The UCL Practitioner

Recent private attorney general attorneys' fees decision: Marine Forests Society v. California Coastal Commission

In Marine Forests Society v. California Coastal Commission, ___ Cal.App.4th ___ (Mar. 4, 2008), the Court of Appeal (Third Appellate District) reversed an order awarding attorneys' fees under the private attorney general doctrine of Code of Civil Procedure section 1021.5. Greg May has a more detailed post on the decision at The California Blog of Appeal.

On a related note, the Supreme Court is currently considering Vasquez v. State of California, no. S143710 (review granted 08/16/06), in which the issue on review is as follows:

Does the rule that, in order to receive attorney fees under Code of Civil Procedure section 1021.5, the plaintiff must first reasonably attempt to settle the matter short of litigation, apply to [cases other than catalyst theory cases]? (See Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 557; Grimsley v. Board of Supervisors (1985) 169 Cal.App.3d 960, 966-967.)

The Court of Appeal determined that the party opposing the fee award waived the issue by not raising it below. Vasquez v. State of California, 138 Cal.App.4th 550 (2006) (Fourth Appellate District, Division Two) (slip op. at 18-19).

BREAKING NEWS: Supreme Court to issue private attorney general doctrine opinion tomorrow: Olson v. Autombile Club of Southern California

Tomorrow morning at 10:00 a.m., the Supreme Court will release its opinion in a case involving Code of Civil Procedure section 1021.5, the private attorney general doctrine:

Olson v. Automobile Club of Southern California, no. S143999 (argued in San Francisco 1-09-08) The court limited review to the following issue: Is a prevailing plaintiff who is awarded attorney’s fees under the private attorney general statute (Code Civ. Proc., § 1021.5) entitled to recover expert witness fees?

When the opinion is up, it will be available at this link: Olson v. Automobile Club of Southern California, __ Cal.4th ___ (Feb. 28, 2008).

UPDATE: The opinion is up. The Supreme Court held that "a prevailing plaintiff is not entitled to an award of expert witness fees in addition to attorney fees under Code of Civil Procedure section 1021.5." Slip op. at 2.

Two new decisions on private attorney general doctrine attorneys' fees: Adoption of Joshua S. and Roybal v. Governing Board

Two new decisions construing the private attorney general doctrine of Code of Civil Procedure section 1021.5 have recently been handed down.

In Adoption of Joshua S., ___ Cal.4th ___ (Jan. 24, 2008), the Supreme Court held that "section 1021.5 does not authorize an award of attorney fees against an individual who has done nothing to adversely affect the rights of the public or a substantial class of people other than raise an issue in the course of private litigation that could establish legal precedent adverse to a portion of the public ...." Slip op. at 2. The Court agreed with the argument that "section 1021.5 attorney fees should not be imposed on parties ... who ha[ve] only engaged in litigation to adjudicate private rights from which important appellate precedent happens to emerge, but has otherwise done nothing to compromise the rights of the public or a significant class of people." Id. at 8.

And in Roybal v. Governing Board, ___ Cal.App.4th ___ (Jan. 11, 2008; pub. ord. Feb. 6, 2008), the Court of Appeal (Sixth Appellate District) reversed a fees award under section 1021.5, holding that the action had not "resulted in the enforcement of an important right affecting the public interest." Slip op. at 5-9, passim.

Two Supreme Court opinions to be handed down tomorrow

The Supreme Court just announced that it will hand down two new opinions tomorrow at 10:00 a.m. While they are not strictly related to the UCL, they do sound very interesting, especially the second one, which addresses attorneys' fees under the private attorney general doctrine of Code of Civil Procedure section 1021.5:

ROSS (GARY) v. RAGINGWIRE TELECOMMUNICATIONS, INC.
S138130 (C043392 – Sacramento County Superior Court – 02AS05476)
Argued in Sacramento 11-06-07

This case includes the following issue: When a person who is authorized to use marijuana for medical purposes under the California Compassionate Use Act (Health & Saf. Code, § 11362.5) is discharged from employment on the basis of his or her off-duty use of marijuana, does the employee have either a claim under the Fair Employment and Housing Act (Gov. Code, § 12900 et seq.) for unlawful discrimination in employment on the basis of disability, or a common law tort claim for wrongful termination in violation of public policy?

ADOPTION OF JOSHUA S., A MINOR.
S138169 (D045067 – San Diego County Superior Court – JA46053)
Argued in Sacramento 11-06-07

This case presents the following issue: Was the plaintiff in a civil action that was brought to confirm the validity of a so-called second parent adoption (see Sharon S. v. Superior Court (2003) 31 Cal.4th 417) entitled to attorney fees under Code of Civil Procedure section 1021.5 for enforcing an important right affecting the public interest, when the plaintiff had a strong and significant, but nonpecuniary, individual private interest in pursuing the litigation?

When the opinions come down, they will be available at these links:

• Ross v. Ragingwire Telecommunications, Inc., ___ Cal.4th ___ (Jan. 24, 2007)

• Adoption of Joshua S., ___ Cal.4th ___ (Jan. 24, 2007)

"Private AGs Watching Fate of Expert Fees"

Yesterday's Recorder had an article on a case to be argued today in the California Supreme Court addressing whether expert witness fees, in addition to attorneys' fees, are recoverable under the private attorney general doctrine of Code of Civil Procedure section 1021.5. Mike McKee, "Private AGs Watching Fate of Expert Fees" (Jan. 8, 2007) (subscription).

The case in which this issue has been raised is Olson v. Automobile Club of Southern California, no. S143999. The Court of Appeal (Second Appellate District, Division Two) held that section 1021.5 did not authorize recovery of expert witness fees:

Only one reported decision, Beasley v. Wells Fargo Bank (1991) 235 Cal.App.3d 1407, 1421 [1 Cal.Rptr.2d 459] (Beasley), permits the award of expert witness fees under section 1021.5 for experts not ordered by the court. We disagree with Beasley, as its conclusion is contrary to the plain statutory language and legislative intent, and its reasoning is unpersuasive.

Olson v. Automobile Club of Southern California, 139 Cal.App.4th 552 (2006) (review granted 07/26/06).

Recent unpublished class action settlement/objector opinion: Vroegh v. Eastman Kodak Co.

In an unpublished opinion, Vroegh v. Eastman Kodak Co., 2007 WL 4217144 (Nov. 30, 2007), the Court of Appeal (First Appellate District, Division Five) affirmed the trial court's order approving a class action settlement, including an attorneys' fees award, and rejected all of the objectors' fairness arguments. According to the docket, on December 12 and 18, 2007, rehearing petitions were filed by two of the objectors.

Recent Seventh Circuit attorneys' fees opinion: Sutton v. Bernard

In Sutton v. Bernard, ___ F.3d ___ (7th Cir. Oct. 12, 2007), the Seventh Circuit reversed a district court order fixing attorneys fees in connection with a class action settlement, holding that the fees award may have been too low because the district court employed the wrong methodology. On October 23, the Chicago Tribune reported that "Class-action lawyers rack up rare victory on fees."

Two new attorneys' fees decisions: Cruz v. Ayromloo and Nichols v. City of Taft

The California Blog of Appeal has a detailed post on Cruz v. Ayromloo, ___ Cal.App.4th ___ (Oct. 3, 2007) (Second Appellate District, Division Seven), which is an interesting attorneys' fees case. There, the Court of Appeal affirmed a fees award in a pro bono matter, holding (in dicta, due to the prevailing party's failure to cross-appeal from the order fixing the amount of fees) that that there is no authority for reducing the lodestar simply because the case was taken on a pro bono basis: "We do not find it self-evident a law firm’s commendable willingness to provide its services on a pro bono basis to low income clients should necessarily justify a diminishment in the fee award when that pro bono representation proves successful. .... [O]ur research uncovered no case in which a trial court reduced a fee award simply because of the 'pro bono type of work' involved." Slip op. at 9 (footnote omitted).

And California Appellate Report has a post on Nichols v. City of Taft, ___ Cal.App.4th ___ (Oct. 2, 2007) (Fifth Appellate District), another attorneys' fees case. This case involves attorneys' fees sought by "members of a large out-of-town law firm with offices in Los Angeles and San Francisco, [whose] usual fees [are] considerably higher than would be charged in the local Kern County area." Slip op. at 2. The Court of Appeal held that applying a lodestar multiplier is not mandatory, but rather discretionary, and that the trial court erred by concluding that it was required to apply a multiplier. Id. at 7-10 (citing Ketchum v. Moses, 24 Cal.4th 1122, 1133 (2001)). The Court also held that "[u]se of a fee multiplier to compensate for the higher rates of out-of-town counsel requires a sufficient showing -- which plaintiff failed to make in this case -- that hiring local counsel was impracticable." Id. at 12.

New federal decision re catalyst theory: Trew v. Volvo Cars of N. Am., Inc.

In Trew v. Volvo Cars of North America, LLC, E.D. Cal., Civ. No. S-05-1379 RRB EFB (order filed 07/31/07), United States District Judge Ralph R. Beistline granted final approval of a class action settlement and awarded attorneys' fees under the catalyst theory. The court found that a CLRA notice letter (see Civ. Code § 1782) satisfied the pre-litigation demand requirement of Graham v. DaimlerChrysler Corp., 34 Cal.4th 553 (2004). Thanks to the blog reader who emailed me this order.

New attorneys' fees opinion: MBNA America Bank, N.A. v. Gorman

On December 19, 2006, the Appellate Department of the Santa Clara County Superior Court handed down its opinion in MBNA America Bank, N.A. v. Gorman, ___ Cal.App.4th Supp. ___ (Dec. 12, 2006). On January 2, 2007, the court ordered the opinion published, and on February 13, 2007, the opinion was posted online along with the rest of the published appellate opinions. Because it is an opinion of a Superior Court's appellate department, it will appear in the Supplement to the Official Reports. Published Superior Court Appellate Division opinions are relatively rare. It seems that the operators of the appellate courts' website had to add an "Appellate Division" category to its pulldown menu in order to accommodate this case.

In any event, in this case, MBNA America Bank commenced an arbitration proceeding against one of its card holders, Mr. Gorman. After obtaining an arbitration award, the bank filed a petition in the trial court to confirm the award. Mr. Gorman opposed the petition by arguing that “under Badie v. Bank of America (1998) 67 Cal.App.4th 779, ‘a mailed insert or “bill stuffer” cannot serve as a waiver of the procedural right of trial by jury or as a basis for enforcement of an ADR clause by a unilaterally issued change in the original agreement.’” The trial court found this argument persuasive, and denied the petition to confirm the arbitration award. Slip op. at 2. Mr. Gorman then moved for attorneys' fees and costs. The trial court granted the motion and awarded over $23,000. The bank appealed. Id.

The Appellate Division affirmed the attorneys' fees award, holding that the award was proper both under the attorneys' fees provision in the credit card contract (which Civil Code section 1717 made reciprocal) and under the private attorney general doctrine of Code of Civil Procedure section 1021.5. Slip op. at 3-8. In reaching the latter conclusion, the Appellate Division determined that Mr. Gorman vindicated "an important public right" by obtaining a ruling that "bill stuffer inserts were not an enforceable means of waiving the procedural right of trial by jury," thus protecting that constitutionally-protected right. Id. at 6. Mr. Gorman also conferred a "significant public benefit" because the order he obtained "should effectively deter [the bank] from [enforcing the arbitration agreement] at least with regard to customers similarly situated to [Mr. Gorman]." Id. at 7. Finally, the court determined that the burden on Mr. Gorman of challenging the arbitration provision was disproportionate to his individual stake in the outcome, because even though the bank said it planned to sue Mr. Gorman in court to recover the debt, Mr. Gorman incurred attorneys' fees that were three times as high as the debt amount. Id. at 7-8.

The Appellate Division also affirmed the amount of the fees award, finding it reasonable, and further held that Mr. Gorman would be entitled to recover his attorneys' fees incurred on appeal. Id. at 11. While challenges to unconscionable arbitration clauses come up quite often in class action litigation, this decision certainly provides an incentive for credit card holders and other consumers to challenge such clauses even in individual actions.

New attorneys' fees decision: Abouab v. City and County of San Francisco

While not a UCL decision, Abouab v. City and County of San Francisco, ___ Cal.App.4th ___ (July 20, 2006), is worth reading because it addresses four of the potential bases for an attorneys' fees award in UCL cases: the private attorney general doctrine, the common fund theory, the substantial benefit theory, and the catalyst theory. The Court of Appeal (First Appellate District, Division Two) held that the plaintiff was not entitled to recover fees under any of these theories.

The decision addresses a question about the catalyst theory that I've had in my mind ever since the Supreme Court decided Graham v. DaimlerChrysler Corp., 34 Cal.4th 553 (2004). In Graham, the Supreme Court held that fees can be recovered under the catalyst theory only if the plaintiff made a pre-lawsuit attempt to resolve the dispute. Id. at 577. So, what if your case was already on file before Graham was decided? How can you satisfy that requirement after the fact? Under Abouab, you can't. The Court of Appeal held that the plaintiff could not recover fees under the catalyst theory because (among other reasons) he had not satified the pre-lawsuit notification requirement, even though his case was filed before the Supreme Court announced that requirement in Graham. (Slip op. at 21-30.) That does not seem entirely fair, but I suppose we should all be thankful that the Supreme Court adopted the catalyst theory at all.

Recent private attorney general doctrine decision: Lindelli v. Town of San Anselmo

Because the UCL has no attorneys' fees provision, successful plaintiffs typically seek their fees under Code of Civil Procedure section 1021.5, the "private attorney general" doctrine. In Lindelli v. Town of San Anselmo, ___ Cal.App.4th ___ (May 26, 2006), the Court of Appeal (First Appellate District, Division Five) held that, absent a contrary agreement with the client, the right to recover fees under section 1021.5 belongs to the attorney. That means that the attorney can intervene in the action and seek fees on her own behalf even if the client refuses to authorize a fee request:

Were we to interpret section 1021.5 as precluding intervention and an attorney’s request for fees where the client declines to move for a fee award, we would diminish the certainty that attorneys who undertake public interest cases will receive reasonable compensation and dilute section 1021.5’s effectiveness at encouraging counsel to undertake litigation enforcing important public policies. (See Flannery [v. Prentice], supra, 26 Cal.4th [572] 583 [(2001)].) Were we to adopt respondents’ position it would also provide a windfall to the wrongdoing defendant, at the expense of the attorneys who labored in the public interest. (Cf. id. at pp. 585-586 [interpreting Government Code section 12965 to avoid windfall to client]; MacIsaac v. Waste Management Collection & Recycling, Inc. (2005) 134 Cal.App.4th 1076, 1091 [“California courts are justifiably reluctant to construe statutes to confer a windfall”]; Lolley v. Campbell (2002) 28 Cal.4th 367, 376 [interpreting fee provision in the Labor Code to avoid windfall to wrongdoing employer in form of exemption from paying attorney fees].) Finally, interpreting section 1021.5 as permitting intervention and a motion for fees by attorneys on their own behalf avoids wasteful collateral actions wherein attorneys sue their former clients because the clients’ refusal to move for fees led to loss of an opportunity to seek a fee award under section 1021.5.

Slip op. at 15. The opinion also notes that any motion for fees under section 1021.5 must be filed before entry of final judgment. Slip op. at 14.