Lead Opinion
Opinion
In this case defendant offered to repurchase a truck that had been marketed with false statements about its towing capacity. This offer came after a lawsuit plaintiffs filed against defendant seeking this repurchase remedy, but before any kind of court judgment was rendered. Plaintiffs were awarded substantial attorney fees under Code of Civil Procedure section 1021.5.
Defendant also contends the trial court erred in concluding that the present lawsuit substantially benefited a large group of people or the general public, as required by section 1021.5. We conclude the trial court did not abuse its discretion in making that conclusion. Finally, defendant, while conceding that a plaintiff could be awarded attorney fees for attorney fee litigation, contends that these fees should not be enhanced beyond the “lodestar” amount. We do not endorse such a categorical rule, but we explain below that fees for fee litigation usually should be enhanced at a significantly lower rate than fees for the underlying litigation, if they are enhanced at all. We therefore will remand the cause to the trial court to recalculate the amount of the fee in light of the principles discussed below, assuming it finds on remand that plaintiffs are eligible for some attorney fees.
I. Statement of Facts
The facts, taken largely from the Court of Appeal’s opinion, are as follows:
DaimlerChrysler incorrectly marketed its 1998 and 1999 Dakota R/T trucks as having a 6,400-pound towing capacity when they could actually tow only 2,000 pounds. The error occurred because the Dakota R/T was a sporty version of an existing truck model, which could tow 6,400 pounds. However, to obtain a sporty design, DaimlerChrysler lowered the suspension on the Dakota R/T, thus reducing its towing capacity.
The reduced towing capacity was a potential risk factor. The lowered suspension meant that towing more than 2,000 pounds would cause the suspension to bottom out, stressing the frame and increasing fatigue and wear. The DaimlerChrysler response team considered this a potential safety issue.
Buyers who wanted to tow more than 2,000 pounds were told they could do so only if their Dakota R/T was modified with a trailer hitch costing $300. The factory installed some of these hitches, while other buyers who wanted to tow had dealer-installed or after-market hitches attached.
Nationwide, DaimlerChrysler sold or leased fewer than 7,000 of the Dakota R/T’s in the two relevant years. Fewer than 1,000 affected R/T’s were sold in California during the two years.
Many Dakota R/T buyers never intended to tow more than 2,000 pounds. When informed by DaimlerChrysler of the error, most of those customers were satisfied with DaimlerChrysler’s offers of cash and merchandise.
Initially, DaimlerChrysler offered $300 refunds to buyers who had purchased hitches of that amount. By the summer, DaimlerChrysler authorized dealers to repurchase or replace Dakota R/T’s on a case-by-case basis, but only for customers who demanded such a remedy.
On July 29, 1999, the Santa Cruz County District Attorney contacted DaimlerChrysler about the problem, threatened legal action, and requested DaimlerChrysler’s input before acting. On August 10, 1999, the California Attorney General notified DaimlerChrysler it had joined the Santa Cruz County District Attorney. The public agencies requested a response by the end of August 1999.
Plaintiffs filed their case on August 23, 1999, in Los Angeles County Superior Court. Plaintiffs alleged they all bought 1999 Dakota R/T’s from various DaimlerChrysler dealers. Only Graham lived and bought his truck in California. Plaintiffs alleged DaimlerChrysler marketed, sold, and warranted their 1998 and 1999 Dakota R/T’s as capable of towing 6,400 pounds when the trucks actually could tow only 2,000 pounds. Plaintiffs alleged DaimlerChrysler acknowledged the error by letter to all purchasers dated June 16, 1999. Plaintiffs alleged they notified DaimlerChrysler of their (1) trucks’ failure to comply with the warranted towing capacity, and (2) revocation of their acceptance of their trucks on July 19, 1999. Plaintiffs sought (but never obtained) class certification for all those who bought Dakota R/T’s nationwide. Plaintiffs alleged a single breach of express warranty cause of action. Plaintiffs sought return of their purchase or lease payments, compensatory damages, and attorney fees. Also on August 23, 1999, the Detroit News contacted DaimlerChrysler’s legal counsel about plaintiffs’ case. DaimlerChrysler’s counsel claimed DaimlerChrysler had responded appropriately to the marketing error, including offering buybacks to customers who
DaimlerChrysler’s response team met throughout August 1999. The team knew about both public agency inquiries and the response deadline. Indeed, DaimlerChrysler wrote the public agencies that its internal approval process prohibited a response by August 31, but promised a response by September 8, 1999. On September 10, 1999, DaimlerChrysler issued its offer to all previous Dakota R/T buyers of repurchase or replacement. In response to later inquiries, response team members conceded they were aware of the class action lawsuit filed in California before DaimlerChrysler’s September 10, 1999, letter offering repurchase or replacement to all Dakota R/T buyers.
DaimlerChrysler demurred to the complaint. Plaintiffs filed an amended complaint, acknowledging DaimlerChrysler’s offer of, among other remedies, repurchase or replacement of the trucks for all previous buyers. The trial court sustained the demurrer without leave to amend and dismissed the case, finding it was moot because DaimlerChrysler already had offered all purchasers the relief plaintiffs sought. Meanwhile, the public agencies continued to pursue legal action against DaimlerChrysler, pointing to the fact that the erroneous marketing of the Dakota R/T continued as late as September 1999. In late 2000, DaimlerChrysler settled the public agency investigations by paying a $75,000 fine and agreeing to ensure that the marketing error did not reoccur. Nationwide, 2,549 Dakota R/T buyers opted for repurchase or replacement. Another 3,101 buyers opted for service contracts and parts coupons. The total value of these offers exceeded $15 million. Fewer than 1,000 of the R/T buyers were Californians.
Although plaintiffs’ case was dismissed, the parties continued to litigate plaintiffs’ entitlement to attorney fees. DaimlerChrysler insisted throughout that plaintiffs were not entitled to attorney fees, contending plaintiffs had no effect on DaimlerChrysler’s recognition of the problem and decision to offer all buyers repurchase or replacement. For over a year, there were hotly contested discovery and other motions to clarify the facts described above. The court held a lengthy evidentiary hearing on October 18, 2000. DaimlerChrysler contended that the Dakota R/T response team was not even aware of the litigation until after September 10, 1999, when its repurchase offer was made, a position that the trial court found to lack credibility.
The trial court filed its final order awarding attorney fees on July 6, 2001. The court concluded after its review of the declarations and documentary evidence presented that DaimlerChrysler’s “position that the lawsuit was not a catalyst was largely a transparent fabrication . . . .” It rejected
In addition to finding that plaintiffs were the successful party, the trial court found the other requirements of section 1021.5 had been met. It found that the lawsuit “resulted in the enforcement of an important right affecting the public interest, ... the protection and enforcement of consumer rights, including highway safety,” and that “as a result of the lawsuit, thousands of consumers received pecuniary benefits and enhanced safety. Thousands more are likely to benefit from it if DaimlerChrysler and/or other manufacturers are deterred from similar conduct in the future.”
The court also concluded that “DaimlerChrysler should pay plaintiffs attorneys fees in the interest of justice. Plaintiffs’ attorney fees will otherwise go unpaid. Fees cannot be paid out of the benefits conferred upon the consumers because DaimlerChrysler . . . distributed the benefits of [its] offer to the consumers without any discussion with plaintiffs or their attorneys. Justice is served by encouraging lawyers to bring meritorious consumer cases, of which this action is an example.”
The trial court found the lodestar fee amount was $329,620 through the October 18, 2000, hearing, with a multiplier of 2.25 for the fees incurred until the October 18, 2000, hearing, including fees for litigating attorney fees, and applied no multiplier for time thereafter. The court awarded no fees for work after April 23, 2001. The total award was $762,830.
The Court of Appeal affirmed. It observed that the United States Supreme Court had recently rejected the catalyst theory as a basis for attorney fee awards under various federal statutes in Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources (2001)
A. Whether the Catalyst Theory Should Be Abolished
An important exception to the American rule that litigants are to bear their own attorney fees is found in section 1021.5.
In order to effectuate that policy, we have taken a broad, pragmatic view of what constitutes a “successful party.” “Our prior cases uniformly explain that an attorney fee award may be justified even when plaintiff’s legal action does not result in a favorable final judgment. (Westside Community, [supra,]
The catalyst theory is an application of the above stated principle that courts look to the practical impact of the public interest litigation in order to determine whether the party was successful, and therefore potentially eligible for attorney fees. We specifically endorsed that theory in Westside Community, supra,
We further observed that “[n]umerous federal decisions have reached the same conclusion, holding that attorney fees may be proper whenever an
Robinson v. Kimbrough, supra,
Nonetheless, the court of appeals in subsequent proceedings affirmed that plaintiffs may be entitled to an award of attorney fees pursuant to the Civil Rights Attorney’s Fees Award Act of 1976 (42 U.S.C. § 1988). Rejecting the argument that the plaintiffs were not a “prevailing party,” the court agreed with other federal appellate courts that recovery of attorney fees under the act “is not dependent upon plaintiffs’ ability to secure formal judicial relief by way of injunction or otherwise. Rather, these opinions have focused upon the type of relief obtained from the defendants as a result of the lawsuit. [Citations.] Common to these decisions is the recognition that plaintiffs may recover attorneys’ fees if their lawsuit is a substantial factor or a significant catalyst in motivating the defendants to end their unconstitutional behavior.” (Robinson, supra, 652 F.2d at pp. 465—466.) The court therefore remanded the case for “the purpose of determining whether plaintiffs’ lawsuit was a
The Westside Community court, although endorsing the catalyst theory found in Robinson and other federal cases, nonetheless went on to conclude that no attorney fees were owed in that case because there was no demonstrable causal connection between the lawsuit and the government’s action. (Westside Community, supra, 33 Cal.3d at pp. 353-354.)
We continue to conclude that the catalyst theory, in concept, is sound. The principle upon which the theory is based—that we look to the “impact of the action, not its manner of resolution” (Folsom, supra,
DaimlerChrysler argues that we should reevaluate that endorsement in light of the rejection of the catalyst theory by the United States Supreme Court in Buckhannon, supra,
In Buckhannon, the plaintiffs sued alleging that certain state law requirements imposed on their assisted living facility violated the Fair Housing Amendments Act of 1988 (42 U.S.C. § 3601 et seq.) and the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.). After the state legislature changed the requirements in a way that vindicated the plaintiffs’ position, the plaintiffs sought attorney fees under the relevant statutes, both of which permit attorney fees for the “prevailing party.” (See 42 U.S.C. § 3613(c)(2) [“[T]he court, in its discretion, may allow the prevailing party ... a reasonable attorney’s fee and costs”] and 42 U.S.C. § 12205 [“[T]he court. . . , in its discretion, may allow the prevailing party ... a reasonable attorney’s fee, including litigation expenses, and costs”].)
A good deal of the Buckhannon court’s reason for rejecting the catalyst theory turns on the definition of “prevailing party.” The Buckhannon majority found the term “prevailing party” to be “a legal term of art,” defined according to Black’s Law Dictionary (7th ed. 1999) at page 1145 as “ ‘[a] party in whose favor a judgment is rendered, regardless of the amount of damages awarded <in certain cases, the court will award attorney’s fees to the prevailing partyx—Also termed successful party.' ” (Buckhannon, supra,
We agree with DaimlerChrysler that the terms “prevailing party” and “successful party,” as used in section 1021.5, are synonymous. (Schmier v. Superior Court (2002)
This practical definition of prevailing or successful party is consistent with our construction of the meaning of “prevailing party” within the context of Civil Code section 1717, which provides that when a contract specifically provides for attorney fees for one party, fees are to go to the prevailing party “whether he or she is the party specified in the contract or not.” In Santisas v. Goodin (1998)
DaimlerChrysler also contends that the catalyst theory must be rejected because section 1021.5 requires that the party achieve success in an “action which has resulted in the enforcement of an important right.” It points to Black’s Law Dictionary’s definition of “enforcement” as “[t]he act or process of compelling compliance with a law, mandate, or command” (Black’s Law Dict., 7th ed., supra, p. 549), and also Merriam-Webster’s Collegiate Dictionary (10th ed. 1998) page 383, which defines “enforce” as to “constrain, compel,” or “to carry out effectively.” But neither definition requires the compulsion or constraint inherent in the term “enforcement” to entail a judicial decision. For example, in Belth v. Garamendi (1991)
Nor are we persuaded that cases decided under a catalyst theory will inevitably give rise to complex and time-consuming litigation over the issue of causality. Case law, as well as our own judicial experience, suggests that catalyst theory cases may be resolved by relatively economical, straightforward inquiries by trial court judges close to and familiar with the litigation. (See, e.g., Southwest Center for Biological Diversity, et al. v. Carroll, supra, 182 F.Supp.2d at pp. 951-952 (opn. of Moreno, J.).) Moreover, the defendant in such cases knows better than anyone why it made the decision that granted the plaintiff the relief sought, and the defendant is in the best position to either concede that the plaintiff was a catalyst or to document why the plaintiff was not. We are unpersuaded that DaimlerChrysler’s inability or unwillingness to do either in the present case, thereby prolonging the litigation, is necessarily attributable to the inherent difficulty of catalyst theory cases.
DaimlerChrysler further argues that overall, the benefits that the catalyst rule is supposed to possess are dwarfed by the harms the rule will engender. It contends the evil to which the catalyst rule is addressed—that meritorious plaintiffs and plaintiffs’ attorneys will be deprived of attorney fees by a favorable settlement—will be a relatively rare occurrence. It quotes the Buckhannon majority that “ ‘[I]t is well settled that a defendant’s voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice’ unless it is ‘absolutely clear
We, of course, have no way of quantifying the magnitude of the potential and actual abuses by plaintiffs under a catalyst rule or by defendants under its absence. DaimlerChrysler and the Buckhannon majority’s prediction—that defendants’ change of behavior depriving worthy plaintiffs of attorney fees will be relatively rare—is one we cannot verify. But as plaintiffs argue, what is objectionable about elimination of the catalyst theory is not only that in a given case an attorney will be unjustly deprived of fees, but that attorneys will be deterred from accepting public interest litigation if there is the prospect they will be deprived of such fees after successful litigation. (See Chemerinsky, Closing the Courthouse Doors to Civil Rights Litigants (2003) 5 U.Pa. J.Const.L. 537, 547.) As matters stand now, public interest attorneys often take a considerable risk that they will not be paid at all because they will not prevail in the litigation or because they will be deemed ineligible for fees under section 1021.5, as when the suit is adjudged not to be sufficiently in the public interest. Abolition of the catalyst theory will increase an already considerable risk. As plaintiffs’ attorney succinctly states: “[I]t defies common sense to think attorneys who take meritorious public interest cases with the expectation that they will be compensated if they obtained favorable results for their clients will not be deterred from doing so if the defendant can litigate tenaciously, then avoid paying their fees by voluntarily providing relief before a court order is entered.”
This court has not explicitly adopted the above two-pronged test. (See Wallace v. Consumers Cooperative of Berkeley, Inc. (1985)
Although the catalyst rule is sometimes formulated to permit an award of attorney fees as long as a lawsuit can survive a motion to dismiss or for judgment on the pleadings (see Buckhannon, supra,
In addition to some scrutiny of the merits, we conclude that another limitation on the catalyst rule proposed by the Attorney General, appearing as amicus curiae, should be adopted by this court. The Attorney General proposes that a plaintiff seeking attorney fees under a catalyst theory must first reasonably attempt to settle the matter short of litigation. (See Grimsley v. Board of Supervisors (1985)
Applying the catalyst rule, as discussed above, to the present case, the trial court applied the first prong of the rule to conclude that the lawsuit was in fact a substantial causal factor in DaimlerChrysler’s change in policy with respect to its willingness to repurchase or replace the Dakota R/T or to offer consumers substantial discounts. DaimlerChrysler does not contend that the trial court’s ruling on that point is unsupported by substantial evidence. But it is unclear whether the trial court considered the merits of the suit, and the trial court did not consider whether plaintiffs attempted to reasonably settle the matter short of litigation. We therefore remand the matter for a determination of whether plaintiffs are eligible for attorney fees under the catalyst rule as articulated above.
DaimlerChrysler also contends that the attorney fee award must be overturned in its entirety because it failed to confer “a significant benefit. . . on the general public or large class of persons” as required by section 1021.5. This contention need not detain us long. We will uphold the trial court’s decision to award attorney fees under section 1021.5, unless the court has abused its discretion. (Hewlett v. Squaw Valley Ski Corp. (1997)
In the present case, the trial court found that the problem addressed by the lawsuit implicated an issue of public safety, and that the lawsuit benefited thousands of consumers and potentially thousands more by acting as a deterrent to discourage lax responses to known safety hazards. In light of the facts reviewed in the first part of this opinion, we conclude the trial court did not abuse its discretion in finding that the lawsuit met the substantial benefit and public interest requirements of section 1021.5.
C. Whether There Should Be a Multiplier for Attorney Fees for Litigating Attorney Fees
In the present case, a large percentage of the attorney fees were awarded for litigation to obtain fees under section 1021.5. As noted, the
We first review some general principles regarding the calculation of attorney fees in public interest litigation. As we recently explained, under our decision in Serrano III, “a court assessing attorney fees begins with a touchstone or lodestar figure, based on the ‘careful compilation of the time spent and reasonable hourly compensation of each attorney . . . involved in the presentation of the case.’ [Citation.] We expressly approved the use of prevailing hourly rates as a basis for the lodestar, noting that anchoring the calculation of attorney fees to the lodestar adjustment method ‘ “is the only way of approaching the problem that can claim objectivity, a claim which is obviously vital to the prestige of the bar and the courts.” ’ [Citation.] In referring to ‘reasonable’ compensation, we indicated that trial courts must carefully review attorney documentation of hours expended; ‘padding’ in the form of inefficient or duplicative efforts is not subject to compensation. [Citation.]
“Under Serrano III, the lodestar is the basic fee for comparable legal services in the community; it may be adjusted by the court based on factors including ... (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award. [Citation.] The purpose of such adjustment is to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services. The ‘ “experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong.” ’ ” (Ketchum, supra, 24 Cal.4th at pp. 1131-1132.)
One of the most common fee enhancers, and one used by the trial court in the present case, is for contingency risk. We reaffirmed the propriety
Turning to the question of compensation for fee-related litigation, we first note it is well established that plaintiffs and their attorneys may recover attorney fees for fee-related matters. (Serrano IV, supra, 32 Cal.3d at pp. 632-633, 639.) As we stated: “the [private attorney general] doctrine will often be frustrated, sometimes nullified, if awards are diluted or dissipated by lengthy, uncompensated proceedings to fix or defend a rightful fee claim.” (Serrano IV, supra,
While DaimlerChrysler does not dispute that fees for fee-related litigation may be awarded, it asks this court to hold that there should be no multiplier for fees on fees. It cites to several out-of-state cases that have disallowed such multipliers, principally because fee litigation is tangential to the primary litigation and of less social value. (See City of Birmingham v. Horn (Ala. 2001)
As plaintiffs point out, our Court of Appeal adopted a contrary position in Downey Cares v. Downey Community Development Com. (1987) 196
We noted the holding in Downey Cares in Ketchum, supra,
In light of the above discussion, we reject DaimlerChrysler’s argument that fees for fee litigation can never be enhanced. Such a rule does not appear in harmony with the principle that the awarding of attorney fees and the calculation of attorney fee enhancements are highly fact-specific matters best left to the discretion of the trial court. (See Ketchum, supra, 24 Cal.4th at pp. 1131-1132.) Although we agree with DaimlerChrysler that the reduction of attorney fee litigation is a desirable objective, it is not clear that a categorical rule barring enhancements for fee litigation will accomplish that objective. It is not clear that the unnecessary prolongation of fee litigation is a significant problem, given that trial courts have the capacity to distinguish between reasonable and unreasonable attorney fee charges and the discretion
Furthermore, “[w]hen the Legislature has determined that the lodestar adjustment approach is not appropriate, it has expressly so stated. Thus, in 1993, it amended Code of Civil Procedure section 1021.5 to provide that attorney fees awarded to a public entity under the section ‘shall not be increased or decreased by a multiplier based upon extrinsic circumstances, as discussed in [Serrano III, supra,]
Nonetheless, building on the discussion quoted above in Ketchum and Downey Cares, we recognize that the enhancement justified for fees in the underlying litigation may differ from the enhancement warranted in the fee litigation, and that a lower enhancement, or no enhancement, may be appropriate in the latter litigation. In fact, a closer examination of the enhancement factors set forth in Serrano III leads to the conclusion that in most cases, the enhancement for the fee litigation should be lower than the enhancement for the underlying litigation, if one is applied at all.
This is especially true of the “results obtained” factor that the trial court relied on in part to justify its multiplier. “The ‘results obtained’ factor can properly be used to enhance a lodestar calculation where an exceptional effort produced an exceptional benefit.” (Thayer v. Wells Fargo Bank (2001)
Moreover, while this factor often takes into account the exceptional skill exhibited by the attorney (Leaolo v. Beneficial Cal. Inc. (2000)
Courts awarding attorney fees under section 1021.5 also may generally differentiate between the contingency risk undertaken during the litigation on the merits and the risk undertaken for litigation on fees. The risk that an attorney takes in the underlying public interest litigation has two components: the risk of not being a “successful party,” i.e., of not prevailing on the merits, and the risk of not estabhshing eligibility for an attorney fee award. (Serrano III, supra,
One enhancement factor that would be as applicable for fees on fees as for fees on the merits is a significant delay in the payment of the fees. (See Serrano III, supra,
In the present case, the trial court made its initial decision regarding the fee multiplier before our decision in Ketchum and then, after further briefing, reduced the multiplier from 3.0 to 2.25, not differentiating between the fees in the underlying litigation and the fees on fees. It appears the court over-enhanced the fees on fees by inappropriately using the “results obtained” factor to arrive at the multiplier. On remand the court should also reexamine its use of the risk factor. While it was not required to explain how it calculated that factor, and we will generally presume the attorney fee award was correct “ ‘ “on matters as to which the record is silent” ’ ” (Ketchum, supra,
III. Disposition
The judgment of the Court of Appeal affirming the award of attorney fees in the present case is reversed, and the cause is remanded for proceedings consistent with the views expressed in this opinion.
George, C. J., Kennard, J., and Werdegar, J., concurred.
Notes
All statutory references are to this code unless otherwise stated.
In its entirety, 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, or of enforcement by one public entity against another public entity, 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. With respect to actions involving public entities, this section applies to allowances against, but not in favor of, public entities, and no claim shall be required to be filed therefor, unless one or more successful parties and one or more opposing parties are public entities, in which case no claim shall be required to be filed therefor under Part 3 (commencing with Section 900) of Division 3.6 of Title 1 of the Government Code.
“Attorneys’ fees awarded to a public entity pursuant to this section shall not be increased or decreased by a multiplier based upon extrinsic circumstances, as discussed in Serrano v. Priest [(1977)]
There have been a number of other federal cases in which attorney fees were granted or found potentially available, despite the absence of a judicial decree altering the legal relationship between the parties. (See, e.g., Baumgartner v. Harrisburg Housing Authority (3d Cir. 1994)
Moreover, if DaimlerChrysler is arguing that Black’s Law Dictionary defines “successful party” as a term of art, identical to “prevailing party,” and that the Legislature was aware of the definition, then the definition that should be consulted is not from the most recent edition of the dictionary, but the one current when the Legislature adopted section 1021.5 in 1977. (Stats. 1977, ch. 1197, § 1, p. 3979.) Black’s Law Dictionary, 4th ed., supra, at page 1352, employs a number of alternative definitions of “prevailing party.” “That one of the parties to a suit who successfully prosecutes the action or successfully defends against it, prevailing on the main
Both sides cite legislative history in support of their position. The legislative history is inconclusive. DaimlerChrysler cites legislative testimony by some of Code of Civil Procedure section 1021.5’s proponents, but we generally will not consider such evidence in determining legislative intent. “Material showing the motive or understanding of an individual legislator, including the bill’s author, his or her staff, or other interested persons, is generally not considered. [Citations.] This is because such materials are generally not evidence of the Legislature’s collective intent.” (Metropolitan Water Dist. v. Imperial Irrigation Dist. (2000)
The dissent theorizes that under the private attorney general doctrine, plaintiffs already have a “great advantage” over defendants in settlement negotiations because plaintiffs face merely the risk they will not be compensated for attorney fees whereas defendants face the near certainty of incurring such fees. (Dis. opn., post, at p. 597.) This assertion substantially oversimplifies a complex matter. The prospect of attorney fees is only one factor .in determining settlement advantage, and other factors often weigh in defendants’ favor in public interest litigation, including the possession of superior information about their own conduct (see
The dissent states that plaintiffs “have not shown that DaimlerChrysler was legally required to offer a full refund in addition to the steps it had already taken regarding plaintiffs, which included full disclosure, prospective correction, and offers to pay for a hitch that, so far as this lawsuit demonstrates, would have cured all harm.” (Dis. opn., post, at p. 601.) The trial court is obviously not bound by the dissent’s characterization of the facts. Moreover, the dissent appears to interpret our requirement that a lawsuit have merit as further requiring that the settlement or the action taken by defendant to moot the lawsuit must be legally required. But no such scrutiny of settlement terms has ever been required, not even under Buckhannon. For example, Buckhannon acknowledges that a consent decree is a valid basis for awarding private attorney general fees. (Buckhannon, supra,
The dissent contends that plaintiffs have “failed to satisfy” these two latter prongs of the catalyst rule. (Dis. opn., post, at p. 600.) The dissent does not point to any trial court finding
The dissent appears to question the rule stated in Beasley that a consumer class action suit conferring significant benefits on a large number of people vindicating a right of substantial societal importance can be the basis of an award of section 1021.5 attorney fees. It cites in support of its position Flannery v. California Highway Patrol (1998)
In the present case, the trial court expressly stated that it was not enhancing the fees because of the “novelty or difficulty of the issues.”
Dissenting Opinion
I dissent.
Plaintiffs filed a simple seven-page complaint alleging a single cause of action for breach of warranty after the defendant had already acknowledged its marketing mistake and was taking steps to correct it, and while the Santa Cruz County District Attorney and the California Attorney General were investigating the matter and preparing to take appropriate action. The complaint constituted plaintiffs’ entire legal effort regarding the underlying lawsuit. They obtained no judicial ruling of any kind in their favor. Nevertheless,
This court has never awarded attorney fees to a party with no judicial ruling in its favor. We should not start now. Relying solely on federal cases that have been overruled and California cases that either denied attorney fees or involved a plaintiff with a judicial ruling in its favor, the majority permits an award of attorney fees to the plaintiffs as the “prevailing” or “successful” party. To do so, it adopts the so-called catalyst theory, a theory that was once prevalent in federal courts, but that the United States Supreme Court has now repudiated. We should not resurrect it.
Moreover, plaintiffs do not qualify for attorney fees even under the majority’s catalyst theory. Their lawsuit was unnecessary when filed, it was moot within days of its filing, and it conferred no substantial public benefit. Plaintiffs have also failed to show their suit had any merit in light of the corrective steps defendant had already taken. The majority implicitly recognizes that plaintiffs failed to justify their award of attorney fees, but it inexplicably remands the matter for yet more litigation, which will undoubtedly increase plaintiffs’ attorney fee demand to a truly astronomic amount. I disagree here also. No reason appears to give plaintiffs a second chance to try to prove what they failed to prove the first time. Courts should seek to resolve litigation, not perpetuate it.
Finally, the majority permits qualifying plaintiffs to receive not only (1) attorney fees for litigating the underlying lawsuit, but also (2) a multiplier on those fees, and also (3) attorney fees for litigating their entitlement to attorney fees, and also (4) a multiplier on the fees for litigating entitlement to fees. I disagree on the final point. Surely, awarding fees for the underlying litigation, with a potential multiplier, plus fees for litigating entitlement to fees, is sufficient. A multiplier for litigating fees on fees is excessive and can only lead to outrageously inflated awards like the one here, where a simple complaint is transformed into an award of over three-quarters of a million dollars.
The majority today goes further than this court has ever gone before— indeed, so far as I can tell, further than any other court has ever gone—in permitting plaintiffs to win large attorney fee awards. I cannot agree. Lest California truly become a mecca for plaintiffs and plaintiffs’ attorneys throughout the country, we need to be at least somewhat in step with the rest of the country.
DaimlerChrysler Corporation (DaimlerChrysler) incorrectly marketed its 1998 and 1999 Dakota R/T trucks as having a 6,400-pound towing capacity when they actually could tow only 2,000 pounds. The error occurred because the Dakota R/T was a sporty version of an existing truck model, which could tow 6,400 pounds. However, to obtain a sporty design, DaimlerChrysler lowered the suspension on the Dakota R/T, thus reducing its towing capacity. During these two .years, DaimlerChrysler sold or leased fewer than 7,000 of the Dakota R/T’s nationwide, including fewer than 1,000 in California.
DaimlerChrysler became aware of the mistake by early 1999. By February 1999, it had set up a response team to address the problem. By June 1999, DaimlerChrysler had replaced the incorrect marketing materials, owners manuals, and engine and door labels for not-yet-sold Dakota R/T’s. DaimlerChrysler had also notified existing buyers of the error, told them not to attempt to tow more than 2,000 pounds, and provided them with the same modified materials. It told buyers who wanted to tow more than 2,000 pounds they could do so only if their Dakota R/T was modified with a trailer hitch costing $300. DaimlerChrysler also began to address remedial measures for customers who had bought or leased their Dakota R/T’s under the incorrect marketing program. Many R/T buyers never intended to tow more than 2,000 pounds. When informed by DaimlerChrysler of the error, most of those customers were satisfied with DaimlerChrysler’s offers of cash and merchandise. Initially, DaimlerChrysler offered buyers who had bought the hitches refunds of the $300 cost. By the summer 1999, DaimlerChrysler authorized dealers to repurchase or replace Dakota R/T’s on a case-by-case basis for customers who demanded such a remedy.
On July 29, 1999, the Santa Cruz County District Attorney contacted DaimlerChrysler about the problem, threatened legal action, and requested DaimlerChrysler’s input before acting. On August 10, 1999, the California Attorney General notified DaimlerChrysler that it had joined the Santa Cruz County District Attorney. The public agencies requested a response by the end of August 1999.
On August 23, 1999, plaintiffs filed the seven-page complaint underlying this appeal. They alleged that they had bought 1999 Dakota R/T’s from various DaimlerChrysler dealers. One of the plaintiffs lived and bought his truck in California. Plaintiffs alleged a single cause of action for breach of express warranty based on the mistake regarding the trucks’ towing capacity. They alleged that DaimlerChrysler acknowledged the error by letter to all purchasers dated June 16, 1999. They alleged that they had previously notified DaimlerChrysler of their trucks’ failure to comply with the warranted
The day the lawsuit was filed, the Detroit News contacted DaimlerChrysler’s legal counsel about the lawsuit. DaimlerChrysler’s counsel claimed DaimlerChrysler had responded appropriately to the marketing error, including offering buybacks to customers who requested them. Plaintiffs faxed their complaint to DaimlerChrysler the same day. The next day, August 24, 1999, DaimlerChrysler’s employee newsletter ran an article on the plaintiffs’ case. DaimlerChrysler’s response team met throughout August 1999. The team knew about both public agency inquiries and the response deadline. DaimlerChrysler wrote to the public agencies that its internal approval process prohibited a response by August 31, but promised a response by September 8, 1999. On September 10, 1999, DaimlerChrysler informed all buyers of Dakota R/T’s that, among other options, DaimlerChrysler would repurchase or assist in replacing their 1998 or 1999 Dakota R/T’s. Evidence showed that the response team was aware of plaintiffs’ lawsuit before September 10, 1999.
DaimlerChrysler demurred to the complaint. Plaintiffs filed an amended complaint, acknowledging DaimlerChrysler’s offer of, among other remedies, repurchase or replacement of the trucks for all previous buyers. The trial court sustained the demurrer without leave to amend and dismissed the case as moot because DaimlerChrysler had already offered all purchasers the relief plaintiffs sought.
The public agency investigation continued. That investigation revealed that some brochures containing the error were distributed as late as August 1999. In late 2000, DaimlerChrysler settled the public agency investigation by paying a $75,000 fine and agreeing to continue to assure that the marketing error did not reoccur.
Although the court dismissed plaintiffs’ case, the parties continued to litigate plaintiffs’ entitlement to attorney fees. As the Court of Appeal described it, “Over a year of hotly-contested discovery and other motions occurred to clarify the facts described above.” The trial court held three contested hearings on the fee request. On October 18, 2000, the court held a lengthy evidentiary hearing and made factual findings rejecting DaimlerChrysler’s claim that it had at least decided to offer all buyers repurchase or buybacks before plaintiffs filed their case. The court found
The court found the “lodestar” fee amount (i.e., the number of hours of work multiplied by a reasonable hourly compensation; see Ketchum v. Moses (2001)
DaimlerChrysler appealed limited to the question of attorney fees. The Court of Appeal affirmed the judgment, and we granted DaimlerChrysler’s petition for review.
II. Discussion
A. California should not adopt the catalyst theory.
“California follows what is commonly referred to as the American rule, which provides that each party to a lawsuit must ordinarily pay his own attorney fees. [Citations.] The Legislature codified the American rule in 1872 when it enacted Code of Civil Procedure section 1021, which states in pertinent part that ‘Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties. . . .’ ” (Trope v. Katz (1995)
Code of Civil Procedure section 1021.5, enacted in 1977, provides an exception to this American rule. As relevant, it states that, “[u]pon 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
The issue here is what it takes to be a “successful” or “prevailing” party within the meaning of these statutes. (I agree with the majority that these terms are synonymous for these purposes.) (Maj. opn., ante, at p. 570.) Although plaintiffs did not obtain any judicial ruling in their favor, they claim entitlement to attorney fees as the successful party because their lawsuit was a “catalyst” that caused DaimlerChrysler to offer the relief they sought. We have never awarded attorney fees predicated on the catalyst theory, but we have discussed it. As we explained in Westside Community for Independent Living, Inc. v. Obledo (1983)
Although, as we explained in Westside Community, supra,
The high court began its analysis by noting that in the United States parties ordinarily must bear their own attorney fees, but Congress has authorized the award of such fees to the “prevailing party” in numerous statutes. (Buckhannon, supra, 532 U.S. at pp. 602-603.) “In designating those parties eligible for an award of litigation costs, Congress employed the term ‘prevailing party,’ a legal term of art. Black’s Law Dictionary 1145 (7th ed. 1999) defines ‘prevailing party’ as ‘[a] party in whose favor a judgment is rendered, regardless of the amount of damages awarded <in certain cases, the court will award attorney’s fees to the prevailing partyx—Also termed successful party.’ This view that a ‘prevailing party’ is one who has been awarded some relief by the court can be distilled from our prior cases.” (Id. at p. 603.) “In addition to judgments on the merits, we have held that settlement agreements enforced through a consent decree may serve as the basis for an award of attorney’s fees. [Citation.] Although a consent decree does not always include an admission of liability by the defendant [citation], it nonetheless is a court-ordered ‘chang[e] [in] the legal relationship between [the plaintiff] and the defendant.’ [Citations.] These decisions, taken together,
The court recognized that some of its cases contain dicta supporting the catalyst theory but noted that its holdings have never applied it; its cases awarding attorney fees involved a judgment on the merits or at least a consent decree. (Buckhannon, supra, 532 U.S. at pp. 603-604 & fns. 5, 7.) It concluded that “the ‘catalyst theory’ falls on the other side of the line from these examples. It allows an award where there is no judicially sanctioned change in the legal relationship of the parties. ... A defendant’s voluntary change in conduct, although perhaps accomplishing what the plaintiff sought to achieve by the lawsuit, lacks the necessary judicial imprimatur on the change. Our precedents thus counsel against holding that the term ‘prevailing party’ authorizes an award of attorney’s fees without a corresponding alteration in the legal relationship of the parties.” (Id. at p. 605.) In response to the dissent’s suggestion that it suffices if the plaintiff shows that the lawsuit stated a “colorable” and not “groundless” claim (id. at p. 627 (dis. opn. of Ginsburg, J.)), the court disagreed “that the term ‘prevailing party’ authorizes federal courts to award attorney’s fees to a plaintiff who, by simply filing a nonftivolous but nonetheless potentially meritless lawsuit (it will never be determined), has reached the ‘sought-after destination’ without obtaining any judicial relief.” (Id. at p. 606.)
In response to the policy arguments that the catalyst theory was necessary to prevent defendants generally from unilaterally mooting actions before judgment to avoid paying attorney fees and to not deter those plaintiffs with meritorious but expensive cases from bringing suit, the court cited contrary policy arguments. It noted “the disincentive that the ‘catalyst theory’ may have upon a defendant’s decision to voluntarily change its conduct, conduct that may not be illegal.” (Buckhannon, supra,
I agree with the majority that we are not required to follow the high court’s interpretation of these federal statutes in interpreting California’s statutes. (Maj. opn., ante, at p. 568.) But federal decisions have persuasive value. “Since both this court and the Legislature have relied on federal cases in framing the private attorney general theory, we regard the federal precedent in this area as persuasive.” (Maria P. v. Riles (1987)
In the companion case of Tipton-Whittingham v. City of Los Angeles (2004)
The majority says we “endorsed” the catalyst theory in Westside Community, supra,
In Buckhannon, supra,
But voluntary action is not compelled action. Without some judicially enforceable order, there is no way to know whether the action was voluntary or compelled. Persons and entities act voluntarily in response to a lawsuit for many reasons, some unrelated to the lawsuit’s merits: to avoid the expense of litigation or bad publicity, to foster good public relations, to make an improvement or take other useful action not required by law, perhaps simply to put the litigation behind and move on. The pressure to yield voluntarily to a lawsuit’s demands, even if not legally required, is exacerbated by the circumstance that historically attorney fee awards have not gone in both directions. Although the statutes do not prohibit awards to prevailing defendants, the private attorney general doctrine has generally resulted only in attorney fee awards to the prevailing plaintiffs and not also to the prevailing defendants. Thus, unlike the plaintiffs who can hope to be reimbursed for their attorney fees, the defendants generally cannot expect to receive compensation from the plaintiffs for their attorney fees. Those defendants who choose to fight a lawsuit lose even when they win; they must pay their attorneys themselves, which can be very expensive even for the victor. This circumstance places the defendants under great pressure to settle a lawsuit, even if unmeritorious, as soon as possible.
The majority, as well as plaintiffs and supporting amici curiae, argue that not adopting the catalyst theory might discourage lawsuits like this one, and lawsuits like this one are so beneficial to society that courts must not do anything that might discourage them. They- claim the catalyst theory is necessary to provide plaintiffs a full incentive to undertake the cost of public interest litigation. (E.g., maj. opn., ante, at p. 574.) I agree that the private attorney general doctrine serves a valuable purpose. (Woodland Hills Residents Assn., Inc. v. City Council (1979)
In Tipton-Whittingham, supra,
The second of these requirements forces a court that has entered no judicial ruling in the plaintiff’s favor (otherwise the catalyst theory would not come into play) to make some sort of ruling regarding the merits of the underlying lawsuit. It is not clear to me exactly what the majority means in this regard, or how the trial court is supposed to go about making this determination, but here, after more than a year of litigating the catalyst theory, no court has yet made the ruling the majority demands. Future courts will have to struggle mightily to decide how to determine whether a moot lawsuit had merit when filed. Finally, the majority requires the plaintiffs to establish that they attempted to settle the litigation without a lawsuit (a requirement that, as I explain below, has long existed). This, too, is a factual question of some complexity, as today’s remand for yet more litigation demonstrates.
Thus, permitting attorney fees on a catalyst theory, with no objective manifestation, in the form of judicial action, that the lawsuit vindicated a legal right, may, as here, “ ‘result in a second major litigation.’ ” (Buckhannon, supra,
I can perceive of few things less useful to society than generating great amounts of attorney fees litigating the catalyst theory. In another attorney fee case, we stated that “scarce judicial resources should not be used to try the merits of voluntarily dismissed actions merely to determine which party would or should have prevailed had the action not been dismissed.” (Santisas v. Goodin (1998)
The majority argues the catalyst theory is needed to eliminate risk in public interest litigation. (Maj. opn., ante, at p. 574.) But there will always be risk. Indeed, one of the requirements for any plaintiff seeking attorney fees is that the plaintiff must have attempted to settle the dispute without litigation. (Grimsley v. Board of Supervisors (1985)
The private attorney general doctrine inherently contains both a risk and a cost. A line must be drawn somewhere to balance this risk and this cost. I would hold that the statute here draws the necessary line by requiring some kind of a judicial imprimatur before a plaintiff can be considered to be a successful or prevailing party that enforced an important public right.
The potential for awards of this kind can also greatly increase the possibility of undue pressure to settle meritless claims. If DaimlerChrysler had simply paid the requested fees at the outset rather than litigate the question, it could have spared itself most of the award (as well as its own attorney fees, which are no doubt substantial). But surely plaintiffs’ entitlement to attorney fees was, and is, not so clear that DaimlerChrysler could not, and cannot, reasonably litigate it. The threat of a huge award of attorney fees generated while litigating the catalyst theory permits the plaintiffs to extort attorney fees from businesses no matter how weak their entitlement to them may be. With this case as a warning, future defendants may surrender to attorney fee demands, no matter how unmeritorious, rather than risk a substantial award of attorney fees down the road.
Indeed, the private attorney general doctrine, even without the catalyst theory and multipliers on fees on fees (see pt. II.C, post), gives the plaintiffs a great advantage in settlement negotiations. The defendants generally have to pay their own attorney fees. Thus, those defendants who litigate rather than sell out as cheaply as possible as soon as possible face not the risk, but the near certainty, that they will incur attorney fees they will not recover. They also risk incurring a potentially substantial award for the opponents’ attorney fees. The plaintiffs, by contrast, merely face the possibility they will not be compensated for their own attorney fees; they run little risk of having to pay their opponents’ attorney fees. And to compensate for even this possibility, the private attorney general doctrine permits courts to add a multiplier to the plaintiffs’ attorney fees, which can be very rewarding, as this case illustrates. The plaintiffs thus have relatively little incentive to settle, defendants a very strong need to settle. I see no need for the catalyst theory to provide yet more incentive to plaintiffs.
For all of these reasons, I would not adopt the catalyst theory as a basis for awarding attorney fees. I would conclude that before a party can be considered to be a successful or prevailing party under Code of Civil Procedure section 1021.5 or Government Code section 12965, subdivision (b), there must be some court-ordered change in the legal relationship between the plaintiff and the defendant in the plaintiff’s favor.
Even accepting the majority’s catalyst theory, plaintiffs have failed to establish entitlement to attorney fees for several reasons.
For any plaintiff (including those who actually win their lawsuit) to receive attorney fees, the action must have “resulted in the enforcement of an important right affecting the public interest. . . .” (Code Civ. Proc., § 1021.5.) “A decision which has as its primary effect the vindication of the litigant’s personal rights is not one which brings into play the attorney fees provisions of [Code of Civil Procedure] section 1021.5.” (In re Head (1986)
In reaching the opposite conclusion, the trial court and the majority of this court claim that the lawsuit “implicated an issue of public safety, and that the lawsuit benefited thousands of consumers and potentially thousands more by acting as a deterrent to discourage lax responses to known safety hazards.” (Maj. opn., ante, at p. 578.) Neither the trial court nor the majority gets more specific, but they must be referring to the incorrect advertising, not any failure to fully compensate the consumers for their damages; whether the consumers were made whole does not implicate public safety. I agree there is some evidence that DaimlerChrysler’s mistake regarding the towing capacity implicated public safety at one time. (See id. at p. 561 [“The reduced towing capacity was a potential risk factor”].) I also agree that the public agency investigation revealed that brochures containing the mistake were distributed as late as August 1999. (Ibid.) But entirely missing is any relationship between public safety concerns and this lawsuit. The plaintiffs expressly alleged that in June 1999, DaimlerChrysler admitted its error in a letter sent to owners of the affected trucks. They alleged nothing regarding any continuing misrepresentations or any other public safety concerns, whether in the past or present. The only remedies the lawsuit sought were individual damages and attorney fees. No evidence whatever supports the conclusion that this lawsuit affected any public safety concerns. All that this lawsuit implicated was the truck owners’ parochial financial interests. Maximizing plaintiffs’ pecuniary gain does nothing to enhance public safety.
In trying to distinguish this lawsuit from the public agency investigation, and thus respond to DaimlerChrysler’s argument that this was an unnecessary “tagalong” lawsuit, the trial court said that the public agencies “were only
The trial court also said that the Santa Cruz County District Attorney and the Attorney General “had only made an inquiry and had not commenced any proceeding when plaintiffs filed this action.” But the private attorney general doctrine should not reward someone merely for winning the race to the courthouse, especially given the long-standing requirement that the plaintiff must have attempted to settle the matter before filing the lawsuit, which the public agencies were doing.
The trial court and majority also suggest the attorney fee award was appropriate because this action served as a deterrent to others who might otherwise have a lax response to safety concerns. This suggestion fails for two reasons, one legal, one factual. First, “Carried to its logical conclusion, the reasoning adopted by the trial court and espoused by plaintiff would make the private attorney general doctrine applicable in every case in which a plaintiff successfully sued a public agency [or, as here, a large business] for some wrongful conduct, because every such lawsuit would communicate a message to the losing party. Such an expansive reading of the statutory requirement is untenable.” (Flannery v. California Highway Patrol (1998)
In addition to erroneously seeking and obtaining credit for what the public agencies did, plaintiffs have failed to satisfy two other requirements: (1) they have failed to show that the lawsuit had any merit; and (2) they have failed to show that they reasonably attempted to settle the matter short of litigation.
I agree that, because the majority adopts the catalyst theory for the first time today, it has just invented some of the rules—in particular, the rule that a court that has never ruled on the merits should do so as part of the attorney fee litigation. Accordingly, to some degree, the limitations are new. But one critical requirement—that plaintiffs show the lawsuit was actually necessary—is not new. The majority tries to obfuscate this circumstance by saying the “Attorney General proposes” this rule. (Maj. opn., ante, at p. 577.) It hopes, no doubt, that the reader will infer that the Attorney General is proposing something new. But the Attorney General is not proposing something new. Rather, he is merely citing a requirement that has long existed. “[Attorney fees under Code of Civil Procedure section 1021.5, will not be awarded unless the plaintiff seeking such fees had reasonably endeavored to enforce the ‘important right affecting the public interest,’ without litigation and its attendant expense(Grimsley v. Board of Supervisors, supra,
The court will also have to determine whether plaintiffs can show that they attempted to settle the matter short of litigation. Because at least waiting until DaimlerChrysler had responded to the public agencies’ inquiry before filing a complaint would have been eminently reasonable, plaintiffs will not be able to make this showing, which is no doubt why they have not yet tried to do so despite the long-standing existence of Grimsley v. Board of Supervisors, supra,
I can only hope that future courts apply the catalyst theory with more care than the majority does its own creation.
C. Plaintiffs should not receive a multiplier for litigating fees on fees.
The majority also holds that a plaintiff may recover, as attorney fees, not only its fees incurred prosecuting the underlying litigation, with a multiplier, and its fees incurred litigating its entitlement to attorney fees (i.e., fees on fees), but also a multiplier on fees on fees. I appreciate the majority’s attempt to limit the size of such multipliers. The majority’s efforts might help reduce the instances of the tail wagging the dog like here, where the fee for litigating fees on fees is nine times greater than the fee for litigating the underlying lawsuit. But I would hold that a multiplier is never appropriate for litigating fees on fees. The majority disagrees with courts from other states that have considered this question and, tellingly, cites no out-of-state cases
Permitting this second multiplier further stacks settlement leverage in the plaintiffs’ favor. Not only must a defendant be concerned about paying its own attorney fees, and about having to pay for the plaintiffs’ attorney fees incurred in the underlying litigation, with a potential multiplier, and about having to pay attorney fees the plaintiff incurred in seeking fees, it must also worry about paying a multiplier on that amount. All this greatly increases the pressure on the defendants to buy their way out of lawsuits as cheaply as possible no matter how meritless they may be.
I must also comment on the irony, no doubt unintended, of the majority’s statements that a multiplier often takes into account the attorney’s “exceptional skill,” and that litigating fees on fees “is for the most part simpler than litigation on the merits.” (Maj. opn., ante, at p. 582.) Plaintiffs exhibited no exceptional skill in litigating the underlying lawsuit. Because DaimlerChrysler had long since voluntarily informed plaintiffs of its mistake, plaintiffs had to undertake little or no investigation. Plaintiffs’ attorneys merely filed a simple seven-page complaint alleging a single cause of action and containing largely boilerplate language. Ironically, these attorneys’ best lawyering came when litigating their entitlement to attorney fees, including their ability to convince the trial court both to find that their action was distinct from the public agency investigation and to credit them with what the public agencies had accomplished. Although I hesitate to suggest this lest the court on remand take, me seriously, in a perverse way, under the majority’s analysis, plaintiffs’ effort while litigating their entitlement to fees might be entitled to a larger multiplier than their effort regarding the underlying lawsuit.
Thus is the topsy-turvy world of catalyst theory and fees plus multipliers plus fees on fees plus more multipliers for fees on fees.
III. Conclusion
At a time when Californians are increasingly concerned about extortionate lawsuits against businesses, large and small, and worried that the legal climate in California is so unfriendly to businesses that many are leaving the
Because the majority does not do so, I dissent. I would reverse the judgment of the Court of Appeal.
Baxter, J., and Brown, J., concurred.
On January 12, 2005, the opinion was modified to read as printed above.
In its entirety, Code of Civil Procedure section 1021.5 provides today: “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, or of enforcement by one public entity against another public entity, 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. With respect to actions involving public entities, this section applies to allowances against, but not in favor of, public entities, and no claim shall be required to be filed therefor, unless one or more successful parties and one or more opposing parties are public entities, in which case no claim shall be required to be filed therefor under Part 3 (commencing with Section 900) of Division 3.6 of Title 1 of the Government Code.
“Attorneys’ fees awarded to a public entity pursuant to this section shall not be increased or decreased by a multiplier based upon extrinsic circumstances, as discussed in Serrano v. Priest [(1977)]20 Cal.3d 25 , 49 [141 Cal.Rptr. 315 ,569 P.2d 1303 ].”
The Fourth Circuit adopted this dissenting opinion after in bank review. (S-l and S-2 v. State Bd. of Educ. of N.C. (4th Cir. 1994)
The majority suggests that Santisas v. Goodin, supra,
The majority says I question the rule of Beasley v. Wells Fargo Bank (1991)
The majority also accuses me of “reweighing and recharacterizing]” the evidence. (Maj. opn., ante, at p. 578, fn. 9.) However, no evidence exists that this lawsuit implicated public safety that can be reweighed or recharacterized. The majority has not even attempted to identify any such evidence. It merely refers the reader to unspecified “facts reviewed in the first part of this opinion.” (Id. at p. 578.) But the majority’s factual recitation shows that the public agencies, not plaintiffs, addressed public safety concerns. (See id. at p. 562 [the “public agency investigation revealed that brochures misrepresenting the trucks’ towing capacity were still being distributed as of August 1999”].)
Indeed, as noted, the trial court awarded plaintiffs attorney fees in part because they filed their lawsuit while the public agencies were trying to settle the matter short of litigation.
On November 2, 2004, for example, the voters approved Proposition 64, which places limitations on private enforcement of California’s unfair competition law. The supporting ballot argument urged a yes vote to “protect small businesses from frivolous [shakedown] lawsuits” that “make businesses want to move to other states where lawyers don’t have a legal extortion loophole. When businesses leave, taxpayers who remain pick up the burden.” (Ballot Pamp., General Elec. (Nov. 2, 2004) argument in favor of Prop. 64, p. 40.)