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Michael S. Little: Lawsuit may put a dent in high attorney fee requests

It's The Law

Posted: May 20, 2010 5:36 p.m.
Updated: May 21, 2010 4:55 a.m.
Undoubtedly, California's Fair Employment and Housing Act is a vital statute that codifies the state's broad fundamental policy prohibiting employment discrimination based on, among other things, race, religion, sex, marital status, medical condition, national origin or disability.

Knowing the enforcement of its provisions would largely be left to private litigants, the Legislature correctly included statutory provisions (Government Code section 12965) which allow a prevailing plaintiff in employment discrimination cases to recover his or her attorney fees.

As the state Supreme Court notes: "In FEHA actions, attorney fee awards, which make it easier for plaintiffs of limited means to pursue meritorious claims, are intended to provide ‘fair compensation to the attorneys involved in the litigation at hand and encourage litigation of claims that in the public interest merit litigation.'" (Flannery v. Prentice (2001) 26 Cal.4th 572, 584)

However, since its enactment, many employment discrimination cases filed under FEHA have been initiated by attorneys solely seeking to recover large (and often inflated) attorney fee awards, rather than to enforce the "fundamental public policies" embodied in FEHA.

This is frequently true in circumstances where a clear violation of FEHA has not occurred, or where the alleged discrimination, even if proven true, did not cause the claimant to suffer any significant damage.

Certainly, many California employment discrimination actions are filed in good faith by counsel properly seeking to recover both damages for their clients and the attorney fees necessary to prosecute such actions.

Nonetheless, there is no denying the potential recovery of significant attorney fee awards for prevailing plaintiffs under FEHA has driven the steady increase in the number of California employment claims and the increase in attorney time necessary to resolve such disputes once they arise.

In Chavez v. City of Los Angeles (2010, 47 Cal.4th 970), the state Supreme Court sought to limit attorney fee awards in circumstances where it is apparent the attorney representing the prevailing plaintiff seeks to abuse FEHA's attorney fee provision.

In Chavez, the plaintiff, a Los Angeles Police Department officer, filed suit against the city and three supervisors, alleging claims under FEHA for employment discrimination and harassment on the basis of a perceived mental disability, for alleged unlawful retaliation stemming from plaintiff's submission of prior FEHA administrative complaints and the filing of prior state and federal actions against the city asserting FEHA claims.

At the trial court level, the jury found the plaintiff's supervisors did not engage in employment discrimination based on a perceived mental disability, but upheld the plaintiff's FEHA retaliation claim after finding that plaintiff's filing of prior FEHA claims was a motivating factor in a decision to rescind the plaintiff's request to transfer to another department.

The plaintiff was awarded $1,500 in economic damages, "including loss in overtime and cash detail," and $10,000 in non-economic damages "including mental suffering and emotional distress." At the conclusion of the lawsuit, the plaintiff - the prevailing party - filed a motion for attorney fees in the amount of $870,935.50 ($435,467.75 in hourly fees enhanced with a 2.0 multiplier).

The trial court, relying on the California Code of Civil Procedure section 1033(a), denied the plaintiff's motion seeking an attorney fee award of $870,935.50, on the grounds that 1033(a) affords the court discretion to limit or completely bar the prevailing party's recovery of attorneys fees when "the prevailing party recovers a judgment that could have been rendered in a limited civil case (i.e. the amount in controversy does not exceed $25,000)," but the action was nonetheless brought as an unlimited civil case (i.e. the amount in controversy exceeds $25,000).

The Court of Appeal reversed the trial court and concluded that section 1033 does not apply in actions brought under FEHA. On review, the state Supreme Court reversed the Court of Appeal and held that "section 1033(a), interpreted according to its plain meaning, gives a trial court discretion to deny attorney fees to a plaintiff who prevails on a FEHA claim but recovers an amount that could have been recovered in a limited civil case."

Although courts are to give due consideration to the policies and objectives of FEHA in general, and its attorney fee provision in particular, trial courts may deny a plaintiff's request for attorney fees in FEHA cases if the court concludes the attorney fee request is grossly inflated in light of the plaintiff's "minimal success."

While Chavez only provides courts, in limited circumstances, with the discretionary power to bar or reduce the recovery of attorney fees available to prevailing plaintiffs under FEHA, the case marks an important step toward the California Supreme Court's recognition that far too often employment discrimination suits are fueled by unfounded financial motives, rather than the altruistic anti-discrimination principals codified in FEHA.

Due to its rather narrow holding, many will argue Chavez will have a limited impact upon FEHA litigation.
However, attorneys filing FEHA cases will at least need to consider, at the onset, whether the severity of the purported claims set forth reasonably justify the number of attorney hours to be incurred in prosecuting such actions and whether such claims should be filed as a limited civil case.

The Chavez court echoed this thought when it provided the following guidance: "In determining whether a FEHA action should have been brought as a limited civil case, the trial court should consider FEHA's underlying policy of encouraging the assertion of meritorious FEHA claims, and it should evaluate the entire case in light of the information that was known, or should have been known, by plaintiff's attorney when the action was initially filed and as it developed thereafter."

The Chavez court also provided a clear warning to attorneys filing FEHA claims solely for financial gain: "Whether plaintiff was entitled to an award of attorney fees for time spent litigating the single successful claim requires consideration of another established principle governing attorney fee awards ... ‘(a) fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether.'"

Ultimately, Chavez and its vesting of discretionary power in the trial courts to limit or deny attorney fee awards should lead to a decrease in the number of unmeritorious FEHA claims and an increase in the number of "low-exposure" FEHA claims that can be resolved through early settlements or through the streamlined procedures of limited civil actions.

In any event, it is clear that Chavez signals the California Supreme Court's growing impatience for inflated attorney fee claims that are driving a growing number of lawsuits under FEHA.

Michael S. Little is an attorney with Poole & Shaffery, LLP, a full-service business, corporate and employment law firm. He can be reached at (661) 290-2991. His column reflects his own views and not necessarily those of The Signal. "It's The Law" appears Fridays and rotates between members of the Santa Clarita Valley Bar Association. ( Nothing contained herein shall be or is intended to be construed as providing legal advice.


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