One of the major concerns in defending an employment lawsuit is the financial cost of doing so. Aside from the very real ‘business’ cost of having to focus management’s attention on the case, an employer must pay its own attorney to defend the company. The employer will also be liable for the employee’s statutory attorney’s fees if the employee obtains a judgment. The attorney’s fee statute is one-sided, favoring the employee. This often forces an employer to consider if it should settle a case with minimal damages to avoid its exposure to a larger award of attorney’s fees.
In a rare piece of good news for California employers, the California Supreme Court upheld a trial court’s decision that denied attorney’s fees under the Fair Employment and Housing Act (FEHA) to an employee, even though the employee prevailed in the lawsuit. The case of Chavez v. City of Los Angeles broke tradition with the practice under the FEHA that a prevailing employee automatically receives an attorney’s fees award.
The employee in Chavez v. City of Los Angeles was a police officer who claimed retaliation, among other things. The employee prevailed on that claim, but was awarded only $11,500 in damages. The employee’s attorney submitted an attorney’s fees requests of $870,000. The trial court denied that fee request in its entirely because the employee did not meet the $25,000 jurisdictional limit of the Unlimited Division of the Superior Court. The Court of Appeal reversed that decision, only to be reversed by the California Supreme Court.
When the Supreme Court reviewed the case, it agreed with the trial court. It held there was a sufficient basis to deny the employee any recovery of his attorney’s fees for not recovering at least the $25,000 jurisdictional limit. This result gives support to employers that face lawsuits of a frivolous or trivial nature. They now know the traditional rule of awarding the employee his or her attorney’s fees even for an insubstantial victory may not be the case in every circumstance.
This information is provided for informational purposes only and should not be construed as legal advice. It should not be acted upon without consulting a licensed California attorney about the facts, particular needs and questions of the person or entity considering these issues. Contact this office for help dealing with employment claims.