RODRIGUEZ v. CALIFORNIA DEPARTMENT OF JUSTICE No. C064756.
JAMES RODRIGUEZ, Plaintiff and Respondent, v. CALIFORNIA DEPARTMENT OF JUSTICE, Defendant and Appellant.
Court of Appeals of California, Third District, Sacramento.
Filed January 31, 2012.
NOT TO BE PUBLISHED
In this case under the California Fair Employment and Housing Act (Gov. Code, § 12900 et seq.) (the FEHA), plaintiff James Rodriguez recovered a judgment against his employer, the Department of Justice (the department), for $560,709 in damages and was awarded $645,534 in attorney fees. On appeal, the department asserts numerous errors, including denial of its motion to bifurcate the trial and application of a multiplier in the award of attorney fees. We find the department's arguments without merit, with one exception: the trial court erred in providing for postjudgment interest on the award of damages at the rate of 10 percent per annum, rather than the 7 percent rate that applies to judgments against state agencies like the department. Accordingly, we will modify the judgment to correct that interest rate and will affirm the judgment as modified.
FACTUAL AND PROCEDURAL BACKGROUND
The Underlying Facts
Only a relatively brief summary of the rather extensive underlying facts is necessary.
Rodriguez began working for the department in 1988. In 1991, he became a special agent.
In May 2006, while assigned to the Sacramento Regional Office for the Bureau of Narcotic Enforcement, Rodriguez contacted the department's equal employment rights and resolution unit (the unit) to complain that he was being treated differently — including being passed over for promotion — because he is Hispanic and because of his support for two other agents with regard to their EEOC (Equal Employment Opportunity Commission) complaints. When his complaint to the unit produced no results, in September 2006 Rodriguez filed his own EEOC complaint, alleging discrimination that included a disciplinary memorandum and denial of an assignment as an acting supervisor in December 2005, removal from an assignment as an acting supervisor after serving only one day in April 2006, and involuntary reassignments in February and April 2006.
In November 2006, Rodriguez and representatives of the department attended a mediation of Rodriguez's EEOC complaint. At that mediation, the parties entered into a handwritten memorandum of understanding. Among other things, that memorandum provided that Rodriguez would be provided the opportunity to take supervision training at the department's expense and that at such time as the position of acting task force commander in South Lake Tahoe became available, Rodriguez would be given that assignment for 30 to 120 days. If that position was not available, upon agreement of the parties, Rodriguez was to be given as assignment as an acting task force commander elsewhere. The memorandum further provided that the parties would enter into a formal settlement agreement "with the standard release language," which apparently was to come from the EEOC's "standard negotiated settlement agreement."
In mid-to late-November 2006, the department placed someone other than Rodriguez in the acting supervisor position in South Lake Tahoe.
In February 2007, the parties signed a formal "Settlement Agreement and Release of Claims" based on the November 2006 memorandum of understanding. Under the terms of the agreement, Rodriguez "waive[d] any rights to assert any claims based upon events through the Settlement Date . . . against [the department]," which was November 3, 2006.
In August 2007, Rodriguez filed a second EEOC complaint alleging further discrimination between December 2006 and July 2007, including multiple denials of promotion. Among other things, he complained that the department had "retaliated against [him] by being in breach of the . . . mediation agreement."
In April 2008, Rodriguez filed a complaint for damages against the department under FEHA for retaliation, discrimination and harassment based on race, and failure to take all reasonable steps necessary to prevent discrimination and harassment. (Gov. Code, § 12940, subd. (k).) The complaint included allegations of his treatment by the department both before and after the settlement agreement in November 2006.
In January 2009, Rodriguez filed a motion for leave to amend his complaint to allege a cause of action for breach of contract. In support of the motion, Rodriguez's counsel explained that earlier that month, the department's counsel "articulated the [department's] position that any alleged adverse acts taken against Rodriguez prior to the date of the EEOC settlement would be inadmissible since [Rodriguez] ha[d] not alleged breach of contract in his original complaint." Accordingly, Rodriguez sought leave to allege a breach of contract action for the purpose of seeking rescission of the settlement agreement. In the proposed amended complaint, Rodriguez expressly did not seek damages or attorney fees for breach of the settlement agreement, just rescission of the agreement.
The department did not oppose Rodriguez's motion for leave to amend but indicated it intended to file a demurrer to the new cause of action. In April 2009, the trial court sustained the demurrer with leave to amend. In May 2009, Rodriguez filed his second amended complaint, and in July 2009 the trial court overruled the department's demurrer to the cause of action for rescission.
The Department's Motion To Bifurcate
Meanwhile, also in May 2009, the department filed a motion to bifurcate the trial of Rodriguez's "equitable claim for rescission and his legal claims based upon the Fair Employment and Housing Act." The department relied on Code of Civil Procedure sections 592 and 1048, subdivision (b) to support his motion.
Rodriguez opposed the bifurcation motion on the ground (among others) that bifurcation would "require two trials involving the same set of facts."
On June 4, the trial court denied the motion to bifurcate as premature, without prejudice to the department moving to bifurcate in front of the trial judge once the case was assigned for trial.
On January 4, 2010, the case was assigned for trial to Judge David De Alba. That same day, the department once again filed a motion to bifurcate "so that [Rodriguez]'s purported rescission cause of action is heard and decided by the Court prior to any jury trial of [his] remaining [FEHA] claims." Once again, the department relied on section 592 and subdivision (b) of section 1048. Once again, Rodriguez opposed the motion.
Following extended oral argument, the trial court denied the motion to bifurcate, concluding that "the question of whether there was a breach of the contract is one that should be addressed [by] the jury if for no other reason because of the duplicity of testimony that would be presented to this Court" if the rescission claim were bifurcated from the FEHA claims. The court expressed "no doubt that it would take multiple days, if not a week, to resolve the issue of whether there was a breach or not, and then the subsequent issue of whether rescission is proper or not." The court also noted that Rodriguez might "be entitled to offer as relevant evidence matters that occurred before November 3rd of 2006 either on a theory of a continuing violation of a work place practice and/or in support of the fourth cause of action of the . . . [d]epartment['s] failure to correct any pre-existing discriminatory and/or retaliatory practices, and possibly under the mandate of Evidence Code section 1101(b) as prior acts that may have some relevance or circumstantial proof of intent to discriminate and/or retaliate." Ultimately, the trial court concluded there were "multiple reasons why a bifurcated proceeding would not be economical and would not prevent any acts that occurred before November 3rd, 2006 from being produced or introduced before the jury." The court expressed its belief that "whether there was, in fact, a breach, whether rescission is proper in equity and how damages if any should be apportioned could properly be the subject of a special verdict form," and the court stated it was "prepared to take under submission the equitable question of whether rescission is a proper remedy pending the jury's resolution of the factual issue of whether there's a breach in the first instance."
Thereafter, the court addressed the department's motion in limine to exclude evidence or argument regarding any act or omission predating the settlement agreement and the settlement agreement itself. The court denied that motion for the same reasons it denied the motion to bifurcate, noting, "The subject of a settlement agreement and its breach is a material fact for the jury to resolve."
Trial And Verdict
The case was tried to a jury over 14 days in January and February 2010. The trial court instructed the jury on retaliation; race-based harassment; failure to prevent race-based harassment, discrimination, and/or retaliation; and breach of contract.
The jury was presented with an eight-page special verdict form. In answering the questions on that form, the jury determined that the department retaliated against Rodriguez for his complaints of discrimination or retaliation or for his assistance to others who filed EEOC complaints, that the department failed to take reasonable steps to prevent discrimination, retaliation, or harassment of Rodriguez, and that these actions or omissions were substantial factors in causing harm to Rodriguez. The jury further determined, however, that the department did not discriminate against or harass Rodriguez based on his race.
The only question on the verdict form related to breach of contract was whether the department breached a material term of the mediation settlement agreement, which the jury answered "yes." As a result of the answer, the jury was directed to determine the amount of Rodriguez's damages without any date restriction. The jury fixed Rodriguez's damages at $248,709 for economic loss and $312,000 for noneconomic loss, for a total of $560,709.
Had the jury determined that the department did not breach a material term of the mediation settlement agreement, the jury would have been directed to determine only the amount of Rodriguez's damages "from the [department's] conduct that occurred after November 3, 2006."
On the same day the jury returned its verdict, the trial court prepared and entered a "Judgment on Verdict" in the amount the jury awarded, "with interest thereon at the rate of ten percent per annum."
The Rescission Hearing
The court then proceeded with the hearing on the issue of rescission. The department argued that the court needed to rule on the department's equitable defenses to Rodriguez's rescission claim and make a determination as to whether Rodriguez could indeed rescind the settlement agreement. The department further argued that the judgment that had been entered on the jury's verdict was "entered in error before we had a final resolution of this outstanding issue" and "needs to be modified accordingly depending on how the Court rules."
Lengthy argument followed on the rescission issue. The department expressed the position that Rodriguez could not rescind the settlement agreement and was limited to the recovery of monetary damages. Eventually, the trial court asked why it could not "just declare there is no option for rescission here." The department agreed that would be a "proper finding." The court then asked Rodriguez's counsel whether Rodriguez was "seeking . . . any form [of] rescission now that the jury has definitively declared breach," and she said, "[n]o." After further discussion, Rodriguez's counsel repeated that Rodriguez was no longer seeking the equitable remedy of rescission. The court then determined that the department's equitable defenses to rescission were moot because there was no longer any equitable claim before the court.
The Motion For Attorney Fees
In March 2010, Rodriguez moved for an award of $645,534 in attorney fees under the FEHA. The amount he requested was based on the application of a multiplier of 1.5, which he applied to a lodestar amount of $430,356. The lodestar amount was based on 46.8 hours of paralegal work at $70 per hour (total $3,276) and 1,067.7 hours of attorney work at $400 per hour (total $427,080).
In opposing the motion, the department argued (among other things) that: (1) the lodestar amount should be reduced by one-third for the time Rodriguez's attorney spent on the nonFEHA rescission claim; and (2) the court should not apply a multiplier but instead should exercise its discretion to adjust the lodestar amount downward.
In reply, Rodriguez argued there should be no reduction for the work on the rescission claim because "the breach of contract had to be presented to the jury to prove adverse acts were taken against [him] and [the department]'s retaliatory animus."
The trial court granted Rodriguez's fee motion without reduction. On the issue of fees related to the breach of contract/rescission cause of action, the court concluded that "[a]ll the claims were related" and "[t]he related nature of the claims leads to a reasonable conclusion that the work performed would have been necessary just for the retaliation claims." The court also concluded that use of a 1.5 multiplier was "warranted" because of "the contingent risk undertaken by counsel," the "difficult and novel issues that presented an immense challenge to [Rodriguez]'s counsel," "counsel's skills and time involved in handling difficult, novel and risky issues," and "the impact this case has had on the hiring and promotional policies within the [d]epartment . . . and more particularly the Bureau of Narcotic Enforcement." The department timely appealed from the fee award.
The Amended Judgment
Following the court's award of attorney fees, Rodriguez's counsel apparently submitted a proposed judgment on special verdict to the court that, among other things, specified that postjudgment interest would accrue at 10 percent. The department filed an objection to this proposed judgment on the ground that "under the law . . . the post-judgment interest rate applicable to judgments against public entities is 7 percent, not 10 percent."
A week later, the court filed an amended judgment that encompassed both the damages awarded by the jury and the attorney fees awarded by the court. (Whether this was the proposed judgment Rodriguez's counsel had submitted is not clear from the record.) On the last page, the judgment provided that interest would accrue on the award of damages at the rate of "10 percent per annum" and separately provided that interest would accrue on the award of attorney fees at "10 percent per annum." With respect to the interest on the attorney fees, however, the court struck the figure "10" and wrote in its place "7." The court did not make a similar change to the interest rate on the award of damages.
Breach Of Contract
The department contends the jury's verdict on Rodriguez's breach of contract cause of action must be reversed for four reasons. First, the department contends (essentially) that the breach of contract cause of action never should have gone to the jury in the first place because the trial court should have sustained the department's demurrer to that cause of action on the ground it was barred by Rodriguez's failure to comply with the Government Claims Act.
As we have noted, all of these arguments are aimed at showing why the jury's verdict on the breach of contract cause of action must be reversed. Even if the department is correct in any of its claims of error, however, it makes no difference because the department suffered no prejudice as a result of the jury's verdict on the breach of contract cause of action.
As we have previously explained, Rodriguez did not seek damages on his breach of contract cause of action; the sole remedy he sought with respect to that cause of action was rescission of the settlement agreement.
Of course, to the extent the department raises the denial of its motion to bifurcate as a basis for reversing the jury's verdict on Rodriguez's cause of action for retaliation, that presents a distinct question that is cognizable on appeal, because the jury ended up awarding Rodriguez $560,709 in damages for retaliation, and if the trial court's ruling on the bifurcation motion was error, the department may have suffered prejudice as a result of that error in connection with the jury's verdict on that cause of action. Accordingly, we will address that issue below. But because the jury's advisory verdict on the issue of breach did not directly lead to any money judgment or other relief against the department, we need not consider whether the trial court should have sustained the department's demurrer to the breach of contract cause of action, whether the trial court erred in instructing the jury on breach of contract, or whether there was substantial evidence to support the jury's finding that the defendant breached the settlement agreement.
Denial Of The Motion To Bifurcate
The department contends the trial court prejudicially erred in denying the motion to bifurcate because the department was entitled to have the issue of rescission decided before Rodriguez's FEHA claims and the department was prejudiced by this ruling because in the absence of bifurcation Rodriguez was able to offer evidence regarding the claims he released in the settlement agreement and recover damages for the department's conduct predating the settlement agreement without first rescinding the agreement.
As we will explain, the trial court did not abuse its discretion in denying the department's request to bifurcate the trial. First, the settlement agreement did not entitle the department to exclude all evidence of the settlement agreement and what happened before it, as long as the preagreement evidence was relevant for a purpose other than proving damages for conduct that predated the settlement, which the trial court concluded it was. Also, the department did not need two distinct phases of trial to prevent Rodriguez from recovering damages for conduct that predated the settlement agreement while that agreement remained in effect. It would have sufficed if the jury had been asked to decide the predicate issue of breach, then the jury's deliberations had been suspended while the trial court decided whether Rodriguez was entitled to rescind the settlement agreement (assuming the jury found for Rodriguez on the issue if breach). Once the trial court decided the issue of rescission, the jury then could have resumed its deliberations to decide liability and (potentially) damages on Rodriguez's FEHA claims, with the scope of its determination determined by whether Rodriguez was permitted to rescind the settlement agreement. That did not happen, however, because the special verdict form that was used skipped the step of allowing the trial court to resolve the issue of rescission before the jury decided liability and damages. But the department does not complain about the special verdict form on appeal, and therefore any claim of error regarding that form has been forfeited. With this overview in mind, we turn to the trial court's ruling on the bifurcation motion.
"Whether there shall be a severance and separate trials on issues in a single action is a matter within the discretion of the trial court, whose ruling will not be disturbed on appeal absent a manifest abuse of discretion." (Downey Savings & Loan Assn. v. Ohio Casualty Ins. Co. (1987)
The department first argues that the trial court was required to bifurcate the trial of the rescission claim from the trial of the FEHA claims because under case law a plaintiff is forbidden from litigating claims that have been released in a settlement agreement before the agreement has been rescinded. As we will explain, however, the cases on which the department relies do not support its argument that the trial court had to bifurcate the trial in this case.
The department first cites Village Northridge Homeowners Assn. v. State Farm Fire & Casualty Co. (2010)
The trial court sustained the insurer's demurrer without leave to amend, concluding the insured could not affirm the settlement agreement and keep the money paid in the settlement without releasing its additional claims. (Village Northridge Homeowners Assn. v. State Farm Fire & Casualty Co., supra, 50 Cal.4th at p. 920.) On review, the Supreme Court agreed that "the rules governing rescission of settlement release agreements require the parties to follow the statutory and common law rescission procedures before suing for damages." (Ibid.)
Because the plaintiff in Village Northridge sought to avoid altogether its obligation to rescind the settlement agreement before suing for damages based on claims released in the agreement, the Supreme Court had no occasion in that case to speak to the situation presented here, where the plaintiff sought to rescind a settlement agreement but combined his suit for rescission with a legal action for damages that encompassed, but did not consist entirely of, the claims released in the settlement agreement. "As is well established, a case is authority only for a proposition actually considered and decided therein." (In re Chavez (2003)
In the next case the department cites — Myerchin v. Family Benefits, Inc. (2008)
Like Village Northridge, Myerchin is distinguishable from the present case. Here, Rodriguez sued for rescission of the settlement agreement. In Myerchin, the plaintiff did not. While the plaintiff in Myerchin argued that his amended answer to the defendant's cross-complaint — in which he asserted that the settlement agreement was unenforceable — qualified as a pleading seeking rescission, the appellate court disagreed. (Myerchin v. Family Benefits, Inc., supra, 162 Cal.App.4th at pp. 1533-1534.) Thus, like the Supreme Court in Village Northridge, the Court of Appeal in Myerchin had no occasion to address whether bifurcation is required where the plaintiff sues for rescission of a settlement agreement at the same time he sues for damages based in part on claims that were released in the agreement.
None of the other cases the department cites is any more on point because none of them speaks to a situation where (as here) the plaintiff seeks damages for statutory claims and at the same time seeks to rescind a settlement agreement in order to recover damages for conduct that was the subject of the settlement agreement, as well as recovering damages for the conduct that postdated the settlement agreement. In the absence of any case law on point, the department has failed to persuade us that the trial court was obligated to grant the department's motion to bifurcate just because Rodriguez was seeking to rescind the settlement agreement.
The department next contends the trial court erred "when it ignored the weight of the authority [under section 592] advising that equitable issues be tried before legal claims." We disagree.
Section 592 provides that "[i]n actions for the recovery of specific, real, or personal property, with or without damages, or for money claimed as due upon contract, or as damages for breach of contract, or for injuries, an issue of fact must be tried by a jury, unless a jury trial is waived, or a reference is ordered, as provided in this Code. Where in these cases there are issues both of law and fact, the issue of law must be first disposed of. In other cases, issues of fact must be tried by the Court, subject to its power to order any such issue to be tried by a jury, or to be referred to a referee, as provided in this Code."
Citing the second sentence of the statute, the department contends section 592 "requires courts to decide equitable claims before legal claims are presented to a jury" and thus the trial court here was required to decide Rodriguez's rescission claim before his FEHA claims were tried by the jury. The department is mistaken.
Section 592 does not speak directly to the order of trial in a case, like this, that presents both legal claims (the claims for damages under the FEHA) and an equitable claim (the claim for rescission of the settlement agreement). To serve its argument, however, the department deems Rodriguez's rescission claim to be an "issue of law" and his FEHA claims to be an "issue of fact," so that the rescission claim had to be "first disposed of" under the mandate of the statute's second sentence. But case law — even the case law cited by the department — does not support this argument.
Citing Estate of Fincher (1981)
Bate makes clear that the trial court was under no obligation to decide Rodriguez's rescission claim before his FEHA claims were tried by the jury. The order of proof was a matter for the trial court's discretion. To the extent the department argues the trial court abused its discretion because the court's refusal to bifurcate the trial "caused severe prejudice to the [d]epartment," we turn to that argument now.
Subdivision (b) of section 1048 provides that "[t]he court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any cause of action, including a cause of action asserted in a cross-complaint, or of any separate issue or of any number of causes of action or issues, preserving the right of trial by jury required by the Constitution or a statute of this state or of the United States."
The department contends bifurcation "would have promoted judicial economy" because if the trial court had found that Rodriguez was not entitled to rescind the settlement agreement, "Rodriguez would not have been able to offer many significant items of evidence" and thus "the trial . . . would have been dramatically shorter." In arguing this point, however, the department ignores the trial court's determination that, even if the agreement was not rescinded, Rodriguez might "be entitled to offer as relevant evidence matters that occurred before November 3rd of 2006 either on a theory of a continuing violation of a work place practice and/or in support of the fourth cause of action of the . . . [d]epartment['s] failure to correct any pre-existing discriminatory and/or retaliatory practices, and possibly under the mandate of Evidence Code section 1101(b) as prior acts that may have some relevance or circumstantial proof of intent to discriminate and/or retaliate."
"A judgment or order of the trial court is presumed to be correct," and "[i]t is the appellant's burden to affirmatively demonstrate error." (In re Marriage of Gray (2002)
Beyond the issue of judicial economy, the department contends it was prejudiced by the trial court's refusal to bifurcate the trial because "the Jury heard evidence of damages arising from claims Rodriguez released in the Settlement Agreement even though that Settlement Agreement has never been rescinded." According to the department, "Had the Jury not heard the inflammatory and irrelevant information that was unrelated to the issue of breach, the Jury m[ight] have answered question 19 of the Special Verdict in the negative" — that is, the jury might have found there was no breach.
This argument fails for much the same reason as the previous argument based on judicial economy. While noting the possibility of "undue prejudice to the state," the trial court concluded that bifurcation "would not be economical and would not prevent any acts that occurred before November 3rd, 2006 from being produced or introduced before the jury." Thus, the trial court recognized that even if the trial were bifurcated, the jury would still hear evidence of the department's presettlement agreement conduct and thus bifurcation would not prevent the potential prejudice. By failing to challenge the trial court's determination that the evidence would have been largely the same whether the settlement agreement was rescinded, the department has failed to show abuse of discretion in the trial court's refusal to bifurcate the trial.
The department complains that the denial of its motion to bifurcate "allowed [Rodriguez] to recover damages for both released claims and for the breach of the Settlement Agreement itself" and "hopelessly muddled the Jury's assessment of liability and damages in this action." With respect to economic damages, the department argues that the amount the jury awarded ($248,709) was made up of two figures: (1) the $240,649 that Rodriguez's economics expert testified was Rodriguez's harm from not being promoted to Special Agent Supervisor in April 2007, and (2) $8,060, which represented 62 sessions with Rodriguez's psychologist at $130 per session.
There are several flaws in the department's argument. First, an award of damages for the harm Rodriguez suffered from not being promoted in April 2007 was not necessarily "dependent upon the existence of the Settlement Agreement," as the department contends. As the department points out elsewhere, in closing, Rodriguez "identified the alleged breach [of the settlement agreement] as evidence of retaliation." Indeed, Rodriguez specifically identified the "denial of promotions" as "acts of retaliation." Thus, the jury could have determined that the department's refusal to promote Rodriguez in April 2007 was an act of retaliation in violation of the FEHA and awarded Rodriguez damages for that retaliatory action regardless of whether the department's denial of that promotion also constituted a breach of the settlement agreement.
Second, the department's assertion that "the $8,060 of Rodriguez['s] economic damages that related to his past and future treatment with [his psychologist] was awarded based upon consideration of claims Rodriguez waived in the Settlement Agreement" is based on pure speculation. While it may be reasonable to conclude the award of economic damages was made up of the $240,649 that Rodriguez's economics expert testified was Rodriguez's harm from not being promoted in April 2007 and the cost of 62 sessions with Rodriguez's psychologist at $130 per session, there is no basis for concluding that the 62 sessions must have included past sessions that would not have been needed except for the department's presettlement agreement conduct, i.e., sessions that were attributable to claims Rodriguez released in the settlement agreement. The psychologist testified that it would be beneficial for Rodriguez to have further treatment with her for "probably a year and a half to two years, preferably weekly." Weekly sessions for two years would amount to 104 sessions. Thus, it is entirely possible that if the award of economic damages included money for 62 therapy sessions, as the department posits, all of those sessions could have been future sessions that the jury concluded were necessary because of retaliation the department engaged in after the settlement agreement. In other words, the department has failed to establish that the jury's award of damages necessarily was based on claims Rodriguez released in the settlement agreement.
To the extent it was possible for the jury to award damages to Rodriguez based on presettlement agreement claims and postsettlement agreement claims (regardless of whether that actually happened), the trial court did not have to bifurcate the trial to avoid that possibility. Instead, as the court recognized, that possibility could be eliminated with a special verdict form that allowed the jury to resolve "the factual issue of whether there's a breach in the first instance," with the court then determining "the equitable question of whether rescission is a proper remedy." If the jury determined there was a breach, but the court determined Rodriguez was not entitled to rescind the settlement agreement, or if the jury determined there was no breach, and therefore no basis for Rodriguez to rescind, the jury could have been directed to determine whether the department had engaged in conduct prohibited by the FEHA after the settlement agreement and, if so, what were Rodriguez's damages from that conduct. If, on the other hand, the jury determined there was a breach and the court determined Rodriguez was entitled to rescind the settlement agreement, then the jury could have been directed to determine whether the department had engaged in conduct prohibited by the FEHA at any time and, if so, what were Rodriguez's damages from that conduct.
It is true the special verdict form actually used here did not achieve this goal of allowing the jury to determine liability and damages for presettlement agreement conduct only after the trial court determined that Rodriguez was entitled to rescind the settlement agreement, but that was a result of a faulty special verdict form, not the trial court's refusal to bifurcate the trial. The department, however, has not asserted any error in the verdict form, and thus any such claim of error has been forfeited.
In summary, then, the department has failed to show that the trial court acted arbitrarily, capriciously, or outside the bounds of reason in refusing to bifurcate the trial into distinct phases addressing first Rodriguez's rescission claim and then his FEHA claims. To the extent it was possible for the jury to have awarded Rodriguez damages for claims that predated the settlement agreement, the department has not shown that the jury in fact did so, and in any event that possibility was a result of a faulty special verdict form that the department has not challenged on appeal rather than a result of the trial court's refusal to bifurcate the trial. Accordingly, we reject the department's claim of error in the trial court's denial of the bifurcation motion.
Failure To Prevent Cause Of Action
The department contends that subdivision (k) of Government Code section 12940
First, the department fails to point to any part of the trial court proceedings where it raised this issue. Thus, the department has failed to identify any claim of trial court error on this point that was preserved for appellate review.
Even assuming some such claim of error was properly before us, however, the department fails to identify any prejudice that it suffered. Under the special verdict form presented to the jury, the jury decided that the department retaliated against Rodriguez but did not discriminate against him or harass him based on his race. The jury also determined that the department's retaliation was a substantial factor in causing harm to Rodriguez. The jury then determined that the department failed to take reasonable steps to prevent discrimination, retaliation, or harassment against Rodriguez and that failure was also a substantial factor in causing harm to Rodriguez. Because the jury found that the department did not discriminate against or harass Rodriguez, it is reasonable to infer that the jury's conclusion on the "failure to prevent" cause of action related solely to the department's failure to take reasonable steps to prevent the retaliation the jury found Rodriguez suffered. Thus, the jury's award of damages to Rodriguez was for the department's retaliation against Rodriguez and for the department's failure to take reasonable steps to prevent that retaliation.
Even assuming for the sake of argument that the failure to take reasonable steps to prevent retaliation is not actionable separate and apart from the underlying retaliation, the department fails to explain how allowing the jury to premise its award of damages in this case on the failure to prevent the retaliation as well as on the retaliation itself could have resulted in any prejudice to him. So far as we can discern, the measure of damages would have been the same in any event. At the very least, the department fails to show otherwise. Accordingly, the department has not persuaded us of any error on this point.
"The FEHA provides that `the court, in its discretion, may award to the prevailing party reasonable attorney's fees and costs . . . .' (Gov. Code, § 12965, subd. (b).) In determining the fee award, the trial court must first determine `a "lodestar" or "touchstone" figure, which is the product of the number of hours worked by the attorneys and a reasonable fee per hour.' [Citations.] The trial court then has the discretion to increase or reduce the lodestar figure by applying a positive or negative `"multiplier"' based on a variety of factors. [Citations.] We review the trial court's decision on attorney fees under an abuse of discretion standard." (Greene v. Dillingham Construction N.A., Inc. (2002)
Fees For The Rescission Claim
On appeal, the department first contends the trial court should have reduced the lodestar amount to account for the work done on the rescission claim. The department argues that "[n]o statute allows for recovery of fees for the pursuit of Rodriguez's purported rescission cause of action," which was not based on the FEHA, and "Rodriguez specifically disclaim[ed in his complaint] that he was seeking attorney fees based upon his purported rescission cause of action."
"Where a lawsuit consists of related claims, and the plaintiff has won substantial relief, a trial court has discretion to award all or substantially all of the plaintiff's fees even if the court did not adopt each contention raised." (Downey Cares v. Downey Community Development Com. (1987)
Here, the trial court specifically found that "[a]ll the claims were related" and "[t]he related nature of the claims leads to a reasonable conclusion that the work performed would have been necessary just for the retaliation claims." In other words, the trial court essentially concluded that it would be impossible to identify services that Rodriguez's attorney provided solely on the issue of rescission that were not also related to the retaliation claims on which Rodriguez was awarded damages. This conclusion makes particular sense when it is understood that the reason Rodriguez was seeking rescission in the first place was to increase the scope of the department's actions on which he could recover damages for retaliation. Under these circumstances, Rodriguez's rescission claim was inextricably intertwined with the FEHA retaliation claims on which he prevailed, and the trial court acted well within its discretion in determining that there should be no reduction for work attributable to the rescission claim.
The department next contends the trial court abused its discretion in applying a multiplier to the lodestar amount. We disagree.
"In FEHA cases, the trial court has the discretion to apply a multiplier or fee enhancement to the lodestar figure to take into account a variety of factors, including the quality of the representation, the novelty and difficulty of the issues presented, the results obtained and the contingent risk involved. [Citations.] In Ketchum v. Moses[, supra,] 24 Cal.4th [at page] 1132 . . ., a SLAPP (strategic lawsuit against public participation) action, our Supreme Court explained that the purpose of a multiplier `is to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services. . . . [¶] . . . [The multiplier] for contingent risk [brings] the financial incentives for attorneys enforcing important constitutional rights . . . into line with incentives they have to undertake claims for which they are paid on a fee-for-services basis.' (Italics added.) The court further noted that applying a fee enhancement does not inevitably result in a windfall to attorneys: `Under our precedents, the unadorned lodestar reflects the general local hourly rate for a fee-bearing case; it does not include any compensation for contingent risk, extraordinary skill, or any other factors a trial court may consider . . . . The adjustment to the lodestar figure, e.g., to provide a fee enhancement reflecting the risk that the attorney will not receive payment if the suit does not succeed, constitutes earned compensation; unlike a windfall, it is neither unexpected nor fortuitous. Rather, it is intended to approximate market-level compensation for such services, which typically includes a premium for the risk of nonpayment or delay in payment of attorney fees.'" (Greene v. Dillingham Construction N.A., Inc., supra, 101 Cal.App.4th at pp. 426-427, fn. omitted.)
Here, the department has not persuaded us that it was clearly wrong for the trial court to apply a multiplier of 1.5 in determining the reasonable value of the services Rodriguez's counsel provided on a contingency fee basis.
The department first argues that "[t]he primary claim upon which Rodriguez prevailed — retaliation — does not involve any particularly novel or difficult questions." The department does concede that "novel and difficult issues" were "involved [in] Rodriguez's contract cause of action for rescission," but the department asserts that "Rodriguez abandoned the rescission claim post-verdict" and "[i]n any event, . . . he cannot recover fees for this non-FEHA claim."
We have concluded already that Rodriguez's rescission claim was inextricably intertwined with the FEHA retaliation claims on which he prevailed, so the latter part of the department's argument is without merit. As for the fact that Rodriguez ultimately declined to pursue his rescission claim to completion — resting instead on the damages award he achieved in the absence of rescission — it remains true that Rodriguez prevailed in establishing breach of the settlement agreement. Under these circumstances, the department has not shown it was clearly wrong for the trial court to determine that "difficult and novel issues that presented an immense challenge to [Rodriguez]'s counsel" were a factor that weighed in favor of a multiplier.
The department next argues a multiplier was not appropriate because "Rodriguez's counsel was able to litigate this case while undertaking representation of others in their own cases." But the trial court did not rely on this factor in approving the multiplier, so the department's showing that this factor was not present is without value.
Relying on Weeks v. Baker & McKenzie (1998)
In Weeks, the appellate court noted that the contingent nature of a fee award in a case under FEHA is not the same as in a case that results in no fund of money from which attorney fees might be paid nor in any monetary recovery by the plaintiff and in which the plaintiff's attorney must rely on the public attorney general theory to recover a fee award, because in that class of cases "it [i]s uncertain that the attorneys w[ill] be entitled to an award of fees even if they prevail." (Weeks v. Baker & McKenzie, supra, 63 Cal.App.4th at p. 1175.) In a FEHA case, on the other hand, "Government Code section 12965, subdivision (b) create[s] a reasonable expectation that attorney fees w[ill] not be limited by the extent of [the plaintiff's] recovery and that [the plaintiff's] attorneys w[ill] receive full compensation for their efforts. The contingent nature of the litigation [in a FEHA case], therefore, [i]s the risk that [the plaintiff will] not prevail. Such a risk is inherent in any contingency fee case and is managed by the decision of the attorney to take the case and the steps taken in pursuing it." (Ibid.)
To the extent the Weeks court downplayed the significance of the contingent nature of a fee award in a FEHA case as a basis for applying a multiplier, we find that court's discussion inconsistent with our Supreme Court's later discussion of the contingency factor in Ketchum v. Moses, supra, 24 Cal.4th at page 1132, set forth above. The Supreme Court has explained that the continent nature of a fee award weighs in favor of a multiplier because the multiplier is intended to approximate market-level compensation for services provided on a contingency fee basis by including a premium for the risk of nonpayment and/or delay in payment. Thus, the fact that Rodriguez's attorney may have "assumed no greater risk than any other contingency lawyer" does not weigh against the application of a multiplier.
The department next argues that a multiplier was not justified because the burden of the award in the case will fall on the "the taxpaying public." We do not disagree that this factor weighs against the application of a multiplier. The department has not shown, however, that this factor alone demonstrates that the trial court was clearly wrong in deciding a multiplier was appropriate here. Moreover, to the extent the department asserts that the multiplier here "will result in reduced narcotics enforcement" in particular, the department cites no evidence in support of that assertion.
Finally, the department contends a multiplier was inappropriate because, under Weeks, "fee enhancements under FEHA are appropriate only in cases where a broad public interest is served by the litigation," which was (in the department's view) not the case here. Unlike the department, we do not read the decision in Weeks to require that FEHA litigation serve a "broad public interest" in order for a mulitplier to be appropriate. Indeed, the portions of the Weeks opinion the department cites in support of its argument did not involve the question of whether a finding of "public interest" is required to make a multiplier appropriate in a FEHA case. Instead, they involved: (1) a discussion of why fee recovery was not appropriate in that case under the private attorney general theory (Weeks v. Baker & McKenzie, supra, 63 Cal.App.4th at p. 1170), and (2) a discussion of "[t]he classic situation justifying an upward adjustment of the lodestar figure," where "[t]he litigation resulted in no fund of money from which attorney fees might be paid, nor did it result in any monetary recovery by the plaintiffs" (id. at pp. 1173-1174).
In any event, even assuming some kind of result inuring to the "public interest" were required to justify application of a multiplier in a FEHA case, the department fails to explain why "the impact this case has had on the hiring and promotional policies within the [d]epartment . . . and more particularly the Bureau of Narcotic Enforcement," as found by the trial court, was not sufficient to meet that criterion.
In the end, only one of the factors on which the department relies — impact on the public fisc — weighed against the application of a multiplier here. As we have explained, however, the department has not shown that this factor alone demonstrates that the trial court was clearly wrong in deciding a multiplier was appropriate here.
The department contends the amended judgment "must be corrected to reflect the appropriate rate of interest [on the award of damages], which is 7% and not 10%" because public entities are subject to only the lesser rate. Rodriguez contends that the 10 percent rate is correct because that is what is provided for in section 685.010, subdivision (a), and the cases the department cites apply only to "
In California Fed. Savings & Loan Assn. v. City of Los Angeles (1995)
Although California Fed. Savings involved a judgment against a local public entity, and not a judgment (as here) against a state agency, the reasoning of the Supreme Court in that case applies with equal force to a judgment against a state agency because there is a provision exactly like Government Code section 970.1, subdivision (b) that applies to state agencies. Specifically, Government Code section 965.5, subdivision (b) provides that "[a] judgment for the payment of money against the state or a state agency is not enforceable under Title 9 (commencing with Section 680.010) of Part 2 of the Code of Civil Procedure . . . ." Accordingly, under the force of the reasoning in California Fed. Savings, the constitutional rate of 7 percent, and not the statutory rate of 10 percent, applies to the judgment against the department. Indeed, the trial court apparently recognized this when it corrected the 10 percent figure applicable to the award of attorney fees to 7 percent; it appears to have been a mere oversight that the trial court did not also correct the figure applicable to the award of damages.
The amended judgment entered April 29, 2010 is modified to provide for interest on the award of damages at the rate of 7 percent per annum, and, as modified, the judgment is affirmed. Rodriguez shall recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a).)
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