Selected Developments
March 2023 Update
The current update includes changes that reflect recent developments in case law and legislation. Summarized below are some of the more important developments included in this update since publication of the 2022 update.
Eligibility and Entitlement to Fees
In Naranjo v Spectrum Sec. Servs., Inc. (2022) 13 C5th 93, the California Supreme Court held that premium pay for rest or meal break violations constitutes “wages” under Lab C §226 and may also violate wage statement requirements under Lab C §226.7, thereby qualifying a prevailing employee for an award of attorney fees under Lab C §218.5. See §§2.2, 3.97.
In California DUI Lawyers Ass’n v California DMV (2022) 77 CA5th 517, the appellate court reversed the judgment against the plaintiff on its federal §1983 claim, and directed the trial court on remand to reconsider the amount of the CCP §1021.5 fee award, and to determine appellate fees, based on the plaintiff’s additional success on appeal. See §§2.13, 2.92.
In Department of Water Resources Envt’l Impact Cases (2022) 79 CA5th 556, the trial court erred by failing to consider the role the plaintiffs’ lawsuit played in the state’s decision to rescind the subject project approvals when analyzing the plaintiffs’ catalyst theory for attorney fees under CCP §1021.5. See §§2.111, 2.114.
In Artus v Gramercy Towers Condominium Ass’n (2022) 76 CA5th 1043, the court of appeal emphasized the discretionary nature of the trial court’s analysis of the prevailing party under the Davis-Stirling Common Interest Development Act (CC §5975(c)), explaining that the party that achieves the “main” or “primary” litigation objective is the prevailing party, and that the determination must be based on “substance over form,” as well as equitable considerations. See §§2.45, 2.51, 2.86, 3.59.
In Duff v Jaguar Land Rover N. Am., LLC (2022) 74 CA5th 491, the court of appeal departed from the CCP §1032 prevailing party definition for a fee award under CC §1794(d) (Song-Beverly Warranty Act) as in Reveles v Toyota by the Bay (1997) 57 CA4th 1139, and required the trial court on remand to use the more “pragmatic, litigation-objective” analysis for determining the prevailing party as in MacQuiddy v Mercedes-Benz USA, LLC (2015) 233 CA4th 1036. See §2.47.
In Green v Mercy Hous., Inc. (9th Cir 2021) 991 F3d 1056, the Ninth Circuit held that the Christiansburg standard (Christiansburg Garment Co. v EEOC (1978) 434 US 412, 98 S Ct 694) applies to attorney fees and cost claims under the Fair Housing Act (42 USC §3613(c)(2)). See §§2.49, 2.71.
In Riskin v Downtown Los Angeles Prop. Owners Ass’n (2022) 76 CA5th 438, the court held that a “minimal or insignificant” success standard applies when determining whether a plaintiff is the prevailing party in California Public Records Act cases, permitting the denial of fees altogether if the circumstances show it would be the fair result. See §§2.76, 2.99, 3.87.
In Poulsen v Department of Defense (9th Cir 2021) 994 F3d 1046, the Ninth Circuit, applying 5 USC §552(a)(4)(E)(ii)(I), held that a FOIA plaintiff “substantially prevailed” when the government’s document production followed the trial court’s order requiring production. See §§2.87, 2.115, 2.117, 3.129.
Fee-Shifting Statutes
In California DUI Lawyers Ass’n v California DMV (2022) 77 CA5th 517, the appellate court affirmed fees awarded to the plaintiff under CCP §1021.5 for establishing that the DMV’s dual role as advocate and adjudicator in automatic suspension proceedings violated the California Constitution’s due process clause and constituted an “illegal expenditure of funds” under CCP §526a. See §§3.45–3.46.
The California Supreme Court granted review in Ramirez v Charter Communications, Inc. (review granted June 1, 2022, S273802; opinion at 75 CA5th 365 to remain published and citable until further order) to address the issue of whether, in a FEHA action, an arbitration clause allowing for the recovery of interim attorney fees after a successful motion to compel arbitration was unconscionable. See §§3.82, 4.94.
In Pulliam v HNL Automotive Inc. (2022) 13 C5th 127, the California Supreme Court held that nothing in the Federal Trade Commission’s Holder Rule, which limits a consumer’s recovery in claims against a seller or its assignee, prevents an award of attorney fees to the full extent provided by state law. In so holding, the court also disapproved of the contrary decisions in Lafferty v Wells Fargo Bank (2018) 25 CA5th 398 and Spikener v Ally Fin., Inc. (2020) 50 CA5th 151, to the extent they are inconsistent with the Pulliam decision. See §3.104.
In Siry Inv., L.P. v Farkhondehpour (2022) 13 C5th 333, the California Supreme Court reviewed Pen C §496(c), under which an injured party may bring an action for treble damages, attorney fees, and court costs “when property has been obtained in any manner constituting theft.” The court held that Pen C §496(c) treble damages and attorney fees were available in a case involving the fraudulent diversion of business funds, rejecting the notion that the statute applied only to the receipt of stolen goods. See §3.108.
In People v Nonaka (2022) 83 CA5th 998, the court held that a convicted criminal defendant’s constitutional obligation to pay restitution to a victim of crime for attorney fees and costs, under Cal Const art I, §28(b)(13)(B) and Pen C §1202.4(f)(3)(H), is not discharged in the event of the settlement of a related civil action. See §3.108.
In Catlin Ins. Co. v Danko Meredith Law Firm, Inc. (2022) 73 CA5th 764, the court held that a ruling on the merits of an anti-SLAPP motion is required as a predicate to a fee award under CCP §425.16. The plaintiff’s voluntary dismissal mooted the action because there was no pending CCP §425.16 motion for attorney fees. See §§3.113, 4.85.
In Clarity Co. Consulting, LLC v Gabriel (2022) 77 CA5th 454, the court affirmed a fee award to the plaintiff when the defendant’s special motion to strike was “totally and completely without merit” and an example of “disturbing abuse” of the anti-SLAPP statute. See §§3.115, 3.120.
Fee Awards Based on Contractual Fee Clauses
In Westwood Homes, Inc. v AGCPII Villa Salerno Member, LLC (2021) 65 CA5th 922, the court held that two third party entities were entitled to fees as prevailing parties for defeating motions by a judgment creditor and its assignee to amend their judgments against a related entity to add the third parties as alter ego judgment debtors. See §4.51.
In California Union Square L.P. v Saks & Co. (2021) 71 CA5th 136, the court held that a contract provision requiring each party to bear its own fees in settling disputes over base rent was broad enough to extend to related judicial proceedings, despite the parties’ agreement to arbitrate all such disputes. See §4.63.
In City of Los Angeles Dep’t of Airports v U.S. Specialty Ins. Co. (2022) 79 CA5th 1039, the court determined there was no prevailing party when the defendant defeated the plaintiff’s claim for $3.4 million in damages but the plaintiff obtained judgment on one claim recovering only $1 in nominal damages. See §§4.77, 4.88.
In Waterwood Enters., LLC v City of Long Beach (2020) 58 CA5th 955, the court reversed a fee award to the defendant when the plaintiff recovered $45,050 on the only claim in the case, because the trial court improperly relied on unspecific tender, settlement discussions, and CCP §998 offers on which neither party prevailed. See §§4.77, 4.79, 4.88.
In United Grand Corp. v Stollof (2022) 74 CA5th 62, the court held the guarantor defendant was the prevailing party under CC §1717(b)(2) when it tendered full payment after a default judgment was vacated but before an answer was filed. See §4.78.
In Chen v Valstock Ventures, LLC (2022) 81 CA5th 957, the court reversed an interim contractual fee award based on partial summary judgment, holding that interim fees are not permitted in contractual fee cases when a final appealable judgment has not been entered. See §§4.91, 4.95.
Attorney Fees Awarded as Sanctions
In Transcon Fin., Inc. v Reid & Hellyer, APC (2022) 81 CA5th 547, the court reversed a sanctions award when the CCP §128.5 and CCP §128.7 motions were filed on the last day of the 21-day safe harbor period. See §§6.13, 6.26.
In Broadcast Music, Inc. v Structured Asset Sales, LLC (2022) 75 CA5th 596, the court held that a party was not entitled to CCP §128.7 sanctions when the underlying objectionable motion was resolved by the court during the safe harbor period. See §§6.26–6.27.
In Shiheiber v JPMorgan Case Bank, N.A. (2022) 81 CA5th 688, the court held that sanctions may be imposed under CCP §575.2 for local rule violations, regardless of whether the violations occur during pretrial or trial proceedings. See §6.56.
In Clarity Co. Consulting, LLC v Gabriel (2022) 77 CA5th 454, the court imposed sanctions against an attorney and client for a frivolous appeal that fell within “the most egregious conduct” grounds referenced in Marriage of Flaherty (1982) 31 C3d 637, plus sanctions “to compensate the state for the cost to the taxpayers of processing a frivolous appeal.” See §§6.60, 6.68, 6.70, 6.72.
Attorney Fees as Damages
In Mai v HKT Cal, Inc. (2021) 66 CA5th 504, the court of appeal held that invoices are admissible evidence to corroborate a party’s testimony that it incurred a liability for purposes of supporting a claim for “tort of another” attorney fees. See §7.7.
In David S. Karton, A Law Corp. v Musick, Peeler, Garrett LLP (2022) 83 CA5th 1027, the court held that fees sought under the “tort of another” doctrine may not be claimed by post-judgment “setoff” motion, citing this text. See §§7.3, 7.34.
Methods of Fee Calculation
In Joffe v Google, Inc. (In re Google Inc. St. View Electronic Communications Litig.) (9th Cir 2021) 21 F4th 1102, the Ninth Circuit affirmed a 25 percent fee award to class counsel even though the entire $13 million settlement fund was allocated to cy pres recipients, reasoning that the district court was not required to reduce the fee based on the lack of direct payments to the class. See §8.18.
In McKinney-Drobnis v Oreshack (9th Cir 2021) 16 F4th 594, the Ninth Circuit determined that the subject vouchers were coupons subject to CAFA, reversing the district court’s fee award and requiring the district court to use the value of any redeemed vouchers when awarding fees. See §8.20.
In Duff v Jaguar Land Rover N. Am., LLC (2022) 74 CA5th 491, the court of appeal reversed a $684,250 fee award when nominal damages in this Song-Beverly Consumer Warranty Act case were $1 based on the trial court’s incorrect application of the CCP §1032 prevailing party standard instead of a “pragmatic litigation-objective” standard. See §8.26.
Determining the Lodestar
In Vines v O’Reilly Auto Enters., LLC (2022) 74 CA5th 174, the trial court’s fee reduction was reversed because time spent on unsuccessful discrimination and harassment claims was related to the successful retaliation claim. See §§9.3, 9.50, 9.56.
In California DUI Lawyers Ass’n v California DMV (2022) 77 CA5th 517, the appellate court held the trial court did not abuse its discretion in determining the fee award, affirming the trial court’s finding that any excess in counsel’s hours was accounted for by rate reductions; affirming the trial court’s refusal to reduce the award for plaintiffs’ use of nine attorneys after finding that tasks completed by counsel were “within the realm of reasonability” and that the trial court had reduced the rates of six attorneys; and affirming the trial court’s refusal to reduce the award due to block billing. See §§9.4, 9.73, 9.84, 9.90.
In Coastline JX Holdings LLC v Bennett (2022) 80 CA5th 985, the court affirmed an attorney fee award for time spent resolving ERISA plan exemption issues in an attempt to enforce an amended judgment. See §9.27.
In Gunther v Alaska Airlines, Inc. (2021) 72 CA5th 334, the court concluded that the plaintiff’s PAGA, wage, and wage statement claims under Lab C §§2699(f)(2), 204, 226(h), and 1174 were all related and therefore affirmed the entire attorney fee award, even though the court reversed and remanded the Lab C §226.3 penalties award of $25 million. See §§9.56–9.57.
Adjustments to the Lodestar
In California DUI Lawyers Ass’n v California DMV (2022) 77 CA5th 517, the court of appeal affirmed the denial of a lodestar enhancement, determining that contingent risk was accounted for in the rate determination. See §§10.5, 10.9, 10.36, 10.42.
In Gunther v Alaska Airlines, Inc. (2021) 72 CA5th 334, the court of appeal affirmed the trial court’s refusal to apply a “limited success” reduction because the record showed the trial court considered and rejected it, and the plaintiff defeated the defendant’s “numerous affirmative defenses” and obtained injunctive relief remedying the defendant’s Labor Code violations. See §§10.8, 10.36, 10.52, 10.53, 10.62, 10.65.
Fees Awarded for Administrative Proceedings
In NLRB v Ampersand Publ’g, LLC (9th Cir 2022) 43 F4th 1233, the court held that fees incurred during the contract bargaining process were reimbursable under the NLRB’s authority to take any “affirmative action” to effectuate the policies of the National Labor Relations Act (29 USC §160(c)). See §13.15.
Collecting Fee Awards
In Buffin v State (9th Cir 2022) 23 F4th 951, the State of California was ordered to pay 42 USC §1988 fees that had been awarded against the county sheriff, as an arm of the state, even though the state was not a party to the litigation. See §§15.8–15.9.
In Guo v Moorpark Recovery Serv., LLC (2021) 60 CA5th 745, the trial court’s failure to specify the amount of the prevailing party’s contract-based fee award in the underlying judgment was not a basis to deny fees under CCP §685.040. See §15.15.
Appellate Review of Fee Orders
In Sanchez v Westlake Servs., LLC (2022) 73 CA5th 1100, the court dismissed the appeal of a pre-judgment order denying fees because the order was not appealable and it did not fall within the scope of the collateral order doctrine. See §16.2.
In Bowerman v Field Asset Servs., Inc. (9th Cir 2022) 39 F4th 652, the court held that an interim fee award was appealable when it was intertwined with the merits appeal. See §16.3.
In Manhan v Gallagher (2021) 62 CA5th 504, the court construed CCP §904.1(b) to permit an appeal from a sanctions order after a voluntary dismissal. See §16.4.
