fund. Four public employee labor unions (Unions)1 ultimately intervened in the action
on the employees' behalf, asserting the same or similar arguments as SDCERS to rebut
the City's claims. After the case settled, the Unions moved to recover $1,785,147 in
attorney fees under Code of Civil Procedure section 1021.5.2 (All further statutory
references are to the Code of Civil Procedure.) The court denied the motion, finding the
Unions were not entitled to fees as their involvement in the lawsuit was unnecessary to
the result that was achieved.
The Unions challenge the court's ruling, contending (1) they are entitled to recover
their fees even if their attorneys' services were unnecessary to the result; and (2) the court
abused its discretion in concluding those services were not necessary. We reject these
contentions and affirm the court's order.
1 The four Unions were: Municipal Employees' Association (MEA); American Federation of State, County, and Municipal Employees; San Diego City Firefighters Local 145; and the San Diego Police Officers Association.
2 Section 1021.5 sets forth California's private attorney general doctrine, as an exception to the general rule that each party to litigation must bear its own attorney fees. (Indio Police Command Unit Assn. v. City of Indio (2015) 230 Cal.App.4th 521, 544.) It authorizes an award of attorney fees to a successful party in an action that has "resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement . . . are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery . . ." (§ 1021.5.) 2
FACTUAL AND PROCEDURAL BACKGROUND
SDCERS is a public employee retirement agency established under the City's
charter (Charter), article IX, §§ 141 et. seq.; its board manages and administers the City's
retirement system. (Lexin v. Superior Court (2010) 47 Cal.4th 1050, 1063.) The board's
responsibilities include "ensuring that benefits are adequately funded through the sound
investment of City- and employee-provided contributions," and ensuring "fully funded
retirement benefits are available and delivered to those [employees] it deems eligible."
(Id. at p. 1092)
Three sources fund the SDCERS retirement system: employee contributions, City
contributions, and investment income from retirement system assets. In 2009, the system
suffered an actuarial investment loss of more than $800 million. Consistent with its past
practice, SDCERS allocated this shortfall solely to the City, not to the employees. In
April 2010, the City requested that SDCERS apportion one-half of the losses to its
employees under Charter section 143, which provides that contributions of the City and
employees to the retirement fund are to be "substantially equal." SDCERS rejected the
City's request and adopted a rule that specifically assigned all financial losses to the City.
The City responded by filing a petition for writ of mandate to compel SDCERS to
equalize employee contributions to match those of the City. In August 2010, SDCERS
demurred to the petition on various grounds, including that City employees or their union
representatives were necessary parties to the case and that the City's failure to join them
warranted dismissal of the writ. The trial court overruled SDCERS's demurrer,
concluding: "At the pleading stage, it appears to the Court that the employees, if joined,
would make the same arguments as being raised by SDCERS and would seek the same
3
objective from this litigation as SDCERS. The Court therefore rejects the argument that
City employees are necessary and indispensable parties."3
Following the court's decision, the Unions sought to intervene in the action on
behalf of more than 7,700 City employees who worked in various job classifications that
were subject to longstanding collective bargaining relationships with the City. The
Unions reiterated SDCERS's claims that the City had always been responsible for
unfunded liabilities arising from investment losses even after the addition of Charter
section 143 and therefore the employees' vested contractual pension rights required the
City to bear the system's unfunded actuarial accrued liability. They also argued that
intervention was necessary to protect the employees' fundamental interests. The court
allowed the Unions to intervene, finding their members "ha[d] a direct and immediate
interest in the litigation; [and] the intervention [would] not enlarge the issues in the
case. . . ."4
In October 2012 the City moved for judgment on the pleadings on the ground that
Charter section 143 required SDCERS to allocate the unfunded liability equally to the
employees and the City. Both the SDCERS and the Unions submitted briefs in
opposition. In December 2012 the court denied the City's motion.
3 The court relied on City of San Diego v. San Diego City Employees' Retirement System (2010) 186 Cal.App.4th 69, 83-84, in which this court held city employees were not necessary or indispensable parties in the City's challenge to SDCERS's funding practices involving pension service credits. (Id. at pp. 78-82.)
4 In February 2011 the trial court granted SDCERS's motion to change venue and ordered the case transferred to Los Angeles. On the City's challenge to the change of venue decision, this court granted relief and ordered assignment of a judge from a neutral county to preside over the matter in San Diego County. 4
The next month, the City moved for summary judgment on similar grounds. After
SDCERS and the Unions filed separate oppositions, each of which contained extensive
factual submissions and legal argument, the City withdrew its motion, stating it wanted to
focus all of its resources on the impending trial.
The parties thereafter reached a settlement, pursuant to which the City agreed not
to require the employees to share in past unfunded accrued actuarial liabilities (UAAL),
but reserving the prospective right to claim that employees should contribute to shortfalls
caused by "all experience gains or losses." The parties agreed that if the City sought
future extra employee contributions, it would first meet and confer with the Unions under
the Meyers-Milias-Brown Act. (Gov. Code, §§3500 et seq.) The agreement also recited
that the City and the Unions had agreed to a five year freeze on so-called pensionable
pay, which would result in substantial reductions to the City's future annual contributions
to the pension plan5
5 Both sides claimed victory. The Unions pointed out that the City surrendered its claim which could have required the employees to make up a $400 million deficit and required compliance with the Meyers-Milias-Brown Act before changing the pertinent ordinance to increase employee contributions for future unfunded accrued actuarial liability. The City claimed that the Unions were not the prevailing party because left unresolved was the issue of whether employees could be forced to increase future UAAL contributions to the retirement fund to make up for fund investment losses. The City also contended that the Unions did not achieve their goal of obtaining final judicial approval of their interpretation of Charter section 143 regarding City and employee UAAL contributions. It also pointed out that during the pendency of the action, the employees agreed to freeze pensionable pay for five years, thus substantially reducing the City's contribution to the retirement fund. Further the City noted that the Unions agreed that it was entitled to reduce its contributions to the retirement fund based on stock market gains. 5
In December 2013 the City filed a motion for good faith settlement
determination.6 In February 2014 the court granted the motion, and entered judgment on
the settlement.
After the court entered judgment based on the settlement, the Unions filed a
collective motion to recover their attorney fees of $1,785,147 under section 1021.5. The
City opposed the motion on numerous grounds, including that the Unions were not
successful parties, the Union members' personal financial stake in the litigation precluded
recovery and the Unions' separate participation in the litigation with SDCERS was not
necessary to facilitate the outcome of the case. On the latter point, the City presented
evidence that it had already paid SDCERS more than $4,000,000 in attorney fees.
After extensive argument and supplemental briefing, the court denied the Unions'
attorney fee motion. Although the court found that the Unions were successful parties,
the settlement conferred a significant benefit on a large class of persons, and the Unions'
financial stake was outweighed by the litigation's financial burden, it denied the motion,
stating: "[The Unions] contend they provided a material contribution[,] which was non-
duplicative and beyond the services rendered by SDCERS. However, the court is not
persuaded [that the Unions'] involvement was necessary to the final outcome or that
enforcement of this action was necessary. As such, [the Unions] have not met their
burden on this element." The Unions appeal the resulting order.
6 We note that this motion for good faith settlement determination is not authorized by section 877.6, which bars future lawsuits for equitable contribution or indemnity against a settling joint tortfeasor or co-obligor. Where, as here, there is no named joint tortfeasor or co-obligor who would be bound by the court's good faith determination, section 877.6 is inapplicable. (See Hartford Accident & Indemnity Co. v. Superior Court (1995) 37 Cal.App.4th 1174, 1178-1179 [recognizing that where an action involves only one tortfeasor or obligor, § 877.6 "do not come into play"].) 6
DISCUSSION
The Unions contend the court erred in concluding they were not entitled to section
1021.5 attorney fees because they did not show their attorneys' services were necessary to
the outcome of the case. Specifically, they aver that they were not required to establish
necessity, and alternatively that they adequately established this element. For the reasons
explained below, we reject these arguments. Based on this conclusion, we do not reach
the issue whether the court's findings on the other elements were correct.7
I. Necessity was a Required Element in this Case
To obtain section 1021.5 attorney fees, a private party must establish that the
necessity and financial burden of its private enforcement efforts were of such a nature "as
to make the award appropriate." (§ 1021.5, subd. (b); see City of Santa Monica v.
Stewart (2005) 126 Cal.App.4th 43, 85 (Stewart).) This prong of section 1021.5 focuses
on "whether there is a need for a private attorney general for enforcement purposes."
(Stewart, supra, at p. 85.) Where there is no governmental agency available to challenge
an official action, the necessity of private enforcement is "obvious" and "readily met."
(Ibid.)
However, when, as here, a private party has litigated a case on the same side as a
non-volunteer public entity, significant questions arise as to whether its private
participation was needed given the public entity's parallel advocacy. Under such
7 We accept, without deciding, the Unions have a financial stake in the outcome of the case. We note, however, that the Unions are generally recognized to have the same financial stake as their members because their "very existence depends upon the economic vitality of [their] members and any benefit or burden derived by [the Unions] from this lawsuit ultimately redounds to the membership…." (California Licensed Foresters Assn. v. State Bd. of Forestry (1994) 30 Cal.App.4th 562, 570.)
7
circumstances, the private party requesting attorney fees must make a significant showing
that its participation was material to the result, i.e., that it proffered significant factual and
legal theories, and produced substantial, material evidence, that were not merely
duplicative of or cumulative to what was advanced by the governmental agency.
(Committee to Defend Reproductive Rights v. A Free Pregnancy Center (1991) 229
Cal.App.3d 633, 642 (Committee to Defend Reproductive Rights).)8
In asserting they were not required to establish necessity to obtain section 1021.5
attorney fees, the Unions rely exclusively on the decision in State Water, supra, 161
Cal.App.4th 304, which they maintain stands for the proposition that a private party is not
required to make a "necessity" showing when the private party colitigates a case with a
public entity "unless the public entity functioned like an attorney general." (Italics
added.)
In State Water, certain private environmental groups and several public local water
agencies, each acting voluntarily in the public interest, sought mandamus relief against
the State Water Resources Control Board (a state agency that was represented by the
Attorney General) to require implementation of a water flow plan designed to protect
salmon. (State Water, supra, 161 Cal.App.4th at pp. 309-310.) Upon prevailing, two of
the local water agencies obtained attorney fees under section 1021.5 and the private
8 This stands in contrast with the situation where the colitigants are all private parties. (Stewart, supra, 126 Cal.App.4th at p.86.) "If two private parties prosecute important public interest litigation together and obtain the same success, neither party's services can be deemed unnecessary simply because the other party would have succeeded without them." (State Water Resources Bd. Cases (2008) 161 Cal.App.4th 304, 315 (State Water).) Although the relative contributions of "multiple private attorneys general" cannot be a basis for denying entitlement to attorney fees under section 1021.5, a court may consider these contributions in determining the amount of the award. (Stewart, supra, at p. 88.) 8
environmental groups also sought to recover their fees. (State Water, supra, at p. 311.)
The trial court declined to award the private environmental groups attorney fees because
they had not shown that the same result would not have been obtained based solely on the
local water agencies' efforts. (Id. at p. 311.)
The appellate court reversed, concluding that section 1021.5's "necessity"
requirement did not apply because, on the facts involved, the local public agencies served
functionally as private attorneys general. (State Water, supra, 161 Cal.App.4th at p.
317,) Recognizing that "the purpose of section 1021.5 is to encourage parties—whether
public or private—who do not necessarily have adequate financial resources to do so[,] to
pursue important public interest litigation . . ." (State Water, supra, at p. 316), the court
concluded that legislative amendments to the statute allowing one public agency to
recover attorney fees under section 1021.5 from another public agency were intended to
apply in favor of public entities that pursued public interest litigation against other public
entities where there was no public attorney general available to act in the case. (State
Water, supra, at pp. 314, 316.)
Given these policies, State Water held that when a public entity's participation in a
lawsuit reflects its required public function, " 'there is no utility in inducing a private
attorney general to duplicate the function' . . . and the efforts of the colitigating private
party should be evaluated under the rule in Committee to Defend Reproductive Rights,
looking to see whether the private party rendered services that were necessary and
significant to the success that was achieved. If, on the other hand, there is no public
attorney general available to act, then the "bounty" that section 1021.5 provides must be
available to any party, public or private, who takes on the responsibility of pursuing
9
important public interest litigation beyond its own interests." (State Water, supra, 163
Cal.App.4th at p. 317.)
Applying these principles to the facts before it, the State Water court held that
because the Attorney General was representing the State Water Resources Control Board,
there was no public attorney general available to pursue the litigation to protect the
public's interests regarding the implementation of the regional water use plan and thus it
fell to the volunteer parties—the local water agencies and the private environmental
groups—to do so. (State Water, supra, 163 Cal.App.4th at p. 317.) The State Water
court emphasized that the local water agencies were not required to litigate the important
public issues at stake, and instead they—like the private environmental agencies—had
essentially acted as volunteers in pursuing the litigation and thus were properly rewarded
for their efforts under section 1021.5, even though they were public entities.
The Unions contend the facts of this case are indistinguishable from State Water
and therefore they were not required to establish necessity of private enforcement to
show entitlement to section 1021.5 attorney fees. We disagree. Unlike the public water
agencies in State Water, SDCERS was the public agency whose job and function it was
to ensure the soundness of the city retirement system and thus it was not acting as a
volunteer in responding to this litigation brought by the City. (Lexin v. Superior Court,
supra, 47 Cal.4th at p. 1063.) Because SDCERS was carrying out its required public
function, the Unions must show their intervention was material to the ultimate result to
recover public interest attorney fees. (Committee to Defend Reproductive Rights, supra,
229 Cal.App.3d at pp. 642-644 [recognizing that absent a necessity requirement, section
1021.5 could be unreasonably transmuted "into an unwarranted cornucopia of attorney
10
fees for those who intervene in, or initiate litigation . . . while actually performing
duplicative, unnecessary, and valueless services"].)9
II. Court Did Not Abuse Discretion in Determining Unions' Services Were Not
Necessary
The Unions alternatively argue that even if necessity is a required element of their
attorney fee claim, the court erred in concluding that their work in this case was not
necessary to the outcome achieved.
Whether a plaintiff established entitlement to a section 1021.5 award of attorney
fees is a question best decided by the trial court. (Planned Parenthood v. Aakhus (1993)
14 Cal.App.4th 162, 170.) "The 'experienced trial judge is the best judge of the value of
professional services ordered in his court, and while his judgment is of course subject to
review, it will not be disturbed [on appeal] unless the appellate court is convinced that it
is clearly wrong"—meaning that it abused its discretion. (Serrano v. Priest (1977) 20
Cal.3d 25, 49.) Great deference should be given to the trial court because of its superior
understanding of the litigation. (Taylor v. Nabors Drilling, USA, LP (2014) 222
Cal.App.4th 1228, 1249.)
Where, as here, private parties have voluntarily joined in cases that government
entities are required to prosecute or defend, the trial court must exercise its discretion to
determine "the necessity, significance, and value of private counsel's services" and is not
9 We likewise reject the Unions' additional argument that the City's allegations that the SDCERS's role is not to advocate on the employees' behalf estop the City from challenging their entitlement to section 1021.5. In this regard, the Unions have not shown either that the City (a) is now taking a position that is inconsistent with the allegations or (b) was successful in its previous assertion of these allegations, as necessary to trigger the application of judicial estoppel principles. (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 183-184.) 11
bound by the characterizations or tactical decisions of private counsel. (Committee to
Defend Reproductive Rights, supra, 229 Cal.App.3d at p. 644.) In exercising this
discretion, the court must consider whether the private party (1) raised significant factual
or legal theories that were not advanced by the governmental entity and (2) produced
substantial and nonduplicative evidence that significantly contributed to the court's
judgment. (Id. at pp. 642-643.) In this case the court was highly familiar with the
litigation and therefore was in the best position to determine whether the Unions' work
was necessary to the outcome of the case. The trial judge presided over this case for over
two and one-half years, during which time he decided a variety of motions, including a
motion to compel, a motion for judgment on the pleadings, a motion to tax costs, a good
faith settlement motion and the motion for attorney fees. The extensive briefing,
supplemental briefing, and supporting documentation for the attorney fees motion
encompassed approximately 700 pages of clerk's transcript and included lengthy oral
argument. The trial judge had ample opportunity to observe the performance of the
Unions' counsel as well as SDCERS's counsel throughout the litigation10 and to
determine whether the Unions' counsel's work was necessary to the outcome of the case.
In moving for section 1021.5 attorney fees, the Unions presented minimal
evidence of necessity. Although Union counsel Ann M. Smith described her specific
efforts in the case, including filing a change of venue motion that the court never ruled on
and a discovery motion challenging the City's authentication of its discovery responses,
10 An impromptu statement by the judge—who was from outside San Diego County—indicated that he had spent a great deal of time on the case and was very familiar with counsel. Before ruling on the attorney fees motion, the judge remarked, "I feel like I would know you all on the street by now." 12
there is no indication that these motions had any significant impact on the litigation or its
outcome.
The Unions' primary appellate argument focuses on their counsel's efforts in
opposing the City's summary judgment motion, pointing out that they took the lead in
deposing key City witnesses during discovery and prepared a separate statement with
many undisputed statements of fact covering a broad range of topics in opposition to the
City's motion for summary judgment. However, the mere fact that witnesses or evidence
available to the public agency were examined or introduced by counsel for a private party
does not suffice to establish that their efforts were necessary for purposes of section
1021.5. (Committee to Defend Reproductive Rights, supra, 229 Cal.App.3d at p. 643, fn.
11.) Further, SDCERS itself submitted points and authorities and a separate statement of
disputed material facts in opposition to the City's motion for summary judgment.
More importantly, the summary judgment motion was based on the same legal
theory as the City's earlier unsuccessful motion for judgment on the pleadings, i.e., that
section 143 of the Charter required SDCERS to equalize the employee retirement fund
contributions to the City's contributions, and the City withdrew the summary judgment
motion before the court ruled on it. Thus, the Unions' submissions in opposition to the
City's summary judgment motion do not appear to have been in any way material to, or a
necessary component of, the outcome of the action.
Under these circumstances, the court had ample reasonable basis for concluding
that the Unions failed to establish that they provided a substantial benefit or contributed
to the successful outcome of the case so as to be entitled to recover their attorney fees
13
under section 1021.5. (Committee to Defend Reproductive Rights, supra, 229 Cal.App.3d
at p. 644.)11
CONCLUSION
The court correctly concluded that the Unions were required to show that their
efforts were necessary to the outcome of the case as a condition of being awarded private
attorney general fees. In addition, given its extensive familiarity with the case, the
paucity of evidence to establish the necessity and significance of those efforts and the
broad discretion afforded it in ruling on the attorney fees motion, we cannot say the trial
court abused its discretion in denying the Unions' request to recover their attorney fees
under section 1021.5.
DISPOSITION
The order is affirmed. Respondent to recover costs on appeal.
PRAGER, J.*
WE CONCUR:
O'ROURKE, Acting P. J.
IRION, J.
11 We deny the City's motion for judicial notice of a status conference statement filed in an unrelated proceeding. The records sought to be noticed were not presented to the trial court and in any event are not relevant except as to the truth of the matters asserted, which are not properly noticeable.
* Judge of the San Diego Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. 14
AI Brief
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Holding. The court held that labor unions intervening in litigation alongside a public agency must demonstrate that their participation was necessary and non-duplicative to recover attorney fees under the private attorney general doctrine. The court affirmed the denial of fees, finding the unions failed to show their services were material to the case outcome.
Issues
Whether intervening labor unions must establish that their participation was necessary to the litigation outcome to recover attorney fees under Code of Civil Procedure section 1021.5.
Whether the trial court abused its discretion in determining that the unions' legal services were not necessary to the final outcome of the case.
Disposition. Affirmed
Quotations verified verbatim against the opinion
“the private party requesting attorney fees must make a significant showing that its participation was material to the result, i.e., that it proffered significant factual and legal theories, and produced substantial, material evidence”
“the court is not persuaded [that the Unions'] involvement was necessary to the final outcome or that enforcement of this action was necessary. As such, [the Unions] have not met their burden on this element.”