Second District, Division Eight Affirms Lower Court’s Discretion to Not Award Fees to Winning FEHA Defendant Where the Actual Beneficiary of the Award is Another Defendant Not Entitled to Fee Recoupment.
In our December 11, 2008 post on Trisler, we discussed the FEHA fee-shifting statute, Government Code section 12965(b), and the leading case of Rosenman v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, 91 Cal.App.4th 859, 864 (2001), which in tandem establish that a prevailing FEHA defendant should be awarded fees only “in the rare case in which the plaintiff’s action was frivolous, unreasonable, or without foundation.” Rosenman also established the requirement that specific written findings be made in cases where lower courts determine the FEHA plaintiff’s action was frivolous as well as specify whether plaintiff has the ability to pay an adverse fees award. The next case presented an unusual twist: winning supervisor defendant was determined to be appropriately awarded fees, but supervisor’s defense was funded by a winning employer defendant which was not entitled to a fee award. Keep reading and see how the lower and appellate courts resolved this twist.
Young v. Exxon Mobil Corp., Case No. B189263 (2d Dist., Div. 8 Dec. 11, 2008) (certified for partial publication) involved a plaintiff employee (Ms. Young) who was terminated after closing down a 24-hour service station for several hours, in violation of company policy. Young sued her employer (Exxon) and her supervisor (Ms. Lopez) under FEHA, principally claiming harassment on the basis of mental disability, retaliation, and wrongful termination. Young lost a summary judgment motion to both defendants, with the trial judge finding that she did not negate Exxon’s legitimate, nondiscriminatory reasons for terminating her and that she could not prove the reasons were pretextual in nature. Supervisor (not Exxon) filed a motion for attorney’s fees under the FEHA fee-shifting statute, seeking $18,750 in fees (about one quarter of the fees spent in the total defense of the action). The trial court did find that Young’s claims, as against the supervisor, were “unreasonable, frivolous, meritless, vexatious, without foundation, and brought in subjective bad faith.” However, Lopez’s defense fees were paid by Exxon, such that the lower court concluded it “does not seem right” to award fees back to a party which did not claim Young’s claims were frivolous. The trial court awarded Lopez nominal attorney’s fees of $1.00. Both employer and supervisor cross-appealed this ruling.
The Second District, Division Eight, in a 3-0 published decision penned by Presiding Justice Cooper, affirmed the fees award on appeal.
The appellate court framed the question as being whether the trial court abused its discretion in refusing to award fees to a defendant who did not incur or pay them, when the fee award would redound to the benefit of another defendant which was not entitled to a fees award. “To this question, our answer, in this case, is “no.” In other words, while a trial court should ordinarily award attorney fees to a prevailing defendant in an FEHA action when the court finds the plaintiff’s action was frivolous, the court has the discretion not to do so if the actual beneficiary of the attorney fee award is a defendant to which an award could not otherwise be made.” (Slip Opn., at p. 20.)
Exxon and Ms. Lopez argued that there are many other cases in which courts have awarded fees to prevailing parties even though those parties were not actually liable for or did not incur or pay fees. (Among others, see, e.g., International Billing Services, Inc. v. Emigh, 84 Cal.App.4th 1175, 1192 (2000) [Civil Code section 1717]; Beverly Hills Properties v. Marcolino, 221 Cal.App.3d Supp. 7, 9, 11 (1990) [same].) Justice Cooper, however, found these situations distinguishable because “in all those cases, the attorney fee award actually benefits the prevailing party or an entity which has provided the services and would otherwise not be compensated for them.” (Slip Opn., at p. 21.) Put another way, the parties or entities in the cases relied on by Exxon/Lopez were not disqualified from obtaining fees in the first instance.
Furthermore, the evidence of record did not show that Ms. Lopez incurred any fees over and above that necessary to also defend Exxon in the case—another reason justifying the nominal award by the lower court.
With respect to Rosenman’s requirement of making findings on plaintiff’s ability to pay, this was unnecessary in this case because the $1.00 award would certainly not “break the bank” or lead to financial ruin. However, there was also evidence of record showing that Ms. Young would be bankrupted or seriously hurt if she had to pay the requested $18,750 fee award. The lower court’s “equitable” decision in Young was affirmed upon review.