Second District, Division 2 Finds Silence In Fee Shifting Statute Does Not Translate Into Legislative Intent to Impose Fees and Costs on Counsel.
We have seen a recent surge in cases where appellate courts have reversed trial court decisions imposing fees and costs against a party’s counsel under certain fee shifting or sanction statutes. This one joins the list, involving Civil Code section 3426.4 (which authorizes an award of attorney’s fees “to the prevailing party” if a trade secret misappropriation claim under the California Uniform Trade Secrets Act is made in bad faith) and Code of Civil Procedure section 1032 (the routine cost statute allowing an award of specified costs to “a prevailing party”).
In Jewels Connection, Inc. v. Czar Jewelry/Oro Direct, Case No. B219034 (2d Dist., Div. 2 Feb. 8, 2011) (unpublished), a trial court awarded $200,000 (out of a requested $224,989.68) in attorney’s fees and $12,087.93 in costs against a plaintiff losing a summary judgment motion in a trade secret misappropriation case as well as against plaintiff’s attorney. Attorney appealed as an objector to these awards.
Attorney did well to appeal.
Justice Doi Todd, writing on behalf of a 3-0 panel of the Second District, Division 2, reversed and ordered the awards stricken with respect to attorney.
With respect to the fee award under Civil Code section 3426.4, the appellate court relied on several cases indicating that “to the prevailing party” statutory language did not mean fees should be awarded as a sanction against a party’s counsel. (See, e.g., Doyle v. Superior Court, 226 Cal.App.3d 1355, 1358-1359 (1991) [lis pendens expungement statute, CCP § 405.38]; Neft v. Vidmark, Inc., 923 F.2d 746, 747 (9th Cir. 1991) [17 U.S.C. § 505]; Roadway Express, Inc. v. Piper, 447 U.S. 752, 761 n. 9 (1980) [federal civil rights fee shifting statute, 42 U.S.C. § 1988]; Pfingston v. Ronan Enginerring Co., 284 F.3d 999, 1006 (9th Cir. 2002) [False Claims Act provision, 31 U.S.C. § 3730(d)(4)]; Moore v. Kaufman, 189 Cal.App.4th 604, 614 (2010) [California’s anti-SLAPP statute, CCP § 425.16, reviewed in our October 24, 2010 post].) “Yet, there is no indication in either the language of section 3426.4 or the cases construing comparable stautory language that the Legislature intended the provision to operate as a direct sanction against a party’s counsel.” (Slip Opn., at p. 7.)
Same result with respect to the routine cost statute in Code of Civil Procedure section 1032(b). “Again, the statute is silent as against whom the prevailing party may recover costs. In the absence of any express statutory authorization permitting a prevailing party to recover costs from a party’s counsel, we must reverse the award of costs to the extent is was imposed against [party’s counsel].” (Slip Opn., at p. 7.)
BLOG UNDERVIEW–All of the opinions in this area basically indicate that it up to the California Legislature to make it explicit that fees, costs, or sanctions are awardable against counsel for a party.