Fees Awardable if Claimant Can That Collateral Action Was “Related to the Action in Which Fees Are Sought and Useful to Its Resolution.”
We have a category devoted to Code of Civil Procedure section 1021.5, which codifies California’s private attorney general doctrine. Frequently in these cases, a prevailing plaintiff seeks fees, both for the pending action and a prior administrative/federal matter that was related to the state court action. Under what circumstances can a fee claimant obtain reimbursement for the collateral proceedings? We explore a published decision and an unpublished decision that establish the governing test and show how the test is applied to two distinct sets of underlying facts.
In Children’s Hospital and Med. Center v. Bonta, 97 Cal.App.4th 740 (2002), rev. den., the First District allowed successful plaintiffs (out-of-state hospitals) to seek recovery of fees incurred in prior federal court proceedings under section 1021.5. There, the plaintiffs had beaten defendant’s summary judgment motion and obtained a favorable ruling on a declaratory relief action from a district judge, a ruling affirmed by the Ninth Circuit. Subsequently, plaintiffs sought damages for past underpayments to Medi-Cal beneficiaries. The state court also deferred to the federal ruling in determining that defendant committed both constitutional and state statutory violations, eventually awarding plaintiffs for a net shortfall of over $6 million. When the fee proceeding juncture arrived, the state trial court awarded plaintiff fees of $827,145, inclusive of about one-third of allowed hours that had been devoted to the related federal proceedings. Defendant was not happy, and predictably appealed.
Defendant primarily argued that fees for ancillary proceedings could only be awarded only if they were necessary to the action in which fees were sought. The Bonta court rejected this as being an unduly narrow construction of the applicable test for awarding fees incurred in related proceedings. After surveying both federal and state decisions mainly concerning administrative proceedings for which compensation was allowed (see especially Webb v. Bd. of Educ. of Dyer County, Tenn., 471 U.S. 234, 244, 249 (1985) and Wallace v. Consumers Cooperative of Berkeley, Inc., 170 Cal.App.3d 836, 847-849 (1985)), Bonta framed the test more broadly: compensable work can be allowed in the discretion of the trial court that “may not have been absolutely necessary to the action in which fees are awarded but was nonetheless closely related to the action in which fees are sought and useful to its resolution.” (Bonta, supra, 97 Cal.App.4th at 780.) Applying this test to the facts before it, the Court of Appeal found that the federal ruling “materially contributed” to the resolution of the constitutional issues presented in the litigation and “not only relieved the superior court of burdensome adjudicative responsibilities it would otherwise have had to undertake but also diminished the work required of counsel.” (Id.at 781.)
A different result was reached under the same test in Pickern v. Best Western Timber Cove Lodge Marina Resort, 2005 WL 1243380 (3d Dist. May 25, 2005). There, a disabled person sued Best Western’s property owners first in federal court and then in state court under the American with Disabilities Act (which has a mandatory fee-shifting statute). State claims under analog California statutes were also included. The federal case sought only injunctive relief and attorney’s fees. Best Western eventually did remedial work, even entering into a stipulation in the federal case to that effect—a stipulation that plaintiff claimed was unenforceable. Eventually, the federal court granted a summary judgment to Best Western on the basis that its remedial work mooted the claim (with the district judge declining to exercise jurisdiction over the state law claims and dismissing the entire action). The federal court denied Pickern’s subsequent fee motion on the ground that she did not prevail because she did not obtain an enforceable settlement stipulation from Best Western. Pickern then filed a state action seeking damages, attorney’s fees and costs under the ADA and analog statute statutes. Pickern and Best Western settled the state action through a compromise by which the owners paid plaintiff $50,000 (which included fees and costs expended in the state action), but left the state trial judge with the discretion to decide plaintiff’s entitlement to fees expended in litigating the state law claims in the federal action. Pickern moved to recover $87,712 in fees and $8,308 in costs under the Unruh Act’s fee-shifting provision and Code of Civil Procedure section 1021.5. The trial court denied plaintiff’s fee request, determining that “there was no ‘inextricable intertwining’ between the federal lawsuit and the subsequent state lawsuit.” The trial court also decided that the property owners had done remedial work well before the state lawsuit was commenced, such that it was not a “catalyst” motivating the remedial activities. Pickern challenged the fee denial on appeal.
She lost.
After contrasting Folsom v. Butte County Assn. of Governments, 32 Cal.3d 668 (1982) with Westside Community for Independent Living, Inc. v. Obledo, 33 Cal.3d 348 (1983), the Third District in Pickern found that the causal link in a “catalyst” analysis presented a factual question for the lower court and that it did not err in determining that the remedial work had been done prior to commencement of the state action. (2005 WL 1243380 at *9.)
The Court of Appeal then addressed Pickern’s argument that she should have been awarded fees for her attorneys’ ancillary work in prior federal court proceedings. The Third District found no flaw in the fee denial ruling of the lower court. It found that the aims of the lawsuits were different: the federal suit focused on equitable relief, and the state action was focused on monetary recovery. Even more to the point, Pickern apparently had made admissions in the federal action that it had served no useful purpose in resolving the sate court action. Because the state law claims were dismissed in the federal action, there was no chance that res judicata or collateral estoppel would render a prior federal ruling binding on the state court. The appellate panel summed up its affirmance in this way: “Pickern’s original choice of the federal forum represented a gamble by Pickern that the case would be fully litigated in that court without the need for additional separate proceedings. She lost that gamble when the federal claims were mooted and the case was dismissed. In that sense, the original federal action was not inextricably intertwined with this action, nor was it useful to the resolution of this case. The trial court’s conclusion on this point did not constitute an abuse of discretion.” (Id., at *11 n. 7.)