Friday, November 21, 2008
Supreme Court Rules:
Attempt to Settle Not Required for ‘Private Attorney General’ Fees
By KENNETH OFGANG, Staff Writer
A prevailing party seeking an award of attorney fees under the “private attorney general” statute, Code of Civil Procedure Sec. 1021.5, need not necessarily show it made adequate efforts to resolve the dispute short of litigation, the state Supreme Court ruled yesterday.
The justices unanimously upheld an award of more than $1.25 million to attorneys for Cristina Vasquez, vice president of the textile workers’ union UNITE.
Vasquez prevailed in an action accusing the state of violating Proposition 139, which requires that prison inmates working for joint ventures with private industry be paid prevailing wages, after officials agreed to a stipulated injunction establishing procedures designed to ensure compliance.
Vasquez’s taxpayer claim arose out of allegations that the state and a private company called CMT Blues violated the Prison Inmate Labor Initiative of 1990 because a joint venture to manufacture clothing at the Richard J. Donovan Correctional Facility in San Diego did not pay wages comparable to those paid in the private sector. Inmates allegedly were also instructed to remove and replace “Made in Honduras” labels on garments with those that read “Made in the USA.”
The inmates’ claims were certified as a class action and tried without a jury, resulting in a verdict of more than $840,000. Vasquez’s taxpayer claim was tried later, but was settled mid-trial, with the amount of attorney fees, if any, left to San Diego Superior Court Judge William Pate’s discretion.
Pate concluded that Vasquez’s attorneys had devoted about $967,000 worth of time to her claim and applied a multiplier of 1.3 in reaching the final amount.
The state appealed the award, arguing among other things that Vasquez was not entitled to attorney fees because she had not engaged in a reasonable effort to settle prior to filing suit. The Third District Court of Appeal affirmed, distinguishing Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, which imposed such a requirement.
The Court of Appeal noted that Graham involved an award of fees under the “catalyst” theory, which holds that a party that did not prevail in litigation may nonetheless be awarded fees under Sec. 1021.5 if the suit caused the defendant to change its behavior in a way that benefited the public or a large class of persons.
Not Catalyst Case
Vasquez’s suit was not a catalyst case, since it resulted in a stipulated injunction, and no policy reason supports extending the requirement of a reasonable settlement effort to non-catalyst cases, the Court of Appeal reasoned.
Justice Kathryn M. Werdegar, writing yesterday for the Supreme Court, said that a trial court, in exercising its discretion over whether to award fees under Sec. 1021.5, must consider “all circumstances bearing on the question whether private enforcement was necessary, including whether the party seeking fees attempted to resolve the matter before resorting to litigation,” but that there is no categorical requirement of a reasonable settlement effort in non-catalyst case.
Nothing in Graham or subsequent California cases supports imposing such a requirement, Werdegar wrote, nor is there any reason to extend the rule.
“In Graham, we simply identified a set of cases at one end of the equitable spectrum that appeared to justify a bright-line rule because, in those cases, no court-ordered change in the parties’ legal relationship exists to show that the public benefit supposedly meriting fees was caused by the plaintiff’s litigation rather than by the defendant’s voluntary action,” the justice wrote.
Werdegar went on to reject the argument that the suit should be treated as a catalyst case since it ended in settlement. “We have...never adopted the formula the state offers as the definition of a catalyst case,” the justice said.
The case was argued in the Supreme Court by San Diego attorney Martin Buchanan for the state and by Richard Berke of Santa Monica for the plaintiff. Amici included the Los Angeles County Bar Association, The Impact Fund, and the Pacific Legal Foundation for the plaintiff and the California State Association of Counties and League of California Cities for the state.
The case is Vasquez v. State of California, 08 S.O.S. 6283.
Copyright 2008, Metropolitan News Company