I. BACKGROUND
"PFRS was created in 1951 when separate police and fire retirement systems were merged pursuant to article XXVI of the Oakland City Charter (Charter). (Charter, art. XXVI, § 2600.) Only members of the Oakland Police Department (Department) or Oakland Fire Department hired prior to July 1, 1976, are eligible for coverage by PFRS." ( OPFRS , supra ,
"On June 14, 2011, the City filed a petition for writ of mandate and complaint for declaratory relief against PFRS and the Board in Alameda County Superior Court.
Our opinion in OPFRS largely reversed the trial court's decision with respect to those questions that were brought before us for resolution. (See OPFRS , supra , 224 Cal.App.4th at pp. 227-249,
Although the Association declined to appeal the trial court's determination that shift differential pay is not compensation attached to rank for pension purposes, it did argue: that the trial court should not have considered the question because the City had failed to exhaust available administrative remedies; that the trial court improperly considered extra-record evidence in making its shift differential decision; and that, regardless, the Board should be barred from collecting any past overpayments related to shift differential pay on equitable grounds. (See
Finally, with respect to alleged pension overpayments related to the number of designated holidays included in compensation attached to rank for the 2009, 2010, and 2011 fiscal years, the Association, again, declined to appeal the underlying merits, asserting only that PFRS pensioners should not be required to return any overpayments they received based on this error for equitable reasons. (See OPFRS , supra ,
II. DISCUSSION
A. Statutory Framework and Standards of Review
" Section 1021.5 codifies California's version of the private attorney general doctrine, which is an exception to the usual rule that each party bears its own attorney fees. [Citation.] The purpose of the doctrine is to encourage suits enforcing important public policies by providing substantial attorney fees to successful litigants in such cases." ( Robinson v. City of Chowchilla (2011)
As is relevant to the case at hand, section 1021.5 provides: "Upon motion, a court may award attorneys' fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement ... are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any. ..." Since section 1021.5 states the criteria supporting a grant of fees in the
Generally speaking, a trial court's decision whether to award attorney fees under section 1021.5 is reviewed for abuse of discretion. ( Samantha C. v. State Dept. of Developmental Services (2012)
B. Entitlement to Attorney Fees Under Section 1021.5
The Association argues on appeal that the trial court committed legal error in refusing to consider the financial situation of the Association and its members when analyzing the financial burden of enforcement for purposes of a fee award under section 1021.5. The City unsurprisingly disagrees. Moreover, the City additionally
Pursuant to section 1021.5, fees may be awarded only if the "financial burden of private enforcement ... [is] such as to make the award appropriate." The trial court in the present case concluded that an award of attorney fees was not warranted because the pensioners represented by the Association had a significant financial incentive to initiate the litigation and the ability to spread the litigation costs among themselves. In reaching this result, however, the court deemed itself barred from considering the relative poverty of either the Association or it members. It also failed to consider certain other circumstances related to the monetary recovery generated by the Association's success in this case. We believe both to be error.
"In determining the financial burden on litigants, courts have quite logically focused not only on the costs of the litigation but also [on] any offsetting financial benefits that the litigation yields or reasonably could have been expected to yield. ' "An award on the 'private attorney general' theory is appropriate when the cost of the claimant's legal victory transcends [the claimant's] personal interest, that is, when the necessity for pursuing the lawsuit placed a burden on the plaintiff 'out of proportion to his [or her] individual stake in the matter.' [Citation.]" ' ( Woodland Hills , supra ,
In Whitley , our high court cited with approval the method for weighing costs and benefits of litigation that was used in Los Angeles Police Protective League v. City of Los Angeles (1986)
The final "value judgment" that Whitley requires when analyzing the financial burden of the litigation appears to encompass the criterion set forth in subdivision (c) of section 1021.5 that a court considering fees must determine whether "such fees should not in the interest of justice be paid out of the recovery, if any." Indeed, Police Protective League - the case whose methodology was cited by the high court in Whitley -states that all of the section 1021.5 factors are "interrelated" and expressly treats the financial burden criterion and the interests of justice criterion together. ( Police Protective League , supra , 188 Cal.App.3d at pp. 10-11,
Turning to the financial burden analysis in this case, we have no quarrel with the trial court's use of $500,000 as the estimated total cost of litigation and 33 percent as the discount factor based on the Association's estimated probability of success at the time that vital litigation decisions were being made. Both numbers appear well supported by the record and have not been challenged by the parties. We do agree with the Association, however, that the $39,000,000 estimated monetary value of the case posited by the trial court appears to be significantly exaggerated.
While it is possible to challenge many of the assumptions underlying the trial court's estimated value calculation, we mention only two. First, it appears that the trial court may have overstated the amount of overpayments related to shift differential pay that the Association reasonably believed was at issue in this litigation by approximately $12,000,000. The trial court used $16,662,758 in its calculations, the amount of shift differential pay estimated to have been improperly included in retirement benefits paid to pensioners from April 2002 through March 2014. However, this District has previously held in the pension context that the three-year statute of limitations for relief on grounds of mistake set forth in Code of Civil Procedure section 338, subdivision (d), applies to claims for the recovery of public money paid out in error. ( County of Marin Assn. of Firefighters v. Marin County Employees Retirement Assn. (1994)
Next, as we mentioned in OPFRS , current members of the Department do not belong to PFRS. "Thus, PFRS is essentially a closed system with a dwindling pool of retirees. As of January 31, 2012, PFRS had 619 retired police members and widows, with an average age of 73." ( OPFRS , supra ,
We recognize that $3,500,000 is still significantly more than the estimated trial costs of $500,000 in this case and that, generally speaking, a fee award under section 1021.5 is not appropriate " 'where the expected value
Additionally, in declining to award attorney fees under section 1021.5 in this case, the trial court expressly indicated that it could not consider the financial situation of either the Association or it members in making its fee determination, despite the obvious relevance of this factor to the financial feasibility of the litigation. Indeed, during a hearing on the Association's fee request, the court opined: "As a factual matter, I will just state that you have made a compelling case for financial difficulty of the plaintiffs. And even go as far to say, if I thought that was something the
We do not, however, read these cases to suggest that a party's poverty is irrelevant to a section 1021.5 fee analysis when it acts as a barrier to financing litigation of benefit to the public. First, the statement in Whitley is part of a larger passage taken from the legislative history of section 1021.5, which the high court cited in support of its argument that section 1021.5 is focused on financial feasibility. ( Whitley , supra ,
Similarly, the statements in both AFL and Citizens regarding the irrelevance
In contrast, a number of other cases have expressly mentioned poverty as a permissible factor to consider in determining whether the financial burden of the litigation was sufficient to merit a fee award. Most notably, the Supreme Court in Woodland Hills discussed a contention by the defendants that the litigation expenses did not place a "disproportionate burden" on the plaintiffs and thus a fee award under section 1021.5 was improper. ( Woodland Hills , supra ,
Similarly, in Mejia v. City of Los Angeles (2007)
The City argues that these prior holdings were abrogated by the Supreme Court's subsequent decision in Whitley , which articulates a test based solely on a litigant's financial stake in relation to the costs of litigation. We disagree. As discussed above, Whitley was focused on whether nonfinancial, nonpecuniary personal interests can disqualify a litigant from a fee award under section 1021.5. ( Whitley , supra , 50 Cal.4th at pp. 1211, 1220-1221,
In sum, we believe that the facts mentioned above-including the relative poverty
2. Other Section 1021.5 Criteria
With respect to the other section 1021.5 criteria at issue in this appeal, we easily dismiss the City's assertion that the Association was not a prevailing party here because the City also achieved some benefits through the litigation-saving "millions of dollars annually"-while the Association's success was "limited." First, it is well settled that "[p]artially successful plaintiffs may recover attorney fees under Code of Civil Procedure section 1021.5." ( California Building Industry Assn. v. Bay Area Air Quality Management Dist. (2016)
Here, when faced with the prospect of substantial pension cuts-both prospective and retroactive-due to alleged errors in the calculation of compensation attached to rank, the Association entered into this litigation with the overarching goal of minimizing those cuts to the extent possible, a goal which it largely achieved. With respect to the holiday pay rate issue, the Association was entirely successful, blocking the City's attempt to decrease the applicable pay rate both retroactively and prospectively. ( OPFRS , supra , 224 Cal.App.4th at pp. 217-221, 227-233,
Next, the City contends that the Association's litigation efforts failed to enforce important rights affecting the public interest, thus making a fee award under section 1021.5 improper. In particular, the City argues that the Association, in litigating this matter, was solely concerned with protecting its own economic interests; that the case involved fact-specific contract interpretation rather than broad principles of pension law; and that, even if the published opinion in this matter is of "general legal interest," that fact is insufficient to support a fee award under section 1021.5 In a related vein, the City asserts that the litigation did not significantly benefit the general public or a large group of persons because only the affected pensioners received an economic benefit. We view the matter somewhat differently than the City, and note in this regard that where, as here, the litigation at issue has resulted in an appellate decision, "an appellate court is in at least as good a position as the trial court to judge whether the legal right enforced through its own opinion vindicates an important public interest and confers a significant benefit on the general public or a broad class of citizens." (
When determining whether a litigant has vindicated an important right affecting the public interest, "[t]he 'judiciary [must] exercise judgment in attempting to ascertain the "strength" or "societal importance" of the right involved.' [Citation.] 'The strength or societal importance of a particular right generally is determined by realistically assessing the significance of that right in terms of its relationship to the achievement of fundamental legislative goals.' " ( Indio Police Command Unit Assn. v. City of Indio (2014)
Here, the City correctly argues that the mere fact that this litigation resulted in a published appellate opinion
The societal importance of public employee pension rights has long been recognized. In the seminal case of Kern v. City of Long Beach (1947)
As for the question of significant benefit to a large group of citizens, the Association's actions protected the pensions of the 590 living pensioners and their families, a clear economic benefit. This, alone might be sufficient to support a fee award under section 1021.5. (See, e.g., Monterey/Santa Cruz etc. Trades Council v. Cypress Marina Heights LP (2011)
Having concluded that the Association has satisfied all of the statutory criteria under section 1021.5, we deem it entitled to an attorney fee award pursuant to that statute. Under such circumstances, "all that remains for this court to do is remand this case to the trial court so that it may exercise its sound discretion in setting an amount of fees." ( Otto v. Los Angeles Unified School Dist. (2003)
III. DISPOSITION
The order denying attorney fees to the Association under section 1021.5 is reversed, and the cause remanded to the trial court to make an award of attorney fees and costs consistent with the views set forth in this opinion. Appellants are entitled to their costs on appeal.
We concur:
STREETER, ACTING P.J.
TUCHER, J.
Notes
Retired Associate Justice of the Court of Appeal, First Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
At oral argument in this matter, both parties agreed that, should we order fees in this case pursuant to section 1021.5, we need not reach the issue of whether a fee award was also appropriate pursuant to section 1988. We therefore do not consider this question.
Although some of the language from Police Protective League quoted in Whitley could be read as requiring the starting point for the financial burden analysis to be the monetary value of benefits actually obtained by the party seeking a fee award, we agree with the appellate court in Collins v. City of Los Angeles (2012)
We use an annual number of $1.5 million in calculating the amount of potential shift differential-based repayments the pensioners could reasonably have hoped to avoid by pursuing this case as that is the number that was available at the time vital litigation decisions were being made.
At the February 2015 hearing on the fee motion, counsel for the Association represented that the Association had 190 members in December 2010 and 363 members in December 2012. The City objected that these numbers were not a part of the record, but stated that it had no reason to dispute them. While we recognize that this number is something of a moving target-and varied during the time vital litigation decisions were being made in the summer of 2011 and the fall of 2012-we will use the 230 number provided to this court as part of the Association's October 2012 petition for writ of supersedeas.
Instead, although it acknowledged the difficulties in attracting counsel given the type of financial "recovery" hoped for in this case, the trial court went on to posit that the Association reasonably could have assessed all affected pensioners to fund the litigation, could have obtained commitments up front from the pensioners to fund the litigation out of any financial benefits actually obtained, or could have requested pensioners to share some of their now-quantifiable financial benefits after the conclusion of the case. None of these scenarios were feasible on this record, however, and the trial court, itself, admitted they were all "counterfactual." In the end, the court appears to have denied fees based simply on its belief that spreading the costs of the litigation among the affected pensioners (at less than $1000 each) would have been objectively reasonable given the amount of their anticipated recovery, while ignoring the fact that the Association had absolutely no ability to do so.
The trial court also cited Whitley 's comment that the "proper subject" of the financial burden inquiry is a plaintiff's "objective financial incentives." (Whitley , supra ,
We acknowledge that California Licensed Foresters , supra ,
While this helped the City retroactively (because the pensioners had been paid for too many holidays), it is sheer speculation to say which party will financially benefit from this holding in the future, as this will depend on whether the number of holidays granted to actives increases or decreases from the status quo in the future. For example, the MOU language covering the 2012, 2013, and 2014 fiscal years only decreased the number of holidays by one. (OPFRS , supra ,