BILL ANALYSIS
SB 1113
Page 1
Date of Hearing: June 10, 2008
ASSEMBLY COMMITTEE ON JUDICIARY
Dave Jones, Chair
SB 1113 (Migden) - As Amended: March 24, 2008
SENATE VOTE : 23-14
SUBJECT : PUBLIC INTEREST ACTIONS: RECOVERY OF COSTS
KEY ISSUE : SHOULD PRIVATE ACTIONS TO ENFORCE ENVIRONMENTAL LAWS
AND OTHER IMPORTANT RIGHTS AFFECTING THE PUBLIC INTEREST BE
AIDED BY CONTINUING TO GIVE COURTS THE DISCRETION THEY HAVE HAD
FOR MANY YEARS TO REIMBURSE SUCCESSFUL PARTIES FOR THE EXPENSE
OF EXPERT WITNESSES AND OTHER COSTS NEEDED TO PROVE THEIR CASES
WHEN THEY SATISFY THE SAME DEMANDING STANDARD JUSTIFYING AN
AWARD OF ATTORNEY'S FEES?
SYNOPSIS
A recent California Supreme Court decision struck down the
longstanding discretion of courts to award expert witness fees,
along with attorney's fees, when a party prevails in an action
that has resulted in the enforcement of an important right
affecting the public interest. This bill would reinstate the
authority of the courts to allow expert witness fees in an
appropriate case when the party not only prevails but meets the
demanding standards of the private attorney general statute.
Supporters representing environmental, civil rights, anti-
poverty and other groups argue that without the ability to
recover costly expert witness and similar expenses, nonprofit
groups may be effectively prevented from bringing actions to
enforce the public interest, particularly when they are opposed
by defendants with much greater wealth and legal resources.
Some of those business interests oppose the bill, arguing that
it will "create a significant new incentive to sue". They
contend that the private attorney general statute "has
unfortunately provided incentive for some plaintiffs?to pursue
meritless and harassing litigation, such as frivolous lawsuits
under Proposition 65. Those who must defend themselves against
such lawsuits must bear the cost of their own attorneys' fees,
even when the lawsuit is ultimately found baseless. SB 1113's
addition of expert witness fees and nonstatutory costs to what
may be recovered under Section 1021.5 will provide further
reward for plaintiffs in such actions, while, again, providing
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no similar cost recovery for defendants who are found innocent".
The opponents agree with supporters on one issue - that expert
witness fees can be significant in some cases.
SUMMARY : Facilitates private enforcement of laws affecting the
public interest by authorizing reimbursement of litigation costs
reasonably incurred in prosecution of the action. Specifically,
this bill authorizes courts to award nonstatutory costs,
including expert witness fees, in actions resulting in the
vindication of important rights affecting the public interest
when the prevailing party satisfies the standard for an award of
attorney's fees in the case.
EXISTING LAW :
1)Authorizes a court, upon motion, to award attorney's fees to a
successful party against one or more opposing parties in any
action that has resulted in the enforcement of an important
right affecting the public interest, if the following
conditions are met: (1) a significant benefit, whether
pecuniary or nonpecuniary, has been conferred on the general
public or a large class of persons; (2) 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 (3) those fees should not
in the interest of justice be paid out of the recovery, if
any. (Code of Civil Procedure section 1021.5.)
2)Provides that whenever the Attorney General prevails in a
civil action to enforce certain public rights the court shall
award to the Attorney General all costs of investigating and
prosecuting the action, including expert fees, reasonable
attorney's fees, and costs. (Code of Civil Procedure section
1021.8.)
3)Provides that in any civil proceeding under the California
Tort Claims Act, or for express or implied indemnity or for
contribution in any civil action, the court after granting
summary judgment or similar dispositive motion, the court
shall render judgment in favor of that party in the amount of
all reasonable and necessary defense costs, in addition to
those costs normally awarded to the prevailing party,
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including expert witness fees, if the court determines that
the proceeding was not brought in good faith and with
reasonable cause. (Code of Civil Procedure section 1038.)
4)Provides that if an offer of judgment made by a party is not
accepted and the party declining the offer fails to obtain a
more favorable judgment or award, that party shall pay the
offering party's costs from the time of the offer and, in
addition, in any action or proceeding other than an eminent
domain action, the court or arbitrator, in its discretion, may
require the party who rejected the offer to pay a reasonable
sum to cover costs of the services of expert witnesses. (Code
of Civil Procedure section 998.)
5)Authorizes a court, as well as and the Fair Employment and
Housing Commission, to award the prevailing party expert
witness fees in an action under the Fair Employment and
Housing Act. (Government Code sections 12965(b), 12989.2,
12987.)
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
COMMENTS : As grounds for the bill, the author states: "Under
the Olson v. Automobile Club of Southern California decision,
public interest lawyers are unable to collect expert witness
fees in cases they win. This change will have a negative effect
on public interest cases because without the ability to be
awarded these expert witness fees the quality of legal
representation and witnesses will be diminished and therefore
the public interest will suffer." The author explains, "SB 1113
restores the courts authority to award attorney's fees and
costs, including expert witness fees, to the plaintiffs who
prevail in public interest law cases. The Supreme Court, in the
recent Olson v. Automobile Club of Southern California decision
narrowly interpreted current law to disallow expert witness fees
to be awarded to successful plaintiffs. In public interest
cases, expert witness testimony is often critical to the outcome
of a trial. SB 1113 will clarify what was the widely accepted
practice in public interest cases by adding nonstatutory costs
and expert witness fees to what courts may award the successful
party."
If Attorney's Fees May Be Awarded To A Prevailing Party In
Public Interest Cases, Is There Something Fundamentally
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Different About Expert Witness Fees That Justifies Treating Them
Differently? Over 30 years ago the Legislature enacted Code of
Civil Procedure Section 1021.5, which appeared to be "in
significant measure an explicit reaction to the United States
Supreme Court's Alyeska decision," which held that legislatures
may enact laws to authorize awards of attorney's fees to
prevailing parties. (Woodland Hills Residents Assn., Inc. v.
City Council (1979) 23 Cal.3d 917, 934.) Section 1021.5
authorizes courts to award attorney's fees in actions to enforce
important rights in the public interest. Section 1021.5 was
intended to encourage litigation deemed to be in the public
interest by persons acting as a private attorney general.
Recently, in Olson v. Automobile Club of Southern California
(2008) 42 Cal.4th 1142, the California Supreme Court held that a
successful party in an action that has resulted in the
enforcement of an important right affecting the public interest
is not entitled to recover expert witness fees under section
1021.5.
As the author indicates, the private attorney general statute
allows for the award of attorney's fees to the prevailing party
in order to promote actions to enforce rights affecting an
important public interest. But the standard for awarding
attorney's fees is demanding; the plaintiff must not only
prevail, he or she must further prove that: (1) a significant
benefit has been conferred on the general public or a large
class of persons; (2) 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 (3) those fees should not in the interest of
justice be paid out of the recovery, if any.
Under this bill, expert witness fees would be treated the same
as attorney's fees, and subject to the same rigorous standards.
It should also be noted that while attorney's fees necessarily
arise in every case, expert witness fees are not necessarily
incurred because courts control whether expert witnesses are
needed.
This Bill Would Return The Law Regarding Expert Witness Fees To
The Long-Held Understanding Prior To A Recent Court Decision.
In Beasley et al. v. Wells Fargo Bank (1991) 235 Cal.App.3d
1407, held that expert witness fees and other nonrecoverable
expenses incurred by counsel may be awarded under section
1021.5. However, Olson rejected this longstanding
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interpretation and thus overruled Beasley. However, the Court
did acknowledge that "it is within the Legislature's prerogative
to conclude that expert witness fees should be awarded to a
prevailing party bringing a private attorney general action."
(Olson, at 1149.) SB 1113 accepts the court's invitation to
return the law to the interpretation prior to Olson.
Expert Witness Fees Are Often Expensive And Critical To The
Success Of Public Interest Cases. Without The Ability To
Recover These Costs, Many Parties May Be Deterred From Bringing
Actions To Enforce The Public Interest And Would Be Forced To
Pay Those Expenses Out Of Pocket When They Prevail. The 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
statutory provisions. Expert witness testimony is often crucial
to the outcome of a trial, and the associated fees can be
extremely costly - particularly in environmental law enforcement
cases. For example, the Sierra Club notes in support of the
bill, "Many public interest lawsuits, like those to protect
drinking water and prevent toxic exposure, often require the
expenditure of tens of thousands of dollars in expert witness
fees, including laboratory analysis and testing, development of
exposure risk analysis, testing protocols, depositions and trial
testimony." Without statutory authorization for costs, private
actions to enforce important rights may, as a practical matter,
be economically infeasible, placing greater demands on public
law enforcement agencies that may lack sufficient resources to
do all that is needed, particularly in an era of severe budget
constraints. Many of these actions filed in the public interest
are brought by non-profit organizations who are seeking
injunctive relief. Under Olson, these parties are currently
faced with the decision either not to file an action or
financing expert witness testimony at the expense of their other
charitable programs.
Is There A Legitimate Basis For Treating Rights Vindicated Under
The Private Attorney General Statute That Justifies Differently
Than The Rights Under The Fair Employment And Housing And Other
Cases? In contrast to section 1021.5, there is an explicit
recognition of the right to recover expert witness fees in
similar public interest cases under the Fair Employment and
Housing Act (FEHA). In Davis v. KGO-T.V., Inc. (1998) 17
Cal.4th 436, the Supreme Court held that the FEHA did not
authorize an award of expert witness fees. Promptly after the
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Davis decision was issued, the Legislature amended 12965(b) to
specifically provide that the court may award expert witness
fees to the prevailing party in an employment discrimination
action. (SB 2139 (Lockyer), Chapter 931, Statutes of 1998.)
That measure was adopted with only one dissenting vote in either
house. A comparable provision exists in cases involving housing
discrimination. (Government Code section 12989.2.) Thus, in
response to a prior decision similar to Olson, a broad
bipartisan majority of the Legislature clarified the law to
allow expert witness fees.
Likewise, existing law provides for an award of expert witness
fees to prevailing parties in proceedings under the California
Tort Claims Act, or for express or implied indemnity or
contribution in any civil action, as well as when a court grants
summary judgment or similar dispositive motions. (Code of Civil
Procedure section 1038.) Expert witness fees are also
recoverable when a party prevails after making an offer of
judgment. (Code of Civil Procedure section 998 (c) and (d).)
In addition, whenever the Attorney General prevails in a civil
action to enforce certain public rights the court is required to
award to the Attorney General all costs of investigating and
prosecuting the action, including expert fees, reasonable
attorney's fees, and costs. (Code of Civil Procedure section
1021.8.)
While there is substantial opposition to this bill, as discussed
below, it is not clear why expert witness fees under the private
attorney general statute should be treated differently than
under discrimination, tort claims, indemnity and contribution
actions, or in actions involving an offer of judgment, or why
private attorney general actions should not be entitled to
recover expert witness fees in the discretion of the court when
public Attorney General actions enjoy mandatory expert witness
fee recovery in many cases.
ARGUMENTS IN OPPOSITION : The California Chamber of Commerce
leads a coalition of business interests in opposition, arguing:
SB 1113 significantly expands the cost recovery for
prevailing plaintiffs under the private attorney general
statute, Code of Civil Procedure Section 1021.5, to include
expert witness fees and nonstatutory costs.
Under current law, Section 1021.5 already provides courts
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authority to award plaintiffs their attorneys' fees in
actions to enforce rights deemed important in the public
interest, in order to encourage private individuals to
bring such litigation by acting as private attorneys
general.
Section 1021.5 has unfortunately provided incentive for
some plaintiffs to use the statute to pursue meritless and
harassing litigation, such as frivolous lawsuits under
Proposition 65. Those who must defend themselves against
such lawsuits must bear the cost of their own attorneys'
fees, even when the lawsuit is ultimately found baseless.
SB 1113's addition of expert witness fees and nonstatutory
costs to what may be recovered under Section 1021.5 will
provide further reward for plaintiffs in such actions,
while, again, providing no similar cost recovery for
defendants who are found innocent.
Moreover, SB 1113's expansion of cost recovery is extremely
broad. Expert witness fees can easily approach or exceed
$100,000 in a single case. Additionally, the bill does not
define "nonstatutory costs," which could create a catch-all
to seek recovery of virtually any cost associated with the
litigation of the case, such as investigation costs,
document reproduction, paralegal costs, consulting fees,
and the like.
Further one-sided expansion of Section 1021.5 is imbalanced
and inequitable.
The Civil Justice Association of California further states "[i]f
attorney's fees and costs are to be awarded to a victorious
defendant as well. Such a provision may lead to more thoughtful
consideration prior [to] the filing of a lawsuit, and may even
reduce the number of meritless lawsuits filed." On that point,
however, it should be noted that like section 1021.5 this bill
applies to all prevailing parties who satisfy the standard for
award of attorney's fees; it is not limited to prevailing
plaintiffs.
Author's Technical Amendment. In order to correct a drafting
error, the author appropriately proposes to amend the bill as
follows:
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1021.5. (a) Upon motion, a court may award attorneys' attorney's
fees and costs, including nonstatutory costs, including and
expert witness fees, to a successful party against one or more
opposing parties in any action that has resulted in the
enforcement of an important right affecting the public interest
if: all of the following are met..
REGISTERED SUPPORT / OPPOSITION :
Support
American Civil Liberties Union
American Federation of State, County and Municipal Employees
California Council of Land Trusts
California Environmental Rights Alliance
California League for Environmental Enforcement Now
Center for Environmental Health
Consumer Attorneys of California
Disability Rights Education and Defense Fund
Los Angeles County Bar Association
Planning and Conservation League
Rose Foundation
Sierra Club of California
Western Center on Law and Poverty
Youth Law Center
Carl Olson
Opposition
Association of California Insurance Companies
California Apartment Association
California Auto Dismantlers and Recyclers Alliance, Inc.
California Bankers Association
California Building Industry Association
California Cable & Telecommunications Association
California Chamber of Commerce
California Citizens Against Lawsuit Abuse
California Grocers Association
California Hotel & Lodging Association
California Independent Grocers Association
California League of Food Processors
California Manufacturers & Technology Association
California Paint Council
California Restaurant Association
California Retailers Association
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Civil Justice Association of California
Chemical Industry Council of California
Consulting Engineers and Land Surveyors of California
Consumer Specialty Products Association
Industrial Environmental Association
Lawyers Against Lawsuit Abuse, APC
League of California Cities
Long Beach Area Chamber of Commerce
National Aerosol Association
National Paint & Coatings Association
Personal Insurance Federation of California
The California Parks Companies
Western Electrical Contractors Association, Inc.
Western Plant Health Association
Western Propane Gas Association
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334