The objective of this article and self-study test is to familiarize bench officers and attorneys with private attorney general attorney fees. Readers will learn about the standards for recovery of fees, including the requirement of the existence of an important right, providing a substantial benefit, the necessity and financial burden of private enforcement, and the "catalyst" theory of recovery. Readers will also learn about the standards of appellate review governing private attorney general fees orders.
Code of Civil Procedure Section 1021.5 authorizes a court to award attorney fees to a successful party, "in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any."
Section 1021.5 codifies the "private attorney general" doctrine of attorney fees set forth in Serrano v. Priest, 20 Cal. 3d 25 (1977), which held, for the first time in California, that a trial court has inherent equitable powers to award attorney fees to plaintiffs who have vindicated an important public policy.
The California Supreme Court in Graham v. DaimlerChrysler Corp., 34 Cal. 4th 553 (2004), explained: "[T]he private attorney general doctrine 'rests upon the recognition that privately initiated lawsuits are often essential to the effectuation of the fundamental public policies embodied in constitutional or statutory provisions, and that, without some mechanism authorizing the award of attorney fees, private actions to enforce such important public policies will as a practical matter frequently be infeasible.' Thus, the fundamental objective of the doctrine is to encourage suits enforcing important public policies by providing substantial attorney fees to successful litigants in such cases." (Citation omitted.)
In Adoption of Joshua S., 42 Cal. 4th 945 (2008), the California Supreme Court carved out a limited exception to those requirements. In that case, the Supreme Court held private attorney general fees could not be imposed against a private litigant with no institutional interest in the litigation when the judgment settled only her private rights and those of her children, merely because she raised an issue in the course of the litigation that gave rise to an important appellate precedent decided against her.
Important Right Affecting the Public Interest
"The enforcement of an important right affecting the public interest implies that those on whom attorney fees are imposed have acted, or failed to act, in such a way as to violate or compromise that right, thereby requiring its enforcement through litigation." Joshua S. "[T]he proper application of statutory language ... is an important right. Furthermore, it has been said that 'the public always has a significant interest in seeing that legal strictures are properly enforced.'" Norberg v. California Coastal Commission, 221 Cal. App. 4th 535 (2013).
"[M]erely because an appellate opinion is certified for publication does not mean it involves an important right affecting the public interest. The fact that litigation results in significant appellate precedent is only one factor to be considered in that regard." Serrano v. Stefan Merli Plastering Co., Inc., 52 Cal. 4th 1018 (2011).
In Stefan Merli, the California Supreme Court explained the distinction between what constitutes an important right and the Joshua S. exception to recovery. The plaintiffs objected to paying an extra fee for an expedited transcript of a deposition notice by the defendant. The plaintiffs won an appeal establishing that trial courts have authority to determine the reasonableness of fees charged by deposition reporters to nonnoticing parties. However, the trial court denied the plaintiffs' request for Section 1021.5 attorney fees, and the Court of Appeal, relying on Joshua S., affirmed. The Supreme Court reversed, concluding the plaintiffs' litigation conferred a significant public interest, and plaintiffs were not required to show the court reporters had done anything adverse to the public interest. The court clarified the exception of Joshua S. applied only in cases in which all three factors for Section 1021.5 fees are satisfied but the party from whom fees are sought "is not the type of party on whom private attorney general fees were intended to be imposed." Joshua S. has no bearing on whether an action has resulted in the enforcement of an important right affecting the public interest.
"[T]he public always derives a 'benefit' when illegal private or public conduct is rectified." Woodland Hills Residents Assn., Inc. v. City Council, 23 Cal. 3d 917 (1979). But, "the Legislature did not intend to authorize an award of attorney fees in every case involving a statutory violation."
It is not enough to merely advance the state of the law to recover attorney fees as a private attorney general under Code of Civil Procedure Section 1021.5. In Azure Limited v. I-Flow Corp., 207 Cal. App. 4th 60 (2012), the plaintiff, a shareholder of the defendant corporation, prevailed in a lawsuit that resulted in a Supreme Court opinion bearing on the rights of all property owners whose property had been wrongfully transferred to the state by another private party. But, the Supreme Court held, "merely advancing the state of the law does not transform a private dispute over substantial economic losses into a section 1021.5 case in which fees may be awarded to attorneys for serving the public interest as private attorneys general."
In Norberg, the appellate court reversed an order awarding fees under Section 1021.5 because the litigation did not confer a substantial benefit on the general public or on a large number of persons. The petitioner's litigation resulted in the invalidation of a permit affecting one parcel of real property on the ground the Coastal Commission's decision failed to track the statutory language. The Court of Appeal concluded the litigation conferred a benefit only on the petitioner and was not prosecuted in the public interest. The fact the lawsuit might cause the Coastal Commission to change its practices in the future is insufficient to satisfy the public benefit exception.
Necessity and Financial Burden
The necessity and financial burden requirement encompasses two issues: (1) whether private enforcement was necessary, and (2) whether the financial burden of private enforcement warrants subsidizing the successful party's attorneys. Conservatorship of Whitley, 50 Cal. 4th 1206 (2010). Private enforcement is necessary only if public enforcement of the important right affecting the public interest at issue is inadequate.
A litigant's personal, nonpecuniary motives in pursuing litigation may not be used to disqualify the litigant from obtaining fees under Section 1021.5. Conservatorship of Whitley.
The financial burden of private enforcement concerns the costs of litigation and the financial benefits reasonably expected by the successful party. An attorney fee award under Section 1021.5 is proper unless the plaintiff's reasonably expected financial benefits exceeded by a substantial margin the plaintiff's actual litigation costs. Conservatorship of Whitley.
"Apportionment of attorney fees may be appropriate under section 1021.5 if the court concludes that the successful litigant's reasonably expected financial benefits were sufficient to warrant placing part of the fee burden on the litigant." Collins v. City of Los Angeles, 205 Cal. App. 4th 140 (2012). "In those circumstances, the court may award against the opposing party the difference between the full amount of reasonable attorney fees and an amount that the successful litigant could reasonably be expected to bear." In Collins, the Court of Appeal concluded the trial court did not abuse its discretion by awarding plaintiffs' counsel 60 percent of the fees sought under Section 1021.5 and apportioning 40 percent of the fees to the plaintiffs.
In a "catalyst" case, the plaintiff may recover attorney fees under Section 1021.5 if the litigation produces no judicial resolution but causes the defendant to change behavior, resulting in a substantial benefit. "[A]n award of attorney fees may be appropriate where plaintiffs' lawsuit was a catalyst motivating defendants to provide the primary relief sought." Graham. The decision in Cates v. Chiang, 213 Cal. App. 4th 791 (2013), provides a thorough discussion of recovery of attorney fees under the catalyst theory. Cates discusses the governing legal principles, requirements for recovery, mode and manner of proof, calculation of lodestar, pre-suit attempts at settlement, contingent risk factors, multipliers, and fees on fees.
Cates said that, "[t]o satisfy the causation prong of the catalyst theory, the plaintiff need not show the 'litigation [was] the only cause of defendant's acquiescence. Rather, [the] litigation need only be a substantial factor contributing to defendant's action.'" "Put another way, courts check to see whether the lawsuit initiated by the plaintiff was 'demonstrably influential' in overturning, remedying, or prompting a change in the state of affairs challenged by the lawsuit.'" In conducting the causation analysis, the court considers (1) the situation immediately before the commencement of the suit, (2) the situation at present, and (3) the role, if any, the litigation played in causing any change between the two. The causation determination does not require complex, time-consuming litigation and may be resolved by "relatively economical, straightforward inquiries by trial judges close to and familiar with the litigation."
In a catalyst case, the plaintiff must engage in a reasonable attempt to settle the dispute in order to recover attorney fees under Section 1021.5. Graham. In Vasquez v. State of California, 45 Cal. 4th 243 (2008), the court held a reasonable attempt to settle was not a prerequisite to recovering attorney fees in a noncatalyst case, although it is a factor to weigh in deterring the "necessity and financial burden of private enforcement" factor under Section 1021.5.
Standards of Review
"On review of an award of attorney fees [pursuant to Section 1021.5] after trial, the normal standard of review is abuse of discretion. However, de novo review of such a trial court order is warranted where the determination of whether the criteria for an award of attorney fees and costs in this context have been satisfied amounts to statutory construction and a question of law." Connerly v. State Personnel Bd., 37 Cal. 4th 1169 (2006).
"In reviewing the trial court's decision, [an appellate court] must pay 'particular attention to the trial court's stated reasons [and determine] whether it applied the proper standards of law in reaching its decision.'" Families Unafraid to Uphold Rural El Dorado County v. Board of Supervisors, 79 Cal. App. 4th 505, 512 (2000).
One appellate decision states that when Section 1021.5 attorney fees are awarded in the trial court following an appellate opinion, the award of fees is reviewed de novo. In that situation, "[a]n appellate court [is] in at least as good a position as the trial court to judge whether the legal right enforced through its own opinion is 'important' and 'protects the public interest' and whether the existence of that opinion confers a 'significant benefit on the general public or a large class of persons.'" Los Angeles Police Protective League v. City of Los Angeles, 188 Cal. App. 3d 1 (1986).