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California Supreme Court Overturns Well Settled Rule Relating To Prevailing Defendant In Cases Filed Under The Fair Employment And Housing Act (“FEHA”)

In a disturbing case for companies sued by employees/former employees under FEHA, and who considered the prevailing party post-trial, the California Supreme Court (in Williams v. Chino Valley Independent Fire District (May 2015) No. S213100) found a prevailing defendant under FEHA is not automatically entitled to their costs of suit.

In Williams, the plaintiff was a firefighter who sued his employer for disability discrimination in violation of FEHA. The Fire District filed a motion for summary judgment to dismiss plaintiff’s claims, which the trial court granted. The trial court separately awarded the fire district its court costs, but reduced the award to approximately $5,300. The Fire District did not seek any of its attorneys’ fees as part of its request for costs.

Plaintiff filed an appeal to the court’s order contending that in the absence of a finding that his action was “frivolous, unreasonable or groundless,” that the Fire District should not have been awarded its costs. The appellate court held the governing statute that controlled court costs was California Code of Civil Procedure section 1032(b), which allows a prevailing party to recover their court costs as a matter of right. The court further indicated that Government Code section 12965(b), which provides an award for costs is discretionary, did not apply to this issue. In addition, the court distinguished between costs such as attorneys’ fees versus ordinary costs, indicating that attorneys’ fees could only be awarded pursuant to the standard set forth in Christiansburg Garment Co. v. EEOC (1978) 434 U.S. 412. In Christiansburg, the U.S. Supreme Court held a prevailing defendant in a Title VII action could receive their attorneys’ fees only where the court finds the plaintiff’s claims are “frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate about it clearly became so.”

Under Code of Civil Procedure section 1032(b) a prevailing party in a civil litigation matter is guaranteed their ordinary costs expended in the litigation. Under Code of Civil Procedure (“CCP”) section 1033.5, recoverable costs are limited to those necessary to the conduct of the litigation.

On the other hand, Government Code section 12965(b), which enforces the FEHA provisions, provides that a court, in its discretion “may award to the prevailing party… reasonable attorney’s fees and costs, including expert witness fees.”

The California Supreme Court (“CSC”) surmised the two principal issues in dispute were as follows: (1) whether Government Code section 12965(b) was an express exception to CCP section 1032(b); and (2) if section 12965(b) was an express exception to the Code of Civil Procedure, was a court bound by the rule that a plaintiff’s action must be found to be groundless before a cost award can be made to a prevailing defendant.

Although the Christiansburg case did not involve court costs, the CSC observed several federal courts have held the Christiansburg standard did not apply to an award of costs. (See Nat. Organization for Women v. Bank of California (9th Cir. 1982) 680 F.2d 1291; Delta Air Lines, Inc. v. Colbert (7th Cir. 1982) 692 F.2d 489; Poe v. John Deere Co. (8th Cir. 1982) 695 F.2d 1103; Cosgrove v. Sears, Roebuck & Co. (2nd Cir. 1999) 191 F.3d 98.) The CSC further observed Ninth Circuit appellate courts have also applied the Christiansburg standard to actions under the American with Disabilities Act. (See Brown v. Lucky Stores, Inc. (9th Cir. 2001) 246 F.3d 1182; Martin v. California Dept. of Veterans Affairs (9th Cir. 2009) 560 F.3d 1042.)

The CSC further noted there were California appellate cases which have adopted the Christiansburg standard with respect to both attorneys’ fees and costs. For example, in Cummings v. Benco Building Services (1992) 11 Cal.app.4th 1383, after granting the defendant’s motion for summary judgement, the trial court awarded defendants over $60,000 in fees and costs. On appeal, the appellate court concluded both the attorneys’ fees and costs were subject to the Christiansburg standard, and plaintiff’s actions in bringing their claims was not groundless. Notably, the Cummings court did not have a separate discussion about costs. (See, also, Leek v. Cooper (2011) 194 Cal.App.4th 399; Young v. Exxon Mobil Corp. (2008) 168 Cal.App.4th 1467; Mangano v. Verity, Inc. (2008) 167 Cal.App.4th 944.)

Even more significant (which the CSC recognized), published appellate court decisions have not followed Cummings, and relied upon section 1032(b) of the CCP, which provides that except as provided by statute elsewhere, a prevailing party is entitled to recover their costs as a matter of right. (See Perez v. County of Santa Clara (2003) 111 Cal.App.4th 671, 681 [“ordinary litigation costs are recoverable by a prevailing defendant even if the lawsuit was not frivolous, groundless, or unreasonable”].) Most employment practitioners have considered this to be the long standing practice in employment cases.

The CSC further noted in a decision issued by it in Chavez v. City of Los Angeles (2010) 47 Cal.4th 479, while it cited with approval the same appellate decisions noted above, and approved of the Christiansburg standard for attorneys’ fees award. It did not actually address the standard for ordinary costs.

After reviewing all of the above, the CSC then concluded Government Code section 12965(b) is an “express exception” to CCP 1032(b), and section 12965(b) governs costs awards in FEHA cases. The CSC stated since the cost award was discretionary under section 12965(b), and mandatory under 1032(b), section 12965(b) expressly excepted FEHA action from application of CCP 1032(b).

The CSC then ruled the Christiansburg standard did apply to both fees and costs. In coming to this determination, the CSC stated a broader application of the Christiansburg standard was consistent with the legislative policy of section 12965(b). The Court explained “in FEHA cases, even ordinary litigation costs can be substantial, and the possibility of their assessment could significantly chill the vindication of employees’ civil rights.” [emphasis added]. Hence, the Court found it was appropriate to apply the Christiansburg standard to discretionary awards of both fees and costs to a prevailing FEHA party under section 12965(b). The Court, however, made it clear the standards for a prevailing plaintiff and prevailing defendant are different. That is, a prevailing plaintiff could recover their fees and costs “unless special circumstances would render such an award unjust.” While, a prevailing defendant could only be awarded their fees and costs where the court objectively found that the plaintiff brought their action without foundation, or the plaintiff continued to litigate their matter after it became clear their action was without foundation.

What does all of this mean?

A prevailing defendant in a FEHA case, tried in state court, will be held to this higher standard (which is considered by many to be hard to meet) even when trying to recover its ordinary costs in a case. This can have a significant impact on FEHA litigation, as in many matters in which the defendant is a prevailing party, the defendant will use its potential for costs recovery as leverage to obtain a waiver by plaintiff of their right to pursue an appeal of their case. To what extent this decision impacts the type of cases that are filed, or number of cases, remains to be seen.

ABOUT THE AUTHOR: Ms. Silva is a graduate of University of the Pacific. She is senior counsel in the firm’s Employment Practices Group. She is a former prosecutor and has considerable trial experience. Contact her at rsilva@tysonmendes.com.

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