38 Cal.App.5th 228
Cal. Ct. App.2019Background
- Sgt. Arthur Scott (plaintiff) sued the City of San Diego alleging race discrimination and retaliation under FEHA after workplace incidents; the City denied liability and prevailed at trial.
- The City served a Code of Civil Procedure section 998 offer for $7,000, which Scott rejected; the jury returned judgment for the City.
- The trial court initially denied post-offer cost recovery but, after the publication of Sviridov, awarded the City $51,946.96 in costs incurred after the section 998 offer (including expert fees).
- While this appeal was pending, the Legislature amended Government Code §12965(b) to add that notwithstanding CCP §998, a prevailing defendant cannot recover fees and costs in FEHA cases unless the court finds the action frivolous, unreasonable, or groundless when brought (effective Jan. 1, 2019).
- The appellate court decided the amendment was clarifying (not changing) existing law and therefore applied the amended §12965(b) to this case, reversing the trial court's post-offer cost award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a prevailing defendant in a FEHA action may recover post-offer costs under CCP §998 when the FEHA claim was non-frivolous | Scott: FEHA defendants may recover fees/costs only if plaintiff's claim was objectively groundless; section 998 should not permit cost-shifting for non-frivolous FEHA suits | City: Section 998 applies; its $7,000 offer was made in good faith and triggered post-offer cost shifting | The amended Gov. Code §12965(b) applies and precludes a prevailing defendant from recovering fees/costs under §998 unless the FEHA action was frivolous/unreasonable/groundless when brought or plaintiff continued to litigate after it clearly became so; cost award reversed |
| Whether the 2018 amendment to Gov. Code §12965(b) applies to pre-enactment conduct | Scott: Amendment clarifies existing law and thus applies retroactively to this case | City: Amendment changed the law and therefore should have only prospective effect | The court held the amendment was clarifying (given legislative history and split appellate authority) and applied it to this case |
| Whether trial court correctly found the City's offer nominal or in bad faith (alternative argument) | Scott: The $7,000 offer was nominal/bad faith, so it should not trigger §998 | City: Offer was not nominal or in bad faith | The court did not reach this alternative argument because it reversed on statutory grounds |
Key Cases Cited
- Carter v. California Dept. of Veterans Affairs, 38 Cal.4th 914 (Cal. 2006) (clarifying amendment may be applied to pre-enactment transactions when courts had not finally and definitively settled issue)
- Western Security Bank v. Superior Court, 15 Cal.4th 232 (Cal. 1997) (statutes ordinarily not retroactive; clarifying amendments treated differently)
- Williams v. Chino Valley Independent Fire Dist., 61 Cal.4th 97 (Cal. 2015) (FEHA defendants may recover fees/costs only if plaintiff's suit was objectively without foundation when brought)
- Christianburg Garment Co. v. EEOC, 434 U.S. 412 (U.S. 1978) (standard for awarding fees against plaintiffs in civil rights cases)
- Sviridov v. City of San Diego, 14 Cal.App.5th 514 (Cal. Ct. App. 2017) (held §998 may permit cost recovery in FEHA cases even where claim not objectively groundless)
- Arave v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 19 Cal.App.5th 525 (Cal. Ct. App. 2018) (reached contrary result to Sviridov on interplay of §998 and FEHA)
- McClung v. Employment Development Dept., 34 Cal.4th 467 (Cal. 2004) (Legislative declarations of intent are persuasive but not controlling; clarifying vs. changing analysis)
- Fellows, In re Marriage of, 39 Cal.4th 179 (Cal. 2006) (subsequent legislative history may clarify prior statute's meaning)