CASE NO: F036920

(Fresno Co. Sup. Ct. No. 636137-2)





IN THE COURT OF APPEAL OF CALIFORNIA


FIFTH APPELLATE DISTRICT




DANIELLE N. MACOMBER,


 Plaintiff and Appellant


vs.


RED ROBIN INTERNATIONAL, INC., et al.


Defendants and Appellees.






RELY BRIEF












 

Charles Trudrung Taylor, #127105

                                                                        LANG, RICHERT & PATCH

                                                                        5200 N. Palm, 4th Floor

                                                                        Fresno, California 93704

                                                                        (559) 228-6700

                                                                        (559) 228-6727 Facsimile


                                                                        Attorneys for Plaintiff/Appellant


 


TABLE OF CONTENTS


Page

 

I.        INTRODUCTION AND SUMMARY OF ARGUMENT. . . . . . . . . . . . . . . . . . . . . .1

 

II.        THE RECORD HAS BEEN FACTUALLY AS WELL AS. . . . . . . . . . . . . . . . . 10

           LEGALLY DISTORTED BY RESPONDENTS

 

III.       THE TRIAL COURT MISAPPLIED SECTION 1033. . . . . . . . . . . . . . . . . . . . . 13

           AS A MATTER OF LAW


            A. Respondents’ Brief Fails To Support The Propriety

                 Of The Trial Court’s Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14


            B. The Court Should Review The Section 1033 Issues

                 De Novo Which Mandate Reversal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16


                        1. The Court Should Apply De Novo Review as the Appropriate

                              Factors to be Addressed Under Section 1033 in FEHA Cases. . . . . . . . . . . . 17

 

2. The Narrow Discretion of Government Code

                               Section 12965 Controls in this Case Rather than

                               the General Discretion of Section 1033 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18


                        3. Public Policy Supports FEHA Actions where

                              Sexual Discrimination Occurs Regardless of the

                            Compensatory Damages Awarded.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19


            C. The Jury’s Findings Of Sexual Harassment Coupled With Conduct

                    Sufficient To Impose Punitive Damages Makes Filing In The Superior

                    Court Reasonable As A Matter Of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21


            D. This Court Should Not Follow Steele Or Should Distinguish

                   It From The Present Matter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23


IV. THE TRIAL COURT MISAPPLIED THE SPECIAL

         CIRCUMSTANCES EXCEPTION IN THIS CASE. . . . . . . . . . . . . . . . . . . . . . . . . . 26


            A. The Correct Formulation Of The Law.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29


                        1. The General Rule is Fees are Awarded to the

                            Prevailing Plaintiff.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31








i.





                        2. The Special Circumstances Exception.. . . . . . . . . . . . . . . . . . . . . . . . . . . 31

 

B. Special Circumstances Do Not Exist In This Case

                  As A Matter Of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33


                        1. Meister is of Questionable Value and in any Event

                            was Applied Beyond its Limits in this Case.. . . . . . . . . . . . . . . . . . . . . . .33


                      2. Recent California and Federal Cases Show the

Fallacy of the Trial Court’s Holding.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35


                        3. The Extension of Meister here Undermines Section 998.. . . . . . . . . . . . .38


                        4. The Ruling here Presents an Illogical Conclusion.. . . . . . . . . . . . . . . . . . 40


            C. Respondents’ Various Arguments Such As Plaintiff Not Prevailing

                  On Certain Claims and “Greed” And “Inflated” Attorneys Fees

                   Request Were Not Recited By The Trial Court And Thus Bear

                   No Weight On Appeal.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42


V.        CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
























ii.



TABLE OF AUTHORITIES


State Cases:                                                                                                                                 Page


Adam v. DeCharon (1995) 31 Cal.App.4th 708 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6, 42


Beyda v. City of Los Angeles (1998) 65 Cal.App.4th 511. . . . . . . . . . . . . . . . . . . . . . . . . . . 31


Bond v. Pulsar Video Productions (1996) 50 Cal.App.4th 918. . . . . . . . . . . . . . . . . . . . . . . . . . .15


Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211 . . . . . . . . . 21, 46


Cummings v. Benco Building Services (1992) 11 Cal.App.4th 1383. . . . . . . . . . . . . .31, 32


Dorman v. DWLC Corp. (1995) 35 Cal.App.4th 1808. . . . . . . . . . . . . . . . . . . . . . . . . . . . passim


Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590 . . . . . . . . 11,15,22, 46


Flannery v. California Highway Patrol, (1998) 61 Cal. App. 4th at p. 647. . . . . . . . passim


Greenberg v. Pacific Telephone & Telegraph Company

(1979) 97 Cal.App.3d 102. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 18


Kelly-Zurian v. Wohl Shoe Co. (1994) 22 Cal.App.4th 397. . . . . . . . . . . . . . . . . . . . 22, 23


Liton General Engineering Contractor, Inc. v. United Pacific Insurance

(1993) 16 Cal.App.4th 577 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19


McMahon v. Lopez (1988) 199 Cal.App.3d 829 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34


Meister v. Regents of the University of California (1998) 67 Cal.App.4th 437. . . . . . . . . . . . . . 2


Mesa Forest Products, Inc. v. St. Paul Mercury Insurance Co.

(1999) 73 Cal.App.4th 324 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17


Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23


Schmid v. Lovette (1984) 154 Cal.App.3d 466. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27, 34


Serrano v. Priest (1977) 20 Cal.3d 25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20, 32, 33


Shain v. City of Albany (1980) 106 Cal.App.3d 294. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41









iii.




Silo v. CHW Medical Foundation (2001) 86 Cal.App.4th 947. . . . . . . . . . . . . . . . . . . . . . . passim


Steele v. Jensen Instrument Co. (1997) 59 Cal.App.4th 326. . . . . . . . . . . . . . . . . . . . . . . . passim


Stephens v. Coldwell Banker Commercial Group, Inc.

(1988) 199 Cal.App.3d 1394. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22


Thompson v. Tracor Flight Systems, Inc.

(2001) 86 Cal.App.4th 1156.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 30


Vo v. Las Vigenes Mun. Water Dist. (2000) 79 Cal.App.4th 440. . . . . . . . . . . . . . . . . . . . . 27


Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128. . . . . . . . . . . . . . . . . . . . . . .passim


White v. Ultramar, Inc. (1998) 62 Cal.App.4th 939. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 23


White v. Ultramar (1999) 21 Cal.4th 563.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 23


Wilson v. Safeway Stores (1997) 52 Cal.App.4th 267 . . . . . . . . . . . . . . . . . . . . . . . . . .6, 42


Woods v. Young (1991) 53 Cal.3d 315. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19



Federal Cases:


Abu-Shahyun v. Palo Alto Unified School Dist. (9th Cir. 1988) 843 F.2d 1250. . . . . . . . . .35


Al-Dabbagh v. Greenpeace, Inc. (N.D. Ill. 1994) 873 F.Supp. 1105. . . . . . . . . . . . . . . . . .12


Brooks v. City of San Mateo (2000) 229 F.3d 917. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11


Christianburg Garment Co. v. EEOC (1978) 434 U.S. 412. . . . . . . . . . . . . . . . . . . . . . 16, 32


City of Riverside v. Rivera (1986) 477 U.S. 561, 106 S.Ct. 2686, 91 L.Ed.2d 466. . . . . . 33


EEOC v. Bruno’s Restaurant (9th Cir. 1993) 13 F.3d 285. . . . . . . . . . . . . . . . . . . . . . . . . . . passim


Erickson v. Board of Education of Baltimore County

4th Cir. 1998) 162 F.3d 128. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35


Flannery v. Superior Court (2001) D.A.R. 8530. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim







iv.



Gudenkauf v. Stauffer Communications, Inc.

(10th Cir. 1998) 158 F.3d 1074. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37, 39, 40


Harris v. Forklift System, Inc.

(1993) 510 U.S. 17, 21, 114 S.Ct. 367, 126 L.Ed.2d. 295.. . . . . . . . . . . . . . . . . . . . . . . . 31


Marek v. Chesny. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7. 37, 40

(1985) 473 U.S. 1, 11, 105 S.Ct. 3012, 3017, 87 L.Ed.2d 1


Newman v. Piggie Park Enterprises

(1968) 390 U.S. 400, 402, 88 S.Ct. 964, 19 L.Ed.2d 1263. . . . . . . . . . . . . . . . . . . . . . . . . . 32


Rosenfeld v. Southern Pacific Co. (9th Cir. 1975) 519 F.2d 527. . . . . . . . . . . . . . . . . . . . . . 34


Statutes:


Code of Civil Procedure section 580, subd. (b)(1).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25


Code of Civil Procedure section 998. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim


Code of Civil Procedure section 1021.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37


Code of Civil Procedure section 1033. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .passim


Civil Code section 3294. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4, 22, 24


Government Code section 12921. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,3


Government Code section 12965.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .passim



Other:


H.R. Rep. No. 102-40(I) at 82, 1991 U.S.C.C.A.N. at p. 620. . . . . . . . . . . . . . . . . . . . . . .8,37


BAJI No. 2.01 (8th ed. 1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12














v.


I.

INTRODUCTION AND SUMMARY OF ARGUMENT

           Plaintiff and Appellant Danielle Macomber (“Macomber”) pled and proved that she was a victim of sexual harassment, which under California law constitutes a violation of her civil rights. (Gov.Code, §12921.) She proved, by clear and convincing evidence, that the perpetrator, her supervisor at work, Defendant Bill Vidana, was “guilty of oppression, fraud or malice.” (Civ.Code, § 3294, subd. (a).) The jury’s verdict resulted in liability against seven defendants, including a nation-wide franchisor with 135 restaurants. Remarkably, the trial court denied Macomber all of her costs, including attorneys fees, necessitating this appeal and these briefs.

           Respondents’ brief, rather than address the substance of the attorneys fees issues on appeal, instead levels an attack on the character of Macomber and her lawyers and then seeks to hide behind boilerplate rules regarding abuse of discretion and limited appellate review.

           First, the court is subjected to page after page of sordid trial testimony that bears no relevance to the issues on appeal and which was clearly disregarded by the jury in arriving at its verdict. This obvious ploy to prejudice the court’s perspective towards this case should not be countenanced. This type of “she got what she asked for” attitude did not sway the jury and is simply the latest desperate attempt by respondents to divert attention from the issues at hand and subvert the truth.

           When respondents finally turn to the legal issues, they do little beyond: (a) reciting that discretion is afforded under Code of Civil Procedure section 1033 (“Section 1033") to deny costs when the judgment is below $25,000; (b) reciting the term “may” in the FEHA attorneys fee provision (Gov.Code, § 12965.) does not make fee awards mandatory; and (c) reciting two cases whose rulings are doctrinally questionable and were based on fact patterns markedly different from those here: Meister v. Regents of the University of California (1998) 67 Cal.App.4th 437, and Steele v. Jensen Instrument Co. (1997) 59 Cal.App.4th 326. Respondents then offer a shallow and tainted explanation of the settlement process in this case and seek to rely on authority decided under Code of Civil Procedure section 998 (“Section 998") despite having never made a statutory offer. Respondents, in essence, claim victory based upon the size of the compensatory damage award and that several causes of action brought by Macomber did not result in a jury verdict. Of course, this ignores the fact that the jury found sexual harassment and malicious conduct by Macomber’s supervisor by clear and convincing evidence. Respondents also conveniently fail to mention that they asked Macomber to amend her complaint to bring additional causes of action in order to obtain insurance coverage.

           The major problem with respondents’ argument is its focus is solely on the money and the number of causes of action, as opposed to violation of the FEHA and the statutory policies and protections afforded a victim thereunder. This is not a simple civil action – it is an action brought by a young woman subjected to the type of conduct our Legislature has determined to be a violation of her civil rights. (Gov. Code, § 12921.) Moreover, respondents fail to address the scope of two universally accepted legal precepts in employment discrimination cases: (1) a successful plaintiff is to be awarded her attorneys fees in the absence of special circumstances; and (2) low compensatory damage figures are not a factor to deny or lower attorneys fees’ awards in these cases.

           Finally, without any mention of such matters by the trial court in any fashion, respondents attack Macomber’s lawyers personally as venal and argue the fee request was inflated. Such arguments are not supported by the record and constitute nothing more than an additional attempt by respondents to lead this court away from the issues at hand.

           Once attention is turned to the actual issues on this appeal, it is clear that the trial court must be reversed. First, as for the Section 1033 issue, the lower court erred in failing to properly assess the pertinent inquiry: Macomber’s reasonableness in filing in the Superior Court on both a factual and legal basis.

           In particular, the FEHA plaintiff who proves “oppression, fraud or malice” on the part of her supervisor should not be held to have acted unreasonably for having filed her action in the Superior Court simply because her actual damages were under $25,000. Given that such conduct supports a claim for emotional distress and punitive damages, and given the uncertainty of a jury award for such damages, a plaintiff should not be penalized for not limiting herself to a $25,000 award at the outset of the litigation. The obvious inability of a plaintiff to know at the time the complaint is filed whether her supervisor’s conduct, let alone that of his superiors, may subject the employer to punitive damages should not be used against her after the fact to deny her attorneys fees and costs. As punitive damages are based upon the worth of the defendants, it is simply ludicrous to require a plaintiff to limit her potential recovery to $25,000, when malicious conduct has been found and when such conduct may subject several business-entity defendants to punitive damages at a time when plaintiff cannot know either the extent of the employer’s responsibility or its net worth.

           Also noteworthy here is the state of the law on punitive damages at the time the complaint was filed. Employers are liable for punitive damages under Civil Code section 3294, subdivision (b), for the conduct of their managing agents or when they have advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others. As of July 1999, the latest appellate court to rule on the scope of the managing agent issue, White v. Ultramar, Inc. (1998) 62 Cal.App.4th 939, held that a managing agent is any supervisor with hiring and firing powers. It was only later that the California Supreme Court limited the scope of a managing agent in White v. Ultramar (1999) 21 Cal.4th 563, 566-567. Thus, it was imminently reasonable for Macomber to have believed that Vidana’s malicious conduct would have subjected the entity defendants in this case to punitive damages at the key moment in time that counts under Section 1033 -- when the complaint was filed.

           In addition, the trial court’s ruling serves to undermine the public policy behind encouraging victims to enforce their rights in private actions by creating an overemphasis on compensatory damages. (Silo v. CHW Medical Foundation (2001) 86 Cal.App.4th 947, 966.) Both federal and California courts have emphasized the fact that attorneys fees awards far in excess of the compensatory damages are acceptable in employment discrimination cases. In fact, Steele is an aberration in allowing the denial of fees based upon the size of a compensatory damage award falling below the jurisdictional maximum of a limited civil action.

           Another significant issue here argued in Macomber’s opening brief, and passed over both by the court in Steele and by respondents, is the conflict between the wider level of discretion generally given to a trial court under Section 1033 to deny costs to the prevailing party and the very narrow discretion to deny a prevailing FEHA plaintiff her fees under Section 12965. The public policy to encourage victims with smaller compensatory damage claims (particularly those with facts egregious enough to warrant punitive damages) to prosecute their cases is severely undermined when the trial court can deny those costs due to the failure to bring the case as a limited civil action.

           Finally, the denial of fees and costs to a successful FEHA plaintiff based upon informal settlement offers, unaccompanied by the statutory protections of Section 998, while approved in the egregious facts of Meister, is highly suspect generally, particularly when taken outside the confines of that case. A key problem with the trial court’s analysis is its reliance on the denial of fees and costs under Section 1033 in assessing the reasonableness of the respondents’ settlement offer. The offer must be assessed at the time it is made, particularly in light of the finding of conduct supporting punitive damages and the general rule awarding attorneys fees to FEHA plaintiffs. Under FEHA, plaintiff’s attorneys fees as of the date of the Section 998 offer must be added to the amount of the judgment to determine whether or not the judgment exceeded defendant’s offer. (Wilson v. Safeway Stores (1997) 52 Cal.App.4th 267; Adam v. DeCharon (1995) 31 Cal.App.4th 708, 713-714.) Here, the trial court’s denial of costs, based upon a rejected informal offer of settlement that did not even cover plaintiff’s fees and costs when made, constitutes a clear abuse of discretion.

           The second major issue on this appeal is whether “special circumstances” exist to deny the plaintiff, who established sexual harassment and conduct worthy of punitive damages, her attorneys fees normally awarded under Section 12965. The trial court simply failed to analyze the issues involved and, in particular, the important policy issues which provide for attorneys fees awards to plaintiffs in FEHA cases.

           The trial court, enticed by the language of the Meister opinion, found special circumstances existed, i.e., the verdict for compensatory damages failed to exceed the defendant’s informal settlement offer and was below the jurisdictional maximum for a limited civil case. The problem with the court’s ruling is its failure to recognize the context in which the offer was made and that the offer did not even cover plaintiff’s fees and costs at the time it was made. The trial court treated this FEHA claim as any other civil matter, failing to recognize the purpose of an award of attorneys fees in FEHA cases is to encourage vindication of rights, not to punish the defendant.

           The idea that informal settlement offers fall under the special circumstances exception has not been favorably accepted. In fact, the Meister court recognized federal precedent against its position. Also significant is that the court based its ruling in large part on the Supreme Court’s opinion in Marek v. Chesny, (1985) 473 U.S. 1, 11, 105 S.Ct. 3012, 3017, 87 L.Ed.2d 1, a Title VII case. However, this decision was expressly overturned by Congress in its 1991 amendment to Title VII given its adverse impact on employment discrimination cases. (H.R. Rep. No. 102-40(I) at 82, 1991 U.S.C.C.A.N. at p. 620, discussed below.) In any event, this court is not duty- bound to follow Meister here and should elect not to expand its reach, particularly given the factual distinctions involved.

           In Meister, the defendants made several written offers to plaintiff, which included payment of money damages, all of his attorneys fees, and injunctive relief. Plaintiff nevertheless refused to settle. When the case went forward in arbitration, defendants stipulated to injunctive relief and plaintiff recovered a lower amount of compensatory damages than those offered. The court then denied plaintiff his post-offer costs given his unreasonable conduct. (Meister, supra, 67 Cal.App.4th at p. 445.)

           Here, Macomber has been denied all costs, despite the fact that her fees and costs exceeded the defendant’s single settlement offer at the time it was made (just before trial). Defendants here disputed any liability whatsoever, and put plaintiff through the ordeal of a month-long trial and a parade of defamatory witnesses, yet plaintiff still proved her sexual harassment claim as well as malicious conduct by clear and convincing evidence.

           Finally, the trial court abused its narrow discretion by erroneously finding that Macomber’s “unreasonable” settlement offers and her failure to consider respondents’ “reasonable” offers were the reason why the case was so intensely litigated. The record is undisputed that Macomber attempted to pursue settlement early in the case, including attempts at mediation, and up to the time of trial. Macomber even allowed respondents’ agents to informally interview her in an attempt to resolve the matter. Instead, respondents choose to pursue discovery and an unsuccessful summary judgment motion, driving up the fees and costs in the case. Respondents made one feigned attempt at settlement just weeks before trial, and the highest offer they made was considerably less than Macomber’s fees and costs already incurred at that time. Clearly, respondents made their offer based upon a position that they would win the case at trial, not on the position that Macomber’s fees and costs were not recoverable if they lost.

           In sum, Macomber was never offered a sum to settle this case that ever approximated her damages, attorneys fees, and costs. Macomber tried the case and won. The law does not recognize as a special circumstance justifying a denial of fees to a successful FEHA plaintiff based on the size of the compensatory award and undervalued informal settlement offers, particularly when the plaintiff establishes her claim and conduct rising to the level of oppressive, fraudulent or malicious. The trial court abused its discretion as a matter of law in denying fees and costs under Section 1033 given the policies under FEHA and the factual and legal predicate of this action, particularly at the time the complaint was filed. Accordingly, the judgment should be reversed.

II.

 

THE RECORD HAS BEEN FACTUALLY AS

WELL AS LEGALLY DISTORTED BY RESPONDENTS

 

           Respondents’ recitation of the facts serves to underscore the hotly contested nature of the trial. The fact that the jury found in favor of Macomber demonstrates that the jury rejected respondents’ evidence. Even more significant is the fact that the jury found in favor of Macomber by clear and convincing evidence that Vidana had acted with oppression, malice, or fraud in harassing her. Finally, the fact that respondents chose not to appeal is a fatal admission of liability.

           Even having conceded the issue of liability on Macomber’s cause of action for hostile work environment sexual harassment, respondents still cannot resist filling their brief with obscene language and suggestive and indecent acts attributed to Macomber. Respondents’ post-verdict ad hominem attacks on Macomber with isolated references to the record are not only irrelevant to this appeal, they are a misguided attempt to prejudice this court against Macomber and victimize her one last time. As demonstrated by the verdict, the jury flatly rejected respondents’ evidence that Macomber had only herself to blame for Vidana’s unrelenting abusive behavior.

           Respondents also attempt to convince this court that the jury only found in favor of Macomber on her hostile work environment cause of action because of the catsup bottle incident. Nothing could be further from the truth. To prevail on a cause of action for hostile work environment sexual harassment the plaintiff must prove that the harassment was unwanted, that it was based on sex, and that the harassment was sufficiently severe or pervasive so as to alter the conditions of employment and create an abusive working environment. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 608.) The record is replete with incidences of Vidana’s indefensible acts of sexual harassment against Macomber. Footnote

           In order to meet the “sufficiently pervasive” element of environmental sexual harassment, the conduct cannot be occasional, isolated, sporadic, or trivial. “[T]he plaintiff must show a concerted pattern of harassment of a repeated, routine, or a generalized nature.” (Id. at p. 610.) Moreover, in order for a single incident to support a sexual harassment cause of action, the incident would have to be extremely severe. (Brooks v. City of San Mateo (2000) 229 F.3d 917, 925-926.) The only case in which a court has held that a single incident was determined sufficient to support a cause of action for sexual harassment is Al-Dabbagh v. Greenpeace, Inc. (N.D. Ill. 1994) 873 F.Supp. 1105. In Al-Dabbagh, the assailant “slapped the [plaintiff], tore off her shirt, beat her, hit her on the head with a radio, choked her with a phone cord and ultimately forced her to have sex with him.” (Id. at p. 1108.) The throwing of the catsup bottle by Vidana does not rise to the level required for a single incident to constitute sexual harassment. Respondents’ arguments to the contrary are simply post hoc rationalizations in an attempt to minimize their culpability. Again, this has no bearing on this appeal.

           Finally, respondents make much of the fact that they presented many more witnesses than Macomber in support of their version of the events at issue. The jury was properly instructed, however, that they were “not required to decide any issue according to the testimony of a number of witnesses” and that “[t]he testimony of one witness worthy of belief is sufficient to prove any fact.” The jury was further instructed that “[t]he test is not the number of witnesses, but the convincing force of the evidence.” (CT 817-818.) (See BAJI No. 2.01 (8th ed. 1994) .) The fact is that respondents’ witnesses were not believable on the issue of Macomber’s sexual harassment. While respondents continually refer to their witnesses as “disinterested,” the jury determined otherwise. Footnote

III.

 

THE TRIAL COURT MISAPPLIED

SECTION 1033 AS A MATTER OF LAW

 

           Macomber demonstrates in her opening brief that the trial court abused its discretion by finding there was insufficient evidence to show that she lacked an objective good faith belief that her case was worth more than $25,000, the jurisdictional maximum for a limited civil action.

           Respondents superficially state that the simple abuse of discretion standard should be applied on this appeal and the court should simply follow Steele lock-step. However, the issues involved are clearly legal rather than factual when it comes to the complex interaction of the statutes involved, an analysis sorely lacking in Steele. In addition, this court should either refuse to follow Steele or distinguish it on the facts. As set out below, the facts and the law demonstrate that the trial court’s order warrants reversal.

A.       Respondents’ Brief Fails To Support The Propriety Of The Trial Court’s Ruling.

 

           Respondents argue the trial court acted within its discretion in denying Macomber her fees and costs under Section 1033. In support of this argument they offer the following, all centered around the holding in Steele:

                      1.        The trial court’s finding that the evidence shows that in July 1999, plaintiff could not have reasonably expected her damages to exceed $25,000 (RB Footnote at p. 29.);

 

                      2.        The amount of fees and costs incurred are irrelevant since they are not added to the judgment for purposes of the Section 1033 inquiry (RB, p. 29-30.);

 

                      3.        Factors supporting FEHA attorneys fees awards apply in any case, but here the trial court’s finding of special circumstances as well as “countervailing policies” guide the court’s discretion on this issue (RB at pp. 30-32.);

 

                      4.        The trial court purportedly did not employ hindsight in its assessment of the evidence, which supposedly shows Macomber “was proceeding in bad faith,” that the settlement judges did not in fact state the case was worth $100,000 (a point made without citation to the record) and that recovery of punitive damages was only speculative (RB at pp.32-35.); Footnote and

 

                      5.        The rules of economic litigation would not have hampered Macomber (despite admitting that over 20 witnesses testified for the defense). (RB at pp. 33, 35-36.)

 

While Macomber’s arguments below dispatch most of the foregoing superficial comments, a brief response is in order.

           First, as to all of these points, Macomber is willing to stand on the record in this case with respect to what occurred. In particular, and as argued supra and in the opening brief, it would have been ridiculous for a FEHA litigant, with knowledge of the acts of Vidana and the potential liability of the employers for punitive damages, to have filed a limited civil action.

           Second, the claim that the fees and costs incurred are irrelevant since they are not added to the damages in calculating the $25,000 threshold is belied by respondents’ own authority. The Steele court merely states this point as a conclusion made in Dorman v. DWLC Corp. (1995) 35 Cal.App.4th 1808 without analysis. (Steele, supra, 59 Cal.App.4th at p. 331.) However, the Dorman court held that the fees and costs are a factor to be considered under Section 1033:

“We conclude ... the trial court is not required to add a potential award of attorney fees pursuant to section 1717 to the damage award before determining whether or not the prevailing party has recovered a judgment in excess of jurisdictional limits. However, that does not mean that the court need not consider the amount of reasonable fees or costs claimed when exercising its discretion pursuant to section 1033.” (Dorman, supra, 35 Cal.App.4th at p.1815.)

 

           Third, the federal and state courts are in agreement that any time liability is established for employment discrimination, as it was here, the purposes behind these statutory protections are furthered. (Christianburg Garment Co. v. EEOC (1978) 434 U.S. 412, 416-17; Flannery v. Superior Court (2001) D.A.R. 8530, 8532 (August 14, 2001) (“Flannery II.) Finally, respondents cite Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, for the proposition that “countervailing policies” of not encouraging frivolous litigation are presented. However, the discussion in Weeks only concerns the merits of lodestar multipliers and not an award of fees in and of itself. (Id. at pp. 1173-1175.) The court earlier states that the baseline attorneys fees should normally be awarded (Id. at pp. 1169-1170.)

B.       The Court Should Review The Section 1033 Issues De Novo Which Mandate Reversal.

 

           As set out below, the correct determination of the standard of review and of the facts in this case will mandate reversal.

           1.        The Court Should Apply De Novo Review as the Appropriate Factors to be Addressed Under Section 1033 in FEHA Cases.

 

           It is, of course, axiomatic that statutory construction is a matter of de novo review. (Mesa Forest Products, Inc. v. St. Paul Mercury Insurance Co. (1999) 73 Cal.App.4th 324.) While the abuse of discretion standard is generally applied to appellate review of Section 1033 rulings, the factors which must be weighed in making the decision are issues of law. In Greenberg v. Pacific Telephone & Telegraph Company (1979) 97 Cal.App.3d 102, 108, the court recognized that an abuse of discretion standard applies to the Section 1033 analysis. Footnote However, the court then interpreted the statute, reciting its failure to provide the trial court with any guidance. The court then stated

“It would seem clear that matters such as plaintiff’s assessment of his chances of recovery beyond the jurisdiction of the municipal court when he filed his action – whether reasonable and in good faith – the amount of the recovery – looked at in relationship to the maximum amount of the municipal court jurisdiction – and the amount of costs incurred – are some of the factors to be considered by the trial judge in exercising his discretion. . . .” (Greenberg v. Pacific Tel. & Tel. Co., supra, 97 Cal.App.3d at p. 108 (emphasis supplied), cited with approval in Dorman v. DWLC Corp., supra, 35 Cal.App.4th at p.1816.)

 

           Also noteworthy in Greenberg was the appellate court’s finding of what an appropriate factor would be in the Section 1033 analysis. There, the court held that the trial court “must consider” a prevailing plaintiff’s percentage assessment of fault in a negligence action, finding that the failure to reduce the costs on this basis constituted an abuse of discretion. (Greenberg, supra, 97 Cal.App.3d at pp. 108-109). Clearly then, the substantive law and the factual findings underlying the judgment are key considerations in exercising discretion under Section 1033.

           2.        The Narrow Discretion of Government Code Section 12965 Controls in this Case Rather than the General Discretion of Section 1033.

 

           Section 1033 generally provides a wide range of discretion to the trial court in assessing costs, while Section 12965 provides a very narrow discretion for finding that a prevailing plaintiff should be denied her fees under the special circumstances exception. The obvious purpose of Section 1033 is to encourage plaintiffs to bring their actions in the appropriate forum. (See Steele, supra, 59 Cal.App. 4th at p. 330.) The court should find as a matter of law that this purpose is not subverted given the factors presented here and the far greater public policy concerns in FEHA cases. Footnote

           There is nothing within the purposes or the language of Section 1033 that would in any fashion be undermined by applying the substantively-based narrow discretion of Section 12965 over the procedurally-based broad discretion of Section 1033. Moreover, California mandates that a specific rule of law will govern over a general provision, even though the general provision standing alone is broad enough to include the subject to which the special provision relates. (Woods v. Young (1991) 53 Cal.3d 315, 325 (specific MICRA statute of limitations provision controls over general); Liton General Engineering Contractor, Inc. v. United Pacific Insurance (1993) 16 Cal.App.4th 577, 589-590 (liability for attorneys fees on surety in payment bond controls general statute limiting surety’s liability to that of its principal).) Accordingly, the court should find that the narrow discretion of the FEHA attorneys fees awards controls the discretion afforded under Section 1033. Once this is established, the only pertinent inquiry falls under Section 12965.

           3.        Public Policy Supports FEHA Actions where Sexual Discrimination Occurs Regardless of the Compensatory Damages Awarded.

 

           The trial court clearly missed the distinction between FEHA cases and general civil disputes. The amount of the general damages is not a factor in determining whether a plaintiff prevailed or not; rather it is a question of substantive law. Requiring a plaintiff to file a limited civil action in a case where she proves a violation of the FEHA undermines her ability to prove this violation of public policy.

           The California Supreme Court has recently again affirmed that FEHA cases fall into that class of cases where

“privately initiated lawsuits are often essential to the effectuation of the fundamental public policies embodied in constitutional or statutory provisions [and] without some mechanism authorizing the award of attorney fees, private actions to enforce such important public policies will as a practical matter frequently be infeasible.” (Flannery v. Superior Court (2001) D.A.R. 8530, 8532 (August 14, 2001) (citations omitted) (“Flannery II”).)

 

           The Flannery II court further reiterated the long-standing practice of attorneys fees awards in FEHA cases, holding that Section 12965 fees are calculated by the lodestar method. This method simply determines the number of hours reasonably worked multiplied by the reasonable hourly rate of the attorneys involved. Then, depending upon the circumstances, consideration may also be given to augmentation or diminution based on factors such as the attorney’s experience, the difficulty of the issues presented, the risk incurred by the attorneys in litigating the case, the quality of work performed, and the result achieved. (Id. at p. 8533, citing Serrano v. Priest (1977) 20 Cal.3d 25, 48.) The court noted: “Again, never in its frequent amendments to the FEHA has the Legislature questioned this practice or the precedents validating it.” (Id.) The court went on to hold

“The policy that promotes the right to seek and hold employment free of prejudice is fundamental. Job discrimination ‘forments domestic strife and unrest, deprives the state of the fullest utilization of its capacities for development and advance, and substantially and adversely affects the interest of employees, employers and the public in general.” (FlanneryII at p. 8533, citing Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211, 220.)

 

           The record here is undisputed that such fees and costs were over $80,000 at the time the offer was made, which, when added to the ultimate compensatory damage award of $10,000, was far in excess of respondents’ final and firm offer of $50,000. (CT 923-936.) To ignore this fact, as the trial court did here, and instead blindly, and with hindsight, rely on compensatory damages for purposes of Section 1033, is to subvert the purposes of FEHA (to encourage private enforcement by awarding attorneys fees), and to exalt procedure over substance. Such a result cannot be allowed.

C.       The Jury’s Findings Of Sexual Harassment Coupled With Conduct Sufficient To Impose Punitive Damages Makes Filing In The Superior Court Reasonable As A Matter Of Law.

 

           Notwithstanding the issue of the proper discretion to be applied, it is clear that under any standard the trial court abused its discretion in denying Macomber her fees and costs given the findings of sexual harassment and conduct rising to the level to impose punitive damages. The “speculative” nature of the damages, as raised by respondents, is not the issue (RB at p. 34); rather the question turns on the good faith and reasonableness of the filing in the Superior Court. (Dorman, supra, 35 Cal.App.4th at p. 1816). The overriding factor is what the plaintiff knew at the time the complaint was filed and what her rights were as of that time.

           Here, sexual harassment was found to exist by the jury. As a matter of law, this means that the conduct of the harasser was severe and pervasive. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 608.) In addition, the jury found that the conduct of the harasser, Vidana, was sufficient to impose punitive damages. (CT 810-812.)

           The trial judge, however, failed to address these facts. Instead he cited only Macomber’s “actual damages” of $3,000 at the time her complaint was filed, referring only to her actual out of pocket losses and suggested that her unreasonable settlement demands led to the vigorous litigation. However, the conduct of Vidana made him liable for punitive damages and Civil Code section 3294, subdivision (b), also made the employer potentially liable to the extent Vidana was a managing agent or he had a history of such conduct.

            Noteworthy at the time the complaint was filed, July 22, 1999, was the state of the law with respect to the definition of a “managing agent.” At that time, there was a conflict between the courts of appeal. In Kelly-Zurian v. Wohl Shoe Co. (1994) 22 Cal.App.4th 397, 421-422, the court held that a managing agent whose conduct could lead to the imposition of punitive damages must be one who exercises substantial discretion in his or her decision making so that decisions ultimately determine corporate policy. However, in Stephens v. Coldwell Banker Commercial Group, Inc. (1988) 199 Cal.App.3d 1394, 1404, and in the most recent case to have addressed the issue prior to the filing of the compliant, White v. Ultramar, Inc. (1998) 62 Cal.App.4th 939, the appellate courts found a managing agent included any supervisory employees who had the ability to hire and fire company employees. While the California Supreme Court subsequently approved the stricter construction found in Kelly-Zurian, that decision was not rendered until August 23, 1999, after the complaint was filed. (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 566.) Given this fact and the employer’s potential liability for Vidana’s work history, filing in the Superior Court was not only imminently reasonable, it was compelled as a matter of law.

           Another key to the analysis is the potential amount of damages. If either of the entity defendants were held liable for the conduct of Vidana, then the amount of punitive damages would be based upon their net worth. Noteworthy is the California Supreme Court’s direction that “the function of deterrence ... will not be served if the wealth of the defendant allows him to absorb the award with little or no discomfort. (Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928.)

           In addition, while the trial court seemed overly concerned with Macomber’s “actual damages,” the rule of law is that punitive damages may be much greater than the compensatory damages awarded. In Neal, the California Supreme Court upheld a punitive damage award 74 times greater than the compensatory damage award. (Id.) In Weeks, the punitive damage award was 70 times greater than the compensatory damage award. (Weeks, supra, 63 Cal.App.4th at p. 1166.) Moreover, the Weeks court expressly rejected the contention that the employer’s liability for punitive damages is in any way limited by the employee’s liability therefore, citing numerous cases where the employer was held liable for punitive damages either far in excess of those assessed against the employee or where there were none against the employee. (Weeks, supra, 63 Cal.App.4th at pp. 1154-1155.)

           Perhaps just as significant as the timing of the state supreme court’s decision are the facts in this case. Macomber alleged and proved she was sexually harassed by her supervisor, his conduct was sufficient to impose punitive damages, and he was still working for the employer at the time she filed her DFEH complaint. (RT 1047:4-15.)

           What is also significant is what plaintiff did not and could not have known at the time of the filing of her complaint: her supervisor’s work history, the employer’s state of knowledge of her supervisor’s unfitness or the employer’s ratification of the wrongful conduct, and the net worth of the defendants, all of which could have subjected the employer to substantial punitive damages under Section 3294, subdivision (b).

           Also noteworthy for purposes of this case is the denial of the motion for summary judgment brought by defendant Red Robin International, Inc. (hereafter “Red Robin”) some nine months after the complaint was filed, seeking an adjudication that it was not liable for the actions of either Morite or Vidana. The motion was denied. (CT 170.) Only when the jury instructions were presented were the entity defendants excused from potential liability for punitive damages for Vidana’s conduct, which the jury ultimately determined met the standard for punitive damages. Thus, it was anything but clear whether or not Red Robin would face liability for punitive damages for Vidana’s conduct at the time the complaint was filed. The trial court ignored these facts in its determination under Section 1033.

           A judgment in a limited civil case cannot be granted in excess of the jurisdictional maximum of $25,000. (Code Civ. Proc., § 580, subd. (b)(1).) Given that the law is clear that (a) a supervisor may subject the employer to punitive damage awards; (b) such awards may greatly exceed the compensatory damage award; (c) that such conduct did in fact rise to the required level of fraud, oppression or malice in this case; (d) Macomber could not have known whether the bases of imposing punitive damages on the employer entities were satisfied at the time she filed her complaint; and (e) one of the employer entities could not even prove its own lack of culpability in its own motion for summary judgment brought before trial, it would have been exceedingly unreasonable for Macomber to have filed a limited civil case. The trial court erred as a matter of law in denying recovery of costs under Section 1033.

D.       This Court Should Not Follow Steele Or Should Distinguish It From The Present Matter.

 

           An award of reasonable attorneys fees under the FEHA is not only not to be based upon the amount of the compensatory damages, but in fact, a smaller damage recovery actually emphasizes the need to award fees to plaintiffs who would otherwise be unable to prosecute such actions and thereby enforce public policy against discrimination. Thus, the idea that a limited compensatory damage recovery serves as a special circumstance to deny attorneys fees has been “rejected outright.” (Silo, supra, 86 Cal.App.4th at p. 966.) This point cannot be overstated. Employees in low-paying jobs are at least as vulnerable to victimization as those in higher paying positions; however, they are less likely to attract competent representation because they will necessarily have lower economic damages. This problem will be further compounded if attorneys cannot expect to be compensated after having vindicated a substantial and fundamental public policy because they failed to secure a large monetary award. The chilling effect is palpable. (See Silo, supra, 86 Cal.App.4th at p. 966-967.)

           Given this predicate and the language of Dorman (not requiring the trial court to add attorneys fees in exercising discretion under Section 1033, but requiring that they be considered), the court should find that the public policies of the FEHA and its rule generally awarding attorneys fees to successful plaintiffs override the policy reasons behind Section 1033. Accordingly, Macomber respectfully requests this court not to follow Steele or, at a minimum, differentiate that case on its facts from this one. The court should find that the public policy present in a FEHA action is a factor that must be considered in the Section 1033 analysis, something ignored by the court in Steele.

           In as much as Steele fails to even publish the factual record, its application of Section 1033 under the FEHA should not be followed by this court. There are a plethora of decided cases where a plaintiff has recovered less than the jurisdictional minimum of the California Superior Court ($25,000) and the plaintiff was still awarded his attorneys fees far in excess of his compensatory damages. (See, e.g., Flannery II, supra, D.A.R. 8530; Vo v. Las Vigenes Mun. Water Dist. (2000) 79 Cal.App.4th 440.) As a mater of public policy, a trial court should not be allowed to avoid the limited discretion to deny the fees under the FEHA by exercising wide discretion to deny the fees under Section 1033. To force FEHA plaintiffs into limited civil actions, with its concomitant limitations on discovery (particularly here in light of the potential recovery of punitive damages), would place impermissible limitations on FEHA actions. (EEOC v. Bruno’s Restaurant (9th Cir. 1993) 13 F.3d 285, 288; Silo, supra, 86 Cal.App.4th at p. 966; Schmid v. Lovette (1984) 154 Cal.App.3d 466, 475-76.)

           The opinion in Steele is noteworthy in its recognition of the complexity of the statutory interaction between Section 12965, subdivision (b), Section 998, and Section 1033; however, it fails to provide any analysis. The Steele court simply relied on the discretion provided in Section 1033 without examination. This court should do better and provide litigants with a proper analysis that demonstrates why FEHA-based attorney fee cases require substance to control over procedure.

IV.

THE TRIAL COURT MISAPPLIED THE SPECIAL

CIRCUMSTANCES EXCEPTION IN THIS CASE

 

           The trial court held that no award of attorneys fees to Macomber under Section 12965 was warranted because her conduct in settlement negotiations caused the case to be intensely litigated. Such conduct, the trial court held, falls under the “special circumstances” exception to the general rule that fees be awarded to the prevailing plaintiff. (CT 1165:19-1166:10-13.) In her opening brief, Macomber illustrated how the trial court misconstrued this exception, and in any event, why her conduct was reasonable. (AOB at pp. 23-27.)

           The silence in respondents’ response is deafening. Respondents not only failed to address in any substantive fashion the general rule under Section 12965, i.e., that a successful plaintiff will ordinarily recover her attorneys fees, but they offer no analysis whatsoever of the narrow “special circumstances” exception to the general rule. For the most part, respondents merely reiterate the trial court’s ruling, combining the holdings of Meister and Steele to argue that their informal settlement offer need not have considered Macomber’s attorneys fees since the trial court later denied them under Section 1033. (RB at pp. 37-39.)

           Before moving ahead with a proper formulation of the standard to be applied, a couple of misleading points raised in respondent’s brief merit attention. First, respondents continually cite Weeks for propositions ranging from the public policy against making unreasonable settlement demands in light of a fee award, to sexual harassment cases not conferring any “catalytic effect” or benefit on the public. (RB at pp. 40-41.) This selective citation of the language of the opinion is blatantly misleading.

            The entirety of the discussion in Weeks concerns one issue: whether or not a multiplier was appropriate in that case. (Weeks, supra, 63 Cal.App.4th at pp. 1169-1176.) The issue of the reasonableness of the baseline attorneys fees (the hours worked multiplied by the hourly rate) was not in dispute. (Weeks, supra, 63 Cal.App.4th at pp. 1169-1170.) In stark opposition to respondents’ argument, and directly on point here, is the case on which Respondents rely so heavily, Meister. There, the court recognized that the catalytic effect of a lawsuit “can be a ‘factor’ in setting the amount of a reasonable attorneys fees award because it is pertinent to ‘the extent of success’ achieved by the lawsuit.” (Meister, supra, 67 Cal.App.4th at p. 454 (citations omitted).) As set out in the opening brief, this case will have caused such an effect. Footnote

           A second problem with respondent’s argument is its disingenuous claim that “Macomber’s litigation strategy suggests the sole motivation of her counsel was to secure an award of attorneys fees.” (RB at p. 41.) This claim is one more example of respondents trying to take the court’s attention away from the real issues on this appeal. The trial court did not remotely suggest such ulterior motives were present in this case and respondents know full well this court cannot sit to reevaluate this case in such a manner. (Thompson v. Tracor Flight Systems, Inc. (2001) 86 Cal.App.4th 1156, 1170-1171.)

           While respondents claim they “conceded” Vidana threw a catsup bottle, they know full well that they never conceded that any acts by Vidana constituted sexual harassment. (See, e.g., respondents’ closing argument, RT at p.1869.) Moreover, the common law causes of action complained of were added in this case at respondents’ counsel’s request for purposes of obtaining insurance coverage. (CT 1115:17-22.) As for the further claim that a “simple battery action” was turned into a FEHA claim, respondents ignore the truth behind the jury verdict: a sexual harassment hostile work environment claim requires a finding that the workplace was “permeated with discriminatory intimidation, ridicule and insult ... sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.” (Beyda v. City of Los Angeles (1998) 65 Cal.App.4th 511, 517, citing Harris v. Forklift System, Inc. (1993) 510 U.S. 17, 21, 114 S.Ct. 367, 126 L.Ed.2d. 295.) Footnote It is ludicrous to suggest that the catsup bottle incident in and of itself could have sustained the verdict in this case.

           As set forth below, the real issues involved concern whether the trial court erred as a matter of law or, alternatively, abused its discretion in finding special circumstances existed to deny Macomber her fees in this case.

.          The Correct Formulation Of The Law.

           Under Government Code Section 12965, subdivision (b), a prevailing plaintiff is entitled to her attorneys fees “unless special circumstances” exist to render such an award unjust. (Cummings v. Benco Building Services (1992) 11 Cal.App.4th 1383, 1386; Weeks, supra, 63 Cal.App.4th at p.1175.) This rule is incorporated from federal Title VII employment discrimination law as interpreted by the U.S. Supreme Court in Newman v. Piggie Park Enterprises (1968) 390 U.S. 400, 402, 88 S.Ct. 964, 19 L.Ed.2d 1263, and Christianburg Garment Co. v. EEOC (1978) 434 U.S. 412, 416-17. (Cummings, supra, 11 Cal.App.4th at p. 1386.)

           The California Supreme Court has recently again affirmed that FEHA cases fall into that class of cases where

“privately initiated lawsuits are often essential to the effectuation of the fundamental public policies embodied in constitutional or statutory provisions [and] without some mechanism authorizing the award of attorney fees, private actions to enforce such important public policies will as a practical matter frequently be infeasible.” (Flannery v. Superior Court (2001) D.A.R. 8530, 8532 (August 14, 2001) (citations omitted) (hereinafter “ Flannery II.”)

 

           The determination of fees under section 12965 must be based upon a proper utilization of the lodestar method. (Weeks, supra, 63 Cal. App. 4th at pp. 1171-1172; Flannery v. California Highway Patrol, (1998) 61 Cal. App. 4th at p. 647 (“Flannery I”).) In California, the lodestar method requires the trial court to first determine a touchstone or lodestar figure based on a careful compilation of the time spent and reasonable hourly compensation for each attorney. (Serrano v. Priest (1977) 20 Cal.3d 25, 48; Weeks, supra, 63 Cal. App. 4th at pp. 1171-1172; Flannery I, supra, 61 Cal. App. 4th at p. 647.) The trial court may then augment or diminish the touchstone figure by taking various relevant factors into account. (Serrano, supra, 20 Cal. 3d at pp. 48-49.)
           Given this background, the trial court’s failure to utilize the lodestar method, and given that the plaintiff established she was sexually harassed, the analysis turns to whether there is a “special circumstance” to deny attorneys fees that are ordinarily awarded.

           1. The General Rule is Fees are Awarded to the Prevailing Plaintiff.

           Discretion to deny a prevailing plaintiff her attorneys fees under Section 12965 under the special circumstances exception is narrow. (Flannery II, supra, D.A.R. at p. 8530.) An award of attorneys fees under Section 12965, subdivision (b), is subject to reversal when the trial court applies the wrong test to determine if the statutory requirements are satisfied. (Flannery I, supra, 61 Cal.App.4th at p. 634.)

           2. The Special Circumstances Exception.

           While no California case other than Meister has reached the issue of settlement offers as a special circumstance, what authorities facing the issues similar to those here hold in defining what does and does not constitute a special circumstance is telling. First, it is uncontroverted that the theme underlying respondent’s position has been clearly negated: a fee award is not to be limited by the amount of the damages recovered. This clear rule of law applies both in the federal context (City of Riverside v. Rivera (1986) 477 U.S. 561, 106 S.Ct. 2686, 91 L.Ed.2d 466) and in California. (Silo v. CHW Medical Foundation (2001) 86 Cal.App.4th 947 (rejecting “outright” the argument that the attorneys fee should be reduced due to the small size of the compensatory damages).) Thus, the size of the compensatory damages here, below $25,000, is not sufficient to warrant a denial of attorney’s fees.

           Next, in Schmid v. Lovette (1984) 154 Cal.App.3d 466, 475-76, the court held that a defendant’s good faith belief is not a special circumstance justifying denial of plaintiff’s attorneys fees, particularly given that attorneys fees are awarded to encourage vindication of rights rather than to punish a defendant. In fact, reliance upon legal authority is not a special circumstance justifying denial of plaintiff’s attorneys fees. (Id., citing Rosenfeld v. Southern Pacific Co. (9th Cir. 1975) 519 F.2d 527, 530; see also McMahon v. Lopez (1988) 199 Cal.App.3d 829, 836.) Thus, respondents’ claims that they defended in good faith based upon their belief in the defense and that the statements of their employees are legally irrelevant.

           Also noteworthy, particularly given respondent’s focus on the testimony in this case, is EEOC v. Bruno’s Restaurant (9th Cir. 1993) 13 F.3d 285, 288. There, the court held that the trial court’s reliance on the credibility of witnesses is forbidden in passing upon an attorney’s fee request, for to do so would be to invite the post-hoc reasoning forbidden in Christianburg. (Ibid.)

           So where are special circumstances found? One of the few cases to find special circumstances is Erickson v. Board of Education of Baltimore County (4th Cir. 1998) 162 F.3d 128, 292-94. There, the court found that this narrow exception applied to deny attorneys fees because the minor plaintiff’s counsel was also his father. The court found that to allow fees there would discourage parents from obtaining independent counsel in such cases. (Ibid.) The Ninth Circuit has held that the two factors involved in the special circumstances inquiry are: (1) whether awarding fees furthers the legislative purpose behind the act; and (2) the balance of the equities. (Abu-Shahyun v. Palo Alto Unified School Dist. (9th Cir. 1988) 843 F.2d 1250, 1253 (reversing a denial of fees on the ground a defendant would not have settled had it known it may have been retroactively charged with the fees).)

B.       Special Circumstances Do Not Exist In This Case As A Matter Of Law.

           Here, the judgment, against a large nation-wide employer and six other business-entity and individual defendants, clearly furthers the purpose of the FEHA to eliminate discrimination. As for the equities, the only issue raised that is not dispatched by the foregoing authorities would be the settlement negotiations, which brings up the major case relied upon by the trial court, Meister. While the facts here are not remotely close to Meister, the trial court’s reliance thereon warrants a closer analysis.

 

 

           1.        Meister is of Questionable Value and in any Event was Applied Beyond its Limits in this Case.

 

           The Meister court found that the plaintiff acted unreasonably by failing to accept defendant’s informal offers which included injunctive relief, over increasing amounts of compensatory damages and all of plaintiff’s attorneys fees incurred up to the time of the offers. (Meister, supra, 67 Cal.App.4th at pp. 442-443.) Even there, the court only denied plaintiff’s fees incurred after the rejection of the offer. As set out in Macomber’s opening brief, the respondents’ only serious settlement offer in this case was $50,000, made shortly before trial and after respondents had driven up the costs of litigation through expensive discovery and an erstwhile summary judgment motion. Unlike the defendant in Meister, the respondents here rebuffed Macomber’s attempts to mediate the dispute early and by the time their offer was made, the amount was less than Macomber’s attorneys fees and costs. (AOB at pp. 23-25.)

           While Respondents attempt to justify the shoehorning of the facts here into Meister, there are several key points worth noting. First, in this case the court disallowed any attorneys fees whatsoever, not just the fees incurred after respondents’ offer. Thus, the court took the case to the next step, finding that a plaintiff’s “unreasonable” offers can serve as a special circumstance to deny all fees. This holding is the first of its kind in a FEHA action. Second, the holding in Meister itself is questionable. The court itself recognized its ruling went against that of existing Title VII precedent and was based in large part on the U.S. Supreme Court’s opinion in Marek, supra, 473 U.S. at p. 11, 105 S.Ct. at p. 3017, 87 L.Ed.2d 1. However, the Marek decision was expressly overturned by Congress in its 1991 amendment to Title VII given its adverse impact on employment discrimination cases. (H.R. Rep No. 102-40(I) at p. 82, 1991 U.S.C.C.A.N. at p. 620., discussed below.)

           Thus, this questionable opinion, albeit on compelling facts, rests on a shaky foundation. Moreover, as addressed in Silo and Gudenkauf below, the extension of Meister in the fashion presented by the trial court is unwarranted. Moreover, this court is not duty-bound to follow Meister. Finally, the extension of Meister beyond its facts serves to undermine the settlement process, in particular favoring informal discussions over the bright line of Section 998.

           2.        Recent California and Federal Cases Show the Fallacy of the Trial Court’s Holding.

 

           A recent case, Silo v. CHW Medical Foundation (2001) 86 Cal.App.4th 947, is instructive on the issues involved in this case. There, plaintiff brought an employment discrimination action for compensatory and punitive damages and sought his attorneys fees under the private attorney general statute, Code of Civil Procedure section 1021.5, a statute often construed identically to Section 12965, subdivision (b). (Id. at p. 962.) Plaintiff was awarded $6,305 in compensatory damages and no punitive damages. The trial court awarded $155,000 in attorneys fees, an amount upheld by the appellate court. The defendants there made many of the same points relied upon by the trial court and the Respondents here, all of which were rejected. First, defendants claimed that plaintiff should have settled if, on the one hand, he did not hope to recover significant damages and he should not be rewarded for further litigation which served only to run up attorney fees. On the other hand, defendants argued they should not have to pay for the miscalculation made by plaintiff had he hoped to obtain significant damages. (Id. at p. 967.)

           The court rejected “outright” the argument that the attorneys fee should be reduced due to the small size of the compensatory damages. “That [plaintiff] was in a low paid position so that his lost wages amounted to significantly less than the amount of the attorneys fees supports rather than diminishes his right to recover attorneys fees....” (Id. at p. 966.)

           The court further found that reduction of the fee award based upon the plaintiff’s refusal to settle was also without merit. The court noted that plaintiff’s attempts to settle, particularly early in the case were significant. This was especially true in light of the defendants’ later offer which failed to even cover plaintiff’s attorneys fees and costs incurred up to that time. Also noteworthy is the court’s comment that “Defendants provide no authority that mutual obstinance in settlement negotiations requires a reduction in attorneys fees.” (Id. at p. 967.)

           On the federal level, a similar result obtains under federal Title VII law. In Gudenkauf v. Stauffer Communications, Inc. (10th Cir. 1998) 158 F.3d 1074, 1081, it was held that a plaintiff who establishes a mixed motive claim under Title VII’s Pregnancy Discrimination Act (42 U.S.C., § 2000e, subd. (k).) (plaintiff discriminated for both illegal reasons (pregnancy) as well as legitimate reasons), will, despite her inability to receive compensatory damages as a matter of law, be awarded her attorneys fees absent special circumstances. The court found that the recovery of damages is not a proper factor upon which to base the denial of attorneys fees as a special circumstance. The Gudenkauf court further found that the successful Title VII plaintiff serves an important public purpose when she proves discrimination occurs. (Id. at p. 1080.)

           In addressing the significance of the public purpose of the federal counterpart to Section 12965, 42 U.S.C., § 2000e-2, subd. (m), the Gudenkauf court emphasized the legislative history in strengthening a private litigant’s right to his attorneys fees in bringing employment discrimination actions:

“On the one hand, the object is to make whole the individual victims of unlawful discrimination.... But this is only part of it. The individual Title VII litigant acts as a ‘private attorney general’ to vindicate the precious rights secured by that statute. It is in the interest of American society as a whole to assure that equality of opportunity in the workplace is not polluted by unlawful discrimination. Even the smallest victory advances that interest.” (158 F.3d at p. 1081 (emphasis in original) (citing H.R. Rep No. 102-40(I) at pp.46-47, 1991 U.S.C.C.A.N. at pp. 584-585).)

 

           In addition, while based upon statutory construction and in part on legislative history, the Gudenkauf court found that Congress did not intend to have Title VII plaintiffs’ fee awards reduced on the basis of a rejected pretrial settlement. (Id. at p. 1084.) While this holding conflicts with Meister, supra, 67 Cal.App.4th at pp. 450-452 (which acknowledges its inconsistency with federal cases), Meister relies in part on the logic of the Supreme Court’s holding in Marek, supra, 473 U.S. at p. 11, 105 S.Ct. at p. 3017, 87 L.Ed.2d 1, which held that where a rejected settlement offer exceeds the ultimate recovery, the plaintiff has not received benefits from the post-offer services of his attorney. However, Marek was expressly disapproved in the 1991 amendment to Title VII as “‘impeding upon private actions relied upon for enforcement of the statute’s guarantees and advancement of the public’s interest.’” (Gudenkauf, supra, 158 F.3d at pp. 1083-1084 (citing H.R. Rep No. 102-40(I) at p. 82, 1991 U.S.C.C.A.N. at p. 620.).)

           Given the foregoing authority, it is clear that this court should either find Meister was improperly extended to this case or choose not to follow it altogether.

 

           3. The Extension of Meister here Undermines Section 998.

           Respondents support their non-statutory informal settlement offers with authority under Section 998, where statutory offers were actually made. In so arguing, respondents would have the court ignore the policy reasons behind Section 998 offers and effectively consider any offers for purposes of an attorneys fees award. While Meister provides support for this argument, its extension to the facts presented here implicates serious policy concerns that support statutory settlement offers.

           Several foundational matters merit attention. First, Section 998 offers are construed generally under the law of contracts. (Poster v. So. Cal. Rapid Transit Dist. (1990) 52 Cal.3d 266, 270-271.) However, a counter-offer does not serve to revoke the 998 offer if the time to accept it has yet to expire. (Id.) Second, a settlement offer that is not in writing cannot be enforced. (Saba v. Carter (1998) 6 Cal.App.4th 150.) Here, the offers on both sides were made informally and during mediation, involving multiple parties, and were never reduced to writing. (Compare Meister, supra, 67 Cal.App.4th at p. 442 (where defendants made two formal written settlement offers, followed by an oral modification).)

           Third, a FEHA plaintiff who fails to beat a Section 998 offer, but still obtains judgment, is nevertheless entitled to her pre-offer costs. (Shain v. City of Albany (1980) 106 Cal.App.3d 294.) Fourth, under the FEHA, plaintiff’s attorneys fees as of the date of the Section 998 offer are required to be added to the amount of the judgment to determine whether or not the judgment exceeded defendant’s offer. (Wilson v. Safeway Stores (1997) 52 Cal.App.4th 267; Adam v. DeCharon (1995) 31 Cal.App.4th 708, 713-714.)

           Given these parameters, the extension by the trial court of Section 998 precedent to the entirety of the informal settlement discussions, including plaintiff’s offers, becomes problematic. For example, a defendant, who has made an unenforceable offer, is actually in a better position for having failed to invoke the provisions of Section 998. The plaintiff, even if she wants to accept, cannot enforce the offer. In addition, the moment a plaintiff counters, the defendant’s offer is extinguished. Moreover, if a dispute arises as to who made what offer when, the court then becomes embroiled in a factual dispute that is otherwise obviated by Section 998.

           Next is the problem of the settlement terms. It is one thing where a defendant makes a formal written offer as in Meister; it is quite another in a situation such as this where the court recites settlement offers involving raw numbers thrown back and forth over the course of an entire case with no discussion of any terms of payment or other conditions. The court cannot countenance placing these negotiations on a par with statutory settlement offers without undermining Section 998 altogether.

 

           4. The Ruling here Presents an Illogical Conclusion.

           Finally, the bizarre result of the interplay of settlement offers, whether under Section 998 or not, and Section 1033 in this case must be addressed. On the one hand, for purposes of Section 998, pre-offer attorneys fees are included with the amount of the damages to see if a judgment is in excess of a defendants’ offer. On the other hand, under Steele, for purposes of Section 1033, the court may deny attorneys fees to an otherwise prevailing party simply because his damages are under $25,000, without taking into account the fees and costs. (Steele, supra, 59 Cal.App.4th at p. 331.)

           Thus, under the logic of the trial court’s ruling, a plaintiff who has beaten a Section 998 offer, when fees and costs are both included, but who fails to obtain a judgment for damages in excess of $25,000 may be denied those very fees and costs as having not prevailed under Section 1033 and thereby denied those very costs. Such a result cannot be allowed to stand.

           The parties obviously look to the full economic picture of their case. A plaintiff cannot settle a case or prosecute it without taking into account her net recovery after payment of fees and costs. Similarly, a defendant who is facing a judgment with an attorneys fees exposure is not interested in how the money is characterized, but rather how much it will take to settle the case. Clearly here, there was never any discussion of breaking down any settlement offers between fees and costs and the parties obviously included such matters in their lump sum offers.

           The only answer to this conundrum can be that the courts not be allowed the discretion to use Section 1033 itself to deny attorneys fees and costs to an otherwise prevailing plaintiff if her compensatory damages and pre-offer fees and costs exceed the Section 998 offer made by defendants. This is particularly true if the total liability exceeds $25,000. Given the sound reasoning behind this rule, the courts should not similarly penalize the plaintiff whose damages and attorneys fees also defeat a defendant’s final informal settlement offer, if such an offer is given credence by the court. Should that be the case here, then the judgment must be reversed and Macomber awarded the entirety of her fees and costs given that the respondents’ $50,000 offer was less than the total of her damages and attorneys fees incurred when the offer was made.

C.       Respondents’ Various Arguments Such As Plaintiff Not Prevailing On Certain Claims and “Greed” And “Inflated” Attorneys Fees Request Were Not Recited By The Trial Court And Thus Bear No Weight On Appeal.

           Respondents make several arguments that have no basis in the record and are merely designed to prejudice this court. They merit only cursory comment.

           First, the comment that Macomber’s decisions not to appeal the damage award or request an addittur as showing counsel’s “greed” is irrelevant and inflammatory. Respondents invite this court to engage in rank speculation and to invade the attorney-client privilege in this veiled attempt to draw attention away from the issues for review. This continued attack on the character of the plaintiff and her attorneys should be given no credence. Footnote

           Second, the argument that Macomber’s failure to obtain judgment on all her causes of action is similarly without merit. Most significantly, this issue is not addressed by the trial court and, moreover, the claim fails to recognize that: (a) plaintiffs must raise every legal theory at the time a complaint is filed or potentially waive their rights; (b) all of the claims arose from the same nucleus of facts; and (c) several of the claims were brought by an amended complaint, filed at the request of Respondent’s counsel to obtain insurance coverage. (CT 1115:17-22.) It is the height of deception and disingenuousness to argue Macomber did not prevail because she did not obtain a judgment on these theories.

           Finally, as set out supra, it is well-settled that in employment discrimination cases, the amount of the attorneys fees often does not bear a correlation to the amount of compensatory damages. (See Silo, supra, 86 Cal.App.4th at pp. 962-968.) This difference does not demonstrate that the fees are inflated, but only that these cases are difficult and expensive to prove. As stated in Silo, the fact that the plaintiff was in a low-paying position supports rather than diminishes his right to recover attorneys fees. (Silo, supra, 86 Cal.App.4th at p. 966.) The trial court never made such a finding and raising the issue on appeal only serves to prove the weakness of the respondents’ position on the truly substantive issues involved.

V.

CONCLUSION

           The elements of a sexual harassment claim are: (1) plaintiff belongs to a protected group; (2) plaintiff was subject to unwelcome sexual harassment; (3) the harassment complained of was based on sex; (4) the harassment complained of was sufficiently pervasive so as to alter the conditions of employment and create an abusive working environment; and (5) respondeat superior. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 608.) Macomber established each of these elements.

           “The [public] policy that promotes the right to seek and hold employment free of prejudice is fundamental. Job discrimination ‘forments domestic strife and unrest, deprives the state of the fullest utilization of its capacities for development and advance, and substantially and adversely affects the interest of employees, employers and the public in general.” (Commodore Home Systems, Inc. v. Superior Court, (1982) 32 Cal.3d 211, 220, cited in Flannery II at p. 8533.) Macomber’s willingness to prosecute her case in the face of vicious attacks and her ability to prove fraudulent, malicious or oppressive conduct furthers this policy.

            Section 12965 attorneys fees are intended to provide “[f]air compensation to the attorneys involved in the litigation at hand and encourage litigation of claims that in the public interest merit litigation.” (Flannery II, D.A.R. at p. 8533) (citations omitted).) Macomber had to try this case or ultimately receive nothing given that the Respondents’ offer did not even cover her attorneys fees and costs.

           Macomber obtained a judgment establishing she was sexually harassed, furthering the above-mentioned policies. Despite this verdict and the jury’s finding of conduct sufficient to impose punitive damages, the trial court applied procedural slight of hand to deny Macomber all of her costs and attorneys fees. This court cannot allow such a result to stand, particularly when it is founded upon two cases, Steele and Meister, which are grounded on egregious facts and are of questionable legal precedent. Instead, this court should follow the lead of Flannery II and Silo and reverse the judgment.

Dated: October 29, 2001.             Respectfully submitted,

                                                       LANG, RICHERT & PATCH, P.C.

 

 

                                                       By ____________________________

                                                                  Charles Trudrung Taylor

                                                                        Attorneys for Appellant

                                                                        Danielle N. Macomber