BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 2773 (Swanson)
As Amended April 8, 2010
Hearing Date: June 29, 2010
Fiscal: No
Urgency: No
KB:jd
SUBJECT
Civil Actions: Costs
DESCRIPTION
This bill, sponsored by the California Employment Lawyers
Association, would exempt 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.
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 Fair
Employment and Housing Act (FEHA) to deny a successful plaintiff
attorney 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 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 fees under Section 1033(a)
would discourageattorneys from taking meritorious cases. (Id.)
This bill has been brought in response to the Chavez decision
(more)
AB 2773 (Swanson)
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and would specify 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.
CHANGES TO EXISTING LAW
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. (Code Civ. Proc. Sec. 1033.)
This bill would exempt civil actions brought pursuant to the
Fair Employment and Housing Act 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.
COMMENT
1.Stated need for the bill
The author states:
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
AB 2773 (Swanson)
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(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
Association further states:
[The Chavez] ruling has the effect of closing the courthouse
doors to employees in low wage industries who suffer
discrimination or retaliation but who are unlikely to be able
to establish economic damages sufficient for an attorney to
take their cases on a contingency fee basis. After Chavez, an
attorney taking the case of a low income employee would have
to decide whether to file the claim in a court of limited
jurisdiction -- which might protect a fee interest, but which
drives the claim into a forum which lacks the tools to
actually expose and remedy civil rights violations -- or to
file the claim in Superior Court ? which places the fee
completely at risk should a judge or jury award a low-wage
worker less than $25,000 in damages. Civil rights enforcement
in California should not have to depend upon this type of risk
calculus (emphasis omitted).
2.Distinction between a limited and unlimited civil case
As a general rule, a limited civil case is one that, before the
unification of the municipal and superior courts, would have
been within the jurisdiction of a municipal court. Actions may
be brought as limited civil cases when the amount in controversy
does not exceed $25,000. (Code Civ. Proc. Secs. 85-86.)
Limited civil cases are subject to specified procedural
restrictions that are intended to control the cost of
litigation. (Code Civ. Proc. Secs. 92-98.) This includes
limitations on discovery a party may conduct. (Code Civ. Proc.
Sec. 94.) Discovery is part of the pre-trial litigation process
during which each party requests relevant information and
documents from the other side in an attempt to ascertain
pertinent facts. Generally discovery devices include
depositions, interrogatories, requests for admissions, document
production requests, and requests for inspection. In a limited
civil action, discovery is typically limited to one deposition
and a combined maximum of 35 interrogatories, document requests,
or requests for admission. This is in contrast to the unlimited
discovery parties generally have in unlimited civil actions,
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which can play a critical role in exposing evidence of unlawful
conduct.
3. Implications of Chavez v. City of Los Angeles
As previously stated, the Chavez Court interpreted Code of Civil
Procedure Section 1033 as providing the trial court with
discretion to deny, in whole or in part, a prevailing
plaintiff's recovery of litigation costs when the plaintiff
obtains a judgment for money damages ($25,000 or less) in a FEHA
case that could have been recovered in a limited civil case, but
the case was instead brought as an unlimited civil case.
On February 23, 2010, this Committee held a joint oversight
hearing with the Assembly Judiciary Committee entitled "Fair
Employment and Housing 50 Years After the FEHA: Where do we go
from here?" The first panel of the hearing featured testimony
by Dr. Gary Blasi and Joseph W. Doherty, who presented a
comprehensive study of employment discrimination enforcement
recently published by the UCLA/Rand Center for Law & Public
Policy. (G. Blasi & J. Doherty, California Employment
Discrimination Law and Its Enforcement: The Fair Employment and
Housing Act at 50, 2010, available at
www.law.ucla.edu/UCLARAND .) The study contained numerous
findings and recommendations on how to improve current
enforcement. Among other things, the study highlighted that
lower-wage workers have a harder time securing private counsel
who operate on contingency fees, and thus are less likely to be
able to access the civil justice system.
The report further states:
The barrier to private counsel has been raised even higher
very recently. The California Supreme Court held in Chavez v.
City of Los Angeles (2010 WL 114941, January 14, 2010) that in
FEHA cases that might have been brought in a limited
jurisdiction Superior Court but were litigated to a verdict of
less than the $25,000 in a general jurisdiction Superior
Court, the court may deny attorneys' fees to the prevailing
plaintiff. Thus any attorney who considers accepting a case
that may result in a verdict under the jurisdictional amount
risks being paid nothing at all, even if he or she prevails at
trial, based on his or her inability to predict a jury
verdict. Although most plaintiffs' lawyers were already
reluctant to accept smaller cases, their disincentive to do so
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is now increased. (FEHA Study Executive Summary, page 64.)
This bill, by exempting civil actions brought under the FEHA
from Code of Civil Procedure Section 1330, would arguably lower
one of the barriers for employees with limited means to
obtaining private counsel so that they may access the civil
justice system to enforce their civil rights.
Notably, courts would still have discretion in awarding
attorney's fees in FEHA cases under Government Code Section
12965, which has been interpreted to mean that a trial court
should ordinarily award attorney fees to a prevailing plaintiff,
unless special circumstances would render an award of fees
unjust. (See Young v. Exxon Mobil Corp. (2008) 168 Cal.App.4th
1467, 1474.) Thus, should AB 2773 become law, a court would
still have discretion in determining the amount of reasonable
fees and to augment or reduce the award depending on the
specific facts of each case.
4.Opposition
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."
Support : California Labor Federation; California Women's Law
Center; Consumer Attorneys of California; Equal Rights
Advocates; Legal Aid Society - Employment Law Center
Opposition : California Chamber of Commerce; California
AB 2773 (Swanson)
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Employment Law Council; Civil Justice Association of California
HISTORY
Source : California Employment Lawyers Association
Related Pending Legislation : None Known
Prior Legislation : None Known
Prior Vote :
Assembly Judiciary Committee (Ayes 7, Noes 3)
Assembly Floor (Ayes 46, Noes 28)
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