Fee Award Only In Favor Of One Litigant Had To Be Remanded To Award Fees To Two Closely-Aligned Litigants Given That The Lower Court Appeared To Apply Wrong Legal Standard.
This is must reading for public interest attorneys on both sides, because it has a fairly elaborate discussion of what type of speculative, future financial benefits do not disqualify a litigant from private attorney general fee recovery under the cost-benefit analysis of Conservatorship of Whitley, 50 Cal.4th 1206 (2010) [our Leading Case No. 14].
In John R. Lawson Rock & Oil, Inc. v. State Air Resources Bd., Case No. F074615 (5th Dist. July 19, 2018) (unpublished), plaintiffs (one of which was a business using many trucks and the second of which was the California Trucking Association) sued under CEQA and the Administrative Procedures Act (APA) relating to Defendant Board’s Truck and Bus Regulation which made it or members invest millions of dollars proactively to comply with diesel truck/buses upgrades. The suit was spawned by the Board modifying these regulations to allow noncompliant parties more time to comply. The theory of the case is that this put plaintiffs at a competitive disadvantage with noncompliant fleets. The lower court did find that the Board had failed to properly comply with CEQA and the APA. Plaintiffs, together, sought an award of attorney’s fees under CCP § 1021.5 for $251,445.53 (a lodestar plus a 1.5 multiplier and also some “fees on fees” with interest) given that the same firm represented both.
The lower court struggled with the fee petition. At first, it denied fees completely, but then concluded that the business did show under Whitley that its financial incentive was out of proportion to its attorney’s fees expenditures, yet did not conclude the same for the Trucking Association. In the end, it awarded $68,182.55 in fees to the business (the fees actually paid), although denying fees to the Association. That prompted cross-appeals by the two plaintiffs.
The Fifth District, in an unpublished decision authored by Justice Detjen, engaged in an extended discussion of the Whitley cost/benefit analysis under the facts of this particular case, affirming the decision to award fees to the business, reversing the decision to deny fees to Association, and remanding for a calculation of the amount of fees to be awarded to both.
The appellate panel concluded that de novo review was appropriate on the lower court’s financial interest analysis under Whitley. It then engaged in an illuminating discussion which concluded that the potential future outcomes for the plaintiffs, which were speculative and remote, could not be considered as true financial incentives. “Future potential benefits contingent upon further action are too intangible to qualify [for purposes of the financial interest analysis under Whitley].” (Slip Op., p. 13.)
Beyond that, the Fifth District reasoned that it was an abuse of discretion to treat the prevailing parties differently.
That shifted attention to what was the reasonable amount of fees to be awarded to the prevailing party plaintiffs. It was disturbed by the fee award based only on what was paid by the business to date, with nothing indicating consideration of the multiplier request, what the trial judge considered to be the actual lodestar, whether fees awarded were an appropriate offset to the business’s separate litigation burden, and without really delving into the billing arrangement with the law firm by both parties. “An award merely compensating for fees paid applies the wrong legal standard and constitutes an abuse of discretion.” (Slip Op., p. 17.)