Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_03-cv-01617/USCOURTS-casd-3_03-cv-01617-2/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

ILENE BUCHHOLZ,

Plaintiff,

v.

DAVE HUMPHREY, et al., 

Defendants.

AND RELATED COUNTERCLAIMS.

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Civil No. 03cv1617-L(WMc)

ORDER DENYING DEFENDANTS’

MOTION FOR ATTORNEYS’ FEES

AND APPLICATION FOR COSTS

In this employment discrimination, breach of contract and fraud action, Defendants

moved for attorneys’ fees pursuant to the California Fair Employment and Housing Act

(“FEHA”), and applied for costs pursuant to Federal Rule of Civil Procedure 54(d)(1). Plaintiff

opposes both requests. For the reasons which follow, Defendants’ motion for attorneys’ fees and

application for costs are DENIED.

Defendants are involved in the manufacture and sale of dietary supplements, including

products specifically developed for the special needs of autistic children. Plaintiff, a nurse with

industry background, was employed by Defendants as a Vice President involved in product

development and marketing. She asserted causes of action for wrongful termination for whistleCase 3:03-cv-01617-L-WMC Document 147 Filed 09/05/07 Page 1 of 8
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blowing, wrongful termination based on gender discrimination, gender discrimination in the

benefits of employment, breach of employment contract, breach of the implied covenant of good

faith and fair dealing, fraud and negligent misrepresentation against Defendants. Specifically,

Plaintiff claimed she did not receive the same benefits of employment as promised when she

accepted the position and that the benefits she received were not the same as those received by

the male vice presidents. Plaintiff also claims she was terminated in retaliation for questioning

Defendants’ product labeling as lactose-, casein- and gluten-free and the truthfulness of their

representations that they conducted independent product testing. Defendants counterclaimed for

fraud and breach of duty of loyalty. They maintained Plaintiff was disloyal by allegedly

misappropriating trade secrets and conspiring to start a competing business. Ultimately, the jury

found for Defendants on Plaintiff’s claims and for Plaintiff on Defendants’ claims. A judgment

was entered wherein neither side recovered anything.

Defendants applied for $31,487.61 in costs pursuant to Rule 54(d), to which Plaintiff

objected. In addition, Defendants moved for $187,287.07 in attorneys’ fees based on FEHA,

which Plaintiff opposed. 

In actions brought under FEHA, “the court, in its discretion, may award to the prevailing

party reasonable attorney's fees and costs, including expert witness fees, except where the action

is filed by a public agency or a public official, acting in an official capacity.” Cal. Gov’t Code 

§ 12965(b) (last sentence). “In interpreting FEHA, California courts have adopted the methods

and principles developed by federal courts in employment discrimination claims arising under

title VII of the Civil Rights Act . . . and under the federal Age Discrimination in Employment

Act” including with respect to FEHA’s attorneys’ fees provision, Cal. Gov’t Code § 12965(b). 

Cummings v. Benco Bldg. Serv., 11 Cal. App. 4th 1383, 1386-87 (1992); Rosenman v.

Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, 91 Cal. App. 4th 859, 865 (2001). 

With respect to attorneys’ fees, California courts apply the standards set forth in Christiansburg

Garment Co. v. EEOC, 434 U.S. 412, 417 (1978). Cummings, 11 Cal. App. 4th at 1387, 1388,

1390; Rosenman, 91 Cal. App. 4th at 865-66, 867-68, 872.

/ / / / /

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Pursuant to Christiansburg, under “Title VII a prevailing plaintiff ordinarily is to be

awarded attorney’s fees in all but special circumstances.” 434 U.S. at 417 (emphasis in original,

footnote omitted). The same standard does not apply to prevailing defendants. Two policy

considerations support the asymmetrical standard. “First, . . . the plaintiff is the chosen

instrument of Congress to vindicate a policy that Congress considered of the highest priority. 

Second, when a district court awards counsel fees to a prevailing plaintiff, it is awarding them

against a violator of federal law.” Id. at 418-19 (internal quotation marks and citation omitted). 

Accordingly, awards to prevailing defendants should not be routinely permitted simply because

the defendant is the prevailing party. Id. at 421; see also Patton v. County of Kings, 857 F.2d

1379, 1381 (9th Cir. 1988) (“[t]he mere fact that a defendant prevails does not automatically

support an award of fees”). “[W]hile Congress wanted to clear the way for suits to be brought

under [Title VII], it also wanted to protect defendants from burdensome litigation having no

legal or factual basis.” Christiansburg, 434 U.S. at 420. Therefore, a prevailing defendant may

recover attorneys’ fees from the plaintiff if “a court finds that his [or her] claim was frivolous,

unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became so.” 

Id. at 422. If these requirements are met, fees can be assessed against a plaintiff “even though

[the claim was] not brought in subjective bad faith.” Id. at 421. 

With respect to evaluating Plaintiff’s claims, the court may not “assess[] attorney’s fees

against plaintiffs simply because they do not finally prevail [because this would] substantially

add to the risks inhering in most litigation and would undercut the efforts of Congress to

promote the vigorous enforcement of the provisions of Title VII.” Id. at 422. In applying the

“frivolous, unreasonable or groundless” criteria, 

it is important that a district court resist the understandable temptation to engage in

post hoc reasoning by concluding that, because a plaintiff did not ultimately

prevail, his [or her] action must have been unreasonable or without foundation. 

This kind of hindsight logic could discourage all but the most airtight claims, for

seldom can a prospective plaintiff be sure of ultimate success. No matter how

honest one’s belief that he has been the victim of discrimination, no matter how

meritorious one’s claim may appear at the outset, the course of litigation is rarely

predictable. Decisive facts may not emerge until discovery or trial. The law may

change or clarify in the midst of litigation. Even when the law or the facts appear

/ / / / /

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questionable or unfavorable at the outset, a party may have an entirely reasonable

ground for bringing suit.

Id.

A pattern has developed in cases awarding attorneys’ fees to the prevailing defendant,

which “indicate that either the plaintiff’s conduct was egregious or that his or her case was

patently baseless for objective reasons.” Cummings, 11 Cal. App. 4th at 1389 (discussing cases);

Rosenman, 91 Cal. App. 4th at 869-70 (discussing cases). For example, fees have been awarded

to defendants when the plaintiff was either charged with or accused of perjury, when the

plaintiff’s claim was “contrary to undisputed facts or well established legal principles

specifically precluding recovery,” when the plaintiff “continuously [sought] to avoid adverse

legal rulings by intentionally submitting renewed motions which disguised the subject matter of

previously denied motions,” or when the plaintiff “pursued litigation after discovery

affirmatively disclosed the factual basis for the alleged discrimination was patently nonexistent.” 

Cummings, 11 Cal. App. 4th at 1389-90; see also Rosenman, 91 Cal. App. 4th at 869-70.

Defendants attempt to liken Plaintiff’s case to cases where attorneys’ fees were awarded

to the prevailing defendant. Patton v. County of Kings, a case on which Defendants rely, is one

of the examples cited in Cummings for the principle that fees may be awarded when the

plaintiff’s cause of action is “contrary to well established legal principles specifically precluding

recovery . . ..” Cummings, 11 Cal. App. 4th at 1390. In Patton, the court applied the

Christiansburg standard to attorneys’ fees in a civil rights action under 42 U.S.C. § 1983. The

district court’s attorneys’ fee award was affirmed because the plaintiff amended his complaint in

an “obvious attempt to avoid the constricture of [applicable case law], that damage to reputation

is not actionable under § 1983 unless it is accompanied by some more tangible interests.” 

Patton, 857 F.2d at 1382. Although Defendants argue Plaintiff’s claims were groundless, they

do not contend that she asserted them in a misleading way so as to avoid controlling law. 

National Organization for Women v. Bank of California, 680 F.2d 1291 (9th Cir. 1982),

another case on which Defendants rely, was discussed in Cummings as an example of the

principle that when the plaintiff “continuously [sought] to avoid adverse legal rulings by

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intentionally submitting renewed motions which disguised the subject matter of previously

denied motions,” attorneys’ fees may be awarded. Cummings, 11 Cal. App. 4th at 1390.

However, no such practice occurred in this case. 

Last, Defendants rely on Moss v. Associated Press, 956 F. Supp. 891 (C.D. Cal. 1996). In

Moss, the defendant’s attorneys’ fee award was limited to the fees incurred after the plaintiff

became aware of facts demonstrating the absence of discrimination, thus rendering his continued

litigation unreasonable. Defendants appear to maintain Plaintiff’s case was unreasonable from

the start. As discussed below, the court disagrees with this view.

The California Court of Appeal found Moss instructive, and relied on it to fashion a

refinement of the patterns identified in Cummings. Rosenman, 91 Cal. App. 4th at 873-74. The

court ruled that 

where the plaintiff presents a colorable claim, and particularly where the adverse

jury verdict is less than unanimous, such an award is inappropriate in light of the

very strong public antidiscrimination policy embodied in FEHA. Any other

standard would have the disastrous effect of closing the courtroom door to

plaintiffs who have meritorious claims but who dare not risk the financial ruin

caused by an award of attorney fees if they ultimately do not succeed.

Id. at 874. The court reversed as abuse of discretion defendant’s attorneys’ fee award in part

because the plaintiff had made out a prima facie case of discrimination. Id. at 873-74

(discussing Gonzales v. Metpath, Inc., 214 Cal. App. 3d 422 (1989) & Guthries v. State of

California, 63 Cal. App. 4th 1108 (1998)).

Defendants do not present any evidence regarding the unanimity of the jury verdict. They

claim “plaintiff’s total lack of evidence at trial of any gender discrimination whatsoever” (Mot.

at 6), however, they do not cite to any transcripts in support of this point. The court disagrees

with their assessment of Plaintiff’s case. 

At trial Plaintiff presented sufficient evidence to make out a prima facie case of disparate

treatment in employment benefits based on gender. “In disparate treatment cases, the plaintiff

must prove the ultimate fact that the defendant engaged in intentional discrimination.” Heard v.

Lockheed Missiles & Space Co., Inc., 44 Cal. App. 4th 1735, 1748 (1996). “Proving intentional

discrimination can be difficult because there will seldom be eyewitness testimony as to the

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employer’s mental processes. It is rare for a plaintiff to produce direct evidence or smoking gun

evidence of discrimination.” Id. (internal quotation marks, brackets and citations omitted). 

“Thus, plaintiffs may demonstrate via indirect or circumstantial evidence that they were the

victims of discrimination.” Id. at 1749. For these reasons, the “burden of proving prima facie

case of disparate treatment is not onerous.” Id. at 1751. “The purpose of the prima facie case is

for the plaintiff to produce evidence demonstrating that the employment decision occurred in

circumstances which allow the court to infer unlawful discrimination.” Id. at 1755. “[P]roof

regarding similarly situated employees outside the protected class may be one way of raising an

inference of intentional discrimination . . ..” Id. (internal quotation marks and citation omitted). 

In this case, Plaintiff not only presented evidence that Defendant Humphrey Laboratories, Inc.

(“HLI”) failed to extend Plaintiff the same benefits it extended to the male vice presidents, the

jury agreed with her on this point. (Special Verdict on Pl.’s Claims at 15.) 

Aside from the lack of evidence argument, Defendants also maintain Plaintiff’s

discrimination claim was groundless because their after-acquired evidence defense “operates as

a complete defense to the wrongful termination claim.” (Mot. at 8.) This is incorrect. Although

the after-acquired evidence doctrine may limit a plaintiff’s remedies depending on the

circumstances in each case, it does not preclude a finding of liability. McKennon v. Nashville

Banner Publ’g Co., 513 U.S. 352 (1995); Cooper v. Rykoff-Sexton, Inc., 24 Cal. App. 4th 614,

618-19 (1994). Accordingly, the court finds Plaintiff’s claim was not frivolous, unreasonable or

groundless.

Defendants also base their attorneys’ fee motion on Plaintiff’s abandonment during trial

of gender discrimination claims against two of the Defendants. Her gender discrimination claim

against Defendant HLI remained, however, and Plaintiff was able to make a prima facie case as

to this Defendant. Defendants have themselves to blame for having to try all of Plaintiff’s

claims because they failed to file a single dispositive motion in more than three years before

trial. If Plaintiff’s claims were as frivolous and groundless as Defendants now contend, they

should have attacked them with a summary judgment motion. Furthermore, Defendants

themselves asserted claims they later abandoned. For example, they named Plaintiff’s husband a

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cross-defendant. Although they later dismissed him, it would appear that including him in the

cross-complaint was intended to exert pressure on Plaintiff rather than assert a viable claim in

good faith. 

Last, Defendants attack Plaintiff’s credibility as a witness by broadly asserting that she

lied. They point to no transcript in support of their accusation. Even if Defendants’ allegations

were accepted arguendo at face value, they are insufficient to rise to the level of blatant perjury

found in cases where fees were awarded to prevailing defendants. See Rosenman, 91 Cal. App.

4th at 870. In this case the jury believed one side over the other, as often happens when cases go

to trial. 

While the jury ultimately was not convinced that gender discrimination motivated HLI’s

decision not to extend Plaintiff the same employment benefits as the male vice presidents,

Plaintiff’s case “appears to be a routine case in which the plaintiff merely failed to achieve

success on her claim.” Id. at 872, quoting Cummings, 11 Cal. App. 4th at 1390. In such routine

cases, awarding fees to the prevailing defendant constitutes abuse of discretion. Cummings, 11

Cal. App. 4th at 1390. Accordingly, Defendants’ motion for attorneys’ fees is denied.

Defendants also applied for costs pursuant to Rule 54(d)(1), which provides in pertinent

part that “costs other than attorneys’ fees shall be allowed as of course to the prevailing party

unless the court otherwise directs . . ..” “Usually the litigant in whose favor judgment is

rendered is the prevailing party for purposes of Rule 54(d).” Charles Alan Wright et al., Federal

Practice and Procedure § 2667 at 204 (West 1998). In this case judgment was entered in favor

of neither party, as Plaintiff failed to prevail on any of her claims and Defendants failed to

prevail on any of their counterclaims. (Judgment at 1.) Defendants point to the jury’s findings

regarding intentional misrepresentation and breach of loyalty. (See Special Verdict on CounterClaim at 1-2.) However the jury expressly found no causation of damage to Defendants (id.),

and neither party obtained any relief. Accordingly, the court finds that neither party is

prevailing. 

/ / / / /

/ / / / /

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For the foregoing reasons, Defendants’ motion for attorneys’ fees and their application

for costs are DENIED.

IT IS SO ORDERED.

DATED: September 5, 2007

M. James Lorenz

United States District Court Judge

COPY TO: 

HON. WILLIAM McCURINE, JR.

UNITED STATES MAGISTRATE JUDGE

ALL PARTIES/COUNSEL

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