Judge Curtis A. Kin, Case Number: 21STCP03887, Date: 2024-02-01 Tentative Ruling

Petitioner Pacific Auto Recycling Center, Inc. moves for an award of attorney fees in the amount of $557,676.06. For the reasons that follow, the Motion is GRANTED IN PART.

On July 7, 2022, petitioner Pacific Auto Recycling Center, Inc. filed the operative Amended Verified Petition for Writ of Mandate and Complaint for Declaratory Relief (“First Amended Petition” or “FAP”).

On December 6, 2022, the Court (Hon. Mary H. Strobel) overruled respondents California Department of Toxic Substances Control (“DTSC”) and Meredith Williams, in her official capacity as Director of DTSC’s demurrer to the second and third causes of action for traditional writ of mandate and violation of the California Environmental Quality Act (“CEQA”), respectively. The Court stayed the first cause of action for declaratory relief. The Court denied respondents’ motion to strike in part and declined to rule on the remainder based on the stay of the first cause of action.

On June 15, 2023, the Court granted the petition in part with respect to the traditional writ of mandate cause of action. On August 8, 2023, pursuant to petitioner’s request, the Court dismissed the first cause action for declaratory relief.

On September 18, 2023, the Court entered judgment in favor of petitioner. On September 21, 2023, the Court issued a writ of mandate directing respondents to reinstate Official Policy/Procedure #88-6.

As a preliminary matter, respondents argue that a motion for attorney fees is premature because they are appealing the judgment ordering the issuance of the writ of mandate. While any reversal of the judgment would result in the reversal of any award of attorney fees, respondents do not cite any authority indicating that the Court cannot (or should not) rule on the instant motion. Indeed, in the cases cited by respondents, the Courts of Appeal heard the appeal of the judgment granting mandate relief and the appeal of the attorney fee award at the same time. (Save Our Residential Environment v. City of West Hollywood (1992) 9 Cal.App.4th 1745, 1754; City of Sacramento v. State Water Resources Control Bd. (1992) 2 Cal.App.4th 960, 978.) When the merits judgment was reversed, the award of attorney fee award was also reversed. In the interest of resolving the instant proceeding in its entirety, the Court proceeds to rule on the merits of the motion.

Petitioner seeks an award of attorney fees pursuant to Code of Civil Procedure § 1021.5. “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….” (CCP § 1021.5.) “[E]ligibility for section 1021.5 attorney fees is established when ‘(1) plaintiffs’ action “has resulted in the enforcement of an important right affecting the public interest,” (2) “a significant benefit, whether pecuniary or nonpecuniary has been conferred on the general public or a large class of persons” and (3) “the necessity and financial burden of private enforcement are such as to make the award appropriate.”’” (Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1214.)

A party “may be considered successful if they succeed on any significant issue in the litigation that achieves some of the benefit they sought in bringing suit.” (Ebbetts Pass Forest Watch v. Department of Forestry & Fire Protection (2010) 187 Cal.App.4th 376, 382.) In determining whether the issue upon which a party prevailed is significant, “the court must critically analyze the surrounding circumstances of the litigation and pragmatically assess the gains achieved by the action.” (Ibid.)

Here, petitioner succeeded in obtaining a writ directing respondents to reinstate Official Policy/Procedure (“OPP”) #88-6. (Compare FAP Prayer for Relief at ¶ 87 with 9/21/23 Writ of Mandate.) Because petitioner prevailed on a significant issue in the litigation, petitioner is the successful party under section 1021.5. Respondents do not argue otherwise.

“In assessing whether an action has enforced an important right, courts should generally realistically assess the significance of that right in terms of its relationship to the achievement of fundamental legislative goals. As to the benefit, it may be conceptual or doctrinal and need not be actual and concrete; further, the effectuation of a statutory or constitutional purpose may be sufficient ... [However,] [t]he benefit must inure primarily to the public. Thus, the statute directs the judiciary to exercise judgment in attempting to ascertain the ‘strength’ or ‘societal importance’ of the right involved.” (Sandlin v. McLaughlin (2020) 50 Cal.App.5th 805, 829, quoting Choi v. Orange County Great Park Corp. (2009) 175 Cal.App.4th 524, 531, internal quotations and citations omitted.)

The Court found that, although OPP #88-6 was an underground regulation adopted without complying with the requirements of the Administrative Procedure Act (“APA”), it could not be rescinded without complying with APA rulemaking requirements because scrap metal recyclers had relied on OPP #88-6 for more than 30 years. (6/15/23 Ruling at 7-9, citing Morning Star v. State Board of Equalization (2006) 38 Cal.4th 324, 341-42.) Accordingly, OPP #88-6 had to be reinstated pending compliance with APA procedures insofar as DTSC seeks to rescind it. (Id. at 9.)

Petitioner clearly succeeded in enforcing the APA. “Where…the nonpecuniary benefit to the public is the proper enforcement of the law, the successful party must show that the law being enforced furthers a significant policy.” (La Mirada Avenue Neighborhood Assn. of Hollywood v. City of Los Angeles (2018) 22 Cal.App.5th 1149, 1158.) Under the APA, “persons or entities whom a regulation will affect have a voice in its creation” and will have “notice of the law’s requirements so that they can conform their conduct accordingly.” (Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 568-69.) “[P]ublic participation in the regulatory process directs the attention of agency policymakers to the public they serve, thus providing some security against bureaucratic tyranny.” (Id. at 569.)

Respondents do not directly address the “important right” element of a fee award under CCP § 1021.5. The Court finds that, by obtaining a writ of mandate requiring compliance with the APA, petitioner enforced an important right affecting the public interest by ensuring that the public has notice and an opportunity to be heard before a long-standing regulation is rescinded. (See also Gov. Code §§ 11346.2, 11346.3, 11346.5, 11346.8 [setting forth procedures to provide notice of and hearing regarding repeal of regulations].)

“Whether a successful party’s lawsuit confers a ‘significant benefit’ on the general public or a large class of persons is a function of (1) ‘the significance of the benefit,’ and (2) ‘the size of the class receiving [the] benefit.’ [Citation.] In evaluating these factors, courts are to ‘realistic[ally] assess[ ]’ the lawsuit’s ‘gains’ ‘in light of all the pertinent circumstances.’ [Citation.]” (La Mirada, 22 Cal.App.5th at 1158.) “A benefit need not be monetary to be significant. (§ 1021.5 [defining “a significant benefit” as either “pecuniary or nonpecuinary”].) Where, as here, the nonpecuniary benefit to the public is the proper enforcement of the law, the successful party must show that the law being enforced furthers a significant policy. [Citation.]” (La Mirada, 22 Cal.App.5th at 1158.)

“[T]he significant benefit requirement of section 1021.5 requires more than a mere statutory violation.” (Burgess v. Coronado Unified School District (2020) 59 Cal.App.5th 1, 9.) However, a significant benefit can be found “simply from the effectuation of a fundamental constitutional or statutory policy” “from a realistic assessment, in light of all the pertinent circumstances, of the gains which have resulted in a particular case.” (Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 939-40.)

For the reasons stated above with respect to enforcement of an important right, petitioner demonstrates that a significant benefit was conferred on the general public. (La Mirada, 22 Cal.App.5th at 1158 [finding when proper enforcement of law is the public benefit, “the significant benefit and important right requirements of section 1021.5 to some extent dovetail”].)

Respondents argue that petitioner has not established that it has conferred a significant benefit on a large group. Respondents contend that, out of 2,500 metal recycling facilities in California, nine facilities performed the type of metal shredding affected by OPP #88-6 2017. (Opp. at 7:24-27.) Petitioner responds that the report from which DTSC obtained the number of metal shredder facilities did not include up to 101 potential metal shredder facilities or mobile shredding facilities. (Reply at 8:9-12.) Petitioner also responds that metal shredder facilities play a central role in the California metal recycling industry, with DTSC having established that six facilities it surveyed processed over 1.9 million tons of metal in 2014. (Reply at 8:8-25.)

Regardless of the number of facilities affected by the reinstatement of OPP #88-6, the Court-ordered reinstatement of OPP #88-6 confers a significant benefit on the general public. By requiring compliance with the APA before rescinding OPP #88-6, metal shredder facilities will have the opportunity to inform DTSC “about possible unintended consequences” that would result from the rescission of that regulation, such as increased costs that might result from having to comply with hazardous waste disposal requirements. (See Tidewater, 14 Cal.4th at 569.) DTSC would thus be required to consider the impact that such increased costs would have on the viability of metal shredder facilities, which process the recycling of major appliances, vehicles, and other metals that can amount to 1.9 million tons of metal annually. (See Pub. Res. Code § 42170(a), (b); Wetzel Decl. ¶ 3 & Ex. B at Ex. F, p. 58.) Allowing metal recyclers to have their economic concerns heard through compliance with the APA, as opposed to permitting rescission of OPP #88-5 without such concerns being made part of the public debate, mitigates against significant disruption to metal shredder facilities with respect to an issue of critical environmental importance to California – preventing the disposal of recyclable metals in landfills.

Moreover, to the extent that evaluation of the size of the class of persons benefitting from reinstatement of OP #88-6 benefits is required, petitioner persuasively argues that the reinstatement affects more than just metal shredding facilities. People who supply scrap metal and service providers who manage and sell processed metal also benefit from reinstatement of OP #88-6 and continued operation of metal shredder facilities pending compliance with the APA. (Gorsen Decl. ¶ 4; AR 856, 918.)

Petitioner demonstrates that issuance of the writ of mandate conferred a significant benefit on the general public or large class of persons.

“[T]he necessity and financial burden requirement really examines two issues: whether private enforcement was necessary and whether the financial burden of private enforcement warrants subsidizing the successful party’s attorneys.” (Whitley, 50 Cal.4th at 1214.)

Private enforcement was necessary in this case because the petitioner brought the action against the government agency that rescinded OPP #88-6. (See Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 941 [“Inasmuch as the present action proceeded against the only governmental agencies that bear responsibility for the subdivision approval process, the necessity of private, as compared to public, enforcement becomes clear”].)

With respect to whether petitioner’s financial burden in pursuing writ relief warrants a fee award, respondents argue that petitioner has not met its burden of “establishing that its litigation costs transcend its personal interest.” (See Beach Colony II v. California Coastal Com. (1985) 166 Cal.App.3d 106, 113.) While petitioner may have a personal interest in seeking to minimize its operating costs, “the purpose of section 1021.5 is not to compensate with attorney fees only those litigants who have altruistic or lofty motives, but rather all litigants and attorneys who step forward to engage in public interest litigation when there are insufficient financial incentives to justify the litigation in economic terms.” (Whitley, 50 Cal.4th at 1211.)

Here, petitioner did not obtain any financial relief from the judgment. (See id. at 1217 [“As a logical matter, a strong nonfinancial motivation does not change or alleviate the ‘financial burden’ that a litigant bears”].) Insofar as petitioner has or ultimately will benefit financially from the reinstatement of OPP #88-6, that benefit is entirely speculative. More to the point, the writ of mandate affects not just petitioner, but everyone who was affected by DTSC’s rescission of OPP #88-6, including other metal shredder facilities and scrap metal suppliers and sellers. Notably, petitioner prevailed on an issue of significant environmental importance that a trade association for scrap metal recyclers lost. (Gorsen Decl. ¶¶ 5, 6.) Simply put, petitioner vindicated the right of all metal shredder facilities to have their concerns heard before rescission of OPP #88-6—a right that transcends petitioner’s personal interests.

Accordingly, the Court finds that the necessity and financial burden of private enforcement by petitioner warrants a fee award under CCP § 1021.5.

Petitioner moves for $557,676.06 in fees. The amount is based on the lodestar and does not include a multiplier.

With respect to the fees incurred in obtaining a favorable judgment, petitioner seeks a total of $557,676.06 in fees, as calculated by litigation stage:

Litigation Stage	Total Fees Claimed
Background/Intake	$8,072.00
Writ Petition	$73,904.50
Amended Writ Petition	$56,480.00
Demurrer	$118,818.00
Writ Proceeding	$203,877.50
After Writ Ruling through Judgment	$26,896.56
Admin Record	$33,506.00
Other Case Admin	$36,121.50
TOTAL:	$557,676.06

Petitioner claims attorney hourly rates ranging from $650 to $1,525 and paralegal hourly rates from $345 to $515. (Id. ¶¶ 18, 45.) The Court finds the asserted hourly rates are reasonable. However, recognizing the relatively high hourly rates reflect a certain level of skill and expertise, the Court takes into account whether the requested hours spent litigating the case are reasonable when calculating the appropriate Lodestar figure below.

With respect to the “Background/Intake” stage, the Court finds the $8,072.00 claimed is reasonable.

With respect to the $73,904.50 claimed for the “Writ Petition” stage, which includes 30 total attorney and paralegal hours[1] of drafting totaling $23,739.50 and 47.5 hours of research/strategy totaling $50,165.00, this amount is excessive. The initial writ petition is substantially similar to a petition previously filed by the West Coast Chapter, Institute of Scrap Recycling Industries, Inc. (“ISRI”), as evidenced by the comparison of allegations performed by respondents. (Wetzel Decl. ¶¶ 3, 4 & Exs. A-C.) Even accounting for any reduction to overall time that using the ISRI petition may have afforded, 30 hours drafting the petition is excessive. The Court finds that a 20% reduction in fees, from $23,739.50 to $18,991.60 is warranted. Further, 47.5 hours of research/strategy is excessive on its face, especially considering that the initial petition was based on a challenge to emergency rulemaking that ultimately expired after a preliminary injunction was issued in the ISRI proceeding. (FAP ¶¶ 4, 5.) The Court finds a 30% reduction, from $50,165.00 to $35,115.50 is warranted.

With respect to the $56,480.00 claimed for the “Amended Writ Petition” stage, which includes 26.4 hours of drafting totaling $27,090.00 and 29.5 hours of research/strategy totaling $29,390.00, the claimed amount is reasonable. ISRI’s challenge to OPP #88-6 had previously failed on demurrer. (Carpenter Decl. ¶ 37.) The First Amended Petition was the operative petition, and petitioner was entitled to incur fees to ensure that its allegations would withstand any defense.

With respect to the $118,818.00 claimed for the “Demurrer” stage, including 56.9 hours of drafting totaling $59,114.50, 29.7 hours of research/strategy totaling $32,621.00, and 25.6 hours for hearing totaling $27,082.50, this amount is excessive. A total of two partners (42 hours at hourly rates of $1,300 and $1,450 in 2022) and four associates (54.4 hours at hourly rates between $650 and $1,225 in 2022) worked on opposing the demurrer. (Carpenter Decl. at ¶ 18, Table B.) The Court finds the level of staffing on the demurrer to be excessive. (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1320 [“The evidence should allow the court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended”].) Out of the total $111,843.50 claimed for attorney hours, the Court finds that a 25% reduction to $83,882.63 is warranted, thus resulting in an award of $90,857.13 ($83,882.63 attorney fees + $6,974.50 paralegal fees).

With respect to the $203,877.50 claimed for the “Writ Proceeding” stage, including 78.5 hours for the opening brief totaling $87,464.50, 49.3 hours for the reply brief totaling $60,276.00, and 43.9 hours for the hearing totaling $56,137.00, this amount is excessive. Like the demurrer, a total of two partners (58.3 hours at hourly rates of $1,425 and $1,525 in 2023) and four associates (95.7 hours at hourly rates between $700 and $1,300 in 2023) worked on briefing the writ petition. (Carpenter Decl. ¶ 18, Table B.) Due to overstaffing, out of the total $196,301.00 claimed for attorney hours, the Court finds that a 25% reduction to $147,225.75 is warranted, thus resulting in an award of $154,802.25. ($147,225.75 attorney fees + $7,576.50 paralegal fees).

With respect to fees for the “After Writ Ruling through Judgment” stage, petitioner seeks fees for “strategizing and meeting and conferring with DTSC on what to do with the declaratory relief cause of action; preparing a Joint Status Report for the Court; and preparing and filing the proposed judgment and proposed writ.” (Carpenter Decl. ¶ 40.) The Court finds the requested fees of $26,896.56 reasonable.

With respect to the $33,506.00 claimed for the “Admin Record” stage, the Court notes that DTSC, not petitioner, prepared the administrative record. (Wetzel Decl. ¶ 2.) In the reply, petitioner explains that it reviewed the administrative record for completeness, prepared the joint appendix in accordance with Court guidelines, and delegated such work to associates and paralegals. (Reply at 13:3-14.) Even crediting petitioner’s assertions, the 28.4 attorney hours and 9.3 paralegal hours spent on this task was excessive. Out of the total $33,506.00 claimed, a 30% reduction to $23,454.20 is warranted.

With respect to “Other Case Admin,” which includes “standard case administration…time spent on general case strategy and consulting with the client,” respondents raise no specific challenge or argument, and the claimed amount of $36,121.50 appears reasonable on its face.

Respondents also argue that the time spent on its CEQA claim should be excluded from a fee award, as petitioner did not prevail on the CEQA claim. “Courts have discretion to compensate a partially successful plaintiff for time spent on unsuccessful legal theories, provided such time was reasonably incurred.” (Environmental Protection Information Center v. Department of Forestry & Fire Protection (2010) 190 Cal.App.4th 217, 240.) Here, the Court exercises its discretion and declines to exclude any time spent on the CEQA claim. “Attorneys generally must pursue all available legal avenues and theories in pursuit of their clients' objectives; it is impossible, as a practical matter, for an attorney to know in advance whether or not his or her work on a potentially meritorious legal theory will ultimately prevail.” (Greene v. Dillingham Construction, N.A., Inc. (2002) 101 Cal.App.4th 418, 424, quoting Sokolow v. County of San Mateo (1989) 213 Cal.App.3d 231, 250.)

Based on the foregoing, the Court finds that petitioner is entitled to the lodestar amount of $450,790.74, as follows:

Litigation Stage	Total Fees Awarded
Background/Intake	$8,072.00
Writ Petition	$54,107.10
Amended Writ Petition	$56,480.00
Demurrer	$90,857.13
Writ Proceeding	$154,802.25
After Writ Ruling through Judgment	$26,896.56
Admin Record	$23,454.20
Other Case Admin	$36,121.50
TOTAL:	$450,790.74

With respect to the fees incurred in obtaining fees, petitioner seeks a total of $81,853, including $58,628.00 for 59.1 hours in preparing the fee motion, $6,290.00 in costs, and $23,225.00 for 21 estimated attorney hours in preparing the reply and attending the hearing.

The Court finds that the hours claimed for the fee motion, which contain routine arguments, are excessive. The Court finds that, out of a total of $75,563.00 claimed for attorney hours, a reduction of 75% to $18,890.75 is warranted. Accordingly, petitioner is awarded $25,180.75 for the fee motion ($18,890.75 in fees + $6,290.00 costs).

The motion is GRANTED IN PART. Using the appropriate lodestar approach, and based on the foregoing findings and in view of the totality of the circumstances, the total and reasonable amount of attorney fees incurred for the work performed in connection with the writ petition is $475,971.49 ($450,790.74 lodestar + $25,180.75 fee motion). Such fees are awarded to petitioner Pacific Auto Recycling Center, Inc. and against respondents California Department of Toxic Substances Control and Meredith Williams, in her official capacity as Director of DTSC.

[1] Subsequent reference to hours or fees include both attorney and paralegal hours, unless otherwise indicated.