182 | 2023 Cal-Peculiarities ©2023 Seyfarth Shaw LLP www.seyfarth.com 6.13 Difficulty in Obtaining Defendant’s Attorney Fees and Even Costs 6.13.1 Fees Under the federal law that most states follow, a discrimination plaintiff who loses a claim is liable for the defendant’s attorney fees if the action was frivolous, unreasonable, or without foundation, even if not maintained in subjective bad faith.294 Applying this standard, California courts have denied attorney fees to prevailing defendants in FEHA cases, even when the plaintiff has rejected the defendant’s more favorable offer of judgment.295 Legislation effective in 2019 clarifies the legislative intent to deny both attorney fees and costs to offer-making FEHA defendants—even if they make an offer of judgment and win, and even if the plaintiff wins but fails to beat the offer—unless the lawsuit was frivolous, unreasonable, or groundless.296 And even those prevailing California defendants who can show that a plaintiff’s FEHA claim was frivolous may face still further obstacles to the recovery of attorney fees. First, the Court of Appeal has held that awarding attorney fees to a prevailing defendant was an abuse of discretion absent proof regarding the plaintiff’s ability to pay for them: “The trial court should also make findings as to the plaintiff’s ability to pay attorney fees, and how large the award should be in light of the plaintiff’s financial situation.”297 Second, in a FEHA decision that affirmed summary judgment for the two defendants—the plaintiff’s employer and her supervisor—the Court of Appeal affirmed the trial court’s decision to award only $1.00 in attorney fees to the prevailing individual defendant, even though the suit against her was “frivolous and vexatious.”298 The Court of Appeal upheld the decision to give only a nominal fee award because any fee award would benefit the corporate employer, which had paid for the individual’s defense, and because the suit against the employer itself, while lacking merit, was not frivolous. In a more welcome development, a Court of Appeal decision upheld an order requiring the plaintiff to pay a prevailing FEHA defendant $100,000 in attorney fees, where (1) the trial court made express oral findings when it ruled on defendant’s motion, (2) the trial court properly considered plaintiff’s financial condition, and (3) the trial court did not abuse its discretion in finding that the action was “unreasonable, frivolous, meritless, or vexatious.”299 6.13.2 Costs Under federal and California law, the prevailing party in a lawsuit generally is entitled to recover its costs of suit (filing fees, court reporter fees, etc.). But California has instituted a double standard to favor FEHA plaintiffs. The Supreme Court held that prevailing defendants in FEHA cases are not automatically entitled to their costs.300 Rather, prevailing FEHA defendants seeking costs must show that the action was objectively without foundation when brought, or that the plaintiff continued to litigate after the lack of foundation had become clear.301 That result follows even when a FEHA defendant made a pre-trial offer—rejected by the plaintiff—and then prevailed at trial: the defendant cannot recover its post-offer costs unless the FEHA plaintiff brought or maintained a frivolous action.302 The same kind of double standard has extended to awards of expert witness fees in FEHA cases, even where the defendant has made an offer of judgment that was more generous than what the plaintiff achieved in a verdict, and thus ordinarily would be entitled to recover its expert witness fees (see § 5.16.) More generally, in 2021, the California Supreme Court held that “[a]n appellate court may not award costs or fees on appeal to a prevailing FEHA defendant without first determining that the plaintiff’s action was frivolous, unreasonable, or groundless when brought, or that the plaintiff continued to litigate after it clearly became so.”303
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