The California Supreme Court issued an interesting opinion in January 2010 on attorneys’ fees. Although it has far reaching implications, it did not get much publicity.

       In Chavez v. City of Los Angeles (2010) 47 Cal 4th 970, (Chavez v. L.A. ) Plaintiff Robert Chavez, a police officer with the Los Angeles Police Department (“LAPD”), sued the City of Los Angeles and his supervisors; (1) first, in Los Angeles County Superior Court for defamation, intentional infliction of emotional distress, invasion of privacy and civil rights violations, (2) then, in federal court for unlawful employment discrimination under California’s Fair Employment and Housing Act (“FEHA”) (Government Code §12900 et seq.), and (3) then again, in Los Angeles County Superior Court alleging employment discrimination, harassment and retaliation in violation of California’s FEHA, trespass and loss of consortium. Plaintiff requested the federal court to take jurisdiction of the state court actions which it did.

       When the dust settled from all of this litigation, the federal court dismissed the lawsuit. The next month, plaintiff filed yet a third action in  Los Angeles County Superior Court alleging various claims in violation of California’s FEHA. He filed it as an “unlimited civil” case meaning that the amount in dispute was $25,000 or more. Eventually, the  matter was heard by a jury during a five day trial. The jury awarded plaintiff $1,500 in economic damages and $10,000 in non-economic damages for a total of $11,500.
 

      As the prevailing party, plaintiff filed a motion for costs in the amount of $13,144.26 and a motion for attorneys’ fees in the amount of $436,602.75 (pursuant to the FEHA statute [Government Code §12965(b)] awarding attorneys’ fees to the prevailing party) encompassing the over 1800 hours of time spent by counsel on all of the different litigation from the very inception.

       The trial court denied the motion for attorneys’ fees as an item of costs under Code of Civil Procedure §1033.5(a)(10), noting that under Code of Civil Procedure §1033(a), it has discretion to do so in those instances where plaintiff filed her action within the unlimited civil jurisdiction (cases valued at $25,000 or more) but “. . .recovers a judgment that could have been rendered in a limited civil case” (cases valued at less than $25,000). (CCP §1033(a)).
   

      The appellate court reversed, agreeing with plaintiff’s counsel that due to the complexity of the case, the case could not have been filed as a limited civil case in light of the very limited discovery allowed in such cases. Because the rules of court greatly limit the number of depositions that can be taken and the other types of discovery that can be conducted in limited civil cases, the appellate court determined it was not practical to file such a complex action in the lower court.

       The Supreme Court disagreed with the appellate court, and sided with the trial court. It noted that the purpose of section 1033(a) “. . .is to encourage plaintiffs to bring their actions as limited civil actions whenever it is reasonably practicable to do so.” (Id. at 988):

      “. . .what it requires is a realistic appraisal of the amount of damages at issue and whether the action might fairly have been litigated using the streamlined procedures of limited civil actions.” (Id.)

      The court further noted that complexity of the case does not change its holding:

      “Although extensive discovery may be conducted in many or even most FEHA actions, this does not mean that elaborate discovery proceedings are invariably necessary to effectively litigate a FEHA claim. Moreover, although in limited civil cases, the discovery permitted as of right is restricted (see, Code of Civil Procedure §94), the trial court may authorize additional discovery. . . or the parties may stipulate to additional discovery . . . .” (Id. at 988-989).

       Consequently, the Supreme Court held that in a FEHA case, a trial court does have discretion to deny costs – i.e., attorneys’ fees – to a plaintiff who recovers damages that fall within the jurisdiction of a limited civil case.
 

      The obvious implication is that an award of attorneys’ fees – whether allowed by contract or statute – is no longer a mandate. The plaintiff’s attorney is at risk of being denied her fees if she wins the case but the award is one that falls within the jurisdiction of the lower court. In sum, if she files the matter in the wrong court, she may end up receiving far less if any, in fees, than she originally assumed.
 

      This issue resonates with me in light of  my mediation practice as I conduct a lot of ‘lemon law” mediations in which plaintiff’s counsel seeks her fees pursuant to one or more applicable state statutes. Often, counsel has filed the action in the unlimited civil jurisdiction of the court (i.e. over $25,000) but settles the matter for less than $25,000 or within the jurisdiction of the limited civil courts. Should counsel now be denied her fees? Should defense counsel seek to severely limit the fees urging that the action was filed in the wrong court? Suppose, the principal case (which was filed in the unlimited civil jurisdiction of the court) settles for less than $25,000, and the parties agree to settle the issue by filing a motion for fees in the unlimited civil jurisdiction of the court. What should the judge do – go along or use her discretion to deny fees because the matter settled for less than $25,000?

      No doubt, there are a myriad of  hypotheticals to which the court’s holding could apply. . .  and none of us has the crystal ball to foresee how they should be or will be resolved. But, the court’s ruling does provide much to ruminate on!  

       . . .Just a lot to think about!

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      The Sunday magazine of the February 28, 2010 New York Times contains an interesting article entitled “Depression’s Upside” by Jonah Lehrer. Mr. Lehrer is the author of How We Decide  which is a great book and is the subject of my  January 15, 2010 blog.
 

      As Mr. Lehrer explains, it seems that depression may be a good thing, after all. While granted, depression has been classified as a mental illness which causes its victim either to stop eating or to start eating too much, lose his/her inclination for sex, have difficulty sleeping and in general be very tired even though he/she is doing less and less, its “rumination” feature is actually beneficial. 
 

      According to evolutionary psychiatrist, Andy Thompson (at the University of Virginia) and Paul Andrews, an evolutionary psychologist at Virginia Commonwealth University, the “thought process” of rumination defines this order. Those who are depressed “fixate on their flaws and problems, thus extending their negative moods” or “chew over” (i.e. ruminate) their thoughts continuously. (Id. at 2). Because rumination takes control of a person’s stream of consciousness, that person will perform poorly on “tests for memory and executive function, especially when the task involves lots of information.” (Id. at 3).
 

      But, perhaps there is a purpose to this rumination. This is what Thompson and Andrews wanted to determine. As evolutionary psychiatrists and psychologists, they believed that the mind is actually “a fine-tuned machine that is not prone to pointless programming bugs.” Thus, while rumination is a response to a specific psychological blow, such as a death, a job layoff or a divorce, they thought that perhaps some good comes out of rumination or that there is, indeed, a net mental benefit from rumination. (Id.) What they found is that it “leads to an extremely analytical style of thinking.” (Id. at 4):
         

        “. . .rumination is largely rooted in working memory, a kind of mental scratchpad that allows us to “work” with all the information stuck in consciousness. When people rely on working memory. . . – they tend to think in a more deliberate fashion, breaking down their complex problems into their simpler parts.” (Id.)

       Because the deliberative thought process is “slow, tiresome and prone to distraction,” our brains grow tired very quickly, and we give up. But the state of depression with its rumination feature allows us to discard all distractions – like eating, sex and sleep – and focus on solving a difficult, if not mind boggling, problems. In short, “wisdom isn’t cheap, and we pay for it with pain.” (Id.)
     

      As Mr. Lehrer points out, obviously, there are many who disagree with this theory that, from an evolutionary perspective, depression is a good thing because it causes us to avoid distractions and focus on solving complex problems.

      But, this theory led me to “ruminate” whether depression is a good or bad thing in the context of resolving disputes. In many of my mediations, I have witnessed parties go through the five stages of grief: denial, bargaining, anger, depression and acceptance (On Death & Dying by Elizabeth Kubler-Ross) and soon realized that the parties will not reach a resolution until they reach “acceptance.” But to arrive at that stage, they must pass through the “depression” stage. 
 

      This article on depression or the fourth-stage – explains that there is a lot more to “depression” than the “I don’t care anymore about anything” attitude that is its hallmark. It actually allows a person to focus on the issue, analyze it and come up with a solution that leads her to the next and final stage: acceptance.
 

      So, while superficially, depression seems to militate against resolving disputes, its rumination feature actually enhances the process, if not the outcome. I guess it is somewhat of an oxymoron.
 

       . . .Just something to think about.

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        On Friday, February 5, 2010, I helped a colleague who teaches a mediation clinic in a local  school by coaching some of her students conducting a mock mediation. That is, I observed the students conduct their first  mediation  (using a fact pattern given out by the professor) and provided suggestions.

      The particular fact pattern was, in essence, a collection action. A quick reading of it showed that Plaintiff did not have a very good case and would probably lose in small claims court, were the matter actually tried.  The issue for the student mediator was how evaluative, if at all, should she be in her discussions with  Plaintiff. Should she say anything to Plaintiff to the effect that she faced an uphill battle and if so, how mildly or strongly should such a “ suggestion” be  worded.

      Each of the student mediators approached the task differently, but, they were all evaluative–telling Plaintiff she did not have much of a case and would lose. They each just conveyed  this sentiment differently.

       In driving back to my office, I reflected on this in light of a recent mediation. There, the parties reached an agreement that involved the participation of a third party who was neither a party to the lawsuit nor to the mediation. Implementing the settlement was not going smoothly as the third party was not responding in the manner envisioned by the parties. So, much communication was occurring in trying to keep the settlement on track. More and more, our discussions focused on the cultural differences of the parties and the third party. Plaintiff and the third party were Asian while the defendant was “American”, (that is, Anglo-Saxon.)  

      Suddenly, I had an epiphany or ‘ah-hah” moment. Both the students that day as well as me, must take into the account the cultural background of the participants in deciding whether to be evaluative. Why? Let me explain. In my mediation, the Plaintiff was from a country that followed Dutch law or the civil code tradition in which the judge also investigates, asks questions and prosecutes. That judge has a lot more power and control over the matter than do our American judges under our adversarial system. The system used in this Asian country is not at all  adversarial but  rather, inquisitorial.  
   

       In the later stages of my mediation and with the blessing of her counsel, I became evaluative with the plaintiff advising plaintiff that because her english was very difficult  to understand,  she might well lose the attention of the jury and thus lose her case.  I noted that using an  interpreter may also cause her to lose because again, she may well lose the jury’s attention.

       Subsequent to the mediation, plaintiff’s attorney  advised me  that after my discussion with plaintiff, plaintiff used her mobile phone and told the other party that “she had lost” her case.  At the time, the attorney did not think much of it, but suddenly, amid all of our discussions about cultural differences, he had his own epiphany or  “ah-hah” moment as well, and realizing that given plaintiff’s cultural background, (and even though I told plaintiff  that I was neither an arbitrator nor judge and was not deciding anything), she cloaked me with  authority, Thus, when I warned her that her inability to speak English could adversely impact her case, she understand that to mean that I was deciding her case and telling her that she had “lost”! 

       I have taken many training classes focusing on cultural differences.  But, the discussions have always been in the abstract. This mediation brought it home; be careful about the cultural differences.  What I say as a mediator with the intent that it be received one way may well be taken completely differently by the listener in light of her cultural background. While I wanted my “evaluation” to be taken with a grain of salt, this plaintiff, because of her culture and her country’s legal system, took it as “gospel.”

      …..  Just something to think about.

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      The February 2, 2010 science section of The New York Times has an interesting article by Natalie Angier entitled “Abstract Thoughts? The Body Takes Them Literally.” Evidently, there is a field of science called “embodied cognition” which studies how the brain’s abstract thoughts are manifested in body movements. For example,

      “Researchers at the University of Aberdeen found that when people were asked to engage in a bit of mental time travel, and to recall past events or imagine future ones, participants’ bodies subliminally acted out the metaphors embedded in how we commonly conceptualized the flow of time.”

      “As they thought about years gone by, participants leaned slightly backward, while in fantasizing about the future, they listed to the fore. . . .” (Id.).

       Embodied cognition studies have shown that “. . .the brain is not the only part of us with a mind of its own.” (Id.) That is, we process information with our entire bodies and not just our brain.

       In one experiment, researchers had one group of students hold a cup of hot coffee while a second group held a cup of iced coffee. Each group was then asked to evaluate an imaginary person based on a packet of information.

       As you might guess, those who had held a cup of hot coffee were more likely to find the imaginary person to be warm and friendly than those who had held a cup of iced coffee.
 

      Similarly, in another experiment, participants were asked to answer a questionnaire attached to a clipboard. In one group, the researchers added weight to the clipboard so that it weighed 2.29 lbs. In the other group, the clipboard weighed 1.45 lbs. Again, in response to giving the value of six unfamiliar foreign currencies, those participants who were using the heavier clipboards, “. . .judged the currencies to be more valuable than those with the light clipboards.” (Id.)

       In short, our body takes into account physical cues in deciding what to do, even though those physical cues are unrelated. That is, “. . .the body takes language to heart and can be awfully literal-minded.”(Id.)

       One of my recent blogs (January 22, 2010, “Initiating The Dance“) discussed the concept of anchoring. Perhaps this research fits into that: using physical cues in mentally processing what to do next or how to approach an issue. If someone is holding a heavy book – will they think the issue is “weighty”?  Probably so.

       Or, perhaps “embodied cognition” is simply a fancy word for body language; that is, our physical actions reveal what we are thinking. We have all read about this, seen it in action, attempted to interpret it in others and even engaged in it ourselves.

       No doubt, this field of embodied cognition ties into negotiation and mediation. I just haven’t quite figured out all of the details. If you do – I would love to hear from you. Drop me a line.

       . . .Just something to think about.

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On February 4, 2010, the California Court of Appeal, Second Appellate District, issued its opinion in Lukather v. General Motors, LLC, Case No. B209979. (Lukather v. GM ) Because this is a “lemon law” case, it caught my interest. (I conduct a lot of “lemon law” mediations.)
Plaintiff’s story unfolds as follows:

On April 25, 2005, Paul Lukather leased a Cadillac. Within a month, the Cadillac began exhibiting intermittent but recurring problems in the electronic stability control system. Lukather first brought the car in for repair on June 1, 2005 when the vehicle had been driven only 854 miles. Between June 5, 2005 and January 30, 2007, he brought the car in for repair of this same concern on more than four occasions.

Then, in February 2007, the brakes came on by themselves making the Cadillac difficult to drive. So, Lukather took the car to the dealer, requested that General Motors (“GM”) repurchase it and left it. He refused to pick it up, although he continued to make the lease and insurance payments on it. Although GM paid for a rental vehicle for two months, it refused to do so after April 4, 2002.  Lukather  paid $21,290.46 in car rental fees.

For the next two months, GM went back and forth with Lukather, trying to determine  whether Lukather would accept a replacement vehicle or was insisting on a repurchase. Lukather wanted his lease money back. According to GM, it was unclear what resolution Lukather was seeking. In April 2007, a GM representative told Lukather that it would take GM several months to decide whether to repurchase the Cadillac.

Frustrated, if not angry, Lukather hired an attorney. Suit was filed under the Song-Beverly Consumer Warranty Act (“ACT”), Civil Code §1790 et seq.

In March 2008, the matter went to trial before the Honorable Dewey Lawes Falcone, Ventura County Superior Court Judge (Case No. VC 048559). The trial court tentatively ruled that GM had violated the Act. In May 2008, it issued its statement of decision determining that GM did not act promptly in offering to repurchase the Cadillac and that such actions were “willful.” Consequently, in addition to awarding actual damages of $61,389.13, the trial court imposed a civil penalty in the same amount - $61,389.13 - in addition to prejudgment interest and attorneys’ fees and costs and expenses.

GM appealed contending that: (1) the evidence was insufficient to support  the findings that GM violated the Act, and did so willfully; (2) the Court erred in rejecting GM’s mitigation of damages defense; and (3) the Court abused its discretion in awarding prejudgment interest and attorneys’ fees and costs.

The appellate court affirmed. It determined that approximately six weeks (March 8 to April 12, 2007) was more than enough time for GM to decide to repurchase the Cadillac. The appellate court noted that there was “. . .[n]o evidence [to] support(s) GM’s assertion that . . . restitution was a labor intensive process that required months to accomplish.” (Id. at 9).

Citing Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 Cal. App. 4th 174,( kwan-vs-mbz) the appellate court affirmed the trial court’s determination that GM had acted “willfully” in that it made decisions “ “. . .without the use of reasonable available information germane to that decision. . ..” ” and thus were not “reasonable, good faith decision(s)” (Lukather,supra, at 12).

The appellate court rejected GM’s mitigation of damages defense. GM argued that Lukather’s refusal to respond to GM was the cause of his approximate $21,000 car rental expense. The appellate court, noting that there is no authority in the Act for this defense, found that GM, in essence, was attempting to offset this expense. Noting that the Act does not provide for this type of offset, the appellate court rejected this defense.

Further, the court rejected the contention that the trial court abused its discretion in awarding prejudgment interest. GM urged that Lukather prevented GM from performing and so should not be awarded interest. The appellate court disagreed.

Finally, it found no basis to reverse the award of attorneys’ fees and costs.

This case is significant because it upheld the awards of a civil penalty, and prejudgment interest. No doubt, it will cause much discussion within the “lemon law” community.

. . .Just something to think about.

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