Cal. Code Regs. Tit. 11, § 3201 - Attorney's Fees

Code of Civil Procedure section 1021.5 permits an award of attorney's fees to a "successful party ... in any action which has resulted in the enforcement of an important right affecting the public interest if:

(a) a significant benefit ... has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement ... are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any." These guidelines are intended to be consistent with existing law interpreting Code of Civil Procedure section 1021.5, but provide assistance to the litigants and the court in applying them to issues commonly arising under Proposition 65. These guidelines apply to settlements under which the basis for a fee award is provided by Code of Civil Procedure section 1021.5. Where there is a different or additional basis for an award of fees, parts of these guidelines may not apply. Since the Legislature has mandated that the court must determine that the attorney's fees in all settlements of Private Proposition 65 actions must be "reasonable under California law," the fact that the defendant agreed to pay the fee does not automatically render the fee reasonable. The fact that the fee award is part of a settlement, however, may justify applying a somewhat less exacting review of each element of the fee claim than would be applied in a contested fee application.

(a) Successful Party. The fact that a defendant changed its conduct prior to entry of a court order or judgment does not preclude a finding that the plaintiff was successful. If the plaintiff's action was the cause or "catalyst" of the change in conduct, the plaintiff may be deemed successful.

(b) Public Benefit.

(1) In a case alleging failure to warn, a settlement that provides for the giving of a clear and reasonable warning, where there had been no warning provided prior to the sixty-day notice, for an exposure that appears to require a warning, is presumed to confer a significant benefit on the public. If there is no evidence of an exposure for which a warning plausibly is required, there is no significant public benefit, even if a warning is given. If the relief consists of minor or technical changes in the language, appearance, or location of a warning in a manner that is not likely to significantly increase its visibility or effectiveness in communicating the warning to the exposed persons, there is no significant public benefit. Where a settlement sets forth a standard or formula for when a given product requires a warning, supporting evidence should show that at least some of the products in controversy in the action either are, or at some time were, above the warning level, or the existence of the standard or formula itself may not establish the existence of a significant public benefit.

(2) Reformulation of a product, changes in air emissions, or other changes in the defendant's practices that reduce or eliminate the exposure to a listed chemical, in lieu of the provision of a warning, are presumed to confer a significant benefit on the public. Where a settlement sets forth a standard or formula for reformulation, supporting evidence should show that at least some of the products in controversy in the action either are, or at some time relevant to the litigation were, above the agreed-upon reformulation standard or formula, or else the mere agreement to a reformulation standard or formula may not establish the existence of a significant public benefit. Similarly, where a settlement requires changes in air emissions or other changes in the defendant's practices, supporting evidence should show that the changes in air emissions or to the defendant's practices will result in emissions or exposures that are less than the emissions or exposures that either are present or were present at some time relevant to the litigation, or else the mere agreement to make the changes may not establish the existence of a significant public benefit.

(3) In a case alleging violations of Health and Safety Code section 25249.5, the reduction or elimination of the discharge of listed chemicals establishes a significant public benefit.

(c) Necessity of Private Enforcement. To establish necessity of private enforcement, the plaintiff should establish that its continued prosecution of the action was necessary to obtain the relief in the settlement. For example, where a defendant proposed in writing to provide certain relief, and the settlement or judgment does not provide any significant additional relief, additional fees incurred after the time that the offer was rejected may not be reasonable or necessary.

(d) Reasonable Fees. Hourly fees should be those reasonable for attorneys of similar skill and experience in the relevant market area. Once a lodestar fee is a calculated, a multiplier of that amount is not reasonable unless a showing is made that the case involved a substantial investment of time and resources with a high risk of an adverse result, and obtained a substantial public benefit. No fees should be awarded based on additional time spent in response to the Attorney General's inquiries or participation in the case, unless specifically identified and approved by the court.

(e) Documentation. All attorney's fees and any investigation costs sought to be recouped in a Settlement should be justified by contemporaneously kept records of actual time spent or costs incurred, which describe the nature of the work performed. Declarations relying on memory or recreated, non-contemporaneously kept records may raise an issue concerning the accuracy of the time estimate.

(f) "Contingent Fee" Awards. A "contingent" fee is an attorney's fee paid pursuant to an agreement between the plaintiff and the plaintiff's attorney under which the attorney will be paid a specified amount or percentage of the total recovery obtained for the plaintiff. Where a plaintiff obtains an award of funds that belong exclusively to the plaintiff without any restriction, these fees generally are not considered to have been awarded by the court, and are reviewed by courts only under specified circumstances (e.g., compromise of a claim of a minor). In Proposition 65 cases, however, there typically is no award of damages or other unrestricted funds to the plaintiff (other than the plaintiff's 25% of any civil penalty recovery). Accordingly, simply denominating a fee award as "contingent" and based on the total monetary recovery does not necessarily render the fee amount "reasonable under California law," and such fees should be justified under Code of Civil Procedure section 1021.5 or another applicable theory.

Notes

Cal. Code Regs. Tit. 11, § 3201

1. New section filed 1-17-2003; operative 1-17-2003 pursuant to Government Code section 11343.4 (Register 2003, No. 3).
2. Amendment of subsections (b)(1)-(2) and (e) and amendment of NOTE filed 8-30-2016; operative 10-1-2016 (Register 2016, No. 36).

Note: Authority cited: Sections 25249.7(f)(4) and 25249.7(f)(5), Health and Safety Code. Reference: Section 1021.5, Code of Civil Procedure; and Sections 25249.7(f)(4) and 25249.7(f)(5), Health and Safety Code.

1. New section filed 1-17-2003; operative 1-17-2003 pursuant to Government Code section 11343.4(Register 2003, No. 3).
2. Amendment of subsections (b)(1)-(2) and (e) and amendment of Note filed 8-30-2016; operative 10/1/2016 (Register 2016, No. 36).