CALIFORNIA ATTORNEY'S FEES

Family Law: Wife’s Request For Section 271 Sanctions In Her Responsive Declarations To A Dissolution Modification Request Was Not Affirmative Relief Under Family Code Section 213 Requiring A Separate 271 Motion

Also, Hearing The 271 Sanctions Request At The Same Time Saved Court Resources.

            The Second District, Division 2, in Perow v. Uzelac, Case No. B283457 (2d Dist., Div. 2 Jan. 31, 2019) (published), decided that a wife’s request for Family Code section 271 sanctions in her responsive declarations in a dissolution modification proceeding was not “affirmative relief” under Family Code section 213 requiring that the request be brought through a separate motion. As colorfully put by the panel, “A party seeking attorney fees under section 271 is not seeking affirmative relief within the meaning of section 213 because the request for such fees is an attack on the messenger, not his message.” Also, hearing the sanctions request with the modification request avoided duplicative proceedings and conserved judicial resources.

Section 998: Joint Defense Section 998 Offer Was Valid So As To Result In Costs-Shifting

Fact That Two Defendants Were Dismissed And Offer Encompassed Any Existent Plaintiff Liens Did Not Impact Its Validity.

            In Ziert v. Young’s Lockeford Payless Market, Inc., Case No. C079669 (3d Dist. Jan. 30, 2019) (unpublished), several defendants made a joint CCP § 998 offer to plaintiff for $50,000, with no extra costs/fees and inclusive of satisfying all existing liens assessable against any recovery by plaintiff. Two defendants were dismissed without prejudice before trial. Plaintiff did not even come close to beating the 998 offer after a jury verdict, which resulted in a costs award against plaintiff and in favor of the offering defendants.

            On appeal, plaintiff argued that the 998 offer was invalid, but the Third District rejected the arguments advanced as to why. Plaintiff initially argued, based on Kahn v. The Dewey Group, 240 Cal.App.4^th 227 (2015) (where a 998 offer by 20 defendants was not enforced where 6 defendants had no court adjudication and were in limbo based on a deadlocked jury such that it was not possible to say if the defendant group prevailed), that the dismissal of the two defendants rendered the offer invalid. The appellate court found Kahn distinguishable because there was no indication that the two defendants would ever go to trial, such that all defendants indeed prevailed. Plaintiff then argued that the “existing lien” satisfaction language voided the offer, but the Court of Appeal concluded no support was provided for this argument and that this type of lien language is routine in many 998 offers.

SLAPP: $102,699 In Appellate SLAPP Fees Affirmed On Appeal Against Losing In Pro Per Defendant/Cross-Complainant In Dispute With City Of Monrovia

Earlier, In Pro Per Litigant Hit With Trial SLAPP Fees Totaling $24,122.50.

            City of Monrovia v. White, Case No. B282713 (2d Dist., Div. 2 Jan. 30, 2019) (unpublished) is quite a remarkable saga, showing how SLAPP fees against a losing litigant, especially against a losing litigant who also loses a subsequent appeal, can be quite steep in nature.

            In this one, City sued defendant to enjoin unpermitted grading/construction on defendant’s property, prompting in pro per defendant to file a cross-complaint with 21 cross-claims. (In pro per litigant happens to be a licensed California attorney.) City successfully SLAPPed the cross-complaint and defendant lost her SLAPP motion, resulting in the imposition of $24,122.50 in attorney’s fees. Defendant/cross-complainant then appealed the SLAPP merits rulings, which were affirmed in large part in a prior appellate decision. City moved for its appellate fees as prevailing party, with the trial court awarding it another $102,699 for this work. The fee hearing was unusually long, with the in pro per litigant taxing the patience of the trial judge—where he recused himself voluntarily after making the fee ruling.

            In pro per appealed the appellate fee award, losing yet again.

            She argued that the trial judge’s recusal voided the appellate fee ruling, but the 2/2 DCA rejected that because the recusal occurred after the merits ruling. City initially had failed to file a supporting fee declaration with the “under penalty of perjury” language, but it corrected the error way before the fee hearing (which, like most hearings these days, are scheduled through a reservations system months down the line)—with the appellate court determining that the errata was not prejudicial because appellant had plenty of time to respond to the fee motion. City did prevail in the prior appeal (because 76% of the cross-claims were properly SLAPPed), and the prior appellate panel’s award of costs to City did not preclude it from also seeking attorney’s fees (put another way, awarding costs is not mutually exclusive of fee entitlement).

            BLOG OBSERVATION—Co-contributor Mike recently appeared before Los Angeles County Superior Court Judge Terry Green (a USC graduate, with a cozy judicial attitude). Judge Green lamented the reservations system, indicating it was another indication that the courts are adopting the method of many other businesses of having you not talk to a real live human being. He likes people-to-people interactions, requiring counsel in discovery disputes to meet in person and work things out. Kinda refreshing, right?

Arbitration: 2/7 DCA Decides, Absent Clearly Worded Arbitration Submission, That Arbitrator Refusing To Award Contractual Fees To Prevailing Party Can Do So Without Fearing Reversal

Appellate Court Follows Safari Over DiMarco, Although Reversing Denial Of Postarbitration Fees To Prevailing Party In Superior Court Proceedings.

            The Second District, Division 7, in Cohen v. TNP 2008 Participating Notes Program, LLC, Case No. B266702 (2d Dist., Div. 7 Jan. 29, 2019; posted Jan. 30, 2019) (published) dealt with a situation where a superior court confirmed an arbitrator’s decision to deny contractual fees to an arbitration prevailing party based on the unclean hands of the party’s founding member who had culpability. The superior court also denied attorney’s fees to the prevailing party in postarbitration confirmation/vacatur/correction proceedings.

            The appellate court affirmed the arbitrator’s fee denial but reversed the denial of postarbitration fees ruling.

            In deciding that the arbitrator has the power to deny fees to a clearly prevailing party (which cannot happen at the California state court level), the 2/7 DCA decided that reasoning in DiMarco v. Chaney, 31 Cal.App.4^th 1809 was flawed and followed instead the opposite rationale acknowledging the arbitrator’s power to do so as set forth in Safari Associates v. Superior Court, 231 Cal.App.4^th 1400 (2014). It recognized that an arbitrator can make his/her award ex aequo et bono (according to what is just and good). [Who says Latin is completely dead in judicial decisions?] APPELLATE HINT—However, the panel in this matter did indicate that precise drafting in an arbitration submission agreement might compel the arbitrator to award fees to the prevailing party, if drafted the right way.

            With respect to the postarbitration fee denial, that was error because fees are awardable under Code of Civil Procedure section 1293.2, in tandem with the definition of fees as “costs” in other CCP provisions.

Costs, Mediation: Co-Contributor Marc's Article On Cost-Shifting In Mediation Is In The January 29, 2019 Daily Journal

Mike & Marc Have Previously Posted About Berkeley Cement v. Regents Of The University of California.

    Co-contributor Marc's article entitled "Cost-shifting in mediation after Berkeley Cement ruling" appears today, in the January 29, 2019 Daily Journal. If you subscribe to the Daily Journal, then you can access the article on-line. Or you can read a short post dated January 17, 2019, on the California Mediation and Arbitration blog, and a post dated January 8, 2019 on the California Attorney's Fees blog.

Deadlines, Special Fee-Shifting Statute: Attorney Asking For Mandatory Relief Stemming From A Failure To File Default Set Aside Motion Before Default Judgment Prove-Up Properly Had To Reimburse Other Side For $10,000 In Attorney’s Fees

Fact That Discretionary Relief Also Included, Which Does Not Allow For Fee Shifting, Did Not Change The Result.

            In Fink v. Cost U Less Cars, Inc., Case No. C085383 (3d Dist. Jan. 29, 2019) (unpublished), attorney was ordered to pay $10,000 in attorney’s fees and costs for the lower court’s grant of a mandatory default relief motion under CCP § 473. The attorney had failed to file a motion to set aside a default before a default judgment prove-up hearing, asking for mandatory and discretionary relief under section 473 from the default judgment. Attorney appealed, arguing that relief should have been granted under the discretionary relief prong which does not require the court to order legal fees and costs.

            Wrong, said the Third District. Attorney moved for both mandatory and discretionary relief, obviously wanting to get relief and not just ride the discretionary “relief valve” which frequently is not granted. By signing the “fall on the sword” declaration, attorney invited the lower court to grant mandatory relief. The amount of the award was not unreasonable, given that the attorney failed to develop an inadequate record for the challenge. Finally, the due process contention was rejected because the fees were not a “sanction,” but really a payment to the opponent to defray the costs of the attorney’s neglectful conduct (the appellate court’s words, not ours).

Section 998: Defendant With Strong Defense Entitled To $30,410.91 In Expert Witness Fees When Plaintiff Rejected 998 Offer And Defendant Prevailed

Weakness Of Case And Strength Of Defenses Must Be Considered Before Rejecting Offers.

            In Del Norte Senior Center, Inc. v. Stelling, Case No. A145016 (1st Dist., Div. 4 Jan. 25, 2019) (unpublished), defendant was awarded $30,410.91 in expert witness fees after she defensed plaintiff in a contentious accounting dispute. She had earlier offered to pay plaintiff $163,636.53 through a CCP § 998 offer after attending a settlement conference, an offer rejected by plaintiff. On appeal, plaintiff argued that the 998 offer was made in bad faith, but this did not resonate at all with the reviewing panel. Although plaintiff wanted $525,000, it failed to evaluate the weakness of its case and strength of defendant’s defense (given that there was an investigative report absolving her of fault). She made a good faith offer, reinforced by the fact it came after a settlement conference where there was some input on exposure. There was nothing wrong with defendant putting the same money on the table through a 998 offer, given that is what section 998 is designed to do—get parties to settle!

Fee Clause Interpretation, Mediation: $331,385 Contractual Fee Award Affirmed Because Absence Of Parol Evidence Did Not Show Fees Clause In One Contract Had A Mediation Condition Precedent

Absence Of Parol Evidence/Reporter’s Transcript Sealed The Result.

            If you are going to argue that a fees clause in one contract also governs another contract between different parties, you better introduce parol evidence to prove it. The loser in a fee battle did not do that in Morales v. Thee Aguila, Inc., Case No. G055224 (4^th Dist., Div. 3 Jan. 25, 2019) (unpublished), much less provide a reporter’s transcript, translating to a loss on appeal.

            Appellant lost an attorney’s fees battle to the extent of a $331,385 exposure based on a two-page handwritten contract with a fees clause. However, appellant claimed that a different contract involving different parties had a mediation condition precedent to fee recovery which was not followed so as to overturn the fees award at issue. The problem here was essentially one of proof: appellant introduced no parol evidence and did not provide a reporter’s transcript of what was offered into evidence below. Given the lack of parol evidence, the objective rule of contractual interpretation applied. There was a provision saying that prior agreements were incorporated into the contract as between the parties; however, given that the fees clause in the second contract involved different parties, there could be no carry-over of the mediation requirement from the second contract. Fee award affirmed.

            Justice Goethals authored the 3-0 decision for the 4/3 DCA.

Sanctions: $17,820 In CCP § 128.7 Sanctions Affirmed, Because No Subjective Bad Faith Finding Necessary, Unlike What Is Required Under § 128.5

However, No Additional Appellate Sanctions Imposed.

            In Horner v. Judges’ Retirement System, Case No. C084619 (3d Dist. Jan. 25, 2019) (unpublished), the Third District affirmed a $17,820 sanctions award imposed under CCP § 128.7, observing in the process that no showing of bad faith (only legal frivolousness) is necessary under this sanctions statute versus the bad faith showing required under § 128.5. However, it refused to impose additional appellate sanctions, based on this reasoning: “The easy case is where there is evidence the appeal was filed for an improper motive. The more difficult case is to distinguish misguided lawyering from an egregious misuse of the appellate process because we certainly do not want to punish a lawyer for full-throated advocacy on behalf of his or her client by raising a novel theory or nudging the development of the law” (Slip Opn. at p. 7), with there being enough advocacy to justify the result.

In The News: Retired Judge Kozinski Has Intriguing Attorney's Fees Proposal For Government Attorneys Who Prosecute Pointless Lawsuits

Lack Of Exposure To Consequences Presents A Moral Hazard.

    The Hon. Alex Kozinski, retired from the Ninth Circuit, and now an expert on moral hazard, has written an intriguing article in today's Friday, January 25, 2019 Wall Street Journal. The article is entitled, "How a Pointless Lawsuit Took Off."

    The lawsuit involved Rahinah Ibrahim, a Malaysian national and Stanford doctoral candidate, who discovered that she was on the government's no-fly list, barred from U.S. airlines and airspace. It was all a horrible mistake, an error resulting from a government agent who misread a form. But the government fought Ms. Ibrahim's efforts to be removed from the no-fly list for 14 years. According to Kozinski, "government officials knew about the mistake almost from the day of her arrest." 

    Aside from the cost of time, effort, and emotional resources, the case consumed $3.6 million in attorney's fees. Kozinski argues government lawyers face no reality check: "Their salaries get paid regardless of outcome, and the costs of litigation are picked up by the taxpayers. . . Litigating for the government thus poses a moral hazard for lawyers: A victory, no matter how Pyrrhic, delayed or pointless, enhances their careers, whereas a loss -- even a finding of bad faith -- carries little risk."

    Kozinski's modest proposal is that the Equal Access to Justice Act, under which Ms. Ibrahim's laywers will get paid, absent a showing that the government's position "was substantially justified," be amended to stick government attorneys with personal responsibility for some share -- say 1% -- of the attorney's fees, upon a finding of bad faith.

    If Kozinski's proposal is enacted into law, we see a new cottage industry springing up. Courts will be forced to decide whether government attorneys acted in good faith as zealous advocates, or whether they were naughty and acted in bad faith. Every contentious case that government attorneys lose will potentially become an opportunity to tap the attorneys for some amount of fees -- one more reason not to work in the public sector. And we will have to create a new sidebar category on this blog for government attorneys.

    

Fee Clause Interpretation, Section 1717: Defendant Prevailing In Easement Dispute Was Entitled To Contractual Fee Award

Easement Agreement Fees Clause Was Broad Enough To Allow For Fee Entitlement.

            In Stark v. Ortiz, Case No. A153680 (1^st Dist., Div. 5 Jan. 24, 2019) (unpublished), defendant won contractual fees in a neighboring landowner easement dispute against a plaintiff. The parties had an Easement Agreement with a fees clause encompassing “any legal action or proceeding arising out of or relating to” the Easement Agreement. The trial court found in favor of defendant on plaintiff’s complaint after defendant dismissed a cross-complaint. The lower court awarded all fees to defendant except for ones relating to the dismissed cross-complaint.

            Plaintiff’s appeal of the fee award was not successful. The fees clause was broad enough to encompass both the declaratory relief claim (for sure) and the intertwined tort claims brought by plaintiff, all of which involved the scope of the Easement Agreement.

Employment: 4/3 DCA Decides That Nanny Winning Berman De Novo Hearing Not Entitled To Fee Recovery Because She Opted For Administrative Remedy And Was Not A Prevailing Respondent (But A Prevailing Appellant Not Entitled To Fees)

Court Of Appeal Found Sampson Decision Sounder Than Eicher In Determining If Labor Commissioner Appeal Was A Civil Action Worthy Of Fees Under Labor Code § 1194.

            Boktor v. Applebaum, Case No. G055509 (4^th Dist., Div. 3 Jan. 23, 2019; posted Jan. 24, 2019) (unpublished) waded into the thorny issue of whether a successful appellant/employee was entitled to attorney’s fees for minimally prevailing in a de novo action appeal from a Berman hearing under either Labor Code sections 98.2(c) or 1194. Because employee opted for the Berman administrative remedy, only section 98.2(c) applied, which did not allow fee recovery by a successful appellant (although fees were allowable to a successful respondent).

            Here, nanny/employee filed against her employer a Labor Commissioner proceeding under Labor Code section 98 for unpaid wages, eventually winning an award of $12,753.94 (inclusive of liquidated damages and penalties)—well short of the $400,000 she requested. Nanny appealed for a de novo hearing and did not even do as well, only winning $300 for unpaid overtime plus penalties and interest of $6,000. Nanny then moved for recovery of $124,132.50 in attorney’s fees under Labor Code sections 98.2(c) [allowing fee recovery by a successful respondent in a de novo appeal] and 1194 [allowing fee recovery by an employee in a civil action regarding overtime wages]. Assuming section 1194 was applicable, the lower court denied fees because the action should have been filed as a limited action rather than an unlimited one. That provoked an appeal by nanny.

            She lost, with the fee denial being affirmed.

            The clincher in this case was that nanny opted to use the Berman administrative remedy rather than filing a direct civil action for overtime wages in court. The 4/3 DCA found that the trial de novo was not the equivalent of a civil action for section 1194 purposes, favoring the analysis of the 2/3 DCA in Sampson v. Parking Service 2000 Com., Inc., 117 Cal.App.4^th 212, 223 (2004) in support over the contrary result reached by the 3^rd DCA in Eicher v. Advanced Business Integrators, Inc., 151 Cal.App.4^th 1363, 1378-1379 (2007). So, that brought the appellate court to a consideration over whether section 98.2(c) allowed for recovery. It did not, because it can only go to a successful respondent, not a successful appellant in nanny’s shoes.

            Presiding Justice O’Leary authored the 3-0 decision.

Deadlines: Appellate Attorney’s Fees Properly Are Claimed Through Noticed Motion, With No Requirement That A Costs Memorandum Be Filed.

CRC 8.278(d)(2) Governed.

            A party saddled with attorney’s fees for losing an appeal, in ASAP Copy and Print v. Canon Solutions America, Inc., Case Nos. B284364 et al. (2d Dist., Div. 2 Jan. 23, 2019) (unpublished), argued on appeal that the opponent failed to file a costs memorandum to claim fees rather than just filing a motion for appellate attorney’s fees. The appellate court found that no costs memorandum was required, such that the fee motion was just fine—citing Cal. Rules of Court, rule 8.278(d)(2) in support of its conclusion.

Section 998: No Attorney’s Fees Recoverable By CCP § 998 Prevailing Party In California Disabled Persons Act/Unruh Act Case Because No Liability Finding That Plaintiff’s Rights Under These Statutes Were Violated In Case Seeking Monetary Damages

If You Want Fees As A Plaintiff, Make Sure You Have A Liability Determination.         

            Linton v. County of Contra Costa, Case No. A153188 (1^st Dist., Div. 1 Jan. 23, 2019) (partially published; section 998 discussion published) is a stark reminder for plaintiff disability attorneys: if you want fee recovery under an accepted CCP § 998 offer in a case seeking monetary damages under the California Disabled Persons Act (DPA) or the Unruh Act, you need to have a liability determination—namely, that plaintiff’s rights were violated under the two statutes—in order to recover fees following acceptance of the section 998 offer.

            The facts here were that three defendants jointly accepted plaintiff’s section 998 offer in a monetary DPA/Unruh Act case for $250,001 “plus costs under CCP § 1032 and attorney’s fees allowed by law as determined by the court.” Plaintiff moved for recovery of fees, but the lower court determined there was no fee entitlement because both the DPA and Unruh Act required a liability determination that plaintiff’s disability rights were violated as a predicate to fee recovery, something missing in the 998 offer language. This result was affirmed on appeal.

            Just because a plaintiff prevails does not automatically cede fee entitlement, which must be based on a contract, statute, or law. In this instance, the two disability schemes, where monetary damages are sought, only allow for fee recovery if there is a liability determination. (See Dorn v. North State Grocery, Inc., 137 Cal.App.4^th 484, 489-491 (2006) [same result in Unruh Act case, with 1/1 DCA in Linton finding same reasoning applicable under the DPA].)

            Plaintiff still went down fighting, contending that the section 998 language created a contractual right to fee recovery. No way, said the Court of Appeal panel. That language only established the plaintiff as the prevailing party, but that designation lacked the additional specification that the defense was admitting plaintiff’s disability rights were violated. The 1/1 DCA also discussed the Judicial Council Form CIV-090 for 998 offers, cautioning practitioners to proceed with the caution because none of the five option boxes really covered a liability determination—although noting that plaintiff could have checked box 2.b and added supplemental language had she wanted to gain fee recovery. No competent parol evidence was introduced to explain the 998 language, given no contemporaneous emails or communications with defense counsel. Reliance on plaintiff’s counsel’s subjective intent was not the equivalent of competent parol evidence.

            FURTHER BLOG COMMENT—The appellate court also “struck” portions of appellant’s appendix for including documents not presented before the trial court, although allowing appellant some leniency in some technical violations of AA requirements. Also, the appellate court noted that, in injunction situations under the Unruh Act, attorney’s fees are mandatory such that no liability determination is necessary, but was necessary in the monetary damages case before it.

Class Action: Non-Class Counsel Has Standing To Appeal Denial Of Fees, But Record Reflected That They Did Not Provide A Substantial Benefit To The Class Versus Individual Client Class Members

244 Non-Class Counsel Fee Motions Resolved On Appeal In The Volkswagen Class Action.

            In In re Volkswagen “Clean Diesel“ Litig., Case Nos. 17-16020 et al. (9th Cir. Jan. 22, 2019) (published), the Ninth Circuit was facing 244 fee motions by non-class counsel seeking fees in the settlement of the VW “clean diesel” action where the lower court had earlier approved a $10 billion settlement (not a common fund) and awarded class counsel $175 million in fees. Needless to say, the non-class counsel filed attorney’s liens on their individual class member recovery and initiated enforcement proceedings against individual clients, with the district court enjoining this at earlier stages of the matter. Eventually, a class action settlement was entered into, with specific provisions by which VW paid fees only to class counsel and under which individual clients would have to bear their own expenses if they utilized counsel other than class counsel. Because non-class counsel wanted to get paid, they moved to enforce attorney’s liens under retention agreements against individual class members, with the supervising district court enjoining those efforts, only to later remove the injunction later on during the case. Non-class counsel moved to recover fees, but the lower court denied them based on the ground their efforts did not result in a substantial benefit to the class.

            The Ninth Circuit affirmed.

            VW challenged the non-class counsel’s standing to appeal, but—in a first impression case—decided that non-class parties/counsel deprived of fees did show an injury worthy of standing to appeal the adverse fee denial order.

           However, that is as good as it got. After carefully analyzing the efforts of non-class counsel (especially calibrated to the settlement provisions on what VW would pay—only class counsel efforts), the federal court of appeals decided that the district did not err in concluding that the non-class counsel efforts did not result in a substantial benefit to the class. With respect to the attorney’s lien issues, this was moot because the lower court vacated the injunction such that individual class members will have to duke it out with their attorneys as what should (or should not) be paid.  

Probate: Where Judgment Was Satisfied, Trial Court Erred In Awarding Post-Satisfaction Fees Against Satisfying Objector

4/3 DCA Also Determines Probate Court Section 859 Allows Doubling, But Not Trebling, Of Damages.

            Objector in Conservatorship of Ribal, Case No. G056105 (4^th Dist., Div. 3 Jan. 18, 2019) (published) was ordered to return funds to the conservatorship and, on remand, the trial court awarded conservator post-judgment attorney’s fees incurred in attempts to enforce the judgment of $43,507.50 against objector. This one was reversed because the record showed that the judgment had been satisfied before the fee motion was brought, meaning the fee motion was untimely under Code of Civil Procedure section 685.080(a). The 4/3 DCA, in the opinion authored by Acting Presiding Justice Moore, also construed the scope of Probate Code section 859, determining that it allows for doubling, but not trebling, of damages for the value of property taken or disposed of by a person committing financial elder abuse.

Costs, Employment: Third Circuit Court Of Appeals Affirms $319,655.80 Costs Award Against Named FLSA Plaintiffs For ESI Vendor TIFF Conversion And Platform Loading Production Activities

Federal Appellate Court Dismisses Arguments That Costs Recovery Not Allowable Under FRCP Or FLSA, Or Was An Abuse of Discretion Under The Circumstances.

           This next case is a harbinger for risk advice which plaintiff litigators should provide to putative Fair Labor Standards Act (FLSA) plaintiff clients, because these clients could be liable for certain e-discovery vendor expenses of a substantial amount if the defense prevails, as the defense did in Camesi v. University of Pittsburgh Medical Center, Case Nos. 17-3476/18-1112 (3d Cir. Jan. 15, 2019) (nonprecedential).

            What happened here is that four named plaintiffs filed an FLSA collective action on behalf of another 2,800 unnamed plaintiffs for meal break violations, a case which was conditionally certified by the district court. Named plaintiffs then sought broad ESI production, with the district court entering an order to that effect. Later, after the defense complied through an ESI vendor who converted documents to TIFF and loaded the converted files onto the vendor’s platform for eventual production, the district court decertified the action, dismissing the unnamed plaintiffs’ claims without prejudice. Named plaintiffs then dismissed their claims in order to appeal the decertification order, an appeal the Third Circuit earlier dismissed due to lack of jurisdiction. Then, the defense sought to recover $319,655.80 in ESI vendor expenses as costs against the named plaintiffs, smartly requesting only a third of the ESI vendor expenses (with $300,000 encompassing copying charges and the remainder the ESI vendor direct expenses). The district court clerk taxed costs (in federal parlance, that means costs were allowed), with the district judge confirming this allowance. Named plaintiffs appealed to the Third Circuit with numerous challenges, all of which were rejected in the 2019 nonprecedential opinion. (In doing so, the federal appeals court relied on the reasoning in Kuznyetsov v. West Penn Allegheny Health System, Inc., 2014 WL 5393182 (W.D. Pa. Oct. 23, 2014).)

            First, named plaintiffs claimed that the costs were not recoverable under 28 U.S.C. §1920, which allows taxing of costs “where the copies are necessarily obtained for use in the case.” No, because the Third Circuit’s prior opinion in Race Tires America, Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3d Cir. 2012) does allow for recovery of these expenses, which the district judge awarded after a prior appeal remand to obtain more evidence to see if Race Tires allowed them. (Both Race Tires and the prior Camesi appeal decision were discussed in our March 28, 2016 post.) The costs were necessary to the case, since plaintiffs were the ones demanding the documents!

            Second, plaintiffs contended that defendants were not prevailing parties under FLSA. This argument did not itself prevail because FLSA does not address a prevailing defendant situation such that FRCP 54(d)(1) did allow for costs recovery of the subject expenses. The appeals court found the award was not violative of FLSA, because plaintiffs should be incentivized to carefully assess and not file meritless/marginal claims. Also, the Third Circuit followed the majority approach that the defense can prevail based upon a voluntary dismissal by unnamed plaintiffs. It further determined that there was nothing unfair about only assessing costs against the four named plaintiffs rather than unnamed plaintiffs too, because this would encourage named plaintiffs’ counsel to advise them, prefiling, of the risks associated should the defense later prevail (which would include a costs award against them).

            Third, the award was not an abuse of discretion. The evidence showed that the four named plaintiffs were not indigent and could bear the costs award (although we presume this will hurt). Beyond that, a district judge only permissively can deny costs based on the indigency/pocketbook factor—it is not mandatory to deny costs in this situation. No bad faith was shown by the defense, given that this side was only responding to the broad document production wanted by plaintiffs anyway.

            BLOG OBSERVATION—An interesting question is whether the result would be the same in a California state case alleging a FLSA collective action. We believe the answer may well be “yes.” Number 6 of our Top 25 decisions for 2018 was the 4/3 DCA’s published opinion in Quiles v. Parent, 28 Cal.App.5^th 100 (2018) (now final), which allowed recovery of costs to FLSA prevailing plaintiffs under FLSA even though California routine costs statutes would not permit costs recovery. In this area, Toshiba America Electronic Components, Inc. v. Superior Court, 124 Cal.App.4^th 762 (2004) held that CCP § 2031.280(b) (formerly § 2031(g)(1)) requires that the reasonable costs of ESI data translation into usable form must be borne by the demanding party. Given that California courts look to federal cases on e-discovery issues (see id. at 770; Vasquez v. Calif. School of Culinary Arts, Inc., 230 Cal.App.4^th 35, 42-43 (2014)), a good case can be made that the result in Camesi would allow recovery of ESI costs in certain respects by prevailing defendants.

Family Law: Pont v. Pont Now Published

Appellate Court Recognized Spin-Off Litigation Under Stipulated Settlement With A Fees Clause Could Give Rise To Fee Recovery Even Though Dissolution Case Venued Elsewhere.

            In our December 22, 2018 post, we discussed Pont v. Pont, Case No. B284064, which was a 2/1 DCA decision which was unpublished at the time. The opinion upheld an attorney’s fees award to a husband who prevailed in Orange County spin-off litigation involving a stipulated dissolution settlement even though the dissolution case was venued in Los Angeles County. We can now report that the opinion was certified for publication on January 16, 2019.

Reasonableness Of Fees, Section 1717: $1,047,313.72 Contractual Fee Recovery To Defendants Was Not Excessive In Long-Running Litigation

Civil Code Section 1717 Has No “Obligation-To-Pay” Requirement.

            Defendants in Legendary Investors Group v. Niemann, Case No. B284736 (2d Dist., Div. 4 Jan. 16, 2019) (unpublished) prevailed in a long-running suit against plaintiff involving commercial loan and guaranty documents. Defendants, as prevailing parties, requested fees of $1,061,208.22, with the lower court awarding $1,047,313.72. Plaintiff primarily challenged the fees as excessive.

            The award was sustained on appeal. Plaintiff argued that defendants should have raised a pivotal standing issue earlier on to avoid fee accumulation, but the reviewing court observed that plaintiff had the burden to establish standing (not the defense) and that the standing issue was hotly litigated over numerous years of the litigation. The fees were adequately documented through detailed attorney declarations and billing entries. Plaintiff then argued that no fees should be awarded because other entities than the defendants were obligated to pay the fees. That argument was rejected on two grounds: (1) Civil Code section 1717 has no “obligation to pay” requirement engrafted into it (Dzwonkowski v. Spinella, 200 Cal.App.4^th 930, 938 (2011)); and (2) the operative provisions stated that the losing party would pay for reasonable, court-ordered fees, saying nothing about them needing to be “incurred.”

Fee Clause Interpretation, Prevailing Party: $53,791.79 Fees/Costs Award To Tenant And Against Landlord Affirmed On Appeal

Fee Clause “Any Right” Language Allowed Tenant To Recover For Landlord’s Misrepresentations.

            Zhang v. Cheung, Case No. B282132 (2d Dist., Div. 7 Jan. 16, 2019) (unpublished) involved a situation where a landlord won only $16,200 in damages for breach of a lease, while tenant won $30,078.85 in damages from landlord for intentional misrepresentation and negligence. The lease had a fees clause providing recovery to prevailing litigant in situations “to enforce any provision of this lease or any right of either party hereto ….” The lower court awarded fees and costs of $53,791.79 to tenant as the prevailing party in the litigation. (The trial judge, while the matter was on appeal, vacated the fee award and then later reinstated it, with the appellate court only looking to the initial fee award given that the vacation order was void once the appeal was filed.)

            The 2/7 DCA upheld the fees/costs award. The “any right of either party” language was broad enough to encompass tenant’s victory on the misrepresentation/negligence claims. Because the jury awarded more to tenant than landlord, tenant was the successful party. Landlord then asked the appellate court to limit his liability to his equity in the property based on a lease limitations provision, but that only applied to any lease claims rather than the tort claims under which tenant was victorious.

Homeowner Associations, Prevailing Party: HOA Obtaining Preliminary Injunction To Aid Fumigation Of Separate Units Was Prevailing Party Entitled To Fee Recovery

Lower Court Fee Award And Appellate Fees Were Warranted In Favor OF The HOA.

            Although we do not know the amount of fees awarded below, the homeowners in Windham at Carmel Mountain Ranch Assn. v. Lacher, Case No. D071799 (4^th Dist., Div. 1 Jan. 16, 2019) (unpublished) obviously were dismayed when the lower court awarded HOA fees after the trial judge issued a preliminary injunction in favor of the HOA. Under the terms of the preliminary injunction, the homeowners had to vacate their unit and provide a key while separate units were being fumigated. The appellate court affirmed the finding that the HOA was the prevailing party, given that a preliminary injunction assisting the fumigation process so as to demonstrate that the organization obtained its litigation objectives. (Rancho Mirage County Club Homeowners Assn. v. Hazelbacker, 2 Cal.App.5^th 252, 262 (2016); Press v. Lucy Stores, Inc., 34 Cal.3d 311, 316 (1983).) To add more insult, HOA was entitled to fees for prevailing on appeal.

Probate: Trust Beneficiary Obtaining Concrete Substantial Benefits On Behalf Of The Trust Was Entitled To Have $721,258.28 In Attorney’s Fees, Expert Fees, And Costs Paid From The Trust

2/6 DCA Has Nice Discussion Of Similarities And Differences Between The Substantial Benefit Versus Common Fund Theories Of Fee Recovery.

          Generally, trust beneficiaries must pay their own attorney’s fees incurred in challenging a trustee’s conduct, even if they ultimately succeed. (Leader v. Cords, 182 Cal.App.4^th 1588, 1595 (2010).) However, a court in its equitable discretion can order a trust to pay for the fees incurred by a trustee beneficiary providing a substantial benefit to the trust or the trust beneficiaries. (Serrano v. Priest, 20 Cal.3d 25, 38 (1977) [our Leading Case No. 3].) These principles were applied by the 2/6 DCA to affirm a substantial attorney’s fee, expert fees, and costs award in favor of a trust beneficiary who provided concrete pecuniary and nonpecuniary benefits to the trust.

            In Smith, Jr. v. Szeyller, Case No. B281758 (2d Dist., Div. 6 Jan. 16, 2019) (published), one trust beneficiary expended hefty sums to challenge the conduct of some trustees to a $14 million trust estate, given that they had apparently spent over $2 million on expenditures, gambling, and gifts from a survivor’s trust accounts during the last year of the wife (who was a co-trustee along with one of the trustees accused of making extravagant expenditures). The litigating trust beneficiary (Don) eventually obtained a settlement by which the trustees froze accounts, had a referee appointed to do accountings, and had the challenged trustees pay some past due tax penalties/interest on behalf of the trust. The lower court also ordered that the trust, in proportion to beneficiaries’ interests, pay Don’s $721,258.28 in attorney’s fees, expert fees, and costs based on the “substantial benefit” doctrine. A nonparticipating beneficiary along the way (Donna) challenged this award, although she failed to contest or object to the fees even through being provided notice of same.

            The 2/6 DCA affirmed. It found that Donna’s failure to object largely gutted her challenges to what Don had accomplished for the trust. With respect to fees, her failure to object had large impacts. The appellate court did believe that Don produced concrete benefits for the trust, and it noted that Donna only had to pay a small amount of the fees given her more limited beneficiary interests in the operative trust, sub-trusts, and related accounts. In doing so, the reviewing court reminded us that, although the substantial benefit doctrine is an outgrowth of the common fund doctrine, the substantial benefit doctrine applies to both pecuniary and nonpecuniary benefits while the common fund doctrine applies only to pecuniary benefits.  

Appealability: Expiration Of Restraining Order Did Not Moot Appeal Where Outcome On The Merits Could Determine Whether Prevailing Party Entitled To Attorney’s Fees

However, Merits Order Was Reversed, So No Fees Would Be Awarded To Prior Prevailing Party.

            In Lall-Yepez v. Pukka, Case No. B283975 (2d Dist., Div. 5 Jan. 14, 2019) (unpublished), respondent won a civil harassment restraining order issued under CCP § 527.6 against appellant, who appealed. However, the restraining order expired by its terms, raising the possibility that the appeal was moot. However, there was a mootness exception applicable here: the order’s propriety affected the prevailing party’s eligibility for an award of attorney’s fees given the existence of a fee-shifting statute in this area. (See, e.g., Carson Citizens for Reform v. Kawagoe, 178 Cal.App.4^th 357, 365 (2009); Save Our Residential Environment v. City of West Hollywood, 9 Cal.App.4^th 1745, 1750-1751 (1992); Mapstead v. Anchundo, 63 Cal.App.4^th 246, 277-279 (1998).) Respondent did file a motion for fees of $34,200 under CCP § 527.6(s), which was pending during the appeal. The appellate court found no substantial evidence to support the restraining order such that the merits order was reversed anyway on review—which, by the way, mooted respondent’s fee motion.

Family Law: Ex-Husband Siphoning Off Equity In House Properly Assessed With Fiduciary Breach, 271, And Financial Disclosure Failure Sanctions

No Abuse of Discretion Shown, With Appellate Court Reminding Practitioners That Fiduciary Breach Fee Sanctions Are Mandatory In Nature.

            Ex-husband in Marriage of Tsatryan, Case Nos. B270784/B276299 (2d Dist., Div. 7 Jan. 14, 2019) (unpublished) was not happy with being hit with $65,000 in attorney’s fees sanctions under Family Code sections 1101(g) [for breach of fiduciary duty with regard to community assets], 271 [failure to promote settlement/hold down the costs of a dissolution case] and 2107(c) [failure to make required disclosures in declaration of financial disclosure]. However, the sanctions award was hardly an abuse of discretion when the record showed that ex-husband had siphoned off equity in the ex-couple’s house to the tune of $650,000 in encumbrances—making the sanctions award only 10% of the transfers (with section 1101(g) allowing a base award of 50% of any transferred asset). The appellate court also reminded everyone that the section 1101(g) award of fees for a spouse’s breach of fiduciary duty is mandatory. (In re Marriage of Fossum, 192 Cal.App.4^th 336, 348 (2011).)

Allocation, Substantiation Of Reasonableness Of Fees: City Prevailing On Cross-Complaint Could Not Obtain Recovery Of Unilateral Inverse Condemnation Fees, Which Could Only Be Awarded To Losing Cross-Complainants

Apportionment Was Required In This Context, Plus A Relook At “Block Billing” Despite A 20% Reduction By The Trial Judge On The First Go-Around.

            In City of Patterson v. Patterson Hotel Associates, Case No. F074038 (5^th Dist. Jan. 11, 2019) (unpublished), City of Patterson prevailed on its complaint and defensed a cross-complaint involving a commercial project. However, the rub was that the cross-complainants included an inverse condemnation claim which has a unilateral fee-shifting clause in their favor, not cross-defendant’s favor. (See Code Civ. Proc., § 1036.) City, feeling emboldened, moved to recoup fees of a little over $1 million for all of the work, arguing everything was intertwined, so that the spoils go the victor. Loser argued that fees for the inverse condemnation work had to be excluded and that block billing made it impossible to review the fee request. The trial judge did not buy the legal argument, but awarded $673,600 in fees to City, reducing the fee request by 20% based on the uncertainties created by block billing.

            The Fifth District reversed and remanded the fee award for another bite.

            The problem here was that the unilateral, pro-plaintiff inverse condemnation time had to be apportioned based upon reasoning in Carver v. Chevron U.S.A., Inc., 119 Cal.App.4^th 498, 504 (2004). Because the inverse condemnation work was not compensable, it needed a restudy by the trial judge—especially given the City had the burden to produce information sufficient to determine how much time was spent on particular claims. However, some apportionment or percentage discount was necessary.

            That then led the Fifth District to look again at the block billing issue. Reading in between the lines, the reviewing court understood the discretion to trial judges on block billing but wanted a better read on whether block billing prevented a “reasoned apportionment of fees.” So, another look is in order on this one.

            Justice Snauffer, a recent Fifth District appointee, authored this opinion.

Appealability, POOF!: Dismissed Defendants’ Later $155,182.50 Fee Award Went POOF! On Appeal Because Defendants Did Not Attempt To Correct Earlier Judgment Indicating No Fees Were To Be Awarded

Lower Court Had No Power To Change Prior Judgment And Then Award Fees.

            The result in this case may sound harsh, but it appears to be legally sound.

            In Schermer v. Upland Cascade, L.P., Case No. D072997 (4^th Dist., Div. 1 Jan. 11, 2019) (unpublished), a first superior court judge “struck” class allegations against defendants, such that the case became a direction against numerous defendants. The first judge denied a defense motion for attorney’s fees without prejudice, finding it premature until the conclusion of the case on the merits in the direct action. Dismissed defendants then won a judgment on the pleadings dismissing the action, with the minute order saying zero fees to defendants and with defendants to prepare a judgment (which they did) with the same language. This judgment of dismissal was never appealed. However, later, a second superior court judge granted defendants $155,182.50 in fees against plaintiffs, prompting an appeal.

            Plaintiffs won. Although not raised by any of the parties, the appellate court gleaned and asked for supplemental briefing about the earlier judgment, never appealed, containing a zero fees award. The 4/1 DCA decided that the language in the earlier judgment was binding, because the court had no ability to correct the earlier judgment through a subsequent fee award which was contrary to the previous judgment. (Ramon v. Aerospace Corp., 50 Cal.App.4^th 1233, 1236, 1238 (1996).) Just like that, the fee award went POOF! on appeal.

Deed Of Trust, Section 1717: Statutory Duties To Reconvey In Quiet Title Action Allowed Prevailing Party To Obtain Fees Under Contractual Clause Incorporating Those Duties

Integrated Loan Document Transaction Governed The Result.

            In Heier v. Barnett, Case No. G054785 (4^th Dist., Div. 3 Jan. 10, 2019) (unpublished) the appellate court affirmed an award of attorney’s fees to a prevailing party under a contractual fees clause in a quiet title dispute. The appellate court affirmed the fee award. The prevailing party’s entitlement to fees depended on a statutory duty to reconvey a deed of trust, which was incorporated into the contractual agreement. The fees provision in the installment note was broad enough, given the integrated nature of the overall loan, to encompass the duty to convey theory which was at issue in the quiet title action. Justice Goethals authored the 3-0 opinion.

Requests For Admissions: Orange County Water District Decision Now Partially Published

Reliance On Expert Retained Opinions Can Demonstrate Reasonable Bases For RFA Denials.

           On December 22, 2018, we posted on Orange County Water District v. The Arnold Engineering Co., Case No. D070763 (4^th Dist., Div. 1 Dec. 19, 2018; partially published Jan.10, 2018), which was unpublished at the time. The appellate court reversed a hefty costs-of-proof sanctions award for denial of RFAs because expert opinions supported the RFA denials in some instances. We can now report that this aspect of the decision was partially published on January 10, 2018. However, the unpublished decision—relating to inadmissibility of the evidentiary submissions on expert costs—was not published, although it is instructive for practitioners when facing costs-of-proof sanctions as far as what needs to be competently introduced for purposes of obtaining a “sanctions” award in this area.

Cases Under Review, Social Security: SCOTUS Decides That Social Security Benefits Cap Of 25% Only Applies To Court Representation, Not Agency Work

SCOTUS Disagreed With Eleventh Circuit, Following The Contrary Conclusion By Three Other Circuit Courts.

United States Supreme Court

            On January 8, 2019, the United States Supreme Court issued its opinion in Culbertson v. Berryhill, No. 17-773 (U.S. Supreme Court Jan. 8, 2019), which confronted this issue in the social security benefits area: “Whether fees subject to 42 U.S.C. § 406(b)’s 25-percent cap related to the representation of individuals claiming Social Security benefits include, as the U.S. Courts of Appeals for the 6th, 9th, and 10th Circuits hold, only fees for representation in court or, as the U.S. Courts of Appeals for the 4th, 5th, and 11th Circuits hold, also fees for representation before the agency.”

            In a unanimous opinion written by Justice Clarence Thomas, SCOTUS decided that the 42 U.S.C. § 406(b)(1)(A) cap of 25% applies only to fees for court representation rather than aggregate fees awarded under § 406(a) and (b), which can include more inclusive “reasonable” agency fees unless a fee agreement dictates otherwise. It disagreed with the Eleventh Circuit, endorsing the conclusion reached by three other federal courts of appeal.

In The News . . . . Los Angeles County Superior Court Judge Richard L. Fruin, Jr. Pens An Interesting Article On Law And Motion Volume In His Courtroom, Including Fees And Costs Trends

He Advocates “Nudges” For Efficient Litigation Given That 40% Of I/C Judges’ Cases Involve Pro-Plaintiff Prevailing Party Statutes; He Also Advocates A Meet And Confer Requirement For Motions To Tax Costs.

            In an interesting article by sitting Los Angeles County Superior Court Judge Richard L. Fruin, Jr. in the January 8, 2019 edition of The Los Angeles Daily Journal, he did a statistical tally of law and motion matters in his courtroom between 2013-2018 as well as making some poignant observations about how prevailing party fee statutes can make a difference in pro-plaintiff cases given the distribution of business to Independent Calendar Judges. Here is a summary of his findings and observations:

• Volume of Fee and Tax Costs Motions – FEES: in 2014, he had 25 motions, in 2017, he had 11 motions, and in 2018, he had 20 motions; MOTION TO TAX COSTS: in 2014, he had 12 motions, in 2017, he had 11 motions, and in 2018, he had 19 motions.
• Distribution of IC Judges’ Business in Pro-Plaintiff Prevailing Party Cases – Judge Fruin estimates that 30-35% of IC Judges’ caseloads involve employment cases and another 10% are motor vehicle warranty matters (many involving the Song-Beverly Act), altogether around 40% overall concern fee shifting statutes which are pro-plaintiff in nature. Given this reality, he tells defense counsel at case management conferences that they need to minimize demurrers and discovery costs given the possibility of fee-shifting. His advice: “Counsel should recognize that any statute or contract that provides the prevailing party shall recovery reasonable fees is a ‘nudge’ to encourage efficient litigation.”
• Motions to Tax Costs Often Exceed the Amount at Issue; Meet and Confer Requirement Suggested – Judge Fruin granted in part most of his 19 motion to tax costs in 2018 because the prevailing party “overclaimed” entitlement to costs recovery. He observed that tax costs motions usually involved rather small monetary amounts, with the expenses to make and defend the costs often exceeding what was at issue. His suggestion: “The Legislature could impose a reasonable ‘nudge’ in the form of an in-person meet and confer as condition to bringing a motion to tax costs. Substantial savings in fees and time could be realized by doing this.”
• LASC Judge Getting More Research Help – In 2019, LASC will provide every IC judge with an assigned research attorney for law and motion matters, rather than the past one research attorney per two judge allocation.

Costs, Mediation: Fifth District Indicates, Quite Strongly, That Private Mediator Fees Are A Prime Candidate For Routine Costs Recovery In A Voluntary Mediation Situation

Court-Ordered Mediation Alone Should Not Determine If Costs Recoverable; However, Expert Witness Expenses Not Ordered By Lower Court Were Not Recoverable.

            The Fifth District, in Berkeley Cement, Inc. v. Regents of the University of California, Case Nos. F073455/F073586 (5^th Dist. Jan. 7, 2019) (partially published; expert fee costs discussion not published; mediation costs discussion published), confronted defense costs requests after it prevailed in front of a jury in a dispute over construction of a building on the Merced campus of the University of California. The trial judge awarded the defense $6,486.25 in expert witness fees for time spent taking their depositions and $15,590 for fees paid to mediators for a voluntary mediation agreed to by the parties.

            On appeal, the Fifth District deleted the expert witness fees costs, but affirmed the voluntary mediation expenses.

            In an unpublished discussion on the expert witness fees, the reviewing court could find no basis to sustain the costs award because this was not a court-ordered witness. (See, e.g., Ripley v. Pappadopoulos, 23 Cal.App.4^th 1616, 1624-1625 (1994); Baker-Hoey v. Lockheed Martin Corp., 111 Cal.App.4^th 592, 601-602 (2003).)

            The published discussion on the recoverability of voluntary mediation costs is significant, given that prior decisions only really dictated the recovery of court-ordered mediator fees. The Fifth District refused a categorical rejection of recovery of voluntary mediation costs, with expansive language indicating that mediation has become an accepted method of resolving cases in recent times. Otherwise, mediation costs could only be awarded in a case where $50,000 or less was in controversy—unnecessary line drawing in the ADR and modern litigation contexts. “We conclude mediation fees incurred for mediation that was not ordered by the court are not categorically nonrecoverable as ‘not reasonably necessary to the conduct of litigation.’ The question whether mediation fees should be awarded as costs in a particular matter must be determined based on the facts and circumstances of the particular action. [Plaintiff] does not contend the trial court erred in assessing the facts and circumstances of this case, when it made its determination that the mediation fees should be awarded.”

            BLOG OBSERVATION—Co-contributor Mike had the voluntary mediation costs issue pop up in a Stockton case, with the lower court determining that many reasons exist for voluntary mediation and with the mediation privilege making it difficult to determine if the mediation was truly reasonable and necessary. The Fifth District did not discuss this evidentiary complication, but its broad reasoning strongly suggests voluntary mediation costs should be recoverable in the absence of extenuating circumstances—Mike wish he had this case at an earlier point in time! But that demonstrates the importance of evolving jurisprudence.

Book Review: Richard L. Hasen's "The Justice of Contradictions: Antonin Scalia and the Politics of Disruption"

Co-Contributor Marc's Review Of Richard L. Hasen's The Justice of Contradictions: Antonin Scalia and the Politics of Disruption, Has Been Published in California Litigation.

    With the permission of California Litigation, the journal of the litigation section of the California Lawyers Association, co-contributor Marc's review of Prof. Richard L. Hasen's book, The Justice of Contradictions: Antonin Scalia and the Politics of Disruption, is made available by clicking here.

In The News . . . . 2018 HBR Consulting Report Indicates Corporate Law Department Spending Is Up And Outside Counsel Hourly Rates Are Up

However, These Same Departments Are Taking Steps To Assimilate More Services In-House, Including Increased Expenses On Artificial Intelligence Technology.

            HBR Consulting provides various surveys, including several with corporate law departments, comprised of 250 organizations participating across 22 industries (with 65% of the survey participants being in Fortune 500 companies). We can now report on the highlights of their 2018 HBR Consulting Law Department Survey:

• Corporate law departments’ total legal spending increased by 5% from 2017;
• 61% of the survey participants indicated an increase in outside counsel hourly rates; and
• Corporate law departments were shifting investment into in-house resources, with some upward emphasis on implementation of artificial intelligence technology.

Family Law: Wife Properly Awarded $87,500 In Needs-Based Fees And $46,000 In 271 Sanctions

Husband And Wife Had Litigated Themselves Into Financial Ruin, Trial Court Observed.

            In Thacher v. Thacher, Case No. B279985 (2d Dist., Div. 2 Jan. 3, 2019) (unpublished), the trial judge observed that husband and wife had litigated themselves into financial ruin in the dissolution case. After all, they had engaged in a 38-day trial on dueling domestic violence protective petitions, followed by a 6-day bench trial on dissolution issues and several hours on fees/sanctions requests. Wife had spent $1.2 million on the case, while husband had expended $603,000 (using three attorneys, including mother—who was a family law specialist representing him free at some later phases of the case). Eventually, husband was ordered to pay needs-based fees to wife in the sum of $87,500 and also ordered to pay $46,000 in 271 sanctions to wife. He appealed aspects of the prior dissolution order as well as the fees/sanctions orders.

            The 2/2 DCA affirmed. The prior dissolution judgment was independently appealable even though issues such as spousal support and fees had not been adjudicated; husband’s failure to appeal the dissolution judgment prevented any challenges to it. With respect to fees and sanctions, husband could show no abuse of discretion in the orders. He had three times the base annual salary as compared to wife’s salary, and he had money to pay the orders based upon his half of sales proceeds from a sale of the family house and funds leftover in trust accounts for his girls’ counsel. The record did show that 271 sanctionable conduct did take place, not to mention that wife was sanctioned for some conduct (with that amount offsetting to arrive at the net aggregate award).

Equity: No Jury Trial Entitlement On Fees Motion Under The Confidentiality Of Medical Information Act

Post-Trial Motion Is The Way To Go!

West courtroom, Jury box, Howard M. Metzenbaum U.S. Courthouse, Cleveland, Ohio

            In Brown v. Mortensen, Case No. B281704 (2d Dist., Div. 1 Jan. 3, 2019) (published), the 2/1 DCA decided that no jury trial is available for attorney’s fee requests under the Confidentiality of Medical Information Act (CMIA), Civil Code section 56.35. Rather, a post-trial motion is the way to seek recovery of such fees.

Section 998: 2/2 DCA Decides Three Factors Are Especially Pertinent In Determining If CCP § 998 Offer Was Made In Good Faith

Those Factors Are: (1) How Far Into The Litigation Was The Offer Made; (2) Information Available To the Offeree Prior To The Offer’s Expiration; and (3) Whether The Offeree Informed Offeror That It Lacked Sufficient Information To Evaluate, And The Offeror’s Response.

            We have posted many times on CCP § 998 offers, which can shift significant prejudgment interest, fees, costs if such offers are made in good faith (an implied important limiting requirement).

            In Licudine v. Cedars-Sinai Med. Center, Case No. B286350 (2d Dist., Div. 2 Jan. 3, 2019) (published), the focus on whether a section 998 offer was made in good faith really did matter—otherwise, plaintiff was entitled to $2.335 million in prejudgment interest under a hefty medical mal jury verdict of $5,594,557 where the defense rejected an early-on section 998 offer for $249,999.99. The trial and appellate courts found that the 998 offer was not made in good faith. In doing so, the 2/2 DCA found three factors were especially pertinent in evaluating whether the offer was made in good faith: (1) how far into the litigation the 998 offer was made; (2) the information available to the offeree prior to the 998 offer’s expiration (such as voluntary exchanges of information or pre-existing relationships between the parties); and (3) whether the offeree let the offeror know it lacked sufficient information to evaluate the offer, and how the offeror responded. Here, the offer was made 19 days after plaintiff filed a “bare bones” complaint; the hospital needed more discovery information to evaluate the offer; and the defense requested more information. So, the hospital avoided a big chunk of prejudgment interest.

Probate: Probate Court’s Failure To Entertain Evidentiary Objections To Extraordinary Fees Results In Reversal

Although Not Raised Artfully, Merits Of Objections Required An Evidentiary Hearing.

            Estate of Willard, Case No. 282122 (2d Dist., Div. 7 Jan. 2, 2019) (unpublished) is a case where an estate administrator of his mother’s estate did not gain any attention to his challenges to an attorney’s request for statutory and extraordinary probate fees. The trial court overruled his objections without allowing an evidentiary hearing, even though he was an in pro per litigant.

            This one got reversed on appeal, where the reviewing court determined that there were meritorious challenges which did not get vetted by an in pro per party. It did not matter that the objections were inartfully “aired,” because this was an unusual situation where the merits showed that the objections should have been considered.

            On appeal, the 2/7 DCA decided that the merits were very compelling because this was a contested matter such that an evidentiary hearing was justified on these issues: (1) failure to respond to a tax assessor’s notice resulting in some penalties; (2) responsibility for an 18-month delay in administering a probate estate; (3) billing charges which were duplicative, excessive, or inaccurate in nature; (4) improperly demanding and receiving compensation from a litigant personally; (5) deciding whether the attorney billed the right client for services; and (5) considering whether the requesting attorney properly communicated with his clients.

Civil Rights: Ninth Circuit, In En Banc Published Opinion, Clarifies EAJA Fee Shifting Analysis For Unreached Claims, Successful vs. Unsuccessful Claims If Common Core Of Facts Involved, And Bad Faith Gov. Test For Whether EAJA Fee Cap Can Be Exceeded

En Banc Hearing Makes A Number Of Cutting EAJA Fee Shifting Determinations.

            Well, we are all in a New Year (2019 to be exact), everyone. Top of the Year, with the Ninth Circuit providing an en banc decision of importance in the civil rights/EAJA fee-shifting area.

            In Ibrahim v. U.S. Dept. of Homeland Security, Nos. 14-16161/14-17272 (9^th Cir. Jan. 2, 2019) (published), the Ninth Circuit, in an en banc hearing, had to confront Dr. Ibrahim’s successful challenge to TSA’s “No Fly” list policy, where she was placed on the list although the U.S. government had to admit she was placed on it erroneously and inadvertently, even though the government tried to deadpan the effects. This did not resonate with the Ninth Circuit en banc majority (and much of the other circuit justices in concurring or even dissenting), which did not like the district court’s award of only $419.987.36 in EAJA fees and $34,768.71 in expenses as against the fees request of $3.63 million and costs request of $293,860.18 when plaintiff clearly prevailed completely on one claim.

            The Ninth Circuit vacated and remanded the fee award, in the process making these determinations:

            *Where a plaintiff obtains complete success on one claim, which makes it unnecessary for a district court to even reach other alternative claims, that qualified as being a successful party;

            *Where there is a true common core of facts or course of conduct, prevailing on one successful claim makes other claims compensable, rejecting a post hoc “mutual exclusivity” test under the circumstances; and

            *Determining whether the government’s position was in bad faith (so as to limit EAJA fees to $125 per hour if bad faith is not shown) means a look at the government’s position as a whole in the case rather than at each stage of the litigation.

            Based on these determinations, a remand was made to award—in our view, a substantially different and greater award—based on the excellent outcome obtained by plaintiff’s counsel.

            The dissent would have not restudied the “lack of bad faith” determination by the district judge so as to cap EAJA fees on remand at $125 per hour.

Cases Under Review: California Supreme Court Grants Review In National Lawyers Guild Case During Week Of December 17, 2018

Issue Was Cost Shifting For Redaction Of Computerized Materials Under The California Public Records Act.

            On September 30, 2018, we posted on the National Lawyers Guild case. We can now report that it was accepted for review by the California Supreme Court during the week of December 17, 2018. Here is the issue as framed in the Weekly Summaries:

#18-173 National Lawyers Guild v. City of Hayward, S252445. (A149328; 27 Cal.App.5th 937, mod, 28 Cal.App.5th 372e; Alameda County Superior Court; RG15785743.) Petition for review after the Court of Appeal reversed the judgment in an action for writ of administrative mandate. This case presents the following issue: Does the California Public Records Act permit a public agency to shift the cost of redacting exempt information from electronic records to the party making the request for the records although the cost of redaction cannot be required for paper records?

Class Action: Class Counsel Awarded Full Request In Requested Fees--$74,775,000—In Class Action Against Ford Motor Co. For Defective Takada Air Bags

Fee Award Was 25% Of The Common Fund, But A Lower 14% If Value Of Customer Support Was Factored Into The Analysis.

            In In re Takada Airbag Products Liab. Litig., Case No. 1:15-md-02599 (S.D. Fla. 2018), a $299 million settlement was approved by District Judge Federico Moreno in a class action against Ford Motor Co. for defective Takada air bags by which each class member will be reimbursed for documented out-of-pocket expenses, up to $500 in undocumented expenses, and provided with a rental car to bridge the gap when the car is being repaired. Also, free customer service is provided by Ford to class members. The district judge approved class counsel’s full fee request of $74.775 million, which was 25% of the common fund but was actually closer to 14% of the percentage of recovery if the value of customer service was factored into the analysis.