1/3 DCA Has Nice Discussion Of Fee Entitlement Under Catalyst Theory.
Center for Environmental Health v. Nutraceutical Corp., Case No. A148208 (1st Dist., Div. 3 June 19, 2018) (unpublished) is must reading for litigants and attorneys on the ambit and limitations of the catalyst theory which will give rise to attorney’s fees entitlement under California’s private attorney general statute, CCP § 1021.5.
Plaintiff was a nationally recognized nonprofit environment group which brought a Proposition 65 lawsuit against defendant, claiming that it offered one or more products containing coconut oil diethanolamine condensate aka cocamide diethanolamine (cocamide DEA) which is on California’s list of chemicals known to cause cancer—asking for, among other things, injunctive relief for actual and threatened violations. Although defendant corporation argued that plaintiff was not a catalyst for its activities in getting cocamide DEA out of products or through its notices to suppliers that the substance was not an approved product ingredient, the trial judge found otherwise and eventually awarded plaintiff $76,930 in section 1021.5 fees.
Corporation’s appeal of the fee order was unsuccessful.
The 1/3 DCA did a comprehensive analysis of the catalyst theory under section 1021.5, observing that a deferential review standard is applied to the lower court’s conclusion that a causal link existed as far as the plaintiff’s efforts and the defense actions to correct the violation.
The first issue was whether the trial court properly found the pre-suit notice required under Proposition 65 or the lawsuit were catalysts for the corporation’s remedial efforts. The trial judge in this case did find that corporation took remedial action either after the pre-suit notice was received or the lawsuit was filed. Corporation argued that the action must postdate the complaint, not the pre-suit notice, but the appellate court observed “the corporation directs us to no case holding that a trial court cannot consider the service of a plaintiff’s prelitigation notice when applying the catalyst test.” (Slip Op., p. 10.) However, the record also showed that the corporation did remedial activities even after the complaint was filed. Corporation argued that the catalyst theory could be abused, but this was rejected because the law requires the trial court to find plaintiff’s lawsuit has merit and that a plaintiff sought to reasonably settle the matter short of litigation as condition before the catalyst theory can be invoked.
The second issue was whether plaintiff achieved the primary relief sought in its complaint. That did occur, because the relief was to address both actual and threatened violations, with plaintiff being successful in preventing future sales or distributions of products containing cocamide DEA without the requisite Proposition 65 notices to consumers.
The third issue was whether the trial court erroneously assigned the burden of proof to the corporation to prove plaintiff’s case lacked merit. The appellate court found that this did not occur because the trial judge found that plaintiff’s lawsuit was meritorious given that the corporation, several months after the complaint was filed, failed to definitively inform its suppliers that cocamide DEA was a banned ingredient—doing so only at a post-lawsuit filing juncture.