CALIFORNIA ATTORNEY'S FEES

Appealability, Employment, Intervenors, Prevailing Party, Section 1717: Bevy Of Appealability Issues And Prevailing Party Issues Were Resolved By 4/1 DCA Dispute Between Former Employer And Employee Over Return And Use Of Documents On A Jump Drive

Employee Did Prevail On Employer’s Contract Claims, But Lower Court’s Reduced Fee Award For Prevailing On Labor Code Claims Was No Abuse Of Discretion—Given Attorney Intervenors Did Timely Appeal And Contest Merits Based On Their Attorney’s Lien Interest In Fees/Costs Awards.

            This next case, Premier Mechanical Group, Inc. v. Harvey (Edwards), Case No. D075663 (4^th Dist., Div. 1 Jan. 20, 2021) (unpublished), is procedurally complicated, but confronted numerous issues on appealability, prevailing party, and reduced Labor Code fee award issues.

            There, former employer and former employee got involved in a real ado centering on employee’s return and use of documents on a jump drive, inspiring various contract/tort claims by employer as plaintiff and primarily Labor Code claims by employee as cross-complainant.  Employee was represented by counsel during some phases of the litigation.  Eventually, a jury found against employer on its contract claim (finding a breach, but no damages), but awarding employer $95,000 on a non-contract unlawful audio/video recording claim against employee.  On the cross-complaint, the jury found employer had failed to pay employee for all work performed, awarding $1,940, although finding against employee on the remaining cross-claims.  Employee then moved to recover over $1 million in attorney’s fees and $57,039 in costs as the prevailing party under both the complaint and cross-complaint.  The lower court did not believe employee prevailed under the contract on the complaint and awarded $10,500 in reduced fees on the cross-complaint.  $57,039 in statutory and nonstatutory costs also were awarded to employee.  That provoked a lot of appeals, with employee’s attorney filing a notice of attorney’s lien against the client’s monetary recoveries and with employee then proceeding in pro per.  Employer then successfully moved to strike the costs award in entirety.  Employee’s substituted-out attorneys then moved to intervene for purposes of protecting their rights to recover attorney’s fees and costs in the litigation, which was eventually granted after employee in pro per and employer reached a settlement.  Attorneys filed appeals, as proposed intervenors, of various fee and costs rulings, with the lower court granting the motion to intervene to address claims for fees and costs against employer but not to seek any relief from employee.  However, the lower court did amend the fees order to direct the fees paid to the attorneys rather than employee.  Another appeal followed by employee’s attorneys. 

            Employer moved to dismiss the attorneys’ appeal, but that was denied.  As intervenors, the attorneys had an independent right to pursue fees and costs, no matter what settlement was reached between employee (former client) and employer.  Their notice of appeal was timely based on the prior entry of judgment not including the fees/costs order and based on the fact that the new order awarding them fees and costs as intervenors, later, was independently appealable.  The fact that the case, as pled, was unlimited civil in nature did not mean an appeal had to be made to the superior court appellate division; the DCA had appellate jurisdiction. 

            On the merits, the 4/1 DCA panel decided that prior orders on fees and costs could be revisited by attorneys because the later order directing fees/costs to them was a substantial modification which was independently appealable.  The lower court erred in not awarding fees and costs to employee (which would be for the benefit of her counsel filing the attorney’s lien) on employer’s complaint because employee beat contract claims, with the unlawful recording claim being a non-contractual claim.  Given that fact, the prior order vacating costs had to be considered in fairness to the intervenor attorneys.  With respect to the Labor Code attorney’s fees award, the reduction by the lower court was reasonable, compensating for 30 hours of work at the rate of $350 per hour.  Nothing demonstrated that the lower court’s apportionments and reductions were out of line under an abuse-of-discretion standard.  Remand ordered to the superior court on fees and costs to employee’s attorneys on employer’s contract-based complaint claim. 

Intervenors, Prevailing Party, Private Attorney General, Special Fee Shifting Statutes: Intervenor Residential Group Were Not Successful For CCP § 1021.5 Fee Recovery Purposes Because They Lost Their Pragmatic Goal Of Stopping A Development Project

The Trial Judge’s Call On Which Side Achieved Its Litigation Objection Was Correct.

            On June 24, 2020, we posted on Redondo Beach Waterfront, LLC v. City of Redondo Beach, Case Nos. B291111/BS168564 (2d Dist., Div. 3 June 19, 2020), unpublished at the time.  We can now report that it was partially published on July 9, 2020, though the fee discussion portion remains unpublished.  You can read the partially published opinion here.

            In the published portion of the opinion, the 2/3 DCA agreed with a trial court ruling that a developer obtained vested rights, based on a vesting tentative tract map, for a Redondo Beach waterfront development before passage of a restrictive city development measure.  During the course of the matter, a residential interest group were allowed to intervene based on its belief the City could not adequately represent the city development measure’s proponents.  Intervenor moved for costs and private attorney general fees, but the lower court found that it was not a successful party—the first element necessary for CCP § 1021.5 fee recovery.

            The appellate court affirmed in an unpublished portion of its opinion.  The problem was that the developer did achieve its litigation goals, while the Intervenor seeking to halt the project did not.  The successful party analysis is pragmatically based, and Intervenor lost its attempt to stifle the project.  Intervenor’s partial success on some ancillary claims did not alter the conclusion.

Intervenors, Private Attorney General: Intervenor In Reverse-CPRA Litigation Properly Denied Attorney’s Fees For Failure To Satisfy Private Enforcement Element Because Its Intervention Did Not Result In A Change In School District’s Release Of Docume

Along The Way, 4/1 DCA Did Not Endorse Marken’s Observations/Dictum On No Fee Recovery In A Reverse-CPRA Case.

            In Voice of San Diego v. Teacher 1 etc., Case Nos. D075148 et al. (4^th Dist., Div. 1 June 23, 2020) (unpublished), an intervenor in a reverse-California Public Records Act (reverse CPRA) case was denied CCP § 1021.5 attorney’s fees after some school districts released records after petitioner active/retired teachers tried to enjoin release of records unless certain information was redacted.  Intervenor’s appeal of the fee denial was affirmed under the deferential abuse of discretion standard.

            The problem here was that intervenor did not satisfy the “private enforcement” element of section 1021.5.  When all the facts were sorted, the school districts had basically agreed to produce the documents, once reverse CPRA concerns were addressed, with nothing significantly tethered to intervenor’s actions.  That was a factual call, with the trial judge not getting it wrong.

            However, in a footnote and other observations, this panel did indicate it did not agree with dictum in Marken v. Santa Monica-Malibu Unified School Dist., 202 Cal.App.4^th 1250, 1268    (2012) suggesting that parties or intervenors could not obtain fee entitlement under the California Public Records Act.

Intervenors, Prevailing Party, Private Attorney General, Special Fee Shifting Statutes: Trial Court’s Prevailing/Successful Party Determination For Purposes Of Costs And Attorney Fees Award Affirmed On Appeal

Determination Based On Achieving Litigation Goal, Not On Prevailing On A Higher Percentage Of Issues.

            Redondo Beach Waterfront v. City of Redondo Beach, Case No. B291111 (2d Dist., Div. 3 June 19, 2020) (unpublished), involved renovation of an existing 150,000 square foot building and a new 400,000 square foot waterfront development in the City of Redondo Beach.  The project was authorized through Measure G – approved by City residents in 2010 – which amended the City’s local coastal program to permit waterfront development.  Developer began working with the City on the project in 2010 and City deemed Developer’s Vesting Tentative Tract Map complete in June 2016.  In early 2017, City residents approved Measure C to stop waterfront development.

            Developer filed a petition for writ of mandate and complaint for declaratory and injunctive relief against City – asserting Measure C was invalid and/or unconstitutional on various grounds, and could not be applied retroactively to the project.  Fearing City would not represent proponents of Measure C, City residents successfully filed to intervene. 

            The trial court ruled against Developer’s claims that Measure C was invalid and/or unconstitutional, but – pursuant to Government Code § 66498.1 and the text of Measure C  – ruled in Developer’s favor as to the ability of City to retroactively apply Measure C to the project.  Developer’s rights had vested against the City as a matter of law because City had approved Developer’s vesting tentative map prior to Measure C’s passing.  Developer dismissed his remaining causes of action, and  City residents then moved for costs and filed an ex parte application regarding their intent to seek attorney’s fees under Code Civ. Proc. § 1021.5.  Based on existing appeals on the case at the time, the trial court requested briefing on and ruled as to successful and prevailing party status – to determine which party would be entitled to seek costs and fees.  The trial court determined Developer was the successful party as it had achieved its litigation objective to proceed with the project without being forced to comply with Measure C, while City residents failed to achieve their objective to stop the project from moving forward. 

            City residents appealed – arguing they were the successful party because they had prevailed on two out of three issues.  The 2/3 DCA found no abuse of discretion.  The panel agreed with the trial court’s finding that City residents had failed to achieve their litigation goals and therefore could not show they were the “successful party” as required for an award of attorney fees under Code Civ. Proc. § 1021.5.   

Intervenors: On Remand, CPUC Erred In Awarding All Requested Fees To Intervenors Without Linking To Specific Orders Or Decisions By The CPUC For Fee Entitlement Purposes

Another Remand To Get It Right.

            Way back in April 21, 2016, we posted on New Cingular Wireless PCS, LLC v. Public Utilities Com., 246 Cal.App.4^th 784 (2016), where the 1/4 DCA remanded a fee award to intervenors under Public Utility Code section 1803 for intervenors making “a substantial contribution of the adoption, in whole or in part, of the commission’s order or decision.”

            On remand from this 2016 appellate decision, the PUC awarded every penny to intervenors based on the theory that compensation was warranted if the positions advocated by the intervenors “would have” materially influenced a decision on the merits. 

            The same appellate court in New Cingular Wireless PCS, LLC v. PUC, Case No. A151870 (1^st Dist., Div. 4 Mar. 29, 2018 published and modified from Mar. 13, 2018 unpublished decision) vacated the fee determinations and remanded once more. 

            This time, the 1/4 DCA found that the “would have” rationale was too speculative, with it being necessary for intervenors to trace time and costs billed by intervenors with precision to an order or decision of the CPUC; and, absent that, making a reasonable allocation of amounts to the successful work rather than just claiming a 100% fee recompense. 

Intervenors: CPUC Did Not Err In Determining Two Intervenors Were Eligible For Intervenor Compensation Eligibility, But Remanded To Make Sure Its Reasoning Was Proper

 

Public Utility Code Section 1803 Was Involved, With Appellate Court Determining Its Scope.

    In New Cingular Wireless PCS, LLC v. Public Utilities Comm. of California, Case No. A144005 (1st Dist., Div. 4 Apr. 19, 2016) (published), the Public Utilities Commission of California (CPUC) awarded fees and costs to two intervenors under Public Utility Code sections 1802-1803 for their work in a complex telecommunications merger review proceeding dismissed by the CPUC as moot for reasons unrelated to anything that happened in the proceeding itself.  One of the merger proponents group challenged the fee award under section 1803, which allowed the CPUC to award reasonable advocate’s fees, expert witness fees, and routine costs to any customer who makes a “substantial contribution of the adoption, in whole or in part, of the commission’s order or decision.”

    The appellate court denied the writ challenges because it believed that the intervenors were eligible for intervenor compensation because the CPUC did decide to adopt some position being advocated by the intervenors—construing the “order or decision” language despite the subsequent mootness developments.  However, based on the reasoning used by the CPUC to get to its award, the reviewing court remanded for a relook based on the guidance in reasoning it provided.  This one is must reading for intervenors or objectors to awards in this narrow area of the law.

Intervenors: Prevailing Intervenor Neighbor In Homeowner/HOA Lawsuit Over Permit Denial Properly Awarded Attorney’s Fees Of $49,650

Second District, Division 6 Finds Intervenor Was In Same Position As Parties to the Lawsuit for Fee Shifting Purposes.

     Here is a case involving an interven0r for our category “Intervenors”--a category that we have not posted on for some time. The case is Larson v. Las Posas Hills Homeowners Assn., Case No. B219066 (2d Dist., Div. 6 Feb. 1, 2011) (unpublished) and comes out of the Second District, Division 6.

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.

            

Can An Intervenor Be Liable for An Award of Attorney’s Fees?

Yes, With the Answer Depending on Whether the Fee Entitlement Statute Is Discretionary/Mandatory in Nature or Whether the Intervenor Is “Innocent.”

            The Ninth Circuit recently explored the issue of when an intervenor may be held liable for an award of attorney’s fees and costs under two fee-shifting statutes, one arising under the civil rights scheme and the other in the antitrust sector.  Intervenors can indeed face fee exposure depending on the nature of the fee entitlement statute and on the nature of the intervenor’s conduct in the underlying litigation.

            In Costco Wholesale Corp. v. Hoen, Case No. 06-36040 (9^th Cir. Aug. 15, 2008), intervenor Washington Beer and Wine Wholesalers Association (WBWWA) intervened and assisted certain Washington state defendants in a suit brought by Costco claiming that Washington’s liquor laws violated the Commerce Clause and federal antitrust law.  Costco mostly prevailed at the district court level despite being outmanned, with the district court finding a Commerce Clause violation and giving the Legislature time to remedy the violation (which happened).  The district court, with one exception, found there were antitrust violations and entered judgment in Costco’s favor.  The Ninth Circuit later reversed one aspect of the antitrust judgment, finding no Sherman Act restraints.  The parties stipulated that Costco was entitled to $1,635,741 in fees and $66,972 in costs from the state defendants.  However, the district court found intervenor WBWWA was not liable for fees and costs, with Costco appealing that determination.

            On appeal, it was a split decision, one in favor of WBWWA and one in favor of Costco on the intervenor fee exposure issues.

            The Ninth Circuit affirmed the decision that intervenor faced no liability under 42 U.S.C. section 1988(b), the civil rights fee statute which authorizes discretionary fee awards by the district court.  The crucial inquiry, as mandated by Independent Federation of Flight Attendants v. Zipes, 491 U.S. 754, 761 (1989), was determining whether the intervenor was “innocent,” in which case fees could only be awarded if an intervenor’s actions were “frivolous, unreasonable, or without foundation.”  Because WBWWA was never found liable on the civil rights claim, it was “innocent,” a status that was not changed because of its active litigation activity in the action below.  The federal appellate court also found that WBWWA’s arguments were not frivolous, even though ultimately unpersuasive, on a novel issue that did not have much jurisprudence in the germane substantive area of law. 

            However, the Costco court reversed and remanded for redetermination on the issue of awarding fees under 15 U.S.C. section 26, which provides that a court “shall award the cost of suit, including a reasonable attorney’s fee” to any plaintiff who files an action seeking injunctive relief “against threatened loss or damage by a violation of the federal antitrust laws” and “substantially prevails.”  Unlike the discretionary fee entitlement statute involved in Zipes, section 26 in contrast has mandatory fee authorizing language.  Extending Zipes to cover section 26 situations would undermine the purpose of the statutory provision because it “would deter private enforcement of the federal antitrust laws by encouraging entities such as WBWWA to vigorously defend anti-competitive state laws with little fear of fee liability, and leading potential plaintiffs to feel less confident of success because of the increased likelihood of intervention from sometimes powerful third parties.”  (Slip Opn., at p. 10770.)  The Ninth Circuit buttressed its rationale by citing to other decisions that had only applied Zipes to discretionary fee situations.  (Ibid.)  The federal appeal panel ended by concluding that section 26 did allow for imposition of fees and costs against actively-involved intervenors like WBWWA, because its actions certainly increased Costco’s costs (almost an oxymoron, no?)—with section 26 designed to protect the injunction-seeking plaintiff by allowing a recoupment of fees/costs.  However, because the Ninth Circuit reversed the Sherman Act restraints aspect of the judgment, it remanded to allow the district court to determine if Costco “substantially prevailed” on its antitrust claims. 

            So, in the end, intervenor liability turns on a careful scrutiny of the specific fee authorizing statute at issue, with determinations of “innocence” or “mandatory/discretionary fee entitlement” being the key determinative factors in the decision making equation.