BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 559| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 559 Author: Swanson (D) Amended: 4/4/11 in Assembly Vote: 21 SENATE JUDICIARY COMMITTEE : 3-2, 6/14/11 AYES: Evans, Corbett, Leno NOES: Harman, Blakeslee ASSEMBLY FLOOR : 47-26, 5/26/11 - See last page for vote SUBJECT : Civil actions: costs SOURCE : California Employment Lawyers Association DIGEST : This bill exempts civil actions brought pursuant to the Fair Employment and Housing Act from the statute that provides discretion to judges to determine costs, in a case other than a limited civil case, if the prevailing party recovers a judgment that could have been rendered in a limited civil case. ANALYSIS : Existing law provides that a prevailing party is entitled as a matter of right to recover costs in any action or proceeding, and specifies those items allowable as costs. Existing law further provides that costs, or any portion of claimed costs, shall be as determined by the court, in its discretion, in a case other than a limited civil case, if the prevailing party recovers a judgment that could have been rendered in a limited civil case. CONTINUED AB 559 Page 2 (Code of Civil Procedure Section 1033) Existing law, the Fair Employment and Housing Act (FEHA), provides that an employee may bring an action against an employer for workplace discrimination. (Government Code Section 12900 et seq.) Under the FEHA, a trial court has discretion to award attorney's fees to the prevailing party. (Government Code Section 12905(b).) Existing case law has interpreted this to mean that a trial court should ordinarily award attorney fees to a prevailing plaintiff unless special circumstances would render a fee award unjust. ( Young v. Exxon Mobil Corp. (2008) 168 Cal.App.4th 1467, 1474) This bill exempts civil actions brought pursuant to the FEHA from the latter provision that provides discretion to judges to determine costs, in a case other than a limited civil case, if the prevailing party recovers a judgment that could have been rendered in a limited civil case. Background On January 14, 2010, the California Supreme Court held in Chavez v. City of Los Angeles (2010) 47 Cal.4th 970, that a trial court has discretion in a civil action brought under the FEHA to deny a successful plaintiff attorney's fees when the plaintiff chooses to proceed in an unlimited civil jurisdiction, but recovers less than the $25,000 jurisdictional minimum. This decision reversed the Court of Appeal's ruling, which had reasoned that the rationale for denying attorney's fees under Section 1033(a) of the California Code of Civil Procedure, which was designed to encourage pursuit of minor grievances in courts of limited jurisdiction, is inapposite to statutory discrimination or civil rights actions because "even a modest financial recovery can serve to vindicate a substantial legal right." (Id. at 982.) The Court of Appeal also opined that denying attorney's fees under Section 1033(a) would discourage attorneys from taking meritorious cases. (Id.) This bill is substantially similar to AB 2773 (Swanson, 2010), which was vetoed by Governor Schwarzenegger who argued that it would have removed a judge's discretion and encouraged frivolous lawsuits. CONTINUED AB 559 Page 3 This bill, sponsored by the California Employment Lawyers Association, seeks to respond to the Chavez decision and specifies that statutory provisions that provide trial courts with discretion to deny costs if the prevailing party recovers a judgment that could have been rendered in a limited civil case does not apply to civil actions brought under the FEHA. Prior legislation . AB 2773 passed the Senate (22-12) on August 26, 2010, but was vetoed by the Governor. Governor Schwarzenegger's Veto of AB 2773 This bill is substantially similar to the enrolled version of AB 2773 (Swanson, 2010). In vetoing AB 2773, Governor Schwarzenegger stated: "This measure would require an award of attorney's fees in all fair employment and housing cases even when nominal damages are awarded and even if the case was improperly filed in a court of unlimited jurisdiction. While there may be instances when an award of attorneys fees may be proper, this measure removes all discretion from a judge and encourages frivolous lawsuits." FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 6/15/11) California Employment Lawyers Association (source) California Conference Board of the Amalgamated Transit Union California Conference of Machinists California Labor Federation California Official Court Reporters Association California Rural Legal Assistance Foundation California Teamsters Public Affairs Council Church State Council Consumer Attorneys of California Disability Rights California Employment Law Center Engineers and Scientists of California Equal Rights Advocates International Longshoremen and Warehouse Union CONTINUED AB 559 Page 4 Labor Project for Working Families Law Office of Mary-Alice Coleman Law Offices of Victor L. George Legal Aid Society of San Francisco Professional and Technical Engineers, Local 21 SCOPE, Laborers International of North America UNITE HERE! United Food and Commercial Workers - Western States Conference Utility Workers Union of America, Local 132 Western Center on Law and Poverty Women's Employment Rights Clinic of Golden Gate University School of Law OPPOSITION : (Verified 6/15/11) California Chamber of Commerce Civil Justice Association of California ARGUMENTS IN SUPPORT : The author writes: "The reality is that limited jurisdiction case procedure has significant consequences in terms of the quantity of discovery the parties may conduct and may be inappropriate for FEHA claims given the complexity of the claim and the importance of the civil rights afforded under the FEHA. Furthermore, damages amounts in FEHA claims, which often involve non-pecuniary damages, are difficult to quantify and hard to predict. "The Legislature must step in to help ensure that plaintiffs' attorneys are not discouraged from taking FEHA cases, as these cases are integral to protect and vindicate important civil rights. As the California Supreme Court noted in its decision, attorney fee awards in FEHA actions make it easier for plaintiffs of limited means to pursue meritorious claims ( Cummings v. Benco Building Services (1992) 11 Cal.App.4th 1383, 1387), are intended to provide fair compensation to the attorneys involved in the litigation at hand, and encourage litigation of claims that are of public interest ( Flannery v. Prentice (2001) 26 Cal.4th 572, 584)." In support of this bill, the California Employment Lawyers CONTINUED AB 559 Page 5 Association further states: "AB 559 will clarify that Civil Procedure Code section 1033(a) does not apply to actions brought under the California Fair Employment and Housing Act. Such a statutory amendment will ensure that plaintiffs are not penalized for being unable to predict damage awards and are allowed more extensive discovery procedures to address the complex nature of claims brought under the FEHA." ARGUMENTS IN OPPOSITION : The Civil Justice Association of California (CJAC) writes that this bill will "undo a judicial deterrent to filing frivolous lawsuits." CJAC further writes: "CJAC believes it is appropriate for judges to use their discretion to refuse to award attorney's fees in cases of nominal value and therefore opposes the bill. Allowing the award of attorney's fees to successful plaintiffs should not be a routine event. While our Legislature and our courts have allowed the award of attorney's fees, the rationale behind such awards is to compensate the attorneys for involvement in litigation that somehow benefits the public. Such awards are discretionary and should remain so." CJAC further asserts that, "limited civil cases have procedural restrictions to limit the time and costs of litigation. If we allowed all cases involving $5,000 in controversy to be filed and litigated as unlimited civil cases, our courts would be even more clogged and backlogged than they are." ASSEMBLY FLOOR : 47-26, 5/26/11 AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block, Blumenfield, Bonilla, Bradford, Brownley, Butler, Charles Calderon, Campos, Carter, Chesbro, Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Gatto, Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning, Pan, V. Manuel Pérez, Portantino, Skinner, Solorio, Swanson, Torres, Wieckowski, Williams, Yamada, John A. Pérez NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly, Fletcher, Beth Gaines, Garrick, Grove, Hagman, Halderman, Harkey, Jeffries, Knight, Logue, Mansoor, Miller, Morrell, Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao, Wagner NO VOTE RECORDED: Buchanan, Cedillo, Davis, Galgiani, CONTINUED AB 559 Page 6 Gorell, Jones, Perea RJG:mw 6/15/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED