FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

INDEPENDENT LIVING CENTER OF 

SOUTHERN CALIFORNIA, INC., a 

nonprofit corporation; GRAY 

PANTHERS OF SACRAMENTO, a 

nonprofit corporation; GRAY 

PANTHERS OF SAN FRANCISCO, a 

nonprofit corporation; GERALD 

SHAPIRO, Pharm. D., DBA Uptown 

Pharmacy and Gift Shoppe; SHARON 

STEEN, DBA Central Pharmacy; 

TRAN PHARMACY, INC.; MARK 

BECKWITH; MARGARET DOWLING,

Petitioners-Appellants,

v.

JENNIFER KENT, Director of 

Department of Health Care Services 

of the State of California; 

DEPARTMENT OF HEALTH CARE 

SERVICES,

Respondents-Appellees.

No. 15-56142

D.C. No.

2:08-cv-03315-

CAS-MAN
2 INDEP. LIVING CTR. V. KENT

SACRAMENTO FAMILY MEDICAL 

CLINICS, INC.; ACACIA ADULT DAY 

SERVICES; RONALD B. MEAD,

D.D.S.; THEODORE M. MAZER, M.D.,

Intervenors-Appellants,

v.

JENNIFER KENT, Director of 

Department of Health Care Services 

of the State of California; 

DEPARTMENT OF HEALTH CARE 

SERVICES,

Respondents-Appellees.

No. 15-56154

D.C. No.

2:08-cv-03315-

CAS-MAN

OPINION

Appeal from the United States District Court

for the Central District of California

Christina A. Snyder, District Judge, Presiding

Argued and Submitted September 26, 2018

Pasadena, California

Filed November 21, 2018

Before: WILLIAM A. FLETCHER, MILAN D. SMITH, 

JR., and MORGAN CHRISTEN, Circuit Judges.

Opinion by Judge Milan D. Smith, Jr.;

Concurrence by Judge Christen
INDEP. LIVING CTR. V. KENT 3

SUMMARY*

Attorneys’ Fees

The panel reversed the district court’s denial of 

plaintiffs’ request for attorneys’ fees following the 

settlement of litigation concerning California’s Assembly 

Bill X3 5, which reduced the Medi-Cal rate of 

reimbursement for healthcare providers by ten percent.

Plaintiffs sought a writ of mandamus under Cal. Civ. 

Proc. Code § 1085 on the ground that AB 5 violated Section 

30(A) of the Medicaid Act, thereby conflicting with federal 

law and violating the Supremacy Clause. The Ninth Circuit 

upheld the district court’s preliminary injunction against 

enforcement of the ten percent reduction, to apply both 

prospectively and retroactively. The Supreme Court vacated 

and remanded in light of the Centers for Medicare & 

Medicaid Services’ approval of certain plan amendments to 

implement AB 5. The parties subsequently entered into a 

settlement agreement in which plaintiffs reserved the right 

to move for attorneys’ fees. Plaintiffs did so pursuant to Cal. 

Civ. Proc. Code § 1021.5, and the district court denied their 

motions.

The panel held that, even though the case was properly 

removed from state court based on federal question 

jurisdiction, plaintiffs brought a state-law claim and were 

therefore permitted to seek attorneys’ fees pursuant to 

§ 1021.5. The panel concluded that plaintiffs’ § 1085 Writ 

 * This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.
4 INDEP. LIVING CTR. V. KENT

was not a federal claim following Armstrong v. Exceptional 

Child Care Ctr., Inc., 135 S. Ct. 1378 (2015), which held 

that neither the federal Medicaid statute nor the Constitution 

provides a cause of action for enforcement of Section 30(A). 

The panel concluded that the § 1085 Writ endured as a statelaw claim because, under California law, § 1085 Writs may 

issue to compel state agencies to comply with federal 

requirements. The panel held that federal common law did 

not govern the award of fees and preclude an award pursuant 

to state law. The panel concluded that the Erie doctrine 

supported allowing plaintiffs to seek fees under § 1021.5. 

The panel reversed the district court’s holding that plaintiffs 

were precluded from seeking an award of attorneys’ fees 

under § 1021.5, and remanded to the district court to 

determine whether plaintiffs met the requirements of 

§ 1021.5 to obtain a fee award, and if so, to calculate that 

award.

The panel further held that the district court abused its 

discretion in denying plaintiffs’ motion to set aside funds for 

attorneys’ fees following the decision permitting retroactive 

monetary relief from the Medi-Cal reimbursement 

reduction. The panel remanded for a determination of 

whether plaintiffs could recover any fees from the 

retroactive relief.

Concurring, Judge Christen wrote that she concurred in 

the result reached by the majority opinion but reached the 

same conclusion in a different way. Judge Christen wrote 

that plaintiffs could seek attorneys’ fees under § 1021.5 

because the parties’ settlement included a state-law request 

for declaratory relief under § 1085. Judge Christen agreed 

that it was an abuse of discretion to deny plaintiffs’ motion 

to set aside attorneys’ fees from the reimbursement.
INDEP. LIVING CTR. V. KENT 5

COUNSEL

Erwin Chemerinsky (argued), University of California, 

Berkeley, School of Law, Berkeley, California; Stanley L. 

Friedman and Rafael Bernardino, Jr., Law Offices of Stanley 

L. Friedman, Los Angeles, California; for PetitionersAppellants.

Craig J. Cannizzo (argued), Hooper, Lundy & Bookman, 

P.C., San Francisco, California; Lloyd A. Bookman and 

Jordan B. Keville, Hooper, Lundy & Bookman, P.C., Los 

Angeles, California; for Intervenors-Appellants.

Susan M. Carson (argued), Supervising Deputy Attorney

General; Julie Weng-Gutierrez, Senior Assistant Attorney 

General; Xavier Becerra, Attorney General of California; 

Office of the Attorney General, San Francisco, California;

for Respondents-Appellees.

OPINION

M. SMITH, Circuit Judge:

This case comes before us once again after a decade-long 

journey within the federal court system. In these final stages 

of the litigation, Petitioners-Appellants (Independent 

Living), a group of health care advocacy organizations and 

medical care providers, and Intervenors-Appellants 

(Intervenors, and together with Independent Living, 

Appellants), another group of health care providers and 

organizations, seek an award of attorneys’ fees from the 

Director of the California Department of Health Care 

Services (the Director), and possibly others. We hold that 

the district court erroneously concluded that Appellants were 
6 INDEP. LIVING CTR. V. KENT

not entitled to seek fees pursuant to California Civil 

Procedure Code § 1021.5. In addition, we hold that the 

district court abused its discretion in denying Independent 

Living’s motion to set aside fees from the retroactive 

monetary relief obtained in 2010. Accordingly, we remand 

to the district court to determine whether, in light of our 

ruling, Appellants meet the requirements to obtain attorneys’ 

fees pursuant to § 1021.5 and Section III (C)(1)(a) and (b) of 

the Settlement Agreement (infra), and whether it is possible 

and appropriate at this stage of the litigation for Independent 

Living to recoup attorneys’ fees “from Medicaid providers 

that purportedly obtained a benefit from counsel’s work,” 

pursuant to Section III (C)(1)(c) of the Settlement 

Agreement, and that received payments from the 

Department of Health Care Services (DHCS) as a result of 

this litigation.

FACTUAL AND PROCEDURAL BACKGROUND

I. Factual Background

The Medicaid Act authorizes the federal government to 

distribute funds to states for the purpose of providing 

medical assistance to low-income persons. Participating 

states are subject to certain conditions. Armstrong v. 

Exceptional Child Care Ctr., Inc., 135 S. Ct. 1378, 1382 

(2015). One such condition is the “equal access” provision 

(Section 30(A)), which requires that states set provider 

reimbursement rates that are “sufficient to enlist enough 

providers so that care and services are available under the 

plan at least to the extent that such care and services are 

available to the general population in the geographic area.” 

42 U.S.C. § 1396a(a)(30)(A).

On February 16, 2008, the California legislature enacted 

Assembly Bill X3 5 (AB 5). AB 5 reduced the Medi-Cal—
INDEP. LIVING CTR. V. KENT 7

California’s Medicaid program—rate of reimbursement for 

healthcare providers by ten percent. These cuts took effect 

on July 1, 2008.

II. Procedural Background

On April 22, 2008, Independent Living filed in Los 

Angeles County Superior Court a petition for a writ of 

mandamus against the DHCS and the Director, pursuant to 

California Code of Civil Procedure § 1085 (the § 1085 

Writ). The petition alleged that the ten percent rate reduction 

enacted pursuant to AB 5 violated Section 30(A), thereby 

conflicting with federal law, and violating the Supremacy 

Clause. In addition to the § 1085 Writ, Independent Living 

sought an injunction preventing the implementation of AB 

5, as well as attorneys’ fees pursuant to California’s Private 

Attorney General Act, Cal. Civ. Proc. Code § 1021.5. On 

May 19, 2008, the Director removed this action to federal 

court based on federal question jurisdiction, and Independent 

Living filed the § 1085 Writ in federal court. On June 1, 

2008, Independent Living dismissed the DHCS from its 

action, leaving only the Director as a defendant.

On June 25, 2008, the district court denied Independent 

Living’s motion for a preliminary injunction preventing the 

enforcement of AB 5. We vacated that decision on July 11, 

2008, holding that a plaintiff “may bring suit under the 

Supremacy Clause to enjoin implementation of a state law 

allegedly preempted by federal statute.” Indep. Living Ctr. 

of S. Cal. v. Shewry, 543 F.3d 1047, 1049 (9th Cir. 2008) 

(per curiam); see Indep. Living Ctr. of S. Cal. v. Shewry, 

543 F.3d 1050 (9th Cir. 2008) (Shewry).

On August 18, 2008, the district court enjoined 

enforcement of the ten percent reduction. On August 27, 

2008, the court modified its injunction to apply only 
8 INDEP. LIVING CTR. V. KENT

prospectively from the date of the injunction because 

sovereign immunity purportedly barred retroactive relief.

On appeal, we analyzed whether retroactive application 

of the injunction violated California’s sovereign immunity. 

Indep. Living Ctr. of S. Cal. v. Maxwell-Jolly, 572 F.3d 644, 

660–63 (9th Cir. 2009), vacated and remanded on other 

grounds sub nom. Douglas v. Indep. Living Ctr. of S. Cal., 

132 S. Ct. 1204 (2012). We first found this retroactive relief 

would violate California’s sovereign immunity absent the 

Director’s waiver of that immunity. Id. at 661. We then 

noted that the Director would have waived sovereign 

immunity by removing the suit to federal court if California 

had previously consented to similar suits in state court. Id. 

Consequently, after reviewing numerous California state 

court decisions that permitted § 1085 mandamus actions 

seeking disbursement of unlawfully withheld funds, we held 

that the Director had waived sovereign immunity. Id. at 663. 

Therefore, we concluded that the injunction should also have 

applied retroactively to Medi-Cal payments between the 

time of AB 5’s implementation and the date of the district 

court’s injunction (the retroactive period). Id.

On March 15, 2010, Independent Living moved to set 

aside a portion of the monies paid, or to be paid, to Medicaid 

providers for the retroactive period to set up a fund from 

which attorneys’ fees could be paid. The district court 

dismissed this motion because it believed it was premature 

and that “[n]either side has provided any reason why [the 

court] at the conclusion of the case could not fashion an order 

requiring . . . California to pay attorneys’ fees based on what 

is ultimately the value of any judgment or settlement.”

In 2011, the United States Supreme Court granted the 

Director’s petition for a writ of certiorari with respect to the 

Supremacy Clause issue. Preceding oral argument before 
INDEP. LIVING CTR. V. KENT 9

the Supreme Court, the Centers for Medicare & Medicaid 

Services (CMS), the federal agency in charge of 

administering Medicaid, disapproved the Director’s 

submitted plan amendments to implement AB 5 because 

they did not satisfy Section 30(A). Douglas, 132 S. Ct. at 

1209. However, after oral argument, and before the 

Supreme Court issued its opinion, CMS approved some of 

the pending amendments. Id.

The Supreme Court ultimately held that CMS’s 

decisions regarding the plan amendments changed the 

procedural posture of the case, and remanded it to our court 

to consider whether the providers could maintain an action 

pursuant to the Supremacy Clause. Id. at 1209–11. The 

Supreme Court thus vacated, but did not reverse, our 

decision affirming the preliminary injunction.

Following Douglas, the parties resolved this case in 

mediation, and produced a Settlement Agreement specifying 

the terms of their concord. In Sections III (C)(1)(a) and (b) 

of the Settlement Agreement, Appellants reserved the right 

to move for attorneys’ fees before the district court. The 

state retained the right to oppose any such request. In 

addition, Section III (C)(1)(c) of the Settlement Agreement 

permitted “any plaintiffs’ attorney” who had appeared in one 

of the listed cases to seek attorneys’ fees “from Medicaid 

providers that purportedly obtained a benefit from counsel’s 

work,” but not from “DHCS or any of the State Released 

Entities.”

Independent Living and Intervenors separately moved 

for attorneys’ fees pursuant to § 1021.5. The district court 

denied the motions, reasoning that this case involved only 

federal law claims, so the district court could not award 

attorneys’ fees pursuant to a state-law provision like 
10 INDEP. LIVING CTR. V. KENT

§ 1021.5. Independent Living and Intervenors timely 

appealed, and their consolidated appeals are before us now.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction over this appeal pursuant to 

28 U.S.C. § 1291. We review a district court’s decision to 

deny attorneys’ fees for abuse of discretion. Labotest, Inc. 

v. Bonta, 297 F.3d 892, 894 (9th Cir. 2002). Abuse of 

discretion occurs if the district court based its decision “on 

an erroneous legal conclusion or a clearly erroneous finding 

of fact.” Id. We review de novo whether the district court 

“applied the correct legal standard in determining 

entitlement to attorneys’ fees.” Klein v. City of Laguna 

Beach, 810 F.3d 693, 698 (9th Cir. 2016).

ANALYSIS

I. Availability of Attorneys’ Fees Under § 1021.5

The central question in this appeal is whether Appellants 

brought a state-law claim or a federal claim, for the answer 

to that question will determine whether they are entitled to 

seek attorneys’ fees pursuant to California’s § 1021.5 in 

federal court. We hold that Appellants brought a state-law 

claim, and that they are therefore permitted to seek fees 

pursuant to § 1021.5.

A. Federal Question Jurisdiction 

The Director argues that despite Appellants’ only cause 

of action being the § 1085 Writ, their action involved 

“solely” federal law, which permitted the federal courts to 

exercise federal question jurisdiction. However, the fact that 

the federal courts exercised federal question jurisdiction 
INDEP. LIVING CTR. V. KENT 11

does not automatically determine whether Appellants’ claim 

was based on federal or state-law.

The Director removed this case based on federal question 

jurisdiction. With good reason, we originally understood 

Appellants’ cause of action to constitute a suit pursuant to 

the Supremacy Clause to enjoin state legislation allegedly 

preempted by a federal statute (here, the Medicaid Act). 

Shewry, 543 F.3d at 1062, 1065–66. In so concluding, we 

relied in part on Shaw v. Delta Air Lines, Inc., in which the 

Supreme Court observed that a plaintiff bringing such a suit 

“presents a federal question which the federal courts have 

jurisdiction under 28 U.S.C. § 1331 to resolve.” 463 U.S. 

85, n.14 (1983).

Of course, federal question jurisdiction encompasses 

more than just federal causes of action. Federal courts have 

jurisdiction to hear “cases in which a well-pleaded complaint 

establishes either that federal law creates the cause of action 

or that the plaintiff’s right to relief necessarily depends on 

resolution of a substantial question of federal law.” 

Franchise Tax Bd. v. Constr. Laborers Vacation Tr. for S. 

Cal., 463 U.S. 1, 27–28 (1983). Where, as here, state law 

creates the cause of action, federal jurisdiction may also lie 

if “it appears that some substantial, disputed question of 

federal law is a necessary element of one of the well-pleaded 

state claims.” Id. at 13. Quiet title actions, for example, have 

prompted the exercise of federal question jurisdiction. See, 

e.g., Grable & Sons Metal Prods., Inc. v. Darue Eng’g & 

Mfg., 545 U.S. 308, 315–16 (2005) (exercising federal 

question jurisdiction over a quiet title action that required 

analysis of the federal notice statute).

In Merrell Dow Pharmaceuticals, Inc. v. Thompson, the 

Court held that federal question jurisdiction was unavailable 

over a state tort claim alleging a violation of a federal 
12 INDEP. LIVING CTR. V. KENT

misbranding prohibition, in part because Congress had not 

provided a private federal cause of action for that violation. 

478 U.S. 804, 812 (1986). However, the Court has since 

noted Merrell Dow did not “convert[] a federal cause of 

action from a sufficient condition for federal-question 

jurisdiction into a necessary one.” Grable & Sons, 545 U.S. 

at 317. Rather, a federal right of action is “evidence relevant 

to, but not dispositive of” federal question jurisdiction. Id. 

Federal question jurisdiction over state-law claims will lie if 

a federal issue is “(1) necessarily raised, (2) actually 

disputed, (3) substantial, and (4) capable of resolution in 

federal court without disturbing the federal-state balance 

approved by Congress.” Gunn v. Minton, 568 U.S. 251, 258 

(2013).

We conclude that the § 1085 Writ meets the 

requirements of the Gunn/Grable & Sons inquiry, and arises 

under federal law within the meaning of 28 U.S.C. § 1331. 

To prevail on the § 1085 Writ, Appellants would necessarily 

have had to show that AB 5 violated the requirements of 

Section 30(A). This purported violation was the “central 

point of dispute.” Gunn, 568 U.S. at 259. While the claim 

only called for a determination of the validity of California 

legislation, it more broadly raised the question of whether 

state legislation conflicted with Medicaid requirements. 

Given the ubiquitous reliance on Medicaid funding 

nationwide, the claim therefore had substantial “importance 

. . . to the federal system as a whole.” Id. at 260. Indeed, the 

Supreme Court confronted this very issue in Armstrong just 

three years after its decision in Douglas. Additionally, the 

role of the Supremacy Clause in this case invokes the 

essence of the “federal-state balance.” Id. at 258. Therefore, 

the Director’s removal was proper, as was the court’s 

exercise of federal question jurisdiction over the § 1085 

Writ. However, the exercise of federal question jurisdiction 
INDEP. LIVING CTR. V. KENT 13

did not itself transform the § 1085 Writ into a federal claim. 

Determination of whether the § 1085 Writ constituted a 

state-law or a federal claim requires further analysis.

B. State Claim or Federal Claim?

Appellants seek an award of attorneys’ fees pursuant to 

California Code of Civil Procedure§ 1021.5. The Director 

argues that fees are unavailable pursuant to § 1021.5 because 

Appellants’ claim was federal—a conclusion also reached 

by the district court.

However, during the period between Shewry and this 

appeal, the Supreme Court in Armstrong considered a suit 

similar to the one at hand. In that case, health providers sued 

officials in Idaho’s Department of Health and Welfare, 

claiming that Idaho violated Section 30(A) of the Medicaid 

Act by reimbursing providers of habilitation services at 

impermissible rates. Armstrong, 135 S. Ct. at 1382. We had 

affirmed the district court’s grant of summary judgment for 

the providers and stated that the providers had an implied 

right of action pursuant to the Supremacy Clause. Id. at 1383 

(citing Inclusion, Inc. v. Armstrong, 567 F. App’x 496 

(2014)). The Supreme Court reversed, holding that the 

Supremacy Clause is “not the source of any federal rights 

and certainly does not create a cause of action.” Id. (citation 

omitted). The Court also determined that the suit against 

Idaho for enforcement of Section 30(A) of the Medicaid Act 

could not proceed in equity because Section 30(A) implicitly 

precluded private enforcement. Id. at 1385. Finally, the 

Court held that Section 30(A) of the Medicaid Act did not 

confer a private right of action under federal law. Id. at 1387. 

Thus, in short order, the Supreme Court determined that 

neither the federal statute nor the Constitutional provision at 

issue here provides similar plaintiffs a cause of action. 

Accordingly, Appellants’ cause of action must be grounded 
14 INDEP. LIVING CTR. V. KENT

in state law, if a cause of action is to exist under the 

circumstances alleged.

Appellants argue that “the gist of [their] claim was that 

California breached its contract with the federal 

government,” and that breach of contract is a claim arising 

under state law. This argument is meritless. In order to 

prevail on a contract theory, Appellants would have had to 

show that, at the least, they were third-party beneficiaries 

entitled to enforce a valid contract between the federal and 

state governments—a requirement that might have been 

impossible to show. See Sanchez v. Johnson, 416 F.3d 1051, 

1059 (9th Cir. 2005) (holding that Medicaid providers “are, 

at best, indirect beneficiaries [of 42 U.S.C. 

§ 1396a(a)(30)(A)] and it would strain common sense to 

read § 30(A) as creating a ‘right’ enforceable by them”). 

Regardless, Appellants never attempted or needed to make 

that showing, because this case was not litigated as an action 

on a contract. Therefore, in order for Appellants to recover 

fees under § 1021.5, the § 1085 Writ must stand on its own 

as a state-law cause of action.1

 1 The parties dispute whether a writ under § 1085 is best described 

as a remedial mechanism or a cause of action under California law; in 

reality, California courts have employed both descriptors. Compare

Kreeft v. City of Oakland, 80 Cal. Rptr. 2d 137, 141 (Cal. Ct. App. 1998) 

(“Ordinary mandamus is the appropriate procedural mechanism for 

resolving the dispute in this case. A traditional writ of mandate under 

Code of Civil Procedure section 1085 is a method for compelling a City 

to perform a legal, usually ministerial duty.” (citations omitted)) with Lee 

v. Blue Shield of Cal., 65 Cal. Rptr. 3d 612, 619 (Cal. Ct. App. 2007) 

(referring to “a cause of action for a writ of mandate,” as well as a 

“declaratory relief cause of action”); see also Hayes v. County of San 

Diego, 305 P.3d 252, 257 (Cal. 2013) (ruminating on the precise 

meaning of “cause of action” under California law). We need not wade 

into this dilemma, because as will be shown, regardless of whether the 
INDEP. LIVING CTR. V. KENT 15

Although Appellant’s breach-of-contract theory is 

unavailing, we conclude that in this case the § 1085 Writ 

endured as a state-law claim. A brief survey of relevant 

cases clearly shows that California courts have deployed 

§ 1085 much as it was used in this case. Section 1085 

provides that “any court may” issue a writ “to any inferior 

tribunal, corporation, board, or person, to compel the 

performance of an act which the law specially enjoins, as a 

duty resulting from an office, trust, or station . . . .” Cal. Civ. 

Proc. Code. § 1085(a). Therefore, writ relief is available to 

compel a public agency to perform an act prescribed by law. 

See, e.g., Berkeley Unified Sch. Dist. v. City of Berkeley, 

297 P.2d 710, 715 (Cal. Ct. App. 1956) (mandamus 

appropriate to direct city auditor to release funds from tax 

levies for school purposes pursuant to city charter). Writ 

relief is available even where state action implicates federal 

issues. See Conlan v. Bonta, 125 Cal. Rptr. 2d 788, 803 (Cal. 

Ct. App. 2002) (writ of mandate issued to provide Medi-Cal 

recipient with proper reimbursements under the Medicaid 

Act). Even more relatedly, in Mission Hospital Regional 

Medical Center v. Shewry, the California Court of Appeal 

considered whether the Medicaid Act’s notice and comment 

requirements applied to the California legislature’s action to 

freeze the Medicaid rate of reimbursement during the 2004–

2005 fiscal year, after a group of hospitals sought writ relief 

under § 1085. 85 Cal. Rptr. 3d 639, 642–43, 649 (Cal. Ct. 

App. 2008). The court agreed with the hospitals, remanding

the case to the trial court to issue a writ of mandate enjoining 

the DHCS from utilizing the freeze provision. Id. at 661.

Particularly pertinent to this case, California courts have 

previously enforced Section 30(A) by issuing writs of 

 

§ 1085 Writ is a procedural mechanism or a cause of action, its use to 

enjoin state action is well recognized.
16 INDEP. LIVING CTR. V. KENT

mandate to the DHCS. See, e.g., Cal. Ass’n for Health Servs. 

at Home v. State Dep’t of Health Care Servs., 138 Cal. Rptr. 

3d 889, 900 (Cal. Ct. App. 2012) (further rate review of 

Medi-Cal reimbursement rates required in accordance with 

Section 30(A) and the state plan). However, a recent 

California appellate court decision called into question the 

future viability of using § 1085 Writs to enforce Section 

30(A) violations. See Santa Rosa Mem’l Hosp., Inc. v. Kent, 

236 Cal. Rptr. 3d 199, 207 (Cal. Ct. App. 2018). Relying 

heavily on the Supreme Court’s decision in Armstrong, the 

California Court of Appeal held that a § 1085 Writ could not 

issue where the Medicaid Act did not provide for private 

enforcement of Section 30(A) and Section 30(A)’s broad 

standards for rate setting impeded a clear duty to perform. 

Id. at 206–207. The California Supreme Court has not 

decided this issue and, arguably, the California Court of 

Appeal decisions are split. Still, the potential ability of 

Appellants to prosecute this precise case under § 1085 if they 

filed again today is largely immaterial to whether they could 

have properly initiated such a state-court action in 2008.

Ultimately, it is clear that, under California law, § 1085 

Writs may issue to compel state agencies to comply with 

federal requirements. That is the essence of Appellants’ 

claim. Moreover, a significant portion of Appellants’ 

success was due to our interpretation of state law. In 

Maxwell-Jolly, we analyzed California law to determine 

whether sovereign immunity precluded Appellants’ claim 

for retroactive relief. We held that it did not, 

acknowledging, “Under California law, an action seeking 

injunctive relief that requires a state official to disburse 

funds is not an action against the State.” Maxwell-Jolly, 

572 F.3d at 662. Thus, had the action remained in state 

court, the Director would “not have enjoyed sovereign 

immunity” against an order for retroactive payments. Id.
INDEP. LIVING CTR. V. KENT 17

Accordingly, we conclude that Appellants’ claim 

pursuant to § 1085 is properly characterized as a state-law 

cause of action and its removal to federal court does not 

compel a conclusion otherwise. The overlapping concerns 

of federal law did not transform the § 1085 Writ into a 

federal claim, for as Armstrong elucidated, there was simply 

no federal right of action to be had. Since the § 1085 Writ 

was a state-law claim, we now turn to whether Appellants 

were entitled to seek attorneys’ fees pursuant to § 1021.5.

C. State Law Fee Awards in Federal Court

The general rule in federal courts is that “absent statute 

or enforceable contract, litigants pay their own attorneys’ 

fees.” Alyeska Pipeline Serv. Co v. Wilderness Soc’y, 

421 U.S. 240, 257 (1975). We have stated that in a “pure 

federal question case” in federal court, federal law governs 

attorneys’ fees. Disability Law Ctr. of Alaska, Inc. v. 

Anchorage Sch. Dist., 581 F.3d 936, 940 (9th Cir. 2009). By 

contrast, “so long as ‘state law does not run counter to a valid 

federal statute or rule of court . . . state law denying the right 

to attorney’s fees or giving a right thereto, which reflects a 

substantial policy of the state, should be followed.’” MRO 

Commc’ns, Inc. v. Am. Tel. & Tel. Co., 197 F.3d 1276, 1281 

(9th Cir. 1999) (quoting Alyeska, 421 U.S. at 259 n.31).

Our previous cases in which we denied plaintiffs an 

award of fees under state law do not preclude recovery here. 

In Klein, we denied the plaintiff attorneys’ fees under 

§ 1021.5 because although he pleaded both federal and statelaw claims, he did not prevail on the state-law claims. 

810 F.3d at 702.2 In Home Savings Bank, F.S.B. v. Gillam, 

 2 Incidentally, Klein clearly states “federal courts apply state law for 

attorneys’ fees to state claims because of the Erie doctrine.” Id. at 701.
18 INDEP. LIVING CTR. V. KENT

952 F.2d 1152, 1163 (9th Cir. 1991), we reversed the district 

court’s award of attorneys’ fees based on Alaska law. 

Gillam concerned the control and disposition of a legal 

indemnification fund set up by Home Savings Bank (HSB) 

with the Federal Home Loan Bank Board. Id. at 1154. The 

conservator of HSB sued Gillam, the former chief executive 

officer of HSB, to recover severance benefits paid to Gillam 

upon his resignation and to contest control over the legal 

indemnification fund. Id. We first held that the conservator 

had a right of action under the federal Financial Institutions 

Reform, Recovery, and Enforcement Act of 1989 (FIRREA) 

to sue Gillam. Id. at 1157 (“FIRREA expressly provides for 

federal court jurisdiction over actions to which the 

[conservator] is a party.”). We then held that the district 

court improperly relied on Alaska law to award attorneys’ 

fees because the federal common law disfavoring nonstatutory awards of fees directly conflicted with the state rule 

relied upon by the district court. Id. at 1162.

Similarly, in Bass v. First Pacific Networks, Inc., 

219 F.3d 1052 (9th Cir. 2000), we considered whether 

federal or state law governed the award of attorneys’ fees 

incurred in filing a motion under Federal Rule of Civil 

Procedure 65.1 for a supersedeas bond posted under Federal 

Rule of Civil Procedure 62(d). The plaintiff originally filed 

in state court alleging state claims and a federal RICO claim. 

Id. at 1053. After the defendant removed the action to 

federal court, the district court dismissed the RICO claim but 

retained supplemental jurisdiction over the state claims. Id. 

The plaintiffs then filed a motion under Rule 65.1 to enforce 

a supersedeas bond, which the court granted. Id. at 1054. 

This court affirmed the district court’s denial of attorneys’ 

fees under California state law because the bond was “posted 

pursuant to Rule 62(d) and enforced pursuant to Rule 65.1.” 

Id. at 1055. The court noted that it had “no opinion” on the 
INDEP. LIVING CTR. V. KENT 19

availability of attorneys’ fees in a removed action seeking 

judgment “on a surety pursuant to state statute,” as opposed 

to enforcement of a surety bond issued pursuant to the 

Federal Rules. Id. at 1056 n.4.

This case presents a different issue than those we 

confronted in Klein, Gillam, and Bass. Unlike in Klein, 

Appellants here prevailed on a state-law claim by succeeding 

on the § 1085 Writ. As determined by the Supreme Court, 

neither Section 30(A) nor the Constitution provided a federal 

right of action for Appellants, so there were no independent 

federal claims in this case. Thus, Gillam and Bass, in which 

federal provisions provided the right of action or the rule of 

decision, are inapposite. In short, federal common law does 

not govern the award of fees here, and an award pursuant to 

state law would not be improper.

D. Erie

Erie3 principles further persuade us that Appellants are 

entitled to seek fees pursuant to § 1021.5. As the Supreme 

Court has noted, nothing in Erie requires a departure from 

the principle that “a state statute requiring an award of 

attorneys’ fees should be applied in a case removed from the 

state courts to the federal courts.” Alyeska Pipeline, 

421 U.S. at 259 n.31. Although this footnote referred to 

diversity jurisdiction cases, we have noted that the Erie

doctrine “applies irrespective of whether the source of 

subject matter jurisdiction is diversity or federal question.” 

Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1102 (9th 

Cir. 2003). Indeed, Erie itself was partially rooted in a desire 

to prevent the “result of a litigation materially to differ 

because the suit had been brought in a federal court.” Hanna 

 3 Erie R. Co. v. Tompkins, 304 U.S. 64 (1938).
20 INDEP. LIVING CTR. V. KENT

v. Plumer, 380 U.S. 460, 467 (1965). Further, Erie sought 

to avoid the forum shopping that had arisen after Swift v. 

Tyson, 41 U.S. 1 (1842). Id.

Because the § 1085 Writ is a state-law cause of action, 

we look to California law to determine whether attorneys’ 

fees are available to Appellants under § 1021.5 of the 

California Code of Civil Procedure. Section 1021.5 is 

California’s “private attorney general” fee statute. 

Woodland Hills Residents Ass’n, Inc. v. City Council, 

593 P.2d 200, 208 (Cal. 1979). It states, “Upon motion, a 

court may award attorneys’ fees to a successful party against 

one or more opposing parties in any action which has 

resulted in the enforcement of an important right affecting 

the public interest.” Cal. Civ. Proc. Code § 1021.5. 

Pursuant to § 1021.5, a court may award attorneys’ fees to a 

“successful party” in any action that

has resulted in the enforcement of an 

important right affecting the public interest 

if: (a) a significant benefit, whether pecuniary 

or nonpecuniary, 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.

Maria P. v. Riles, 743 P.2d 932, 935 (Cal. 1987).

In determining whether a plaintiff is a successful party 

for purposes of § 1021.5, “the critical fact is the impact of 

the action, not the manner of its resolution.” Id. at 937. 

Accordingly, the California Supreme Court has held that a 

plaintiff securing a preliminary injunction may be awarded 
INDEP. LIVING CTR. V. KENT 21

attorneys’ fees under § 1021.5. Press v. Lucky Stores, Inc., 

667 P.2d 704, 710 (1983) (preliminary injunction restraining 

defendant from denying plaintiffs access to the store 

premises fulfilled § 1021.5’s requirements for an award of 

fees).

In Maria P., for example, the plaintiffs sought a 

preliminary injunction to prevent the school district from 

denying a student admission to school based on her 

noncitizen immigration status, and to prevent the school 

district and State superintendent from complying with 

California Education Code § 6957, which required the 

district to report the child’s immigration status to the board 

of supervisors and Immigration and Naturalization Service. 

Maria P., 43 Cal. 3d at 934. The trial court issued the 

preliminary injunction, ruling that Education Code § 6957 

conflicted with the federal Family Education Rights and 

Privacy Act of 1974, and was therefore void under the 

Supremacy Clause. Id. Between the trial court’s issuance of 

the preliminary injunction and the plaintiffs’ motion for 

attorneys’ fees, the California legislature amended the 

Education Code to delete all reporting requirements. Id. at 

935. Due to the legislative amendment, the trial court 

awarded attorneys’ fees to the plaintiffs based only on their 

work obtaining the preliminary injunction. Id. The 

California Court of Appeal reversed the fee award, but the 

California Supreme Court held that plaintiffs were 

successful parties because the state’s posture changed as a 

result of their lawsuit and thus it served the public interest 

purposes of § 1021.5. Id. at 935, 938.

Similarly, here, Appellants secured a preliminary 

injunction against the enforcement of California state 

legislation on the ground that it violated a federal statute. 

Further, Maria P. establishes that CMS’s subsequent 
22 INDEP. LIVING CTR. V. KENT

approval of California’s amended reimbursement rates does 

not necessarily preclude Appellants’ recovery of attorneys’ 

fees. Thus, California law appears to demonstrate 

Appellants are “successful” parties under § 1021.5 and 

would have been entitled to move for attorneys’ fees in state 

court.

Thus, to permit the Director to evade attorneys’ fees by 

removing this action to federal court would violate the spirit 

of Erie and its twin aims. As here, when fees would 

probably be available in state court, to preclude a similar 

award in federal court would likely lead to forum shopping, 

among other maladies. Moreover, such a divergent result 

would foster the very “inequitable administration of the 

laws” that Erie sought to rectify. Plumer, 380 U.S. at 468. 

Therefore, we conclude that the district court erred in 

holding that Appellants were precluded from seeking an 

award of attorneys’ fees under California Civil Code of 

Procedure § 1021.5.4

We remand to the district court to determine whether 

Appellants meet the requirements of § 1021.5 to obtain a fee 

award, and if so, to calculate that award. We express no 

opinion as to how the Settlement Agreement may affect such 

an award and leave that issue to the district court to consider 

in the first instance on remand.

 4 Appellants also argue that the district court erred by not employing 

the doctrine of judicial estoppel against the Director. In light of our 

ruling, we find no need to consider this additional argument.
INDEP. LIVING CTR. V. KENT 23

II. Motion to Set Aside Attorneys’ Fees from the 

Common Fund

After our decision in Maxwell-Jolly permitted 

retroactive monetary relief from the Medi-Cal 

reimbursement reduction, Independent Living moved to set 

aside 25 percent of the $70 million reimbursement to set up 

a fund for attorneys’ fees. The district court denied the 

motion to set aside funds, finding the request “premature” 

because there had not yet been a final adjudication or 

settlement, and determining that a set-aside was not in the 

public interest. Appellants now argue that the district court 

abused its discretion when it denied their motion to set aside 

funds. We agree.

“[A] litigant or a lawyer who recovers a common fund 

for the benefit of persons other than himself or his client is 

entitled to a reasonable attorney’s fee from the fund as a 

whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 

(1980). The principle justifying this doctrine is that

persons who obtain the benefit of a lawsuit 

without contributing to its cost are unjustly 

enriched at the successful litigant’s expense. 

Jurisdiction over the fund involved in the 

litigation allows a court to prevent this 

inequity by assessing attorney’s fees against 

the entire fund, thus spreading fees 

proportionately among those benefited by the 

suit.

Id. (citations omitted). An award of fees from a common 

fund applies only if “(1) the class of beneficiaries is 

sufficiently identifiable, (2) the benefits can be accurately 

traced, and (3) the fee can be shifted with some exactitude to 

those benefiting.” Paul, Johnson, Alston & Hunt v. Graulty, 
24 INDEP. LIVING CTR. V. KENT

886 F.2d 268, 271 (9th Cir. 1989) (quoting In re Hill, 

775 F.2d 1037, 1041 (9th Cir. 1985)). We have referred to 

the percentage requested by Appellants, 25 percent of the 

fund, as a standard or benchmark amount. Six (6) Mexican 

Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 (9th 

Cir. 1990).

We conclude that the district court abused its discretion 

when it denied Appellants’ motion to set aside funds. First, 

the retroactive relief obtained satisfied the common fund 

requirements. The identifiable class of beneficiaries was 

comprised of Medi-Cal health providers who received 

reduced reimbursement for services provided between July 

1, 2008 and August 18, 2008. Each member of this class had 

an “undisputed and mathematically ascertainable claim to 

part of a lump sum judgment recovered on his behalf.” Van 

Gemert, 444 U.S. at 749.

Second, contrary to the district court’s statement, a final 

settlement agreement or adjudication on the merits is not a 

prerequisite to the formation of a common fund. See Reiser 

v. Del Monte Properties Co., 605 F.2d 1135, 1140 n.4 (9th 

Cir. 1979) (noting that it is not necessary to an award of 

attorneys’ fees that a suit be litigated on the merits). We 

observed that the Supreme Court “has refused to place form 

over substance, focusing instead on the actual effect of a 

plaintiff’s suit.” Id. at 1140. The question is thus “whether 

a plaintiff . . . has conferred a benefit on others.” Id. Here, 

the procurement of $70 million retroactive relief on behalf 

of Medi-Cal providers, many of whom were not plaintiffs in 

the case, undoubtedly conferred a benefit onto them 

irrespective of a final settlement or adjudication. In finding 

otherwise, and denying the motion to set aside funds, the 

district court abused its discretion. See Hill, 775 F.2d at 

1040 (holding that a district court abuses its discretion if its 
INDEP. LIVING CTR. V. KENT 25

decision is based on an erroneous conclusion of law or if the 

record contains no evidence on which it rationally could 

have based its decision).

The Director’s arguments to the contrary are unavailing. 

She primarily argues that the district court’s denial of 

Appellants’ motion to set aside funds was not a final 

judgment, and therefore we lack jurisdiction to review it 

under 28 U.S.C. § 1291. However, “[a] necessary corollary 

to the final judgment rule is that a party may appeal 

interlocutory orders after entry of final judgment because 

those orders merge into that final judgment.” Am. Ironworks 

& Erectors, Inc. v. N. Am. Constr. Corp., 248 F.3d 892, 897 

(9th Cir. 2001). Appellants could not, and did not, appeal 

the denial of their motion to set aside funds at the time that 

decision was made. Appellants were only able to appeal that 

decision after the district court entered final judgment.

The Director also summarily argues that Appellants 

cannot appeal the motion to set aside attorneys’ fee because 

the Settlement Agreement bars this relief. The Settlement 

Agreement specifies that the released claims either were 

“asserted” in the various cases between the parties (including 

this case) or “could have been asserted” in those cases. Yet, 

any relief that may result from this claim would likely not 

run against the Director, but rather against the recipients of 

the $70 million. See Vincent v. Hughes Air W., Inc., 

557 F.2d 759, 770 (9th Cir. 1977) (stating the “the original 

client’s attorney’s fees are not shifted to . . . the adversarylosing party; rather, fees are shifted to third parties, people 

viewed as beneficiates of the fund in some way”). 

Furthermore, the Settlement Agreement permitted 

Appellants to move for attorneys’ fees under the “common 

benefit” theory provided they sought payment “exclusively 

and directly from Medicaid providers that purportedly 
26 INDEP. LIVING CTR. V. KENT

obtained a benefit from counsel’s work, and not from [the 

Director].” Therefore, it is doubtful that the Settlement 

Agreement serves as a complete bar to this relief, unless the 

Director were ordered to pay. In any event, determination of 

the Settlement Agreement’s effects, if any, on this issue are 

for the district court to ascertain in the first instance.

We remand this issue to the district court acknowledging 

the potential difficulty or impossibility of reversing its denial 

of the set aside for attorneys’ fees, given the possible 

disposition of the funds to the various Medi-Cal providers 

and that some recipient providers may not still be operating. 

Nevertheless, the district court is better positioned than we 

are to determine if any non-disbursed funds remain, or if 

other funds could be recouped from which to award 

appropriate attorneys’ fees.

CONCLUSION

We remand to the district court to determine whether 

Appellants should recover attorneys’ fees under Cal. Civ. P. 

Code § 1021.5, and, if so, the amount of the award. We also 

remand for a determination of whether Appellants can 

recover any fees from the retroactive relief obtained in 2010.

REVERSED and REMANDED.
INDEP. LIVING CTR. V. KENT 27

CHRISTEN, Circuit Judge, concurring:

I concur in the result reached by the majority opinion. I 

write separately because I reach the same conclusion in a 

different way.

1. Attorneys’ Fees Under Cal. Civ. Proc. Code § 1021.5

As the majority explains, in February 2008, the 

California legislature enacted legislation reducing the 

Medicaid reimbursement rate for California healthcare 

providers by ten percent. Several Medicaid providers and 

recipients (the Appellants here) claimed that the discounted 

reimbursement rate was so low that it was inconsistent with 

the mandate in § 30(A) of the Medicaid Act, which requires 

states to keep the rate high enough to ensure that there are 

sufficient provider options.1 Appellants’ argument was that 

the California Legislature’s action ran afoul of the 

Supremacy Clause.

Appellants petitioned for a Writ of Mandate in state court 

pursuant to § 1085 of California’s Code of Civil Procedure. 

They sought to bar the California Department of Health Care 

Services (“DHCS”) and its director from imposing the 

discounted reimbursement rate. The Director removed the 

action to federal court, and after several years of litigation, 

the parties settled their dispute. Appellants now seek 

 1 See 42 U.S.C. §1396a(a)(30)(A), under which states accepting 

federal Medicaid funds must “provide such methods and procedures 

relating to . . . the payment for, care and services available under the plan 

. . . and to assure that payments are consistent with efficiency, economy, 

and quality of care and are sufficient to enlist enough providers so that 

care and services are available under the plan at least to the extent that 

such care and services are available to the general population in the 

geographic area[.]”
28 INDEP. LIVING CTR. V. KENT

attorneys’ fees under California’s private attorney general 

provision, Cal. Civ. Proc. Code § 1021.5.

District courts in our circuit have concluded that “federal 

courts are without power to issue writs of mandamus to 

direct state agencies in the performance of their duties.” See, 

e.g., Robinson v. Cal. Bd. of Prison Terms, 997 F. Supp. 

1303, 1308 (C.D. Cal. 1998); Dunlap v. Corbin, 532 F. Supp. 

183, 187 (D. Ariz. 1981), aff’d, 673 F.2d 1337 (9th Cir. 

1982) (table) (finding federal courts lacked the power to 

issue a writ of mandamus “directing a state agency to 

exercise its discretionary power”); see also Clemes v. Del 

Norte Cty. Unified Sch. Dist., 843 F. Supp. 583, 596 (N.D. 

Cal. 1994) (concluding district court lacked jurisdiction to 

issue a state law writ).2 The majority cites to a number of 

California state court cases to illustrate that writs of mandate 

are available, including against the DHCS, to compel 

compliance with § 30(A), ante at 15–16, but that authority 

does not establish that a federal court is similarly authorized 

to order relief pursuant to § 1085. Our court has never 

precisely defined whether and when a federal court may 

issue a § 1085 Writ of Mandate or injunction, but the State 

offers no persuasive support for its argument that federal 

courts cannot provide any relief pursuant to that provision.

Appellants’ basic requested relief did not change when 

the State removed their case to federal court. Suits with 

federal and state claims are removed in their entirety—“the 

entire action may be removed”—and any claims for which 

the district court lacks jurisdiction must subsequently be 

remanded. 28 U.S.C. § 1441(c)(1)(B) and (2) (emphasis 

added). Here, nothing was ever remanded, and as they had 

 2 Abrogated on unrelated grounds by Maynard v. City of San Jose, 

37 F.3d 1396, 1403–04 (9th Cir. 1994), as amended (Nov. 22, 1994).
INDEP. LIVING CTR. V. KENT 29

done from the beginning, Appellants continued to seek a 

judgment establishing that California’s imposition of a cut 

reimbursement rate was unlawful because it conflicted with 

§ 30(A)’s mandate. In other words, they sought both 

injunctive and declaratory relief.

Appellants were entitled to continue pressing their claim 

because a petition for a § 1085 Writ necessarily includes a 

request for a determination and declaration of rights. A court 

ruling on a § 1085 petition is required to first determine 

whether the requesting party is, or is not, entitled to the “use 

and enjoyment of [the] right” at issue. Cal. Civ. Proc. Code 

§ 1085(a). Indeed, California case law recognizes that 

declaratory relief is the foundation for a § 1085 Writ of 

Mandate. See, e.g., Beach & Bluff Conservancy v. City of 

Solana Beach, No. D072304, 2018 WL 5023596, at *1 (Cal. 

Ct. App. Oct. 17, 2018) (explaining that plaintiff “brought 

the present action for declaratory relief and traditional 

mandate under Code of Civil Procedure section 1085”). We 

need not be concerned with whether the district court could 

have issued an injunction or a writ of mandate in Appellants’ 

favor had this case proceeded to judgment because the 

district court certainly could have entered a declaratory 

judgment establishing whether the discounted 

reimbursement rate was inconsistent with § 30(A), and that 

request for declaratory relief is enough to anchor Appellants’ 

fees petition.3

 3 The State argued that § 1085 is only a procedural mechanism, not 

a cause of action. But there is no question that requests for declaratory 

relief can be stand-alone causes of action under California law. See Cal. 

Civ. Proc. Code § 1060 (allowing a party who desires a declaration of 

his or her rights or duties with respect to another to ask for such a 

declaration, either alone or with other relief).
30 INDEP. LIVING CTR. V. KENT

The majority explains that Armstrong v. Exceptional 

Child Care Ctr., Inc., essentially foreclosed Appellants’ 

federal law claims by holding that neither the Supremacy 

Clause, the Medicaid statute, nor even general principles of 

equity provide a federal basis for challenging a state’s use of 

Medicaid funds under § 30(A). 135 S. Ct. 1378, 1383–87 

(2015). Armstrong’s limitation may apply to challenges 

based on state law as well, because the Court held that “the 

Medicaid Act implicitly precludes private enforcement of 

§ 30(A),” and thus may preempt suits bringing § 30(A) 

challenges under state law. Id. at 1385. If we were ruling 

on the merits, Armstrong likely would require dismissal of 

Appellants’ claims, but the parties settled their dispute 

before Armstrong was decided and we are tasked only with 

identifying the nature of the claims the parties resolved. PreArmstrong, California state courts had issued writs of 

mandate to force compliance with § 30(A), see ante at 15–

16, and Appellants’ insistence that the State had violated 

§ 30(A) presented significant litigation risk to the State. 

Both parties were aware of this and their settlement was 

global; it encompassed not only the Appellants’ remaining 

federal claims but also their state § 1085 claim (or what 

remained of it).

So what state claim was settled? If nothing else, the 

settlement included that portion of Appellants’ claim that 

constituted a request for declaratory relief; that much of the 

§ 1085 claim surely survived. From there, Erie dictates that 

California’s substantive law on attorneys’ fees applies. Erie 

R. Co. v. Tompkins, 304 U.S. 64 (1938); ante at 19–22. Just 

as the State could not escape its waiver of sovereign 

immunity by removing the case to federal court, Indep. 

Living Ctr. of S. Cal., Inc. v. Maxwell-Jolly, 572 F.3d 644, 
INDEP. LIVING CTR. V. KENT 31

661–63 (9th Cir. 2009)4, it could not avoid exposure to 

attorneys’ fees through removal. On remand, the district 

court must decide whether Appellants’ counsel is eligible for 

attorneys’ fees pursuant to Cal. Civ. Proc. Code § 1021.5.

2. Motion to Set Aside Attorneys’ Fees

I also agree that it was an abuse of discretion to deny 

Appellants’ motion to set aside attorneys’ fees from the 

$70 million reimbursement. Moreover, it is hard to see 

anything that would prevent the district court from recouping 

funds to which the Appellants’ attorneys may be entitled, as 

long as the relief ultimately comes from providers who 

received a windfall as a result of the earlier reimbursement, 

and those providers have an opportunity to be heard on any 

proposed plan for recoupment.

Although we lack jurisdiction over the individual 

beneficiaries of the original reimbursement fund (i.e., the 

various medical care providers), the court continues to have 

jurisdiction over the Director and presumably it will be the 

Director who will be responsible for reimbursing providers 

for services yet to be furnished. I see no absolute obstacle to 

gradually recouping an appropriate fee amount either as part 

of a fractionally reduced reimbursement payment to the 

overcompensated providers or through some comparable 

process. The Director pointed out in her briefing at the time 

the Appellants moved for a set aside that there are 

inefficiencies and transaction costs associated with adjusting 

the department’s automated payouts. However, those 

difficulties do not appear to be sufficiently onerous to 

 4 Vacated and remanded on other grounds sub nom. Douglas v. 

Indep. Living Ctr. of S. Cal., Inc., 132 S. Ct. 1204 (2012).
32 INDEP. LIVING CTR. V. KENT

warrant denying Appellants’ counsel a fee award to which 

they may be entitled.