

            The trial judge awarded a litigant appellate fees and costs for winning a prior appeal.  The adverse party appealed, but to no avail.  The primary procedural argument was that the motion for appellate fees and costs was untimely, given it had to be filed 40 days after remittitur issuance under California Rules of Court, rule 8.278(c)(1).  The motion indeed was filed 41 days later, but it was still timely because the fortieth day was on Labor Day—a holiday such that the filing period was extended until the next court day under CCP § 12a.

Civil Rights/Costs: Trial Judge Properly Granted Losing Plaintiff’s Motion To Tax Costs With Respect To Prevailing Defendant In Case Involving FEHA/Non-FEHA Claims

$68,382.38 In Costs Not Allowed To Defense Is The Upshot.

            In Smith v. Sharp Healthcare, Case No. D069206 (4^th Dist., Div. 1 Dec. 22, 2017) (unpublished), plaintiff lost a case with both FEHA and non-FEHA claims, with the defense filing a costs memorandum seeking $68,382.38 after plaintiff rejected a CCP § 998 offer of $25,000.  The trial judge granted plaintiff’s motion to tax costs in entirety, prompting an appeal by the defense.

            Nothing changed on appeal.

            Based on one jury response, the trial judge properly found that plaintiff’s case was not frivolous so as to justify a refusal to grant costs in accordance with the reasoning in Williams v. Chino Valley Independent Fire Dist., 61 Cal.4^th 97 (2015) and Roman v. BRE Properties, Inc., 237 Cal.App.4^th 1040, 1057-1058 (2015).  The defense argued that it should be granted costs on the separate Health & Safety Code section 1278.5 retaliation claim, but both courts found that it was intertwined with the FEHA claims such that costs were not justified under Roman.  Finally, the section 998 offer was governed under the frivolousness standard, Mangano v. Verity, Inc., 167 Cal.App.4^th 944, 951 (2008), such that no change in result was in order. 

Costs: Defendants Allegedly Failing To Meet And Confer Pursuant To Demurrer-Mandated Process Still Entitled To Routine Costs After Defeating Complaint Through A Dismissal

Denial Of Costs Is Not A Sanction Prescribed For Failing To Meet And Confer.

            By now, most California litigators are well aware of Code of Civil Procedure section 430.41, which requires that a demurring party must meet and confer in person or by telephone with a party whose pleading is the subject of a putative demurrer. 

            Powers v. Emerson, Case No. B280286 (2d Dist., Div. 6 Dec. 20, 2017) (unpublished) dealt with an interesting post-dismissal costs issue:  can a successfully demurring defendant obtain a costs award after obtaining a dismissal of a complaint when that defendant allegedly did not comply with the section 430.41 meet-and-confer requirements?

            The 2/6 DCA answered the question “yes” in Powers.  Here is the appellate court’s reasoning: “[S]ection 430.41 does not contain any penalties for the failure to follow the meet-and-confer process set forth in section 430.41, subdivision (a)(1). For example, section 430.41, subdivision (a)(4) provides that ‘[a]ny determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.’  Section 430.41, subdivision (f) states that ‘[n]othing in this section affects appellate review or the rights of a party pursuant to [s]ection 430.80.’ The Legislature’s decision to forego such penalties suggests it did not intend for a defendant’s failure to adhere to section 430.41, subdivision (a)(1) to result in the loss of the right to claim costs following a post-demurrer dismissal of the case.”  (Slip Opn., pp. 6-7.)

            BLOG OBSERVATION—Although the meet-and-confer statute says it can be done in person or telephonically, some judges—such as Judge Dukes, who sits in Los Angeles County Superior Court (Pomona)—requires in-person conferences on demurrers.

Costs, Discovery, Private Attorney General, Special Fee Shifting Statutes: Multi-Million Dollar Costs, Discovery Violation Sanctions, And Fee Recoveries Reversed And Remanded Based On Reversals And Necessity To Revisit Fee Entitlement Bases

            

Moonlight Fire.  2007.  Wikipedia.  Author:  kkmontandon.

                 Dept. of Forestry & Fire Protection v. Howell, Case Nos. C074879/C076008 (3d Dist. Dec. 8, 2017) (fully published; first posted on Dec. 6, 2017 with costs/fee discussions not published) is a case arising from the 2007 Moonlight Fires which burned 65,000 acres in Plumas County.  Plaintiffs, mainly governmental agencies or affiliates, sought to recover fire suppression costs, investigation costs, and damages from defendants, mainly landowners, alleged to violate fire suppression statutes.  The defense won, with the trial judge awarding multiple millions of dollars for routine costs, discovery violations, and attorney’s fees to the various prevailing defendants. 

            Lots of things happened on appeal, but a revisit was necessary on most of these postjudgment orders.  However, the multi-millions in attorney’s fees award against Department of Forestry (Cal Fire) evaporated on appeal.

            With respect to routine costs, the appellate court had to remand to apportion costs given that it found only the judgment against Cal Fire was justified on appeal.  The costs award was not allocated, requiring a remand to determine the costs to be awarded against Cal Fire.

            The discovery violations of over $20 million also had to be remanded because the trial judge’s award was overbroad in nature—it awarded costs and fees for work prior to the discovery violations and failed to apportion out expenses not related to the violations.  Federal court broader discovery sanctioning authorities were different, and did not require a different result given the more narrow sanctions mandate under Code of Civil Procedure section 2033.

            That brought the appellate court to the attorney’s fees award against Cal Fire (somewhere in the $28 million area), which fell as a matter of law.  The first basis was Health and Safety Code sections 13009 and 13009.1, which provide in relevant part that the charge for fire suppression costs, rescue or emergency medical service costs constitute “a debt of that person [found liable under sections 13009 or 13009.1], and is collectible by the person, or by the federal, state, county, public, or private agency, incurring those costs in the same manner as in the case of an obligation under a contract, expressed or implied ” combined with Code of Civil Procedure section 1021.8, which provides that when the Attorney General prevails in a civil action based on sections 13009 and 13009.1, the Attorney General is to be awarded his or her “ costs of investigating and prosecuting the action, including expert fees, reasonable attorney [] fees, and costs.”  From this, the trial judge concluded fees were awardable pursuant to Civil Code section 1717; however, the appellate court found that the first scheme only talked about a mechanism for collection (not a fee entitlement basis) and the second statute only related to the Attorney General (not private persons).  The second basis was California’s private attorney general statute, but the Third District perceived that the defense had significant financial stakes given the potential personal exposure such that the financial burden element of Code of Civil Procedure section 1021.5 could not be met under the circumstances.

Costs, Discovery, Private Attorney General, Special Fee Shifting Statutes: Multi-Million Dollar Costs, Discovery Violation Sanctions, And Fee Recoveries Reversed And Remanded Based On Reversals And Necessity To Revisit Fee Entitlement Bases

            Dept. of Forestry & Fire Protection v. Howell, Case Nos. C074879/C076008 (3d Dist. Dec. 8, 2017) (fully published; first posted on Dec. 6, 2017 with costs/fee discussions not published) is a case arising from the 2007 Moonlight Fires which burned 65,000 acres in Plumas County.  Plaintiffs, mainly governmental agencies or affiliates, sought to recover fire suppression costs, investigation costs, and damages from defendants, mainly landowners, alleged to violate fire suppression statutes.  The defense won, with the trial judge awarding multiple millions of dollars for routine costs, discovery violations, and attorney’s fees to the various prevailing defendants. 

            Lots of things happened on appeal, but a revisit was necessary on most of these postjudgment orders.  However, the multi-millions in attorney’s fees award against Department of Forestry (Cal Fire) evaporated on appeal.

            With respect to routine costs, the appellate court had to remand to apportion costs given that it found only the judgment against Cal Fire was justified on appeal.  The costs award was not allocated, requiring a remand to determine the costs to be awarded against Cal Fire.

            The discovery violations of over $20 million also had to be remanded because the trial judge’s award was overbroad in nature—it awarded costs and fees for work prior to the discovery violations and failed to apportion out expenses not related to the violations.  Federal court broader discovery sanctioning authorities were different, and did not require a different result given the more narrow sanctions mandate under Code of Civil Procedure section 2033.

            That brought the appellate court to the attorney’s fees award against Cal Fire (somewhere in the $28 million area), which fell as a matter of law.  The first basis was Health and Safety Code sections 13009 and 13009.1, which provide in relevant part that the charge for fire suppression costs, rescue or emergency medical service costs constitute “a debt of that person [found liable under sections 13009 or 13009.1], and is collectible by the person, or by the federal, state, county, public, or private agency, incurring those costs in the same manner as in the case of an obligation under a contract, expressed or implied ” combined with Code of Civil Procedure section 1021.8, which provides that when the Attorney General prevails in a civil action based on sections 13009 and 13009.1, the Attorney General is to be awarded his or her “ costs of investigating and prosecuting the action, including expert fees, reasonable attorney [] fees, and costs.”  From this, the trial judge concluded fees were awardable pursuant to Civil Code section 1717; however, the appellate court found that the first scheme only talked about a mechanism for collection (not a fee entitlement basis) and the second statute only related to the Attorney General (not private persons).  The second basis was California’s private attorney general statute, but the Third District perceived that the defense had significant financial stakes given the potential personal exposure such that the financial burden element of Code of Civil Procedure section 1021.5 could not be met under the circumstances.

Costs: Dole Food Company Obtained Reduced, But Significant, Costs Award Of $318,858.89

The High Cost Of Unsuccessfully Seeking Justice:  Appellate Court Chopped Some Expert Witness Fees; Plaintiffs’ Attorneys May Be On The Hook For The Costs.

            Perez v. Dole Food Company, Inc., Case No. B277659 (2d Dist., Div. 5 Nov. 14, 2017) (unpublished) is an interesting fall-out from a wrongful death action which was dismissed with prejudice, resulting in a substantial costs award against plaintiffs which was upheld with one major reduction by the appellate court in an opinion authored by Acting Presiding Justice Kriegler.

            The case involved a suit by plaintiffs for wrongful death and other claims against Dole for negligently hiring members of a paramilitary organization to provide security and protection services, with the paramilitary members allegedly murdering Columbian nationals (including plaintiffs’ decedents) on or near Dole banana plantations between 1994 and 2007.  As would be expected, there were lots of foreign depositions with attendant travel, deposition court reporter, and security costs (the latter because some of the deponents may well have been mass murderers).  Some of the plaintiffs had a retainer agreement with their attorneys by which attorneys assumed the responsibility for all expenses and costs, not looking for any return unless the clients obtained monetary compensation.  This did not happen.  After some spoliation and e-discovery contentious battles, plaintiffs ultimately voluntarily dismissed the entire action with prejudice.

            The trial court then faced Dole’s request to recoup routine costs (although they were high in amount) to the tune of $493,809.55.  The court below taxed some requested costs, entering a costs award of $479,418.23, determining that plaintiffs’ claimed indigence did not per se result in a categorical denial of costs and determining that the proof submitted on this issue was stale in nature.  That prompted plaintiffs to appeal.

            They got some relief, but ultimately, ultimately were hit with a costs award of $318,858.89.

            Here is how the appellate court came out on the challenged costs:

• Forensic examination expert witness fees – on this one, the trial court did not expressly order the appointment of a forensic exam expert. Although one was ordered, the parties were free to choose their own, which was done and with the court not needing to provide any further intervention.  Given that only a truly, partial expert witness will give rise to mandatory costs under CCP § 1033.5(a)(8), the $160,559.34 in Dole-requested expert witness fees had to be taxed.  (Sanchez v. Bay Shores Medical Group, 75 Cal.App.4^th 946, 949-950 (1999).)
• Courier/messenger fees – these are not allowed or not prohibited, but subject to the trial court’s discretion if they were reasonably necessary to the conduct of the litigation. Here, given the bulk of the documents and the trial judge’s insistence on obtaining a chambers-copy of papers (very standard in state court complex cases, as well as federal cases), it was not abuse of discretion to allow these costs to Dole.
• Translation fees – same as courier/messenger fees, subject to the discretion of the trial judge. No abuse of discretion given the nature of this case.
• Deposition costs – this one had some twists, because it involved foreign travel by court reporters and security costs of having guards at the depositions given the nature of the case. The appellate court found these costs justifiable, rejecting the argument that the CCP cost provisions “prohibit travel expenses for court reporters, videographers and interpreters, who by geographical necessity were required to travel internationally for each deposition” much less security costs associated with the foreign depositions.

            That brought the Court of Appeal to the argument that plaintiffs’ indigence should have dictated in favor of denied/reduced costs in connection with Dole’s request.  After observing that “California does not categorically exempt an unsuccessful indigent party from liability for an opposing party’s costs” (Chaparral Greens v. City of Chula Vista, 50 Cal.App.4^th 1134, 1153 n. 21 (1996)), the appellate court agreed with the trial court’s conclusion that the submitted financial information was stale, as well as determining that plaintiffs’ attorneys were likely

 the persons responsible for assuming costs based on the retainer agreement.  (In reaching the latter conclusion, the appellate court cited to the L.A. County Bar Association Professional Responsibility and Ethics Comm. Formal Opinion No. 517 discussing indemnification of client’s litigation costs.)

            BLOG OBSERVATION—With respect to the indigence issue, this case illustrates that litigants need to make sure they properly present updated proof of financial condition, with a somewhat similar result being reached in our recent November 15, 2017 post on Garau v. Torrance Unified School District.