We might have known it was coming since I reported about being subpoenaed to testify that attorneys fees were unwarranted in a Federal employment case because the employer would have settled for the same amount as the ultimate verdict in a mediation that took place six months before trial...but now the California Supreme Court has decided that an employee may not be entitled to recover attorneys fees in a meritorious employment case where the amount in controversy (or the ultimate verdict) is too small to have warranted the fees incurred. The decision -- Chavez v. City of Los Angeles -- tilts the balance between employee and employer interests in employment cases a little towards the employer by allowing trial courts to deny attorney fee recoveries to plaintiffs who only recover a small amount.
In Chavez, the Plaintiff was awarded $11,500 for FEHA violations, but the Attorneys submitted a fee bill of $840,000. Prior to this decision, the Court didn't have the discretion to deny attorneys fees, although they could be taxed pursuant to motion. Now, if the Court thinks they're out of balance with the value of the case, it can deny the fees. Game changer!
I have often seen the threat of huge legal fees tip the evaluation towards settling a case that otherwise has relatively low damages in employment actions. Although the cases are not frivolous, they may have limited value without the additional threat of legal fees.
Plaintiff's attorneys will likely be scrutinizing the intake on these cases more thoroughly where the damages are low. Employees who have been wrongly terminated may have less access to quality attorneys to take their cases where damages are small. Indeed, I'm going to assume that more of these cases will be settled earlier and through mediation than assuming the risk and expense of trial in light of this decision.
Interesting development in light of the economic recession in our generally pro-employee liberal State.
Attorney Jan Frankel Schau is a highly skilled neutral, engaged in full-time dispute resolution. Following a successful career spanning two decades in litigation, she has mediated over 700 cases for satisfied clients. Ms. Schau understands the nuances of trial and settlement practice as well as client relations and balancing the needs of their representatives with the risk and expenses of trial. Those who have used Ms. Schau’s services recognize excellence in her persistence, optimism, creativity and integrity.
Ms. Schau was the President of the Southern California Mediation Association in 2007 and is recognized as among the most outstanding mediators in Southern California in the mediation of civil disputes by her peers and clients. She also serves as a Trustee of the Board of Directors of the San Fernando Valley Bar Association, and has presided as Chair of it’s Alternative Dispute Resolution Section and Litigation Section. She holds a Certificate of Advanced Skills in Negotiation from the Straus Institute for Dispute Resolution of Pepperdine University as well as from the Western Law Center for Disability Rights at Loyola Law School.