CALIFORNIA ATTORNEY'S FEES

Legislation: California Consumer Privacy Act Of 2018 Becomes Law On January 1, 2020

Does It Have An Attorney’s Fees Clause?—Not An Express One, But It Does Have A Catchall Which Will Be The Subject Of Judicial Interpretation.

            On January 1, 2020, the California Consumer Privacy Act of 2018 (CCPA) becomes law.  It is a wide-ranging law that impacts more than 500,000 U.S. companies doing business with California residents.  It provides California residents with a panoply of rights as to their personal information.  Among other things, the CCPA provides that a California resident may bring a private right of action under the CCPA against an impacted business for failure to implement and maintain reasonable security procedures/practices appropriate to the nature of the information resulting in an unauthorized access, exfiltration, theft, or disclosure of unencrypted or nonredacted personal information—with a recent amendment clarifying that this private right of action only applies to data breaches and no other CCPA violations.

            However, despite the private right of action granted to California residents, the law does not include an express provision allowing prevailing plaintiffs to recovery their attorney’s fees, although it does include catchall language allowing the court to award “[a]ny other relief the court deems proper.”  So, that broad language will be the subject to court interpretation, although we could see cases where successful plaintiffs request fees under California’s private attorney general statute—especially in class action cases.

            Interestingly enough, a study commissioned by California’s Attorney General estimates that “initial compliance” with the CCPA may, for its part, cost the estimated 500,000 affected American firms about $55 billion, as summarized in an article in the December 21, 2019 issue of The Economist.  Stayed tuned for developments in the attorney’s fees area. 

Legislation: Effective January 1, 2019, California Public Records Act Amendments Clarify That Only Requesters Are Entitled To Prevailing Party Fees Unless A Request Is Frivolous

Amendments Were In Response To The Result Being Sought By Public Entity In The Brazil Case In The Bay Area.

            Before the legislative amendments which we will soon discuss, a public entity District in Newark Unified School Dist. v. Brazil, Alameda County Superior Court Case No. RG14738281 sought to recover prevailing party fees from a taxpayer requester of certain records under the California Public Records Act (PRA). District was a plaintiff obtaining a return of inadvertently produced documents. Based on the former wording of Government Code section 6259(d), District claimed it was a successful “plaintiff” and sought $449,317.60 in fees from requester Ms. Brazil.

            That apparently inspired the introduction of SB 1244 (Wieckowski) to amend the fee-shifting provision of the PRA. Governor Brown did sign the changes into law, effective January 1, 2019.

            This new law changes the term “plaintiff” in PRA’s mandatory fee-shifting provision to “requester.” The new law also declares that nothing in the fee-shifting provision shall be construed to limit a requester’s right to obtain fees and costs pursuant to section 6259(d) or pursuant to any other law. Together, these changes to the PRA protect requesters who defend the public’s right to know, regardless of the requester’s technical title in litigation, but does not retard a public entity from suing to obtain a return of inadvertently produced documents.

            Incidentally, Alameda County Superior Court Judge Jeffrey Brand did deny District’s fee motion without the benefit of the amendments, relying on the public policy of the PRA to encourage rather than chill requesters from seeking disclosure of public records. We also share that Ms. Brazil did not obtain fees based on the lower court’s determination she had only obtained interim success at the time she sought fee recovery.

Legislation: Senate Bill 1244, If Passed, Would Clarify “Plaintiff” Language In The California Public Records Act’s Fees/Costs-Shifting Provision

Bill Was Inspired By Position Taken By Government In Newark Unified School District v. Snyde/Brazil.

            The California Public Records Act (CPFA) has a fees/costs shifting provision in Government Code section 6259(d) which provides that the court shall award court costs and reasonable fees to the “plaintiff” should the plaintiff prevail in CPRA litigation and shall award court costs and reasonable fees to the public agency if the court find that the “plaintiff’s” case is clearly frivolous.

            In Newark Unified School District v. Snyder, Brazil et al., an Alameda Superior Court decision involving a small city in the Bay Area which gave rise to an appellate decision published at 245 Cal.App.4^th 887, citizen Elizabeth Brazil made a CPRA request for public record and the school district disclosed documents to her. After the disclosure, it stated that it had inadvertently produced some exempt documents and demanded their return. When Ms. Brazil refused, the school district sued to have the documents returned and to prevent her from disclosing any information in those records. The trial court decided district waived the privilege, a result reversed on appeal in the published decision. District then sought to recover $500,000 in fees from Ms. Brazil. In seeking fees, district argued it was a “plaintiff” for purposes of section 6259(d), but the trial judge found that “plaintiff” meant a citizens requester other than a public agency. The $500,000 fee request was not granted.

            Senate Bill 1244 was introduced to clarify that “plaintiff” for costs/fee-shifting purposes in a CPRA action is a non-public agency “requester” to avoid a chilling effect with regard to public citizens requesting records. Such a requester only gets tagged with costs and/or fees if the requester files a “clearly frivolous” lawsuit.

            Legislative comments to the bill make clear that fees and costs in reverse-CPRA actions are not impacted by the bill.

            As reported by an OpEd article in The Orange County Register on May 13, 2018, last week this feature of the bill passed the Senate’s Judiciary Committee by a 7-0 vote.

In The News . . . . Delaware Enacts Law To Invalidate Stock Corporation Charter Provisions Attempting To Impose Fees Upon Stockholders In Corporate Governance Suits

Exceptions Are Made For Nonstock Corporations And For Shareholder Agreements.

     In our March 31 and June 12, 2014 posts, we discussed ATP Tour, Inc. v. Deutscher Tennis Bund, 91 A.3d 554 (Del. 2014), where the Delaware Supreme Court upheld as facially valid a bylaw imposing liability for certain legal fees of the nonstock corporation on certain members who participated in the litigation.

     This raised a real fracas about whether shareholders in Delaware stock corporations could also be visited with potential fee exposure in derivative or other corporate governance suits.

     We can now report that the Delaware Legislature passed S.B. 75, which was signed into law by Delaware Governor Jack Markell on June 24, 2015, with the certain amendments to Delaware General Corporation law becoming effective August 1, 2015. Here is a synopsis of S.B. 75 from the Delaware legislative website:

     “In combination with the amendments to Sections 109(b) and 114(b)(2), new subsection (f) does not disturb that ruling [ATP Tour] in relation to nonstock corporations. In order to preserve the efficacy of the enforcement of fiduciary duties in stock corporations, however, new subsection (f) would invalidate a provision in the certificate of incorporation of a stock corporation that purports to impose liability upon a stockholder for the attorneys’ fees or expenses of the corporation or any other party in connection with an internal corporate claim, as defined in new Section 115. New subsection (f) is not intended, however, to prevent the application of such provisions pursuant to a stockholders agreement or other writing signed by the stockholder against whom the provision is to be enforced.

     “Like the concurrent amendment to Section 102, the new last sentence of subsection (b) would invalidate a provision in the bylaws of a stock corporation that purports to impose liability upon a stockholder for the attorneys’ fees or expenses of the corporation or any other party in connection with an internal corporate claim, as defined in new Section 115. The new last sentence of subsection (b) is not intended, however, to prevent the application of any provision in a stockholders agreement or other writing signed by the stockholder against whom the provision is to be enforced.

     “The amendment to Section 114 has the effect of avoiding the application to nonstock corporations of new Section 102(f) and the new last sentence of Section 109(b).”

News/Legislation: Immigration Attorney Reforms Closer To Enactment, Law School Applications Drop, ABA Ethics Opinion Allows Lawyers To Fee Share With Non-lawyers In Certain Cases, And Career Education Corp. Settles Inflated Job-Placement Case

 

California Immigration Attorney Reforms.

     As reported by Chapman Law School graduate and columnist Frank Mickadeit in the August 23, 2013 edition of The Orange County Register, AB 1159 (a bill winding through the California Legislature) seems to be getting closer to enactment. Although subject to change, this bill would require--under its 16th version--California immigration attorneys to do or not do these things: (1) not charge fees until the new federal immigration bill becomes law; (2) once the federal bill becomes law, lawyers must provide immigration clients a written contract in both English and the client’s native language (a requirement already for nonlawyer consultants); (3) consultants must post a $100,000 bond with the state, up from $50,000; (4) consultants may not use the Spanish term notario in any ad or document; and (5) the retainer agreement must have a statement of where to send complaints and must state the web listings/toll-free numbers for the State Bar/DOJ.

Law Schools Applications/Applicants Down.

     According to Debra Cassens Weiss in an August 20, 2013 ABA Journal on-line post, law school applications for Fall 2013 have dropped 17.9% and applicants numbers have dropped 12.3%.

ABA Issues Formal Ethics Opinion on Lawyer/Nonlawyer Fee Sharing.

     ABA Formal Opinion 464 concludes that lawyers working in a jurisdiction that bars fee splitting with nonlawyers can divide a fee with a lawyer in another jurisdiction not subject to such restrictions even though the second lawyer might fee share with nonlawyers. Jurisdictions permitting fee sharing include Washington, D.C. and the United Kingdom.

Career Education Corp. Settlement Includes $1 Million in Fees Reimbursement.

     Career Education Corp., accused by the New York Attorney General of inflating job-placement rates, agreed to a $10 million settlement, with around $9.25 million going to former students and $1 million in reimbursement for attorney’s fees.

Legislation: 2013 California Legislation Does Bring Changes To Selective Attorney’s Fees And Routine Costs Provisions

 

Also, Civil Deposition Changes Are Significant

      As we ring in the new 2013 year, there are three changes in the attorney’s fees and routine costs area, although fairly narrow in nature. Also, we also include an off-topic change relating to civil depositions that should be of interest to all California civil litigators. All laws are effective January 1, 2013.

Personnel File Requests.

     AB 2674/Labor Code sections 226 and 1498.5 require that employers must provide current and former employees with personnel records within 30 days of a request. Failure to comply subjects an employer to a $750 penalty per violation as well as attorney’s fees incurred in obtaining compliance.

Family Law Proceedings Involving Certain Violent Sexual Felony Spouses.

     AB 1522/Family Code section 4324.5 prohibits family law judges from awarding alimony and attorney’s fees to spouses convicted of certain violent sexual felonies under Penal Code section 667.5 against the other spouse (the injured spouse) within 5 years of the conviction, unless the fees are awarded out of community property assets. The new law would prohibit fees from being awarded out of the injured spouse’s separate property assets.

Routine Costs Include Pro Bono Litigant-Represented Court Interpreter Fees.

     AB 2684/Code of Civil Procedure section 1033.5(a)(12) now codifies that mandatory routine costs are available for court-authorized interpreter fees for an indigent person represented by certain qualified pro bono attorneys.

Civil Deposition Time Limits.

     AB 1875, adding section 2025.290 to the California Code of Civil Procedure, requires that many depositions be limited to 7 hours in total.  While the 7-hour limit is the default mechanism under the new rule, several exceptions apply. The most significant one is that a court may authorize additional time if “needed to fairly examine the deponent or if the deponent, another person, or any other circumstance impedes or delays the examination.” The second exception is in play where parties voluntarily stipulate that the default limit does not apply to specific depositions or to the entire proceeding.  The 7-hour limit also does not apply to complex litigation, expert witnesses, employment cases, PMK deponents, or parties added after the deposition has concluded.  Despite the exemption for depositions in complex litigation, a 14-hour limit will be applied to complex litigation depositions where a witness has a fatal medical condition, evidenced by a medical affidavit/declaration attesting there is a substantial doubt the witness will survive for another 6 months. Commentary on this new provision has argued that the new law shifts the burden from counsel for the deponent, who formerly had to seek a protective order from the court to avoid an excessively long deposition, to the counsel of the party taking the deposition, who will soon have to secure the agreement of the other parties or obtain an order from the court to obtain more than 7 hours of deposition time under specific circumstances.

Deeds Of Trust: Borrowers Subject To Improper “Dual Tracking” Can Now Obtain Attorney’s Fees In Addition To Damages/Penalties Under Homeowner Bill Of Rights Effective January 1, 2013 Against Certain Foreclosing Lenders

 

     Co-contributor Marc noticed a somewhat chilling story about borrowers who successfully won a fraudulent “dual tracking” case against OneWest Bank. (“Dual tracking” is the nomenclature for the practice by which some lenders simultaneously pursued foreclosure remedies while attempting loan modification negotiations with borrowers.)

     According to an October 31, 2012 story in the San Francisco Chronicle, borrowers won a “dual tracking” dispute with OneWest in front of a jury in San Mateo County Superior Court, with the jury finding that the bank committed a wrongful foreclosure by dual tracking. However, borrowers only obtained $13,500 in damages for a remodeling project but would have to pony up the mortgage delinquency in order to get their home back. The real rub is that they received no attorney’s fees for this violation, with damages being very insufficient to cover borrowers’ legal expenses.

     However, thank to the Homeowner Bill of Rights that will become effective on January 1, 2013, borrowers now have the ability to recoup attorney’s fees in “dual tracking” disputes unless the violation is promptly cured by the lender of residential properties foreclosing on more than 175 properties on an annual basis.

     That takes us to the enhanced remedies, which are codified for many violations of the Homeowner Bill of Rights. However, unlike the limited remedy of staying the foreclosure found to govern the Perata Act predecessor provisions, the new legislative scheme codifies that material violations of its terms--including the failure to provide notice of foreclosure prevention alternatives to borrowers and failure to desist from “dual tracking”--gives rise to these additional remedies in addition to an injunction of a pending foreclosure sale until the enjoined entity has corrected or remedied the pertinent violations: (1) actual economic damages incurred by the borrower after completion of a trustee’s sale for material violations; (2) the greater of treble damages or $50,000 statutory damages if the material violations are judicially found to have been intentional, reckless, or the result of willful misconduct by the lender or mortgage servicer after completion of a trustee’s sale (new Civ. Code, §§ 2924.12(b), 2924.19(b), 2924.12(c), 2924.19(c)); and (c) an award of reasonable attorney’s fees and costs to the prevailing borrower if the borrower obtains injunctive relief or damages (new Civ. Code, §§ 2924.12(i), 2924.19(h).)

     The Legislature expressly made this a unilateral fee-shifting clause in favor of the prevailing borrower and even provided the judiciary with how to determine if a borrower “prevailed.” Any violation of specified provisions of the Homeowner Bill of Rights are also deemed violations of the corporate, financial institution, or real estate licensing laws. (Id. §§ 2924.12(d), 2924.19(d)).

     Nevertheless, keep in mind that these provisions only apply to first-priority lienholders on residential properties where the borrower is a natural person/trust deed trustor and where the lender forecloses on 175 or more residential properties on an annual basis.

     If you want more detail on the Homeowner Bill of Rights, co-contributor Mike has written an article that can be accessed under the Lexis Nexis Real Estate Commentary online service or in a relatively recent edition of Matthew Bender’s California Real Estate Reporter--September or October 2012. (No plug, because he doesn’t get any royalties on this.)

Class Actions: Legislation Pending For Governor Approval Would Allow Trial Courts Discretion To Award Attorney’s Fees To Successful Class Action Settlement Objectors

 

Bill Would Abrogate Flemming v. Barnwell Nursing Decision.

     In our October 22, 2010 post, we reported on the New York Court of Appeals’ decision in Flemming v. Barnwell Nursing, which denied awarding attorney’s fees to a class action settlement objector whose efforts helped reduce requested class counsel fees of $448,000 down to $425,000 in a $950,000 settlement.

     Now, a New York bill is pending for Governor Andrew Cuomo’s approval that would reverse the 1975 law that Flemming relied on in denying the fee award to the objector. The bill would allow trial courts discretion to allow attorney’s fees to a successful class action settlement objector who increased the amount of a settlement or the benefits for a class. Governor Cuomo does not comment on pending legislation, but some like the bill while others say that it will promote spurious objections to class action settlements.

     More details on this bill can be found at the September 21, 2011 post at thomsonreuters.com.

SLAPP: Texas Recently Enacts SLAPP Statute Similar to California’s Statute, With Similar Fee Shifting Provisions

 

U.S. Congress and North Carolina Also Considering SLAPP Legislation.

     We have posted frequently on California’s anti-SLAPP statute and its fee-shifting provisions.

      We can now report that, according to a June 20, 2011 post on the Reporters Committee for Freedom of Press News website, Texas is the 27th state, along with the District of Columbia, to adopt anti-SLAPP litigation. The U.S. Congress and North Carolina are considering similar legislation.

      Much like California’s statute, the trial judge in a Texas anti-SLAPP proceeding must (shall language) award to the moving party “court costs, reasonable attorney’s fees, and other expenses incurred in defending against the legal action as justice and equity may require.” (BLOG OBSERVATION--This statute appears to be broader than California’s, with some decisions indicating that the work must be related to the anti-SLAPP proceeding rather than broader “in connection” work. Compare Lafayette Morehouse, Inc. v. Chronicle Publishing Co., 39 Cal.App.4th 1379 (1995) [stricter “related” work interpretation of California anti-SLAPP statute] with Rosenaur v. Scherer, 88 Cal.App.4th 260, 285-286 (2001) [Lafayette supplanted by later legislative amendment requiring only an “in connection” work test]. However, the Texas statute talks about costs, fees, and expenses incurred in defending against the legal action--seemingly much broader than the California provision.) Also in line with California, the trial judge may (discretionarily) award costs and fees to the responding party where he/she finds that the plaintiff’s motion was frivolous or intended solely for delay.

Legislation: Introduced Lawsuit Abuse Reduction Act Would Strengthen Sanctions For Frivolous Lawsuits

 

Attorney’s Fees and Costs Are the Main Sanctions.

     House Judiciary Committee Chairman Lamar Smith (R-Texas) and Senate Judiciary Committee Ranking Member Chuck Grassley (R-Iowa), on March 10, 2011, introduced legislation to curb frivolous lawsuits. The Lawsuit Abuse Reduction Act, if passed as introduced, would impose mandatory sanctions upon lawyers filing meritless suits in federal court. The legislation proposes a three-pronged attack on frivolous suits: (1) F.R.Civ. P 11 sanctions would be mandatory (not just discretionary) in nature; (2) frivolous suit sanctions would be mandatory against the offending lawyer, including an award of attorney’s fees and costs incurred by the other side; and (3) Rule 11’s 21-day “safe harbor” provision would be eliminated. According to one study, the 2002 tort system’s purported direct costs were $223 billion, the equivalent of a 5% tax on wages, with the annual direct cost of American tort litigation now exceeding $250 billion.  [Query:  What are the measurable economic benefits of the tort system, if it leads to cleaner air, cleaner water, and safer automobiles, and if it compensates persons who are injured?]  If passed, the sponsors hope that state courts would strengthen rules in line with the proposed Rule 11 reforms. More on this bill can be found by reading the March 10, 2011 post on IowaPolitics.com.

     A March 11, 2011 post in The BLT:  The Blog of Legal Times, noted that a House Judiciary subcommittee, “received some cautionary testimony from Lonny Hoffman, a professor at the University of Houston Law Center. Hoffman described the results of a 1983 change in Rule 11 that made sanctions mandatory before it was reversed a decade later. Among the reported problems with that change was that it distracted lawyers from resolving the merits of a case, ultimately adding to litigation costs and delays.

     ‘Any decision by this committee to repeat the same mistake of the 1983 judicial rules committee in assuming a need for the proposed legislation is lamentable,’ Hoffman wrote.”

New Legislation: Expedited Jury Trials Are Now Possible, With Attorney's Fees Motions Among The Allowable Motions

 

AB 2284 Became Effective January 1, 2011.

     Effective January 1, 2011, litigants can opt to participate in an expedited jury trial before a reduced jury panel of eight jurors with a goal to complete the trial in one day. Participation is completely voluntary, but the parties do agree to waive certain post-trial motions and limit the issues to be appealed drastically. The parties can also enter into high/low agreements. Voir dire and pre-trial procedures are much more truncated in nature and much more flexible.

     The only post-trial motions allowed, fortunately for the litigants, are motions relating to costs and attorney's fees, motions to correct a judgment for clerical error, and motion to enforce a judgment. (Code Civ. Proc., § 630.09(c).) So, there appear to be no procedural changes for bringing costs or fee issues before the trial court under this new procedure.

     For more on this expedited jury trial process, see Patrick Cathcart's recent LexisNexis Emerging Issues Analysis on the subject. (See 2011 Emerging Issues 5474.) Mr. Cathcart is a colleague of co-contributors Marc and Mike at AlvaradoSmith, APC. The new procedure is codified at Code of Civil Procedure section 630.01 et seq.

   First Woman [sic] Jury, Los Angeles.  1915.

Elder Abuse: Senate Bill 1140, Effective January 1, 2009, Strengthens Elder Abuse Protections And Has Fee-Shifting Impetus

Effect of New Law Explored in Steven Riess’ Article in August 2009 California Lawyer.

     For those attorney readers practicing in the elder abuse area, there is an excellent article that is must reading in the August 2009 edition of California Lawyer. It is authored by Steven Riess and is entitled “Combating Financial Abuse of Elders.”

     This article explores the expansion of protections in the elder abuse areas that occurred with the January 1, 2009 effectiveness of Senate Bill 1140, which amended various parts of the Welfare and Institutions Code. Mr. Riess explores the impact of these amendments in detail.

     Among other things, Senate Bill 1140 now authorizes the recovery of attorney’s fees and costs to prevailing plaintiffs in elder abuse “undue influence” and abusive sale practice cases. (See, e.g., Welf. & Inst. Code sections 15657.5(a) and 15657.6.)

     Mr. Riess is a San Francisco attorney who participated in the drafting of Senate Bill 1140.

Enacted and Vetoed California Legislation Involving Attorney's Fees in 2008

Two Bills Enacted; One Vetoed

     Although a considerable segment of the state government's resources was consumed with general budgetary wrangling, two bills were enacted (effective January 1, 2009) and one bill vetoed with features involving attorney's fees/cost awards.

Governor Schwarzenegger Vetoes AB 1830, Which Targeted Mortgage Brokers

Governor Cites Unilateral Fee-Shifting Attorney’s Fees Provision As One Basis For His Veto.

            Recently, on September 25, 2008, California Governor Arnold Schwarzenegger vetoed AB 1830, pending legislation sponsored by Assemblyman Ted Lieu (Democrat—Torrance).  AB 1830 would have expanded mortgage broker regulation and contained a provision that borrowers must be awarded attorney’s fees if they are prevailing parties for violations of the proposed prohibitions in AB 1830.

            As one basis for his veto of AB 1830, Governor Schwarzenegger cited his distaste of the attorney’s fees provision of the proposed legislation.  He believed that it made mortgage brokers liable for technical violations and was not enthralled with the attorney’s fees provision that was unilateral in nature—borrowers get fees if they prevail, but mortgage brokers do not recoup them if they win. 

            For more on AB 1830 and other consumer-oriented legislation that was signed into law or vetoed, see this September 26, 2008 article from the San Francisco Chronicle which was posted on SFGate.