Third District, in Unpublished Decision, Affirms Fee Award Against Losing Plaintiff.
Many of our past posts under the category “Cases: Civil Rights” tend to demonstrate that it is an unusual showing that results in fee exposure for a losing plaintiff in civil rights or Fair Employment and Housing Act (FEHA, Gov. Code sec. 12940 et seq.) cases. However, with the right showing that the claims were objectively unreasonable from the start, defendants can recoup their fees. The next case, Olfati v. State Bd. of Equalization, Case No. C053897 (3d Dist. Dec. 5, 2008) (unpublished), shows how subsequent admissions in summary judgment proceedings can create the right record for imposition of fee awards normally not resulting in cases where plaintiffs are usually given the benefit of the doubt in vindicating civil rights/employment discrimination charges.
In Olfati, plaintiff employee of the Board of Equalization (BOE) sued BOE and three individual BOE employees for fraud, defamation, retaliation in violation of FEHA, retaliation in violation of the False Claims Act (Gov. Code sec. 12650 et seq.), and discrimination/harassment in violation of FEHA. All defendants obtained summary judgment/adjudication of the claims, except the trial court gave plaintiff leave to amend to add a cause of action against BOE for retaliation under Labor Code section 1102.5. The lower court sustained a demurrer without leave on the added claim based on naming the individual defendants, adding new facts, failure to exhaust administrative remedies, and statutory governmental immunities.
That brings us around to the topic that peaks our interest: attorney’s fees. Defendants moved for fees and costs pursuant to two sections: (1) Code of Civil Procedure section 1038 (allowing defense fees and costs for government tort actions not brought or maintained in good faith and with reasonable cause); and (2) Government Code section 12965(b) (allowing the prevailing party in a FEHA action reasonable attorney’s fees and costs in the trial court’s discretion). The trial court granted fees/costs under both statutes, ordering plaintiff alone to pay BOE fees/costs in the amount of $221,452. Plaintiff appealed, losing challenges to the merits determinations and the fees/costs award.
FEHA Fee-Shifting Provision
Government Code section 12965(b) does allow fee-shifting when a FEHA action is found to be “unreasonable, frivolous, meritless or vexatious.” (Bond v. Pulsar Video Productions, 50 Cal.App.4th 918, 921(1996); Cummings v. Benco Building Services, 11 Cal.App.4th 1383, 1387 (1992).) The “meritless” and “vexatious” prongs are objectively based, although a finding of bad faith will provide even a stronger basis for imposition of fees. (Bond, supra, 50 Cal.App.4th at 925.)
Because the lower court’s findings were reviewed for abuse of discretion (Bond, supra, 50 Cal.App.4th at 921), plaintiff failed to show that she had any basis to allege retaliation based on race, religious creed, national origin, sex, age, etc. as well as actually admitting in the summary adjudication proceedings that she was not discriminated against based on sex, religion, disability, or national origin. These circumstances and ultimate rulings in the law-and-motion proceedings showed plaintiff had no factual basis for the FEHA action “from the beginning.” (Slip Opn., at p. 45.) Nevertheless, fees were justified because BOE had to pursue discovery and bring subsequent summary judgment/adjudication motions to dispose of the FEHA claims.
Plaintiff argued that the fees/costs award was flawed based on Hon v. Marshall, 53 Cal.App.4th 470, 474, 478 (1997), which found section 12965(b) fees inappropriate where an adverse disposition was based on a litigant’s failure to exhaust administrative remedies. In contrast, plaintiff suffered an adverse determination on the merits, with the trial court determining she lacked facts to support the basic elements of her claims.
Tort Claims Act Fee-Shifting Provision
Code of Civil Procedure section 1038 allows recovery of defense fees/costs in a Tort Claims Act case upon a finding that the plaintiff lacked either reasonable cause or good faith in filing or maintaining the lawsuit. (Kobzoff v. Los Angeles County Harbor/UCLA Medical Center, 19 Cal.4th 851, 853 (1998).) The question of “reasonable cause” under section 1038 focuses on whether the claim was objectively tenable and is reviewable de novo, whereas the question of “good faith” centers into an inquiry on the plaintiff’s subjective intent and is scrutinized under the substantial evidence review standard. (Hall v. Regents of University of California, 43 Cal.App.4th 1580, 1586 (1996).) The reasonableness test is much like that for a malicious prosecution action, depending on the tenability of the action actually brought, reasoned the Third District. (Leonardini v. Shell Oil Co., 216 Cal.App.3d 547, 571 (1989).)
Plaintiff never even responded to the defense summary judgment arguments on the fraud count. The defamation count was precluded because two of the statements were not actionable and the other communications were covered by at least two privileges and multiple governmental statutory immunities. They were not tenable as a matter of law, concluded the appellate panel.
Plaintiff again sought refuge under Hon, but it did not provide sufficient shelter. The Court of Appeal observed that other cases did award section 1038 fees even where the actions were found barred by statutory immunities. (See, e.g., Kobzoff, supra, 19 Cal.4th at 854, 863-864; Salazar v. Upland Police Dept., 116 Cal.App.4th 934 (2004).) Beyond that, the lower court also based its adjudications on the failure to satisfy the elements of each tort claim, which was an independent reason for affirmance.
The substantial fees/costs award against plaintiff was affirmed.
BLOG UNDERVIEW—Kobzoff reminds us that the UCLA-USC rivalry heats up again this weekend. Marc is a graduate from UCLA’s law school, while Mike is an undergraduate alumnus from USC. Mike is playing the odds and saying USC will win. Marc makes no predictions, though of course he would like to see UCLA win.
No matter what, may the best team win! Go Bruins; go Trojans. Whatever the outcome, we will continue publishing this blawg.