Attorneys' fees and costs in FEHA cases (2023)

Reimbursement of Fees and Expenses and Legal Settlement Offers in Post-Williams FEHA Cases and the 2019 FEHA Legislative Amendment

Kelly A. Caballero

august 2019

For claims filed under the Fair Employment and Housing Act ("FEHA"), Section 12965 of the Government Code, subdivision (b), provides for recovery of attorneys' fees, costs and expert witness fees and supersedes the standard cost recovery rule applicable in civil proceedings in general, article 1032 of the Code of Civil Procedure.

For prevailing plaintiffs, attorneys' fees, costs, and expert witness fees are recoverable unless special circumstances render the judgment unfair.

However, for prevailing defendants, none of these charges are recoverable unless the court finds that the plaintiff's action was frivolous.

This applies irrespective of any legal comparison offer by the defendant pursuant to § 998 ZPO. An amendment to Section 12965, Subdivision (b), effective January 1, 2019, makes this clear.

In cases where both FEHA and non-FEHA claims exist for reimbursement of the costs of the non-FEHA claims, the defendant must demonstrate that the claimed costs were incurred solely to defend the non-FEHA claims. Otherwise, the above rules apply. 🇧🇷Roman gegen BRE Properties, Inc.(2015) 237 Cal.App.4th 1040.)

Remaining issues include the role that Section 998 now provides in FEHA actions. For example, can a Section 998 offer still generate interest under Section 3291 of the Civil Code in FEHA harassment claims? In the event that a court reduces plaintiff's costs, attorneys' fees, and witnesses if the plaintiff wins the case, but the defendant's pretrial offer under Section 998 (or other settlement offer given the inapplicability of 998 cost adjustment offers ) does not exceed ) ? Is this a "special circumstance" that would make full award of fees and costs unfair? We expect answers to these questions from the courts and the legislature.

The standard rule for ordinary costs, expert costs and attorney fees

The standard rule in non-FEHA civil actions is that the prevailing party is legally entitled to certain out-of-pocket expenses. (§ 1032, subsection (b).)

Section 1033.5 subsection (a) of the Code of Civil Procedure lists costs that are legally recoverable under section 1032 subsection (b) (e.g., witness fees, etc.). Section 1033.5, subsection (b) specifically prohibits reimbursement of certain other expenses (such as surveyors' fees, postage, private investigations, and more) "except as expressly authorized by law." Other costs not listed in subsections (a) or (b) may be awarded at the discretion of the court. 🇧🇷I COULD.,§1033.5, engraved. (c)(4).)

Pursuant to Section 1033.5, subsection (a)(10), attorneys' fees are recoverable as part of expenses only where permitted by contract, statute or statute. Several labor statutes contain such a provision, including Section 12965, subsection (b) and provisions dealing with wage and hour violations; the Equal Pay Act; PAYS Claims and Others.

Finally, the Section 998 ZPO permits the retention or increase of cost allowances under Section 1032 if the requirements of Section 998 are met, but not accepted in the case of an offer pursuant to Section 998 (commonly known as an "offer 998"), and if the recipient fails "more favorable judgment or no more favorable arbitral award", certain adverse consequences may result for the recipient. , including reducing post-bid costs for the recipient and awarding post-bid costs and expert fees to the bidder. 🇧🇷I COULD.,§ 998, Ranks. (c)-(e).)

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If a defendant does not accept a 998 offer and the plaintiff obtains a more favorable judgment under Section 3291 of the Civil Code, the defendant will also be liable for interest at ten percent per annum from the date of the offer in tort. personal injury claims. (BGB § 3291.)

Recovery of FEHA shares

The FEHA is a broad set of statutes that govern employment in the state. Among other things, FEHA prohibits certain forms of discrimination, harassment and retaliation in the workplace, requires reasonable accommodation for physical and mental disabilities, and requires employers (in certain circumstances) to provide maternity leave and parental leave.

The EHHA has its own provision on attorneys' fees and expenses, including expert witness fees. In FEHA claims, the lower court may “in the sole discretion of the prevailing party . 🇧🇷 🇧🇷 reasonable attorneys' fees and expenses, including expert witness fees. 🇧🇷 🇧🇷 🇧🇷 (§ 12965, subd. (b).) As we will see later, a recent amendment to the FEHA adds an important clause to this section.

Prior to 2015, Section 12965, subsection (b) was interpreted to allow the collection of attorneys' fees from a responding employer only if the plaintiff's case was frivolous. But with respect to ordinary costs and expert fees, defendant employers could threaten reimbursement of litigation costs against plaintiffs. This included threatening to recover expert fees in the event of a rejected 998 bid.

The result? Plaintiffs in labor claims have often reduced their settlement positions considerably because an adverse cost premium would spell financial ruin in many cases.

All that changed in 2015.

Williams2015 changing the landscape

In 2015, two main issues relating to the cost of FEHA measures were decided: (1) Is § 12965 subd. (b) or does Section 1032, subsection (b) govern a party's right to costs? (2) If section 12965 subsection (b) applies, what is the standard of discretion for reimbursement, and is the standard the same or different for prevailing plaintiffs versus prevailing defendants? the answers cameWilliams x Chino Valley Independent Fire District(2015) 61 Cal.4th 97 („Williams'), a key opinion that changed the landscape of FEHA's actions.

I amWilliams,The California Supreme Court ruled that Section 12965, subsection (b) is an express exception to the mandatory cost determination of Section 1032, subsection (b) and therefore governs recovery of costs in FEHA actions:

We conclude that Section 12965(b) of the Government Code is an express exception to Section 1032(b) of the Code of Civil Procedure and therefore governs the first rather than the second surcharge in FEHA cases. The FEHA Statute specifically requires the use of a different standard than the general Expenses Act: Expenses that would lawfully be awarded to the prevailing party under Section 1032(b) of the Code of Civil Procedure are awarded at the discretion of the court. of the government code. By making the award of costs discretionary rather than an obligation, Section 12965(b) of the Government Code expressly exempts FEHA claims from the mandate of Section 1032(b) of the Code of Civil Procedure to award costs to the prevailing party.

(I COULD.61 Cal.4th at p. 105.)

LosWilliamsThe court then turned to the degree of discretion that courts must apply in determining grants under FEHA. While Title VII makes cost allocation mandatory, FEHA differs from Title VII in that even recurring costs have discretion. 🇧🇷I 109.) And Section 12.965, subdivision (b) of FEHA allows the trial court to award ordinary costs. So heWilliamsThe court had to deal with how that discretion should be exercised when the defendant is the prevailing party.

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The Court found that, although the wording of Section 12.965, subsection (b) does not distinguish between grants to plaintiffs and defendants, its legislative history and underlying policy objectives indicate that the legislature intended the instance of court proceedings to have an asymmetrical pattern used, which was first approved by the United States Supreme Court in Title VII claims inChristiansburg Garment Co. x EEOC(1978) 434 US 412, 421-422. Under that standard, an employer should receive attorneys' fees in a Title VII action only if the court finds that the plaintiff's claim was “frivolous, unreasonable, or without merit, even if it was not brought in subjective bad faith. 🇧🇷 🇧🇷 or that the plaintiff continued to litigate after it clearly became so. 🇧🇷ibid.)

Therefore, theWilliamsCourt concluded that prevailedplaintiffcosts and attorneys' fees are recoverable in FEHA actions, while theaccusedYou shall not receive attorneys' fees or costs unless the lower court finds that the plaintiff's action was frivolous. 🇧🇷Williams, 61 Cal.4th at p. 115.)

This was a big change in the landscape for FEHA. ForWilliamsFEHA claimants were no longer faced with the threat of a disadvantageous surcharge. Employer defendants, on the other hand, felt greater pressure: because FEHA plaintiffs suffered less disadvantage, litigants in FEHA actions were exposed to a significantly different comparison dynamic.

What about cases involving FEHA and non-FEHA measures?

What happens if a defendant wins a lawsuit that includes both FEHA and non-FEHA claims? Answers:Roman gegen BRE Properties, Inc., 237 Cal.App.4th at pp 1049-1050, the defendant can only recover costs incurred solely in defending non-FEHA claims (unless the plaintiff's claim is frivolous).

But the costs of defending non-FEHA claims, which are intertwined and inseparable from FEHA claims, must followWilliamsRule. 🇧🇷ibid.) Another ruling “would undermine the private enforcement of vital anti-discrimination laws and the rights of persons with disabilities, thereby 'discouraging even potentially meritorious claims by plaintiffs with limited financial resources' [citation], a cost assessment under Section 1032, subdivision (b), simply because the plaintiff invoked other civil rights theories in addition to his FEHA claims based on the same alleged wrongdoing.'” (ibid.)

What about recovering individual defendants who are not employers?

It isWilliamsDoes the rule apply to individual defendants winning FEHA cases? Yup. 🇧🇷Lopez vs. Routt(2017) 17 Cal.App.5th 1006, 1014-1016.)lopezrejected a claim that theWilliamsThe rule applies only to dominant employer defendants and not to individual defendants in FEHA claims.

998 offers

Sviridov vs. San Diego-Stadt

Sviridov vs. San Diego-Stadt(2017) 14 Cal.App.5th 514 was the first postWilliamsCase in which the issue of legal comparison offers is at stakeWilliams🇧🇷 There, the plaintiff rejected three different offers from 998 offering a waiver in exchange for termination, and the defendants prevailed in a court case. The lower court awarded the defendants more than $90,000 in costs but did not find the plaintiff's claim frivolous.

The Court of Appeals upheld the judgment and found that Section 998, like Section 12965, subdivision (b), operated as an exception to Section 1032. And the Court concluded that Section 998 should take precedence over Section 12.965, subdivision (b), because to do otherwise would be contrary to the purpose of Section 998 to promote settlement. 🇧🇷I COULD.,14 Cal. 5. on pg. 521 [„[A] general application ofWilliamsexcluding Section 998 costs, unless FEHA's claim was factually unfounded, would undermine public policy to promote a resolution in such cases."].)

This result sent a small shock wave through the job bar. If good law had stood, nothing would stop FEHA Defendants from making 998 bids for zero dollars in all cases (subject to regular 998 requirements, which are beyond the scope of this article). In the event of a defense judgment, the plaintiff would be burdened with a negative assessment of the costsWilliamsRule.

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Arave gegen Merrill Lynch, Pierce, Fenner & Smith, Inc.

Less than six months laterSviridov,The courtArave gegen Merrill Lynch, Pierce, Fenner & Smith, Inc.(2018) 19 Cal.App.5th 525, refused to followSviridov🇧🇷 I amcampus, the plaintiff filed a complaint with the FEHA alleging discrimination, harassment and retaliation and other claims based on his religious affiliation and non-payment of wages and claims of retaliation by the whistleblower under Section 1102.5 of the Labor Code. 🇧🇷campus, 19 Cal.App.5th at 529.) Prior to trial, the defendant made a 998 offer of $100,000 plus attorneys' fees and costs to settle the allegation of non-payment of wages and related fines, plus an undisputed amount for the entire Termination suit. 🇧🇷I 548-549.) In other words, this was the equivalent of the defendant offering a monetary amount (plus costs and attorneys' fees) for the non-FEHA wage claim and zero dollars for the FEHA claims.

The case ended in a defense judgment, and the lower court awarded a substantial amount in costs, expert fees and attorneys' fees to enforce wage claims under Section 218.5 of the former Labor Code (which awarded the prevailing party's fees in certain salary claims). 🇧🇷 ) and the plaintiff's failure to exceed the defendant's offer of 998. (SeeI 529-530, 544.) The lower court denied the defendants' request for attorney fees in the FEHA claims, ruling that the claims were not frivolous. 🇧🇷I 533.) This resulted in the denial of most of the more than $1.2 million in attorney fees claimed by the defendants, and an award of only a minor portion for the defense of wage claims. (To seeI COULD.em 544.)

Both parties appealed. On appeal, the parties agreed that the lower court, in determining the attorney's fees, applied the wrong standard of Section 218.5 of the former CLT, which was amended with new legislative wording in effect prior to the determination of the attorney's fees. which prohibited the employer from awarding attorney fees unless the court found that "the employee brought the action in bad faith". 🇧🇷I 545.) Since the lower court failed to make a malicious conclusion thatcampusThe court overturned and ordered it to rule by the correct standard.

With respect to the rejection of the attorney fees requested for the defense of FEHA's actions, thecampusThe court first did not find abuse of power in finding that the plaintiff's claim was not frivolous, thus affirming the denial of attorney fees. (To seeI COULD.em 545-547.)

The parties also agreed that the lower court made a legal error in determining ordinary costs under Section 1032. As the lower court ruled that FEHA's claims were not frivolous, the defendants were not entitled to recover expenses incurred in defending FEHA's claims. , although they were not prevented from obtaining the usual costs of defending against the wage claim. 🇧🇷I 548.) OrcampusCourt reversed and referred to lower court to distinguish between costs incurred at FEHA and wage claims. 🇧🇷ibid.)

Finally, thatcampusThe court appealed against awarding expert fees. The plaintiff contended that the lower court erred in awarding the section 998 experts' fees because section 998 conflicted with section (b) of FEHA section 12965, and the lower court already concluded that the plaintiff's claim did not it was frivolous. 🇧🇷ibid.)

LoscampusThe court agreed, noting that theWilliamsRegardless of a 998 offer, the following rule applies to expert fees: Expert fees may only be awarded to a successful defendant if the lower court finds that the plaintiff's claim is unfounded. 🇧🇷I p. 550.)

Huerta v. Kava Holdings, Inc.

I amHuerta v. Kava Holdings, Inc.(2018) 29 Cal.App.5th 74, the plaintiff went to trial on the FEHA allegations of harassment, discrimination, and failure to prevent harassment and/or discrimination, and the jury returned a defense verdict on all allegations. After sentencing, the lower court found that the plaintiff's claim was not frivolous and denied the defendant's claim for attorney fees, expert witness fees, and costs under Section 12965, subdivision (b) of the FEHA. But the lower court awarded $50,000 for expenses and expert fees incurred after the date of the defendant's offer of 998, which the plaintiff rejected. The lower court's verdict included a reduction in the amount sought for common expenses and expert fees to reflect the plaintiff's limited financial resources.

On appeal, the court issued thecampusapproach and concluded that all three cost categories, whether ordinary costs, attorney fees or expert fees,WilliamsRule regardless of whether the author turned down an offer of 998 and failed to win it. 🇧🇷I COULD., 29 Cal.App.5th en p. 84.)

The legislature is amending Section 12965, subdivision (b) to codify tenancyWilliams

On September 30, 2018, the Governor signed into law Senate Bill 1300, which made several revisions to the FEHA. In that regard, the new provisions include an amendment to Section 12.965, subsection (b), effective January 1, 2019, which reads:

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In civil actions brought under this Section, the court, in its sole discretion, may award reasonable attorneys' fees and costs, including expert witness fees, to the prevailing party, including the Division., except that, in derogation of Section 998 of the Code of Civil Procedure, no fees and costs will be awarded to the prevailing defendant, unless the court finds that the action was frivolous, unreasonable or groundless at the time of filing, or that the plaintiff continued the process after that became obvious.

(Government Code, § 12965, subd. (b) (emphasis added).)

This language effectively encrypts theWilliamsRule, contains the stocks ofcampusjhuertamore than 998 offerings and canceled the celebrationSviridov.

The rule now and the remaining questions

Now, there should be no doubt as to the reimbursement of ordinary costs, attorney's fees and expert fees in FEHA actions:

First, a prevailing plaintiff is entitled to recover costs, attorneys' fees, and expert witness fees under Section 12.965, subsection (b), unless special circumstances render the judgment unfair.

Second, a prevailing defendant will not be entitled to recover these items unless the court finds that the plaintiff's claim was frivolous despite a 998 offer.

Some questions remain. What happens if a plaintiff wins the suit but does not comply with the Defendant's offer of 998 (if made) or refuses a pretrial settlement offer and does not improve in the lawsuit? UnderWilliams,campus, and revised section 12965, subdivision (b) and its legislative history, the result is clear that 998 bids alone cannot be used to impose an adverse cost surcharge. But the fact that the plaintiff settled well before trial can be used as a key factor in the trial court's exercise of discretion to award much less than the full amount of costs and fees claimed as a "circumstances special" [which would] make such an award unfair" (Williams, 61 Cal.4º in 115)? What other "special circumstances" would influence such an award? Stay tuned.

Another question: what are the special circumstances that make the sentence unfair? While the examples in case law predate the change in law, one of these possible "special circumstances" could be that a plaintiff fails to bring the suit in the limited civil courts and then fails to recover an amount that exceeds the maximum limit of limited jurisdiction, i.e. say $25,000. (To seeWilliams, 61 Cal.4th at 107-108, citingChávez v. Los Angeles-Stadt(2010) 47 Cal.4th 970, 986 [“The plaintiff's failure to take advantage of the time-saving and cost-saving features of limited civil proceedings may be considered a special circumstance that would render the award of fees unfair. "].) It remains to be seen what circumstances a court might now take into account.

Finally, what about plaintiffs' use of 998 offers to activate Civil Code Section 3291 and secure post-offer interest in FEHA harassment claims?

I amBihun contra AT&T Information Systems, Inc.(1993) 13 Cal.App.4th 976, the court ruled that a FEHA sexual harassment claim constituted a "personal injury" claim under Section 3291 of the Civil Code. 🇧🇷I COULD., 13 Cal.App.4th at 1001-02, 1004; See tooLakin Associated Industries em Watkins(1993) 6 Cal.4th 644, 657 [Harm for emotional distress exacted in a negligent act and intentional infliction of emotional distress constitutes "personal injury" under Section 3291, citingvideoswith consent, but annulmentvideosand other cases to the extent that you believe interest may be awarded pretrial under section 3291 punitive damages.)

Due to the new legal reform and the actions ofWilliamsjcampusSince Section 998 was superseded by Subdivision (b) of FEHA Section 12965, does the ability to claim interest in personal injury claims still apply to FEHA harassment claims?

We still don't have an answer. FEHA may be the sole applicable jurisdiction with respect to remedies for FEHA Claims. Or, Section 998 may not govern the decision and adjustment ofCoston FEHA claims (since costs are now governed exclusively by Section 12965, subd.(b) FEHA), this should not affect the use of 998 bids to trigger the separate interest provision of Section 3291 of the Civil Code. And the purpose of Section 3291 does not seem to conflict with the intent of FEHA. (See p.Nonetheless, 6 Cal.4th at 663-664 [the purpose of section 3291 is to encourage plaintiff's settlement and redress at the time of injury, including compensation for loss of use of personal injury during the pre-trial phase]. 🇧🇷

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We'll have to wait and see what happens. But this may be one of the reasons why plaintiffs still want to bid 998 in FEHA harassment cases. Even though 998 offers may not trigger cost adjustments to FEHA actions, they may still trigger pretrial interest in FEHA harassment actions. Stay tuned.


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