In my original post on Vasquez, I summarized the Supreme Court's holding that Code of Civil Procedure section 1021.5 does not "categorically" require a prelitigation demand as a prerequisite to an attorneys' fees award. Some other aspects of the opinion are worthy of further discussion. Vasquez v. State of California, ___ Cal.4th ___ (Nov. 20, 2008).
One important point to remember from Vasquez is the holding that, while a prelitigation demand is not absolutely required, whether the plaintiff made one is going to be relevant to the court's analysis of whether a fees award is proper under section 1021.5. See, e.g., slip op. at 6, 18. The opinion provides some examples of factors that might justify not making a prelitigation demand:
The statute’s relevant language provides the court may award attorney fees if, among other things, “the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate ... .” (§ 1021.5, subd. (b), italics added.) This language does not expressly or by necessary implication require that the plaintiff have attempted to settle the dispute; it requires, instead, only that the court determine that private enforcement was sufficiently necessary to justify the award. To be sure, failed attempts to settle can help to demonstrate that litigation was necessary, but the absence of settlement attempts does not logically or necessarily demonstrate the contrary. Depending on the circumstances of the case, attempts to settle may have been futile, exigent circumstances may have required immediate resort to judicial process, or prior efforts to call the problem to the defendant’s attention — perhaps by other parties or in other proceedings — may have been rebuffed. The language of section 1021.5 is sufficiently flexible to permit courts to consider these and all other relevant circumstances in determining whether private enforcement was sufficiently necessary to justify awarding fees.
Slip op. at 6-7 (footnote omitted). The opinion goes on:
As we have explained, settlement efforts (or their absence) are relevant in every case to show that “the necessity and financial burden of private enforcement . . . are such as to make the award appropriate . . . .” (§ 1021.5, italics added.) In assessing such information in a particular case to determine whether private enforcement was sufficiently necessary to justify an award of fees, the trial court exercises its equitable discretion in light of all the relevant circumstances. That a plaintiff for tactical reasons might choose not to propose, or not to accept, a reasonable settlement offer is thus, in every case, a circumstance that potentially weighs against an award of fees. In Graham, we simply identified a set of cases at one end of the equitable spectrum that appeared to justify a bright-line rule because, in those cases, no court-ordered change in the parties’ legal relationship exists to show that the public benefit supposedly meriting fees was caused by the plaintiff’s litigation rather than by the defendant’s voluntary action.
Id. at 18 (footnote omitted) (emphasis added).
Another important aspect of the opinion is its discussion of whether the case at bar was a "catalyst" case subject to the prelitigiation demand requirement of Graham. The Court said no:
While we did not in Graham, supra, 34 Cal.4th 553, expressly define “catalyst case,” a definition of the term is necessarily implicit both in Graham and in its companion case, Tipton-Whittingham, supra, 34 Cal.4th 604. In Graham, we described “the catalyst theory” as permitting attorneys fees to be awarded “even when litigation does not result in a judicial resolution if the defendant changes its behavior substantially because of, and in the manner sought by, the litigation.” (Graham, at p. 560, italics added.) Similarly, in Tipton-Whittingham we held that Graham’s “limitations on the catalyst theory” (Graham, at p. 575) set out the factual prerequisites that a plaintiff must establish “[i]n order to obtain attorney fees without ... a judicially recognized change in the legal relationship between the parties ... .” (Tipton-Whittingham, at p. 608, italics added.) Accordingly, and of necessity, a plaintiff who has not succeeded in obtaining “a judicial resolution” (Graham, at p. 560) or “a judicially recognized change in the legal relationship between the parties” (Tipton-Whittingham, at p. 608) must obtain attorney fees under the catalyst theory, or not at all.
This case is not a catalyst case because Vasquez successfully obtained a stipulated injunction that was entered as a judgment and thus brought about a judicially recognized change in the parties’ legal relationship. (See Tipton-Whittingham, supra, 34 Cal.4th 604, 608.) ....
Id. at 19-20 (footnote omitted).
It will be quite interesting to see how Vasquez plays out in future cases. What do you think?