“I want to sue my California employer for harassment and discrimination? But what happens if I lose my case?”

One important question that people often ask (and should ask) when thinking about suing their employer is, “What happens if I lose?  Do I have to pay the defendant any money?”Gear-and-Gavel_dark-blue

In answering this question, it is critical to understand the difference between attorneys’ fees and costs.  “Attorneys’ fees,” as the name indicates, are the actual fees that a defendant has paid to its attorneys to represent it in a lawsuit.  “Costs” refers to the various expenditures that are made during the course of litigation, and can include things such as filing fees and court reporter fees.

In Williams v. Chino Valley Independent Fire District S213100 (May 4, 2015) the California Supreme Court recently clarified the circumstances in which a plaintiff who files a case under the Fair Employment and Housing Act (FEHA) and loses must pay the defendant’s case costs.  The FEHA governs claims under California law for discrimination, harassment, and retaliation for complaining about discrimination and harassment, among other things.  The Williams opinion will therefore impact all cases involving such claims.

First, the holding:  A plaintiff who wins in a FEHA case is normally able to recover both costs and attorney fees absent special circumstances that would make such an award unjust.  But when a plaintiff loses in a FEHA case, the court should not award costs or fees to the defendant unless the action had no foundation when it was filed, or the plaintiff continued to pursue the case after it became clear that the action had no foundation.

The Chino case arose because there are two statutes that apply to the recovery of costs by prevailing parties in California.  California Code of Civil Procedure (CCP) section 1032 guarantees that prevailing parties in civil litigation can recover their case costs.  Under this statute, a defendant that prevails is ordinarily entitled to recover case costs.  However, Government Code section 12965(b), which is part of the FEHA, provides that a court may, in its discretion, award reasonable attorney fees and costs, as well as expert witness costs, to prevailing parties in cases brought under the FEHA.  These statutes thus raise two questions:

  1. Is Section 12965(b) an exception to the general rule set forth in Section 1032?
  2. If so, what must a prevailing defendant prove to recover attorney fees and costs in a FEHA case?

The California Supreme Court began by considering the state of the law under related federal statutes.  In the seminal case of Christiansburg Garment Co. v. EEOC (1978), the U.S. Supreme Court held that defendants who prevail in cases brought under Title VII of the Civil Rights Act of 1964 may not recover attorneys’ fees unless the plaintiff’s action was frivolous, unreasonable, or groundless.

Costs, however, are more complicated.  In the Ninth Circuit, a defendant who prevails in a Title VII case need not meet the Christiansburg standard to recover costs.  See, e.g., Nat’l Org. for Women v. Bank of California.  In other words, in discrimination and harassment cases brought under federal law, a defendant that wins is able to recover its costs without having to provide that the action was frivolous, unreasonable, or groundless.

For over twenty years California courts have applied the Christiansburg standard to determine whether defendants who prevail in FEHA cases are entitled to recover their attorneys’ fees.  See, e.g., Cummings v. Benco Building Services (1992).  This doctrine is important, because attorneys’ fees in these types of cases can easily reach five hundred thousand dollars.  If plaintiffs were required to pay the defendants’ fees if they lost, many plaintiffs would choose not to pursue meritorious cases because of the specter of economic ruin should a jury reject their claims.

In Chino, the California Supreme Court applied the Cummings doctrine to a defendant’s costs.  The Court held that Government Code section 12965(b) is an exception to CCP 1032(b).  Therefore, a defendant that prevails in a case brought under the FEHA may not recover its costs unless the action was without foundation when the plaintiff filed it, or the plaintiff continued to pursue it after it became clear that the action was without foundation.

The Chino case did not address the effect of offers to compromise under CCP section 998 in FEHA cases.  However, it did take an important step in protecting plaintiffs who bring claims under California law for discrimination and harassment.