Can't Skip the Lodestar

Frym v. 601 Main Street LLC, No. A163086 (D1d5 Aug. 24, 2022)

Tenant brings similar claims against each of Landlord Entity, Landlord Entity’s Owner, and Landlord Entity’s Attorney. Each is separately represented. All three defendants file anti-SLAPP motions. Court grants Owner’s motion, and awards her fees. While briefing is pending, however, Tenant dismisses LE and Attorney. Court correctly recognizes that the dismissals don’t moot LE and Attorney’s motions—indeed it effectively concedes their merits. But it declines to award them fees, finding that the three motions had so much overlap that they could have been brought as one joint motion, so there’s no marginal value-add to the two extra motions.

That was error. A prevailing anti-SLAPP movant is statutorily entitled to fees, determined by the lodestar (reasonable rate times reasonable time) method. The court could have done that and—to the extent time was wasted or duplicated—declined to include it in the lodestar. But it could not just make a gestalt judgment that the whole shebang was duplicative. Moreover, because they had separate counsel, it could not all have been duplicative. For instance, Attorney’s lawyer prepped for and showed up at the hearing. And it just wasn’t fair to give fees only to Owner’s lawyer, just because her motion was heard first. So the case gets remanded to the trial court to do a legit lodestar. And moreover, Owner and LE get fees on appeal.

Reversed.

Your Arb Clause Does Not Need to Be in ALLCAPS

Conyer v. Hula Media Servs., LLC, No. B026738 (D2d8 Aug. 26, 2020)

Employee signed an acknowledgement of an employee handbook that contained an arbitration clause. The acknowledgment didn’t specifically call out the arbitration provision—there was no requirement of separate initialing or something like that. Plaintiff now says he’s not bound to the agreement. But that’s wrong. In Sanchez v. Valencia Holding Co., LLC, 61 Cal. 4th 899, 914 (2015) the California Supreme Court held that there is no obligation to highlight an arbitration clause in a contract and that if someone doesn’t bother to read a contract before signing it, it is their problem.

Of course, the context of the signing does go to procedural unconscionability. The fact that a clause is buried in a take it or leave it employee handbook gives rise to at least mild procedural unconscionability. And here, two parts of the agreement were substantively unconscionable—it required an employee to pay its pro rata share of the arbitrator’s fees, and it permits a prevailing employer to recover its attorneys’ fees. Both of those violate Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83, 112 (2000). The Court of Appeal, however, finds that these terms are severable. So remands for the trial court to sever the unconscionable terms and to otherwise compel the case to arbitration.

Reversed.

Intervenors Get Fees

Carlsbad Police Officers Assoc. v. City of Carlsbad, No. D075723 *D4d1 (May 18, 2020)

This is a “reverse public records act” lawsuit brought by some cop unions to prevent the disclosure of excessive force complaints, which are now subject to disclosure under a law passed in 2018. The ACLU and several media outlets sought to intervene. The trial court granted intervention, but conditioned it on the intervenors disclaiming any right to obtain fees under Code of Civil Procedure § 1021.5, which codifies the private attorney general doctrine. Ultimately the court agreed with intervenors’ position that the law required disclosure of the records. Intervenors then appealed the condition.

Under § 387(d)(1)(B), the intervenors were entitled to intervene as a matter of right. They had previously filed PRA requests to obtain the disputed documents, had the cops prevailed, intervenors’ ability to obtain the documents would have been impaired, and the real defendants in the case—various police departments—were essentially agnostic to the merits of the cops’ case. As the Court of Appeal explains, that didn’t necessarily preclude the court from subjecting the intervenors to appropriate conditions to ensure the efficiency of the litigation. But because intervenors of right have an interest in the controversy equivalent to that of a party, courts have less leeway to impose conditions than they do for permissive intervenors. Generally conditions on as of right intervenors are limited to “housekeeping” conditions aimed to prevent duplicative litigation.

The Court of Appeal holds that the trial court abused its discretion in imposing the condition. Indeed, “the analysis here is not close.” It is settled law that a successful intervenor in a reverse PRA case is entitled to a fee award under § 1021.5. Forcing the intervenors here to give that up impaired their substantive rights and ran contrary to the public policy justification for § 1021.5. The trial court went too far.

Reversed.

Fees. Tribes. Arbitration.

Findleton v. Coyote Valley Band of Pomo Indians, No. A145444 (D1d2 as modified, Sept. 26, 2018).

In a prior appeal in this case, the First District held that an Indian tribe had waived its sovereign immunity such that it could be compelled to arbitrate. A second appeal reversed a grant of attorneys’ fees to the Tribe in connection with the denied motion to compel, because, in light of the first appeal, the Tribe was no longer the prevailing party. On remand, the case was compelled to arbitration and fees awarded to the Plaintiff.

Plaintiffs' Joint § 998 Offer Holds Up

Gonzalez v. Lew, No. B271312 (D2d3 Mar. 1, 2018) 
 
This is a wrongful death case arising out of a house fire where two people were killed. Plaintiffs made a joint, undifferentiated offer of judgment under Code of Civil Procedure § 998 for $1.5 million. Defendants didn’t accept it, and a jury ultimately awarded $2.6 million. So the Court awarded Plaintiff’s their expert fees and interest on the award from the date the offer expired. 

A Demand for Everything Is Apparently Not an Offer of Compromise

Arave v. Merrill Lynch, Pierce, Fenner & Smith Inc., No E061677 (D4d2, as modified, Jan. 23, 2018)

First things first. A footnote at the beginning of this 95-page opinion says “We certify this opinion for publication under California Rules of Court, rules 8.1105(b) and 8.1110, except for parts I.B., I.C., I.D., I.E., I.F., I.G., II.A.1., II.A.2., II.A.4., II.A.5., II.A.6., II.B., II.C., II.D., II.E., II.F., and II.I.” (On a publication request the court struck II.C from the footnote.) So to figure out what is actually being published, you’ll need to make a list (like literally write it down) then scroll through the opinion and figure out by process of elimination what’s not excluded.

Can Kicking on a Costs Ruling

Heimlich v. Shivji, No. H062641 (D6 May 31, 2017)

About a year into an Attorney-Client fee dispute, Client made an offer of judgment under Code of Civil Procedure § 998 to settle the case for thirty grand. Attorney didn’t respond. Months after that, client sought to compel arbitration under the parties’ fee agreement. For reasons unclear, the trial court compelled the case to arbitration after summary judgment was denied, which ended in a $0 award where each party bore its own costs and fees. 

Client tried to raise the § 998 offer with the arbitrator as a basis of fee-shifting. But the arbitrator said that since her award had been rendered, she no longer had jurisdiction to address the question. As part of an effort to confirm the (lack of) award, Client asked the court to shift costs based on his beating the pre-arbitration § 998 offer. The trial court denied relief, finding that the issue should have been raised with the arbitrator before the substantive award was entered. Client appeals.

Some relevant legal points at play here. 1. § 998 was amended in 1997 to apply in arbitrations. 2. § 1293.2 permits a court upon confirmation of an arbitral award to award the same kinds of costs that are recoverable by a prevailing party in a civil litigation. 3. § 1284.2 says that, absent a contractual agreement otherwise, a party bears his own costs plus his pro rata share of the expenses of arbitration, such as the arbitrator’s fee.

Courts have generally read the interplay between 2 and 3 to mean that a court can shift court-related costs of compelling, confirming, or vacating an arbitration, but not costs incurred within the arbitral process itself. The 1997 amendments to § 998, however, change that somewhat, permitting the recovery of costs within the arbitration, even if not contractually agreed to. That’s not too controversial. But still, who decides? Generally litigants have been expected to enforce intra-arbitration cost shifting within the context of the arbitration, not afterwards.

The trouble with putting the question to the arbitrator is that with the exception of a limited authority to correct obvious or immaterial errors, the arbitrator doesn’t have much in the way of post-award jurisdiction. Cases and statues re pretty clear on that. But when it comes to a § 998 issue, that makes absolutely no sense, because an arbitrator can’t decide if a § 998 offer was bested until a decision has been rendered. Indeed, § 998 itself says that a rejected offer is inadmissible in evidence during a case on the merits.

So it’s a quintessential Catch 22. A § 998 “determination necessarily must postdate an arbitration award,” since there’s no way to adjudicate the § 998 before the award is entered, particularly when the rejection is inadmissible. But the arbitrator basically lacks jurisdiction to do that. 

Lacking many great options, and hemmed in by conflicting case law, the Court of Appeal just gets to rulin’ in the interest of common sense. It says: 1. an arbitrator can and should consider a post-award § 998 motion, and has jurisdiction to do so. 2. If the arbitrator won’t do that, he has failed to consider a submitted issue—a grounds for vacation under § 1283.4 and related case law. So the arbitrator here made that mistake.

The court thus orders the matter remanded for reconsideration by the arbitrator. But if that doesn’t work, there is some tangential dicta in a Supreme Court case that says something from which one could read—were one to squint a little and turn your head like a puppy—that a superior court can also entertain such an award if the arbitrator refuses to do so. So if the arbitrator continues to refuse, the superior court should address the issue on remand.

Reversed.

A Malpractice Hall of Mirrors

Gotek Energy Corp. v. SoCal IP Law Grp., No. B266684 (D2d6 Oct. 12, 2016)

Client hires “Law Firm #2” to bring a malpractice case against Law Firm #1—its prior patent counsel—for blowing a deadline for some patent applications. But Firm #2’s own complaint was filed after the one-year statute in Code of Civil Procedure § 340.6 had run. But that limit is tolled during the time an attorney-client relationship exists between the client/plaintiff and the attorney/defendant. So the issue in this case is when the relationship between Client and Firm #1 ended. Firm #1 claims the relationship ended when—a year and a week before this case was filed—it sent an email to Client informing Client that it needed to withdraw. The next day, Client replied by email to Firm #1, sting that it was terminating the relationship and demanding that Firm #1 immediately transfer the client file to new counsel. Client claims the date extended until the date its files were actually received by new counsel—364 days before the complaint in this case was filed.

The trial court sided with Firm #1, finding that the relationship ended when client said so. The fact that some ministerial work was done to transfer the files after Firm #1 was told it was terminated did not extend a confidential attorney client relationship until that work was complete. The trial court also awarded Firm #1 its fees under a fee provision in Client’s retainer agreement.

The Court of Appeal affirms. Tolling under § 340.6 stops when a client ceases to have any reasonable expectation that legal work will be performed. Given the unequivocal termination, the mere fact of the post-termination transfer of the client’s file did not provide a reasonable basis to believe that there was any kind of ongoing attorney-client relationship. The Court of Appeal further finds Client’s arguments against the fee award to be makeweight.

So the world inevitably await the malpractice case against the attorneys who blew the SOL on a malpractice case against some attorneys who blew the SOL on a patent filing. These guys really need to hire some counsel with a decent calendaring system.

Affirmed.

Sometimes It Pays to Interplead.

Wertheim, Inc. v. Omidvar, No. B262485 (D2d1 Sept. 29, 2016)

This is a complicated and long running fight between two entities that appear to be jockeying to swindle a widow of her dead husband’s ASCAP and BMI songwriting royalties. After Party 1 won an arbitration, which Party 2 appealed but declined to post a bond to stay collection. Party 1 tried to levy against ASCAP and BMI, which responded by interpleading the royalty streams, obtaining a court-approved $238k, paid of the res, for the costs incurred in interpleading. See Code Civ. Proc. § 386 (permitting a discretionary award of fees for costs incurred in interpleading and obtaining discharge). But then the arb judgment got reversed, resulting in a ruling that Party 2 was entitled to the interplead funds. Party 2 then moved to recoup from Party 1 the fees paid to ASCAP and BMI under Code of Civil Procedure § 386.6, which permits gives the court discretion to allocate the interpleader’s fees to the claimants “as may appear proper.” The trial court denied the motion and Party 2 appeals.

The Court of Appeal affirms. It appears that there’s no transcript of the hearing on the fee motion, so the court’s terse minute order denying allocation is presumed to be correct and to include any implicit findings necessary to support it. Moreover, the circumstances supported denial. The only reason ASCAP and BMI interplead was because Party #2 took no effort to stay collection pending appeal. Had it posted a supersedeas bond, ASCAP and BMI would never have gotten involved and Party #2 could have recovered its bond cost from Party #1 as a recoverable cost. So, although a range of allocations between Parties #1 and #2 would fall within the reasonable exercise of the court’s discretion, that discretion wasn’t abused in denying Party #2 to recover part of the fees from Party #1.

Affirmed.

The Man Wins, the Attorney Doesn't Lose, the Client Loses ...

Settle v. State of California, No. B249236 (D2d6 July 23, 2014)

Code of Civil Procedure § 1038 requires an award of costs (including attorneys’ fees) to a government entity defendant in that wins summary judgment if the court finds that plaintiff lacked a reasonable basis to bring suit. In this case, after granting the state’s summary judgment motion, the trial court assessed about $11,500 in costs and fees against both plaintiff and her attorney, jointly and severally. Section 1038, however, is silent about whether costs can be assessed against an attorney. Given the statute’s complete absence of any reference to attorneys, and in light of the other statutory remedies available to punish attorney participation in frivolous litigation—such as sanctions under § 128.7—the court here (employing some funny metaphors) finds that § 1038 does not authorize awards against attorneys.

Reversed.

Another Per Se Reveral Rule Bites the Dust

Robert v. Stanford University, No. H037514 (D6 Feb. 25, 2014)

After plaintiff brought and lost an apparently frivolous employment discrimination case against Stanford University, the trial court awarded Stanford $100,000 for its fees. Although the trial court never made any express written findings in support of the fee award, it made oral findings on the record that supported an award under the governing Christiansburg/Cummings standard. Plaintiff appealed the fee award, relying on Rosenman v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, 91 Cal. App. 4th 859 (2001), an earlier court of appeal case holding that a court commits per se reversible error when it awards fees to a prevailing defendant in a  FEHA case without making express written findings to support the award. But continuing a notable trend, the court departs from prior precedent and holds that Rosenman’s procedural error per se rule—like most rules mandating automatic reversal for procedural error—runs afoul of Article VI § 13 of the state constitution and Code of Civil Procedure § 475, which permit reversal of trial court rulings only when there is a miscarriage of justice or prejudice to the appealing party. Because it was clear from the trial court’s oral findings that it did not abuse its discretion in awarding fees to Stanford, reversal was not merited.

Affirmed.

Further coverage here.

A Cost, Is a Cost, Is a Cost ...

Williams v. Chino Valley Independent Fire District, No E055755 (D4d2 July 23, 2012) 

Plaintiff lost a Fair Employment and Housing Act case and the trial court awarded costs under Code of Civil Procedure § 1032(b). On appeal, Plaintiff argued that costs could be awarded to a prevailing FEHA defendant only if the defendant satisfied the standard necessary to recover its attorneys fees under FEHA, i.e., that plaintiffs’ case was “frivolous, unreasonable, or without foundation.” The court of appeal rejected the argument and upheld the fee award.