Judge: Daniel S. Murphy, Case: 19STCV24840, Date: 2023-04-05 Tentative Ruling

Case Number: 19STCV24840    Hearing Date: April 5, 2023    Dept: 32

BACKGROUND

            This action was initiated on July 15, 2019 by Carla Janzen (“Plaintiff”) against the Regents of the University of California and UCLA Medical Center Medical Staff (collectively “Defendants”). The operative complaint is the First Amended Complaint (“FAC”) filed on January 13, 2021. The FAC alleges two causes of action: (1) retaliation in violation of Health and Safety Code section 1278.5; and (2) whistleblower retaliation in violation of Labor Code section 1102.5.

            The matter was tried by the Court from October 20, 2022, to November 1, 2022. On December 16, 2022, the Court issued a statement of decision finding Defendant liable on both causes of action and awarding total damages of $150,000. Judgment was entered accordingly on February 15, 2023.

            On January 20, 2023, Plaintiff filed the instant motion for attorneys’ fees on the grounds that she is the prevailing party with a net monetary recovery.    

LEGAL STANDARD

“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.” (Code Civ. Proc., § 1032(b).) A “prevailing party” includes “the party with a net monetary recovery . . . .” (Id., subd. (a)(4).) Allowable costs include attorney’s fees when authorized by contract, statute, or law. (Id., § 1033.5(a)(10).)  

The lodestar method for calculating attorney fees applies to any statutory attorney fees award, unless the statute authorizing the award provides for another method of calculation. (Glaviano v. Sacramento City Unified School Dist. (2018) 22 Cal.App.5th 744, 750-751.) “Under the lodestar method, the trial court must first determine the lodestar figure—the reasonable hours spent multiplied by the reasonable hourly rate—based on a careful compilation of the time spent and reasonable hourly compensation of each attorney involved in the presentation of the case.” (Id. at p. 751.) The trial court has broad authority to determine the amount of a reasonable fee. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.)

DISCUSSION

I. Health and Safety Code Section 1278.5

            Defendant argues that “Plaintiff’s recovery is limited to fees accrued after January 13, 2021, the date she filed the FAC to include a cause of action for retaliation under Labor Code § 1102.5, because only Labor Code § 1102.5, not Health & Safety Code § 1278.5, expressly allows for her recovery of attorneys’ fees.” (Opp. 9:3-6.)

            Under the Health and Safety Code, “[a]n employee who has been discriminated against in employment pursuant to this section shall be entitled to . . . the legal costs associated with pursuing the case, or to any remedy deemed warranted by the court pursuant to this chapter or any other applicable provision of statutory or common law.” (Health & Saf. Code, § 1278.5(g).) Defendant contends that because the statute only mentions “costs,” it excludes attorneys’ fees. However, the statute does not only mention costs. It allows any other remedy the court deems appropriate. Defendant cites no authority for the proposition that “costs” as used in Section 1278.5 excludes attorneys’ fees. Defendant claims that a statute must expressly mention attorneys’ fees in order to permit such an award, as opposed to using the term “costs.” But in the same brief, Defendant acknowledges that “costs” under Code of Civil Procedure section 998 includes attorneys’ fees. (See Opp. at p. 10, fn. 3.) Defendant cannot have it both ways.

            Therefore, the Health and Safety Code does not preclude an award of attorneys’ fees.

II. Code of Civil Procedure Section 998  

            “If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her post offer costs and shall pay the defendant’s costs from the time of the offer.” (Code Civ. Proc., § 998(c)(1).)

            In this case, Defendant made two offers, one for $500,000 and another for $700,000. Plaintiff rejected both and only obtained an award of $150,000 at trial. Therefore, by the plain language and purpose of Section 998, Plaintiff is precluded from recovering post offer costs. However, Plaintiff argues that the offers did not comply with Section 998 because they were ambiguous, and that even if the offers were valid, the cutoff date should be the date that Plaintiff rejected the second offer.

            a. Validity of the Offers

            “The written offer shall include a statement of the offer, containing the terms and conditions of the judgment or award, and a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted.” (Code Civ. Proc., § 998(b).) For a 998 offer to be valid, “the terms and conditions must be sufficiently certain to be capable of valuation.” (Chen v. Interinsurance Exchange of the Automobile Club (2008) 164 Cal.App.4th 117, 121.)

            Plaintiff argues that the 998 offer was invalid because it was made exclusive of Plaintiff’s attorneys’ fees and costs. This argument is unsupported by law. First, Plaintiff cites Linton v. County of Contra Costa (2019) 31 Cal.App.5th 628, 632, extracting the quote: “Indisputably, a section 998 offer that is silent as to attorney fees cannot reasonably be interpreted as excluding such recovery to the prevailing party, provided attorney fees are authorized by statute or contract.” Then, Plaintiff cites Wohlgemuth v. Caterpillar, Inc. (2012) 207 Cal.App.4th 1252, 1259 for the proposition that a section 998 offer “excludes [attorney] fees only if it says so expressly.” The offer here is not silent as to attorneys’ fees. Rather, it expressly states that the offer is exclusive of attorneys’ fees. If anything, this makes the offer unambiguous. Plaintiff cites no authority finding this language in a 998 offer to be problematic, and in fact her own cited caselaw suggests the opposite.

            Plaintiff also complains that the offer does not identify what “reasonable” attorneys’ fees are or apportion such fees. Plaintiff cites no authority supporting her position that this renders a 998 offer impermissibly vague. Instead, the amounts in an offer must be sufficiently “capable of valuation.” (See Chen, supra, 164 Cal.App.4th at p. 121.) Reasonable attorneys’ fees are capable of valuation even if they are not precisely calculated within the offer itself.

            Plaintiff then argues that the offer wrongfully provides that it is not to be construed as an admission of liability. Plaintiff relies on Doran v. North State Grocery, Inc. (2006) 137 Cal.App.4th 484, 490-93, where the court reversed an award of attorneys’ fees under the Unruh Act because Unruh requires a finding of liability for an award of fees, but such finding never occurred because the parties settled. The settlement did not include an admission of liability, and “a compromise settlement entered into under Code of Civil Procedure section 998 does not constitute an adjudication of liability.” (Id. at pp. 491-92.) The plaintiff was also precluded from litigating the defendant’s liability after the fact for purposes of establishing entitlement to attorneys’ fees. (Id. at p. 492.) In effect, by agreeing to settle, the plaintiff precluded herself from recovering attorneys’ fees under Unruh.

            Here, Plaintiff argues that the Labor Code and Health and Safety Code similarly require a finding of liability for an award of attorneys’ fees. According to Plaintiff, since the 998 offer did not admit liability and contains no apportionment of fees, it precludes her from subsequently establishing entitlement to attorneys’ fees and is therefore ambiguous. However, Plaintiff cites no authority applying the logic of Doran to deny attorneys’ fees in a case involving the Labor Code or Health and Safety Code. Nor does this have any bearing on the validity of the offer. The court in Doran acknowledged that the settlement placed the plaintiff in a dilemma but merely held that “Doran was not compelled to accept North State's offer to compromise and, indeed, could have tendered a counteroffer that included an apportionment of the attorney fees or a statement of North State's liability under section 51.” (Doran, supra, 137 Cal.App.4th at p. 492.) Doran did not find the offer invalid because it failed to admit liability or apportion fees, nor does Plaintiff cite any authority for that proposition.

            b. Cutoff Date

            Defendant tendered the first offer on June 24, 2022 and the second on September 14 or 16, 2022. Plaintiff argues that the cutoff date should be October 16, 2022, the date that the second offer was rejected or deemed withdrawn. (See Code Civ. Proc., § 998(b)(2) [“If the offer is not accepted prior to trial or arbitration or within 30 days after it is made, whichever occurs first, it shall be deemed withdrawn . . .”].)

                        1. Whether the First Offer or Second Offer Controls

            First, Plaintiff’s argument relies on the assumption that the cutoff date is based on the second offer and not the first. Plaintiff cites no caselaw addressing this issue. Defendant relies on Martinez v. Brownco Construction Co. (2013) 56 Cal.4th 1014, 1026, which held that “where, as here, a plaintiff serves two unaccepted and unrevoked statutory offers, and the defendant fails to obtain a judgment more favorable than either offer, the trial court retains discretion to order payment of expert witness costs incurred from the date of the first offer.”

            Plaintiff argues that the holding in Martinez is limited to discretionary expert fees. While the parties in Martinez only disputed expert fees, the court’s holding did not rely on the specific type of costs at issue. Rather, the court analyzed generally “whether a later offer extinguishes a previous offer for purposes of section 998's cost-shifting provisions.” (Id. at p. 1017.) The court answered in the negative, at least where both offers are more favorable than the trial verdict. (Id. at p. 1026.) The court reasoned that the purpose of Section 998 “would be more fully promoted if the statutory benefits and burdens were to operate whenever the judgment or award is not more favorable than any of the statutory offers made.” (Id. at p. 1025, emphasis added.) There is no reason why this logic only applies to expert fees and not the rest of Section 998.

            Plaintiff points out that the court in Martinez did “not find the last offer rule or the first offer rule controlling in all circumstances.” (See Martinez, supra, 56 Cal.4th at p. 1026.) However, the court did not need to make this finding because when both 998 offers are better than the trial verdict, the cutoff date is determined by the first offer regardless of which rule controls. (Ibid.) The last offer rule or first offer rule plays a role in situations where one offer is more favorable than the verdict and the other is less favorable. (Ibid.) But where both offers are more favorable than the verdict, the first offer unambiguously controls.

            Here, like in Martinez, “each offer met the statutory time and content requirements of section 998, subdivision (b); . . . [Plaintiff] did not accept either offer; and . . . [Plaintiff] did not obtain a judgment more favorable than either offer.” (See Martinez, supra, 56 Cal.4th at pp. 1024-25.) Plaintiff points out that these facts were undisputed in Martinez, but disputed here. This is a distinction without a difference. Here, the Court makes the requisite findings: (1) as discussed above, Defendant’s 998 offers were valid; (2) Plaintiff did not accept either offer; and (3) a $150,000 verdict is clearly less favorable than a $500,000 or $700,000 settlement. “[T]o be consistent with section 998's financial incentives and disincentives, parties should not be penalized for making more than one reasonable settlement offer. Nor should parties be rewarded for rejecting multiple offers where each proves more favorable than the result obtained at trial.” (Id. at p. 1026.) Therefore, the first offer controls for purposes of cost-shifting under Section 998.

                        2. Whether the Date of Offer or Date of Rejection Controls

            Section 998(c)(1) provides that “the plaintiff shall not recover his or her post offer costs and shall pay the defendant’s costs from the time of the offer.” Plaintiff cites no authority interpreting this plain language to mean the expiration or rejection of the offer. Plaintiff relies on dicta from Guerrero v. Rodan Termite Control, Inc. (2008) 163 Cal.App.4th 1435, 1443, fn. 3, where “no issue [arose] as to whether the date on which the section 998 offer was submitted or the date on which it was rejected or deemed withdrawn by expiration of the period for acceptance should control . . . .” The court expressed its belief that the date of withdrawal should control, but that was not relevant to its holding. (Ibid.) The court in Guerrero also recognized that under Section 998, “the plaintiff is entitled to recover its costs incurred prior to the submission of the section 998 offer but the defendant is entitled to recover costs incurred thereafter.” (Id. at p. 1445, emphasis added; see also Licudine v. Cedars-Sinai Medical Center (2019) 30 Cal.App.5th 918, 923 [costs begin running “after the 998 offer was made”].)

            Therefore, for purposes of Section 998, the date that Defendant made the first offer controls, which is June 24, 2022. Plaintiff is entitled to recover costs incurred before that date, whereas Defendant is entitled to costs incurred after. (See Code Civ. Proc., §§ 1032(b), 998(c)(1).)

III. Reasonableness of Fees

            Plaintiff seeks attorney fees totaling $1,133,637.46.  Plaintiff has prevailing party is entitled to reasonable attorney fees under California Health and Safety Code, Section 1278.5(g) and California Labor Code, Section 1102.5.

a.      Reasonable Hourly Rates

Plaintiff retained several law firms, Theodore Oringher (“Theodore”), Law Offices of Arthur H. Barens (“Barens”), and Fenton Law Group (“Fenton”).  The hourly rates claimed by Theodore were between $300.00 and $500.00 per hour.  The hourly rates claimed by Barens were $500.00 per hour.  The hourly rates claimed by Fenton were between $150.00 and $600.00 per hour.

“In determining hourly rates, the court must look to the ‘prevailing market rates in the relevant community.’”  (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 100.)  In making this determination, “[t]he court may rely on its own knowledge and familiarity with the legal market.”  (Ibid.) 

The Court finds that $500.00 per hour is the reasonable hourly rate in this case for Theodore.  The Court finds that $500.00 per hour is the reasonable hourly rate in this case for Barens.  The Court finds that $500.00 per hour is the reasonable hourly rate in this case for Fenton. 

b. Hours Reasonably Expended

The total number of billable hours claimed by Theodore was 2,148.30 hours.

The total number of billable hours claimed by Barens was 400.16 hours.  The total number of billable hours claimed by Fenton was 139.80 hours.

            Defendant claims that the number of hours billed is unreasonable. 

The Court finds that the reasonable hours spent by plaintiff’s attorneys in this matter are as follows: Theodore 1,410 hours; Barens 240 hours; and Fenton 60 hours.

In making this determination, the court the court notes that three law firms and 10 attorneys worked on this case.  While plaintiff has the right to have multiple attorneys, the court finds that some of the attorneys’ work were duplicative and redundant.   Also the court did not award any fees after June 24, 2022. 

Assuming plaintiff is only entitled to fees on one of the causes of action, the court declines to apportion the fees.  The court finds that the claims in this action are intertwined and concerned common issues. (See, Santana v. FCA U.S., LLC, 2020 Cal. App. LEXIS 991 (September 29, 2020) [the two causes of action, fraud and Song-Beverly Act, encompass “one set of facts.”].)

c. Multiplier

Plaintiff did not request a lodestar multiplier enhancement, and Defendant did not request a negative lodestar multiplier.

            The Court finds that an upward adjustment to the lodestar is not warranted in this action and that a downward adjustment to the lodestar is not warranted either. 

CONCLUSION

Based on the foregoing reasons, Plaintiff’s motion for attorney fees is GRANTED.  The Court awards $855,000.00 in attorney fees (Theodore $705,000.00; Barens $120,000.00; and Fenton $30,000.00). 

BACKGROUND

            This action was initiated on July 15, 2019 by Carla Janzen (“Plaintiff”) against the Regents of the University of California and UCLA Medical Center Medical Staff (collectively “Defendants”). The operative complaint is the First Amended Complaint (“FAC”) filed on January 13, 2021. The FAC alleges two causes of action: (1) retaliation in violation of Health and Safety Code section 1278.5; and (2) whistleblower retaliation in violation of Labor Code section 1102.5.

            The matter was tried by the Court from October 20, 2022 to November 1, 2022. On December 16, 2022, the Court issued a statement of decision finding Defendant liable on both causes of action and awarding total damages of $150,000. Judgment was entered accordingly on February 15, 2023.

            Both parties have filed a memorandum of costs, and both parties presently move to tax each other’s costs. The Court addresses both motions herein.     

LEGAL STANDARD

The statutory scheme for cost recovery establishes three categories of trial preparation expenses: (1) one category allowable as a matter of right to the prevailing party (Code Civ. Proc., § 1033.5, subd. (a)); (2) one category disallowable unless expressly authorized elsewhere by law (Id., § 1033.5, subd. (b)); and (3) one category allowable or disallowable in the court’s discretion (Id., § 1033.5, subd. (c)(4)). Even where costs are deemed allowable, such costs are only recoverable to the extent that they are (1) reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation and (2) reasonable in amount. (Id., § 1033.5, subd. (c)(2)-(3).)

“In ruling upon a motion to tax costs, the trial court’s first determination is whether the statute expressly allows the particular item and whether it appears proper on its face. ‘If so, the burden is on the objecting party to show [the costs] to be unnecessary or unreasonable.’ [Citation.] Where costs are not expressly allowed by the statute, the burden is on the party claiming the costs to show that the charges were reasonable and necessary.” (Foothill-De Anza Community College Dist. v. Emerich (2007) 158 Cal.App.4th 11, 29-30.)

DISCUSSION

I. Defendant’s Motion to Tax Costs

a. Effect of Defendant’s Section 998 Offer

            As discussed in the Court’s concurrent ruling on Plaintiff’s motion for attorneys’ fees, Defendant’s June 24, 2022 settlement offer, which Plaintiff rejected, precludes Plaintiff from recovering costs incurred after that date and requires her to pay Defendant’s costs. Therefore, Plaintiff’s memorandum of costs must be taxed to the extent that it seeks recovery of postoffer costs. This includes: (i) $188.50 from Item 1; (ii) $1,570.39 from Item 4; (iii) $4,800 from Item 11; (iv) $3,772.49 from Item 12; and (v) $2,500 from Item 16. This amounts to $12,831.38.

b. Costs Claimed Without Substantiation

Defendant challenges the reasonableness or necessity of Plaintiff’s claimed costs. Although Plaintiff attached invoices to substantiate some costs in her opposition, other costs remain unsubstantiated, and the Court cannot determine their reasonableness or necessity. These unsubstantiated costs include: (i) $1,317.80 from Item 4; (ii) $1,491.58 from Item 16; and (iii) $173.34 for a filing in San Bernardino Superior Court. This amounts to $2,982.72.

The Court takes judicial notice of Plaintiff’s other filing and motion fees and finds them to be reasonably incurred.

c. Costs Expressly Prohibited

As part of Item 16 (other costs), Plaintiff claims $329.31 in postage fees, which are disallowed. (Code Civ. Proc., § 1033.5(b)(3).)

d. Remaining Costs

The Court finds the remaining costs to be reasonably incurred and substantiated by evidence.

            In sum, the Court taxes Plaintiff’s memorandum of costs in the amount of $16,143.41.

II. Plaintiff’s Motion to Tax Costs

a. Effect of Defendant’s Section 998 Offer

            As discussed in the Court’s concurrent ruling on Plaintiff’s motion for attorneys’ fees, Defendant’s June 24, 2022 settlement offer, which Plaintiff rejected, precludes Plaintiff from recovering costs incurred after that date and requires her to pay Defendant’s costs. The Court has rejected Plaintiff’s argument that the offers were invalid.

            b. Reasonable Costs

            Plaintiff otherwise argues that “supporting documentation would be necessary to ascertain the extent to which any of the costs in UCLA’s MOC are truly recoverable costs under Section 1033.5.” (Mtn. 7:1-3.) UCLA attached invoices to its opposition, and Plaintiff does not challenge the evidence in her reply.

            Plaintiff also requests the Court to exercise its discretion under Section 998(c)(1) to deny Defendant’s claimed expert fees. Plaintiff argues that Defendant was found not credible at trial. However, the fact that the Court found some of Defendant’s witnesses to be uncredible has no bearing on whether expert fees were reasonably incurred. Plaintiff also argues that the expert fees are inappropriate for “various other reasons” but only offers one reason: “the Resolution Economics’ expert was never deposed, and never re-wrote their original report, which was prepared before both the July 998 and October 998 offers.” (Mtn. 7:14-17.) However, that expert (Mr. Crandall) appeared in person for trial and prepared a new slide deck with the updated economic analysis. (Bravo-Karimi Decl. ¶ 8.)

            The Court finds that Defendant’s fees are supported by evidence and were reasonably necessary.

CONCLUSION

            Defendant’s motion to tax costs is GRANTED in the amount of $16,143.41. Plaintiff’s motion to tax costs is DENIED.