When I evaluate a potential employment case, it’s always nice when there’s a cause of action under FEHA that provides for attorney’s fees. That gives plaintiff leverage in settlement discussions. Smart defense counsel will advise their clients that if plaintiff wins at trial, depending on the case, the attorney’s fees can sometimes dwarf the jury’s verdict. Especially if unwise defense counsel plays games and resists discovery requiring motions to compel, files a motion for summary judgment with hundreds of pages of exhibits that has no chance of prevailing, etc… all to simply increase billings and make it appear to defense counsel’s client that defense counsel is being “aggressive.”
But what happens if plaintiff loses in a case where it’s clear the client will lose? One of the FEHA myths is that plaintiff never has to pay defendant’s attorney’s fees, even when plaintiff loses. But that’s not the case – as the Second District Court of Appeal reminds us in a recent unpublished decision.
In this case plaintiff, a 31-year employee of Liberty Mutual, filed a lawsuit under FEHA alleging ethnic origin discrimination and retaliation along with other related causes of action after being terminated. Liberty Mutual filed a motion for summary judgment arguing in part that plaintiff’s DFEH administrative complaints were insufficient. Plaintiff then filed amended DFEH complaints, but the court said that in two of the three amended complaints, plaintiff made false allegations about the dates of the discrimination.
Well, the trial court ordered the FEHA causes of action stricken because plaintiff pursued them in bad faith. Plaintiff then tried to file her case in federal court, but apparently that didn’t go well.
So guess what? Defendant decided to file a motion for attorney’s fees under the prevailing party provision of FEHA—California Government Code § 12965(b). Smartly, Liberty Mutual only asked for fees for the time between the its motion for summary judgment and the dismissal of the FEHA causes of action, and only 5/8ths of its fees incurred during that time, since only 5 of the 8 causes of action were under FEHA.
So what did plaintiff do? Well, she didn’t argue that she pursued these claims in good faith or that the fees sought were excessive. Instead, she argued that the motion was premature since the court had not ordered summary judgment, the court had only stricken her FEHA claims, so, technically, Liberty Mutual was not a prevailing party.
But the court granted Liberty Mutual’s motion for attorney’s fees for $78,681 with payment stayed until the end of the lawsuit.
And then the lawsuit ended when the court granted summary judgment.
And plaintiff appealed, and lost. And now plaintiff owes Liberty Mutual’s lawyers $78,681 and Liberty Mutual’s costs on appeal.
The moral of this story for plaintiff’s attorneys and their clients is when you get a case that looked good but once discovery commences and things go south, don’t try to raise a sinking ship. Get out as fast as possible. You’ll be thankful to cut your losses, and so will your client. Because if you don’t, you won’t get paid and your client will paying your opposing counsel.
Dzhanikyan v. Liberty Mutual Ins. Co.
California Court of Appeal, Second Appellate District, Case No. B261113
June 15, 2016