CIVIL WRONGS

The ability of counsel to bring a motion for attorney fees after successfully litigating violations of the Fair Employment and Housing Act is being challenged. The California Supreme Court is ready to weigh in on the issue after granting review of Chavez v. City of Los Angeles, an opinion out of the Court of Appeal for the 2nd District. The city of Los Angeles' petition for review was granted by the California Supreme Court in May 2008.

The Fair Employment and Housing Act provides that a trial court has discretion to award a prevailing party reasonable attorney fees and costs.  An appellate court may only reverse a trial court decision concerning an award of attorney fees where there is a prejudicial abuse of discretion.  Whether the trial court abused its discretion in denying a motion for attorney fees brought under the act is at the forefront of the dispute before the Supreme Court.

In Chavez, L.A.P.D. Officer Robert Chavez sued his employer and three supervisors for disability discrimination and retaliation in violation of the Fair Employment and Housing Act after complaining about harassment and discrimination. The Court of Appeal opined that the city's litigation strategy protracted the case so that Chavez was compelled to engage in extensive discovery and litigation for five years through trial and appellate courts, incurring substantial attorney fees. The city never made a Section 998 offer to compromise with Chavez, and it never made an offer to settle during five separate mediation sessions.

In the end, a jury awarded Chavez only $11,500: $1,500 for economic damages and $10,000 for emotional distress against the city and one of the three supervisors sued. The award was not a complete victory on all of the causes of action raised by Chavez. A motion for nonsuit had been granted in favor of the second supervisor during the trial, and the jury found in favor of the city and the third supervisor on the discrimination claim.

Despite the relatively low award, Chavez filed a motion for attorney fees under the Fair Employment and Housing Act as the prevailing party. Chavez's attorney fees were over $435,000, but with Chavez's request that a multiplier of two be used, his request to the trial court totaled over $870,000. Chavez submitted an expert witness declaration supporting the reasonableness of his request. The city opposed Chavez's request for attorney fees and argued that Chavez failed to establish a reasonable hourly rate based on attorneys with comparable experience, that Chavez submitted inflated bills, that Chavez's request for a lodestar method multiplier of two was unreasonable, and that Chavez wrongfully sought to recover attorney fees for time spent litigating claims that were ultimately unsuccessful.

The trial judge denied Chavez's motion. The Court of Appeal had to determine whether this was an abuse of discretion. A trial court's discretion does not mean that it can grant or deny an attorney fee request based on visceral impulse or whim. Rather, in the context of the statutory discretion to grant attorney fees under the Fair Employment and Housing Act, it means that a court may only act in a manner that is consistent with and promotes the goals of the act. The trial court's decision to deny the motion was based on Code of Civil Procedure Section 1033. Section 1033 aims to deter plaintiffs from inflating the dollar value of their cases by encouraging the filing of low dollar value cases in courts of limited jurisdiction (i.e., the amount demanded is $25,000 or less), and the filing of larger value cases in courts of unlimited jurisdiction (i.e., the amount demanded is more than $25,000).  To that end, Section 1033 gives a trial court the discretion to deny fee requests even where they are authorized. For instance, in a case in which a plaintiff files an unlimited civil action, but only recovers a judgment of $25,000 or less, a trial court has discretion to deny the request for attorney fees. Chavez filed his suit in a court of unlimited jurisdiction, but in the end, only recovered a judgment in the amount of $11,500, thereby making the judgment one that could have been rendered in a court of limited jurisdiction. Based on these facts and Section 1033, the trial judge denied Chavez's request for attorney fees.

The trial court in Chavez relied on Chavez's modest recovery, the limited evidence he introduced at trial regarding damages, and the Steele decision to justify invoking Section 1033 to deny his motion for attorney fees.  Steele v. Jensen Instrument Co. is a 1997 2nd District Court of Appeal case that largely mirrors the basic underlying facts of Chavez. In Steele, the plaintiff brought a claim for pregnancy discrimination in violation of the Fair Employment and Housing Act, filed the case in a court of unlimited jurisdiction, but was only awarded $21,078. Steele filed a motion for attorney fees, which was denied. The trial court in Steele relied on Section 1033 to deny the motion for attorney fees because the amount of the judgment could have been rendered in a court of limited jurisdiction. The 2nd District affirmed the lower court's decision. The trial court in Chavez relied on Steele as its primary guide for its decision to deny the request for attorney fees.

Chavez appealed to the 2nd District, the same court that decided Steele, but this time, the court reversed the trial court, and remanded the matter for a determination of the amount of fees that Chavez was entitled to. The Court of Appeal drew a factual distinction between Steele and Chavez. The court noted that Chavez had prevailed on one cause of action against one individual defendant and the city, and made several attempts to settle.  Additionally, the court noted that during five years of litigation, the city made no settlement offers. But in Steele, nonsuit was granted in favor of all of the individual defendants, and the plaintiff had rejected a Section 998 offer to compromise that was twice the amount ultimately rewarded. In addition, the court criticized its own opinion in Steele for failing to address whether Section 1033 can ever be applied in a civil rights action where the underlying statute giving rise to a plaintiff's claim allows for the discretionary recovery of attorney fees. The Chavez court intimates that Section 1033 cannot apply because its application does not further the purposes of the Fair Employment and Housing Act. The fundamental problem for the Chavez court is that Section 1033 and the attorney fee provision in the act serve conflicting public policy goals. These concerns were not raised in Steele. 

The court discussed the public policy aim behind the attorney fee provision.  It exists to encourage plaintiffs' attorneys to take meritorious cases alleging civil rights violations that may not have a sizable judgment attached to them. The resolution of such civil rights cases still serves a public purpose. If courts begin to deny attorney fee motions brought under the Fair Employment and Housing Act solely on the basis of a minimal judgment obtained at trial, attorneys will have little motivation to take on civil rights cases with a smaller dollar value. Chavez cites other federal cases to support its position that attorney fees should be awarded even where the amount of attorney fees sought by a prevailing plaintiff exceeds the amount of a nominal judgment.

The court's opinion also suggests that Section 1033 serves a very different public policy purpose that should not be considered in Fair Employment and Housing Act cases. Chavez holds that Section 1033 cannot apply in cases brought under the Fair Employment and Housing Act because although recovery may be small, that fact alone should not turn a legitimate civil rights claim into a trivial gripe that is subject to the denial of attorney fees.  The Chavez court believes that the litigation of these civil rights claims is important because they can result in the development of substantial rights for the public at large.

Chavez concluded that the trial court abused its discretion when it denied Chavez's motion for attorney fees. The court noted that neither of the parties raised the issue of the amount in controversy not exceeding $25,000, but instead the trial court did so on its own. Chavez also chastised the trial court for disregarding the requisite analysis of whether special circumstances existed to justify denying a motion for fees under the Fair Employment and Housing Act.

Instead, the trial court focused solely on the low $11,500 judgment and Section 1033 to deny the motion. Chavez further berates the trial court for not questioning the applicability of Section 1033. This last point seems particularly harsh since the trial court relied on Steele - a case decided by the same court that failed to explore this question - to ultimately support its decision.

The Supreme Court's decision in Chavez will have a tremendous impact on attorneys, parties and the public.

If the Supreme Court holds that Section 1033 can be used as a basis to deny attorney fee motions in Fair Employment and Housing Act cases where the underlying judgments are less than $25,000, plaintiffs' attorneys will be less likely to pursue cases on behalf of indigent workers who are more likely to receive lower damages awards. On the other hand, employers will benefit tremendously if the Supreme Court upholds Steele. Gone will be the days of paying six-figure attorneys fee awards when faced with minimal judgments under $25,000.

The Supreme Court presumably granted review of Chavez to send a clear message about the granting of attorney fee awards in Fair Employment and Housing Act cases. There are very serious public policy implications on both sides of the debate. Whether the decision will benefit employers or employees remains to be seen.

Morin I. Jacob is of counsel to Liebert Cassidy Whitmore in their San Francisco office. The firm specializes in public sector labor and employment law.