Excessive Attorney’s Fee Awards in FEHA Cases May Be Rejected Where Plaintiff’s Damages Are Less Than $25,000

Second Quarter 2010Newsletters California Update Employment Law

Where a plaintiff's attorney has "no reasonable basis to anticipate" a damages award in excess of $25,000 in a case brought under the Fair Employment and Housing Act (FEHA), and where the case could have been fairly litigated as a limited civil case, California Code of Civil Procedure Section 1033(a) provides the court with discretion to limit or deny recovery of attorney's fees.

A recent case before the California Supreme Court involved the issue of whether the attorney's fees provisions under FEHA and Section 1033(a) are at odds with one another. The California Supreme Court ultimately determined that there is no conflict between the provisions. Under FEHA, the trial court has discretion to award reasonable attorney's fees and costs to the prevailing party. Generally, this means that absent special circumstances that would make an award of fees unjust, a prevailing plaintiff should ordinarily be awarded attorney's fees in a FEHA action. On the other hand, Section 1033(a) states that "where the prevailing party recovers a judgment that could have been rendered in a limited civil case [less than $25,000]," and such case was not brought as a limited civil case,"[c]osts or any portion of claimed costs shall be as determined by the court in its discretion."

In Chavez v. City of Los Angeles, the jury awarded the plaintiff $11,500 in damages for his FEHA retaliation claim. The plaintiff claimed attorney's fees of $870,935.50. The trial court denied the plaintiff's motion for attorney's fees, based on the discretion afforded the court in Code of Civil Procedure Section 1033(a). The Court of Appeal reversed, concluding that Section 1033(a) did not apply to FEHA cases. The Supreme Court evaluated the policies and legislative history behind the two provisions and reversed the appellate court, holding that there is no conflict between the attorney's fees provisions and that 1033(a) does apply to FEHA cases.

In light of Chavez, plaintiffs' attorneys may be less likely to inflate their fees, especially where a low damage award is expected. In settlement negotiations for certain cases, this decision may provide some advantage for employers. Where a plaintiff is not likely to recover more than $25,000 in damages, a plaintiff 's attorney may be deterred from using the threat of a potentially large attorney's fee award as a bargaining chip. In minimal damage cases, if plaintiffs' lawyers believe that their disproportionate fees may be rejected altogether by the court, they may also be more inclined to recommend settlement to their clients.