Prevailing FEHA Defendant Not Entitled To Litigation Costs Unless Plaintiff’s Lawsuit Lacked Objective Basis

by Fenwick & West LLP

The California Supreme Court in Williams v. Chino Valley Independent Fire District affirmed the asymmetrical nature of litigation costs awards in discrimination lawsuits under the California Fair Employment and Housing Act (FEHA), finding that a prevailing defendant is not entitled to an award of litigation-related costs as a matter of right, unlike a prevailing plaintiff. Such an award is within the discretion of the trial court, and must be based on the court’s finding that the plaintiff brought or continued litigating the action without an objective basis for believing it had potential merit.

Loring Winn Williams, a firefighter, sued his employer for alleged disability discrimination under the FEHA. The trial court awarded judgment to the employer, finding that no genuine issues of material fact existed regarding the merit of the claim. After the defendant moved for an award of costs (but not attorneys’ fees), the trial court — without making any findings that the lawsuit was frivolous, unreasonable or groundless — awarded defendant $5,368.88 in costs. A California Court of Appeal affirmed the ruling, holding that an award of costs is mandatory under general court rules rather than discretionary under the FEHA statute.

The California Supreme Court reviewed the case to determine the appropriate standard for an award of costs to a prevailing defendant in a FEHA action, and whether the “frivolous, unreasonable or groundless” standard applicable to an award of attorneys’ fees also applies to an award of litigation costs. (Litigation costs typically consist of filing, motion and jury fees, costs of deposition transcripts, costs of service of process and expert witness fees, and are usually much smaller than the amount of attorneys’ fees incurred in defending a lawsuit.)

The Court determined that an award of costs, like an award of fees, is within the discretion of the trial court. The Court further noted that the risk of bearing an award of litigation costs would chill potential plaintiffs from attempting to vindicate their statutory right against workplace discrimination, and therefore should be subject to the same standard as an award of attorneys’ fees. Accordingly, costs should not be awarded to a prevailing FEHA defendant unless the trial court determines that the action was objectively without foundation when brought, or the plaintiff continued to litigate after it clearly became so.

The Williams decision highlights the asymmetry between prevailing plaintiffs and prevailing defendants in FEHA lawsuits. Prevailing plaintiffs are ordinarily entitled to receive his or her costs and attorneys’ fees unless special circumstances would render such an award unjust. On the other hand, a prevailing defendant will not be awarded fees and costs unless the trial court finds that the action was objectively without foundation.

While the Williams decision imposes a higher standard for prevailing defendants in FEHA actions who seek recovery of costs, the case does not appear to affect the ability of defendants to seek an award of costs under California Code of Civil Procedure § 998. C.C.P. § 998 allows a defendant to recover costs where the plaintiff failed to obtain a more favorable judgment or award than a settlement or judgment formally offered by the defendant during litigation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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