On May 4, 2015, the California Supreme Court unanimously decided a case that will be a game-changer for lawsuits brought under California’s Fair Employment and Housing Act (FEHA). In Williams v. Chino Valley Independent Fire District, the Court addressed the issue of when losing FEHA plaintiffs may be required to pay their opponents’ case costs. The Court held that a losing plaintiff may be ordered to pay a prevailing defendant’s costs only if the “court finds the action was objectively without foundation when brought, or the plaintiff continued to litigate after it clearly became so.”
Williams was a firefighter who sued his employer for disability discrimination in violation of FEHA. Williams lost the case on a summary judgment motion. The trial court then awarded the employer-defendant costs totaling $5,368.88. Williams appealed and the Court of Appeal affirmed.
On review, the California Supreme Court explored two issues:
Is a defendant prevailing in a FEHA action entitled to its ordinary court costs as a matter of right . . . or only in the discretion of the trial court . . . ? And, if the trial court does have discretion, must that discretion be exercised according to the rule applicable to attorney fee awards in certain federal civil rights actions under Christiansburg Garment Co. v. EEOC (1978) 434 U.S. 412 (Christiansburg), according to which a prevailing defendant receives its attorney fees only if the plaintiff‘s action was objectively groundless?
The California Supreme Court held that the FEHA allows the court discretion in awarding costs. It then held that:
[T]he Christiansburg standard applies to discretionary awards of both attorney fees and costs to prevailing FEHA parties under Government Code section 12965(b). To reiterate, under that standard a prevailing plaintiff should ordinarily receive his or her costs and attorney fees unless special circumstances would render such an award unjust. (Citation.) A prevailing defendant, however, should not be awarded fees and costs unless the court finds the action was objectively without foundation when brought, or the plaintiff continued to litigate after it clearly became so.
Why is this case so important?
FEHA is the primary civil rights law that protects California workers. It prohibits discrimination, harassment, and retaliation against workers based on the following protected categories: race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status. It also requires that reasonable accommodations be made for pregnant and disabled workers.
The default rule in civil litigation is that each side must bear its own attorneys’ fees, but the prevailing party can recover its case costs from the losing party. This is codified by Code of Civil Procedure section 1032(b), which provides that: “Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.”
Congress, California’s legislature, and state and federal courts have long recognized, however, that employees with civil rights cases are unlikely to be able to afford to pay lawyers by the hour and may have a difficult time finding lawyers to represent them on a contingency basis if there is no award of attorneys’ fees for winning the case. It can take hundreds—and sometimes thousands—of hours to litigate a case through to verdict. Thus, these civil rights statutes modify the default rule and provide that a “prevailing party” can recover attorneys’ fees and costs. The FEHA, in Government Code Section 12965(b), states that: “In civil actions brought under this section, the court, in its discretion, may award to the prevailing party, including the department, reasonable attorney’s fees and costs, including expert witness fees.”
Courts, including the United States Supreme Court in Christiansburg, have interpreted “prevailing party” for the purpose of fee-shifting in civil rights cases in an asymmetric manner that supports righteous civil rights cases: a “prevailing plaintiff” is normally entitled to attorneys’ fees and costs for winning the case. In contrast, a “prevailing defendant” is only entitled to attorneys’ fees if the action was “frivolous, unreasonable, or without foundation.”
However, until the Williams decision definitely resolved the issue, California courts were split on whether prevailing FEHA defendants were automatically entitled to recover their court costs or whether the Christiansburg standard applied to a costs award. Many courts awarded prevailing defendants their costs as a matter of course, using their discretion only to reduce that amount if merited by the plaintiff’s financial situation or other circumstances.
Losing a case could be financially devastating to a plaintiff, as employers often sought tens or even hundreds of thousands of dollars in costs and pushed to collect on them. Consider, for example, the Ellen Pao v. Kleiner Perkins case, in which the prevailing defendant has sought nearly $1 million in costs. Over the years, many employees with righteous cases have been deterred from filing lawsuits out of fear that they would be bankrupted if they lost their case and were faced with a judgment for defense costs.
In addition, the risk of having to pay a defendant’s costs created incentives to settle. It was not uncommon for employers to offer to settle (what they perceived to be) weak cases for a waiver of costs (meaning, the defendant agreed not to go after the plaintiff for costs). Employees now have far less pressure to settle a case that they believe in.
California employees who are suing for discrimination, harassment, or retaliation under FEHA no longer have to fear that if they lose their case, their employer-defendant will be able to recover case costs as a matter of right. This lifts a huge weight off of plaintiffs, who can now pursue justice without a fear that they will be bankrupted if they lose.