As a direct response to the “Me Too” movement, California enacted a number of new laws in 2018 regarding workplace sexual harassment. This wave of legislation included an amendment to the section of the Fair Employment and Housing Act (“FEHA”) governing fee and cost awards, which was intended to make it more difficult for prevailing defendant-employers to recover attorneys’ fees and costs from plaintiff-employees.
No Fee-Shifting Except Where Plaintiff Brings a “Frivolous” Case
The fee-shifting FEHA amendment, which became effective on January 1, 2019, made it dramatically harder for a prevailing employer-defendant to recover its fees in a FEHA lawsuit after making an “offer to compromise” pursuant to section 998 of the Code of Civil Procedure. (In general, a Section 998 offer to compromise allows a prevailing party to recover its costs from the date the offer is made if the prevailing party ultimately recovers more than the amount specified in the offer. For a more detailed discussion of Section 998 offers, please see our previous blog post here.)
As a result of the amendment, a prevailing defendant-employer in a FEHA lawsuit can only recover its post-998 offer fees and costs if the court finds the plaintiff’s “action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.” Further, even when a plaintiff’s case was found to be “frivolous, unreasonable, or groundless,” the Court still retains discretion as to whether to issue an award of fees to the defendant-employer.
Scott v. City of San Diego
Many assumed that the above FEHA amendment represented a change in the law. However, in the recent case of Scott v. City of San Diego, 38 Cal.App.5th 228, a California Court of Appeal found that the FEHA amendment merely clarified existing law, as opposed to creating new law. Therefore, because it merely clarified existing law rather than making new law, the Court held that the FEHA amendment applied retroactively.
Applying the FEHA amendment to the facts of the case, the Court ruled that the plaintiff-employee’s lawsuit was not frivolous. Thus, the Court reversed the trial court’s award of attorneys’ fees to the defendant-employer.
You can read the opinion in Scott v. City of San Diego here.
