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Tuesday, February 16, 2010

Cal. Supreme Court Rules in FEHA Attorney Fee Case

On January 14, 2010, the California Supreme Court has issued its decision in Chavez v. City of Los Angeles (2010) 47 Cal.4th 970, and - as many predicted - the resulted was not pretty for the plaintiff and his lawyer.

In 1998, the plaintiff filed an action against the City of Los Angeles, alleging defamation and other violations. The Court dismissed that action. In May, 2000, the plaintiff filed a second action, this one for discrimination, harassment, and retaliation. In August, 2000, the plaintiff filed a third action, this one for federal civil rights violations. In November, 2004, the plaintiff filed a fourth action, this time alleging that the City retaliated against him for filing his earlier actions. Ultimately, the plaintiff won a verdict of $11,500 in this fourth action, well below the $25,000 threshold for "limited actions."

The plaintiff then asked for attorney fees of $870,000 -- 2.0 times the fees incurred on all work done from 2000 through the date of judgment, including fees incurred in the prior litigation. The trial court denied the motion for fees, but the Court of Appeal reversed, holding that the trial court had “applied the wrong statutory standard and abused its discretion.” Slip opinion at p. 5. The Supreme Court granted review.

The Court started by going through Cal. Code Civ. Proc. section 1033, which gives the court discretion to award fees and costs when the plaintiff chooses to proceed with an unlimited civil case, but recovers less than $25,000. The Court then noted that the Fair Employment and Housing Act (FEHA) also gives courts discretion to award fees: “In actions brought under this section, the court, in its discretion, may award to the prevailing party reasonable attorney's fees and costs....” Cal. Gov. Code section 12965(b). Next, the Court held that there was no conflict between these two sections, and a trial court has discretion in an appropriate FEHA case to deny a successful plaintiff his attorney fees, although the Court was clear that this should not be an exercise in Monday morning quarterbacking:
If, based on the available information, the plaintiff's attorney might reasonably have expected to be able to present substantial evidence supporting a FEHA damages award in an amount exceeding the damages limit (now $25,000) for a limited civil case, or if the plaintiff's attorney might reasonably have concluded that the action could not be fairly and effectively litigated as a limited civil case, the trial court should not deny attorney fees merely because, for example, the trier of fact ultimately rejected the testimony of the plaintiff's witnesses or failed to draw inferences that were reasonably supported, although not compelled, by the plaintiff's evidence. But if, to the contrary, the trial court is firmly persuaded that the plaintiff's attorney had no reasonable basis to anticipate a FEHA damages award in excess of the amount recoverable in a limited civil case, and also that the action could have been fairly and effectively litigated as a limited civil case, the trial court may deny, in whole or in part, the plaintiff's claim for attorney fees and other litigation costs.
Slip opinion at p. 9. Finally, the Court held that the trial court did not abuse its discretion in denying fees to Mr. Chavez.

Chavez may be a good cautionary tale for those who may be tempted to overreach, but employers should not try to rely on it too heavily in wage and hour cases. FEHA, which was at issue in Chavez, varies substantially from California wage law. FEHA makes an award of attorney fees to a successful plaintiff discretionary and allows successful defendants to recover their attorney fees and costs.

In stark contrast, a number of California Labor Code sections provide for one-way fee shifting in favor of successful plaintiffs, make such fee awards mandatory, rather than discretionary, and forbid attorney fee awards to successful defendants. See, e.g., Cal. Labor Code section 1194; Earley v. Superior Court (2000) 79 Cal. App. 4th 1420.

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