The California Supreme Court issued an interesting opinion in January 2010 on attorneys’ fees. Although it has far reaching implications, it did not get much publicity.
In Chavez v. City of Los Angeles (2010) 47 Cal 4th 970, (Chavez v. L.A. ) Plaintiff Robert Chavez, a police officer with the Los Angeles Police Department (“LAPD”), sued the City of Los Angeles and his supervisors; (1) first, in Los Angeles County Superior Court for defamation, intentional infliction of emotional distress, invasion of privacy and civil rights violations, (2) then, in federal court for unlawful employment discrimination under California’s Fair Employment and Housing Act (“FEHA”) (Government Code §12900 et seq.), and (3) then again, in Los Angeles County Superior Court alleging employment discrimination, harassment and retaliation in violation of California’s FEHA, trespass and loss of consortium. Plaintiff requested the federal court to take jurisdiction of the state court actions which it did.
When the dust settled from all of this litigation, the federal court dismissed the lawsuit. The next month, plaintiff filed yet a third action in Los Angeles County Superior Court alleging various claims in violation of California’s FEHA. He filed it as an “unlimited civil” case meaning that the amount in dispute was $25,000 or more. Eventually, the matter was heard by a jury during a five day trial. The jury awarded plaintiff $1,500 in economic damages and $10,000 in non-economic damages for a total of $11,500.
As the prevailing party, plaintiff filed a motion for costs in the amount of $13,144.26 and a motion for attorneys’ fees in the amount of $436,602.75 (pursuant to the FEHA statute [Government Code §12965(b)] awarding attorneys’ fees to the prevailing party) encompassing the over 1800 hours of time spent by counsel on all of the different litigation from the very inception.
The trial court denied the motion for attorneys’ fees as an item of costs under Code of Civil Procedure §1033.5(a)(10), noting that under Code of Civil Procedure §1033(a), it has discretion to do so in those instances where plaintiff filed her action within the unlimited civil jurisdiction (cases valued at $25,000 or more) but “. . .recovers a judgment that could have been rendered in a limited civil case” (cases valued at less than $25,000). (CCP §1033(a)).
The appellate court reversed, agreeing with plaintiff’s counsel that due to the complexity of the case, the case could not have been filed as a limited civil case in light of the very limited discovery allowed in such cases. Because the rules of court greatly limit the number of depositions that can be taken and the other types of discovery that can be conducted in limited civil cases, the appellate court determined it was not practical to file such a complex action in the lower court.
The Supreme Court disagreed with the appellate court, and sided with the trial court. It noted that the purpose of section 1033(a) “. . .is to encourage plaintiffs to bring their actions as limited civil actions whenever it is reasonably practicable to do so.” (Id. at 988):
“. . .what it requires is a realistic appraisal of the amount of damages at issue and whether the action might fairly have been litigated using the streamlined procedures of limited civil actions.” (Id.)
The court further noted that complexity of the case does not change its holding:
“Although extensive discovery may be conducted in many or even most FEHA actions, this does not mean that elaborate discovery proceedings are invariably necessary to effectively litigate a FEHA claim. Moreover, although in limited civil cases, the discovery permitted as of right is restricted (see, Code of Civil Procedure §94), the trial court may authorize additional discovery. . . or the parties may stipulate to additional discovery . . . .” (Id. at 988-989).
Consequently, the Supreme Court held that in a FEHA case, a trial court does have discretion to deny costs – i.e., attorneys’ fees – to a plaintiff who recovers damages that fall within the jurisdiction of a limited civil case.
The obvious implication is that an award of attorneys’ fees – whether allowed by contract or statute – is no longer a mandate. The plaintiff’s attorney is at risk of being denied her fees if she wins the case but the award is one that falls within the jurisdiction of the lower court. In sum, if she files the matter in the wrong court, she may end up receiving far less if any, in fees, than she originally assumed.
This issue resonates with me in light of my mediation practice as I conduct a lot of ‘lemon law” mediations in which plaintiff’s counsel seeks her fees pursuant to one or more applicable state statutes. Often, counsel has filed the action in the unlimited civil jurisdiction of the court (i.e. over $25,000) but settles the matter for less than $25,000 or within the jurisdiction of the limited civil courts. Should counsel now be denied her fees? Should defense counsel seek to severely limit the fees urging that the action was filed in the wrong court? Suppose, the principal case (which was filed in the unlimited civil jurisdiction of the court) settles for less than $25,000, and the parties agree to settle the issue by filing a motion for fees in the unlimited civil jurisdiction of the court. What should the judge do – go along or use her discretion to deny fees because the matter settled for less than $25,000?
No doubt, there are a myriad of hypotheticals to which the court’s holding could apply. . . and none of us has the crystal ball to foresee how they should be or will be resolved. But, the court’s ruling does provide much to ruminate on!
. . .Just a lot to think about!