Opinion ID: 2508131
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Heading: Whether the Catalyst Theory Should Be Abolished

Text: An important exception to the American rule that litigants are to bear their own attorney fees is found in section 1021.5. [2] As we have stated: The Legislature adopted section 1021.5 as a codification of the private attorney general doctrine of attorney fees developed in prior judicial decisions. [Citation.] Under this section, the court may award attorney 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.' ... [T]he private attorney general doctrine `rests upon the recognition that privately initiated lawsuits are often essential to the effectuation of the fundamental public policies embodied in constitutional or statutory provisions, and that, without some mechanism authorizing the award of attorney fees, private actions to enforce such important public policies will as a practical matter frequently be infeasible.' Thus, the fundamental objective of the doctrine is to encourage suits enforcing important public policies by providing substantial attorney fees to successful litigants in such cases. ( Maria P. v. Riles (1987) 43 Cal.3d 1281, 1288-1289, 240 Cal.Rptr. 872, 743 P.2d 932 ( Maria P. ).) In order to effectuate that policy, we have taken a broad, pragmatic view of what constitutes a successful party. Our prior cases uniformly explain that an attorney fee award may be justified even when plaintiff's legal action does not result in a favorable final judgment. ( Westside Community for Independent Living, Inc. v. Obledo, [ supra , ] 33 Cal.3d 348, 352 [188 Cal.Rptr. 873, 657 P.2d 365]; see also Press v. Lucky Stores, Inc. (1983) 34 Cal.3d 311 [193 Cal.Rptr. 900, 667 P.2d 704] [although their action had become moot, plaintiffs were awarded fees under § 1021.5 because they had achieved the relief they sought through preliminary injunction].) It is also clear that the procedural device by which a plaintiff seeks to enforce an important right is not determinative of his or her entitlement to attorney fees under section 1021.5. ( In re Head (1986) 42 Cal.3d 223, 228-229 [228 Cal.Rptr. 184, 721 P.2d 65].) Similarly, a section 1021.5 award is not necessarily barred merely because the plaintiff won the case on a preliminary issue. ( Woodland Hills Residents Assn., Inc. [ v. City Council (1979)] 23 Cal.3d [917,] 938 [154 Cal.Rptr. 503, 593 P.2d 200].) In determining whether a plaintiff is a successful party for purposes of section 1021.5, `[t]he critical fact is the impact of the action, not the manner of its resolution.' ( Folsom [ v. Butte County Assn. of Governments (1982)] 32 Cal.3d at [668], 685 [186 Cal.Rptr. 589, 652 P.2d 437] ( Folsom ).) [¶] The trial court in its discretion `must realistically assess the litigation and determine, from a practical perspective, whether or not the action served to vindicate an important right so as to justify an attorney fee award' under section 1021.5. ( Woodland Hills Residents Assn., supra, 23 Cal.3d at p. 938 [154 Cal.Rptr. 503, 593 P.2d 200].) ( Maria P., supra, 43 Cal.3d at pp. 1290-1291, 240 Cal.Rptr. 872, 743 P.2d 932.) The catalyst theory is an application of the above stated principle that courts look to the practical impact of the public interest litigation in order to determine whether the party was successful, and therefore potentially eligible for attorney fees. We specifically endorsed that theory in Westside Community, supra, 33 Cal.3d 348, 188 Cal.Rptr. 873, 657 P.2d 365. The plaintiffs in that case sued to compel the Secretary of the Health and Welfare Agency to issue regulations implementing Government Code section 11135, which bars state funded programs from engaging in various forms of discrimination. Shortly thereafter, the defendant issued proposed regulations, thereby mooting the case. Plaintiffs filed for private attorney general fees pursuant to section 1021.5. ( Westside Community, supra, 33 Cal.3d at pp. 351-352, 188 Cal.Rptr. 873, 657 P.2d 365.) The defendants argued that there was no evidence the plaintiffs were successful parties because the litigation had not reached a final judgment. ( Id. at p. 352, 188 Cal.Rptr. 873, 657 P.2d 365.) We rejected that argument and cited with approval Fletcher v. A.J. Industries, Inc. (1968) 266 Cal.App.2d 313, 325, 72 Cal.Rptr. 146 ( Fletcher ), in which the Court of Appeal upheld an attorney fee award in a shareholder derivative action under the theory that the plaintiffs were successful in conferring a substantial benefit to the corporation, even though the litigation was resolved through a settlement. That court held that `[i]t was not significant that the benefits found were achieved by settlement of plaintiffs' action rather than by final judgment.' ( Westside Community, supra, 33 Cal.3d at p. 352, 188 Cal.Rptr. 873, 657 P.2d 365, quoting Fletcher, supra, 266 Cal.App.2d at p. 325, 72 Cal.Rptr. 146.) We further observed that [n]umerous federal decisions have reached the same conclusion, holding that attorney fees may be proper whenever an action results in relief for the plaintiff, whether the relief is obtained through a `voluntary' change in the defendant's conduct, through a settlement, or otherwise. (See, e.g., Sullivan v. Com. of Pa. Dept. of Labor, etc. (3d Cir. 1981) 663 F.2d 443, 447-450; Robinson v. Kimbrough (5th Cir.1981) 652 F.2d 458, 465-466; American Constitutional Party v. Munro (9th Cir.1981) 650 F.2d 184, 187-188.)[¶] Thus, an award of attorney fees may be appropriate where `plaintiffs' lawsuit was a catalyst motivating defendants to provide the primary relief sought....' ( Robinson, supra, 652 F.2d at p. 465, italics added.) A plaintiff will be considered a `successful party' where an important right is vindicated `by activating defendants to modify their behavior.' ( Westside Community, supra, 33 Cal.3d at pp. 352-353, 188 Cal.Rptr. 873, 657 P.2d 365.) Robinson v. Kimbrough, supra, 652 F.2d 458 ( Robinson ), cited with approval in Westside Community, provides a useful example of the catalyst theory's application. The plaintiffs filed suit in federal district court alleging that Harris County, Georgia, jury commissioners had compiled jury lists, from which grand and petit juries were summoned, with disproportionately low percentages of Blacks and women, resulting in their underrepresentation on the county's juries. One month after the complaint was filed, the jury commissioners, in a nonadversarial proceeding that did not involve the plaintiffs, requested a county judge to order them to recompile jury lists to obtain a more representative cross-section. The court order was required because the jury commissioners were not authorized to revise jury lists other than biennially, and the regular revision had been recently completed. The court granted the order and the jury lists were revised. The district court then dismissed the plaintiffs' suit as failing to raise a substantial constitutional question. The plaintiffs appealed and the court of appeals held that, in light of the revised jury lists and certain statutory changes during the pendency of the appeal, the plaintiffs' challenge was moot. The plaintiffs therefore never received judicial relief. (652 F.2d at pp. 460-462.) Nonetheless, the court of appeals in subsequent proceedings affirmed that plaintiffs may be entitled to an award of attorney fees pursuant to the Civil Rights Attorney's Fees Award Act of 1976 (42 U.S.C. § 1988). Rejecting the argument that the plaintiffs were not a prevailing party, the court agreed with other federal appellate courts that recovery of attorney fees under the Act is not dependent upon plaintiffs' ability to secure formal judicial relief by way of injunction or otherwise. Rather, these opinions have focused upon the type of relief obtained from the defendants as a result of the lawsuit. [Citations.] Common to these decisions is the recognition that plaintiffs may recover attorneys' fees if their lawsuit is a substantial factor or a significant catalyst in motivating the defendants to end their unconstitutional behavior. ( Robinson, supra, 652 F.2d at pp. 465-466.) The court therefore remanded the case for the purpose of determining whether plaintiffs' lawsuit was a substantial factor or significant catalyst in bringing about an end to the unconstitutional underrepresentation of blacks and women in the Harris County jury lists. ( Id. at p. 467.) [3] The Westside Community court, although endorsing the catalyst theory found in Robinson and other federal cases, nonetheless went on to conclude that no attorney fees were owed in that case because there was no demonstrable causal connection between the lawsuit and the government's action. ( Westside Community, supra, 33 Cal.3d at pp. 353-354, 188 Cal. Rptr. 873, 657 P.2d 365.) We continue to conclude that the catalyst theory, in concept, is sound. The principle upon which the theory is based  that we look to the impact of the action, not its manner of resolution ( Folsom, supra, 32 Cal.3d at p. 685, 186 Cal.Rptr. 589, 652 P.2d 437)  is fully consistent with the purpose of section 1021.5: to financially reward attorneys who successfully prosecute cases in the public interest, and thereby `prevent worthy claimants from being silenced or stifled because of a lack of legal resources.' ( Folsom, supra, 32 Cal.3d at p. 683, 186 Cal.Rptr. 589, 652 P.2d 437.) We therefore reaffirm our endorsement of the catalyst theory. DaimlerChrysler argues that we should reevaluate that endorsement in light of the rejection of the catalyst theory by the United States Supreme Court in Buckhannon, supra, 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855. At the outset we state what hardly needs stating: that United States Supreme Court interpretation of federal statutes does not bind us to similarly interpret similar state statutes. Indeed, in the realm of attorney fees for private attorneys general, this court has markedly diverged from United States Supreme Court precedent. In Serrano v. Priest (1977) 20 Cal.3d 25, 141 Cal.Rptr. 315, 569 P.2d 1303 ( Serrano III ), an opinion that predated the effective date of section 1021.5 (see Serrano v. Unruh (1982) 32 Cal.3d 621, 624, 186 Cal.Rptr. 754, 652 P.2d 985, fn. 1 ( Serrano IV )), this court rejected the holding of Alyeska Pipeline Co. v. Wilderness Society (1975) 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 that attorney fees cannot be awarded on a private attorney general theory absent express statutory authorization. ( Serrano III, supra, 20 Cal.3d at pp. 46-47, 141 Cal.Rptr. 315, 569 P.2d 1303.) More recently, we unanimously declined to follow the United States Supreme Court's rejection of the use of a contingency fee multiplier in calculating private attorney general fees. ( Ketchum v. Moses (2001) 24 Cal.4th 1122, 1137-1139, 104 Cal.Rptr.2d 377, 17 P.3d 735 ( Ketchum ).) We reaffirmed that the `fashioning of equitable exceptions' to the California rule that parties must bear their own costs `is a matter within the sole competence of this court.' ( Id. at p. 1137, 104 Cal.Rptr.2d 377, 17 P.3d 735.) As explained below, we do not find the reasoning of the five-to-four majority in Buckhannon persuasive, and decline to apply its holding to section 1021.5. In Buckhannon, the plaintiffs sued alleging that certain state law requirements imposed on their assisted living facility violated the Fair Housing Amendments Act of 1988 (42 U.S.C. § 3601 et seq.) and the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.). After the state legislature changed the requirements in a way that vindicated the plaintiffs position, the plaintiffs sought attorney fees under the relevant statutes, both of which permit attorney fees for the prevailing party. (See 42 U.S.C. § 3613(c)(2) [[T]he court, in its discretion, may allow the prevailing party ... a reasonable attorney's fee and costs] and 42 U.S.C. § 12205[[T]he court ..., in its discretion, may allow the prevailing party ... a reasonable attorney's fee, including litigation expenses, and costs].) A good deal of the Buckhannon court's reason for rejecting the catalyst theory turns on the definition of prevailing party. The Buckhannon majority found the term prevailing party to be a legal term of art, defined according to Black's Law Dictionary (7th ed.1999) at page 1145 as `[a] party in whose favor a judgment is rendered, regardless of the amount of damages awarded .  Also termed successful party.  ( Buckhannon, supra, 532 U.S. at p. 603, 121 S.Ct. 1835.) This definition, together with prior court decisions, led the Buckhannon majority to conclude that a prevailing party must be a party that has brought about a `material alteration of the legal relationship of the parties,' ( id. at p. 604, 121 S.Ct. 1835) which could include both a judgment[ ] on the merits, and a settlement agreement enforced through a consent decree. ( Ibid. ) The Buckhannon majority concluded that the `catalyst theory' falls on the other side of the line from these examples. It allows an award where there is no judicially sanctioned change in the legal relationship of the parties. Even under a limited form of the `catalyst theory,' a plaintiff could recover attorney's fees if it established that the complaint had sufficient merit to withstand a motion to dismiss for lack of jurisdiction or failure to state a claim on which relief may be granted. [Citation.] This is not the type of legal merit that our prior decisions, based upon plain language and congressional intent, have found necessary.... A defendant's voluntary change in conduct, although perhaps accomplishing what the plaintiff sought to achieve by the lawsuit, lacks the necessary judicial imprimatur on the change. Our precedents thus counsel against holding that the term `prevailing party' authorizes an award of attorney's fees without a corresponding alteration in the legal relationship of the parties. ( Buckhannon, supra, 532 U.S. at p. 605, 121 S.Ct. 1835.) We agree with DaimlerChrysler that the terms prevailing party and successful party, as used in section 1021.5, are synonymous. ( Schmier v. Supreme Court (2002) 96 Cal.App.4th 873, 877, 117 Cal.Rptr.2d 497; Urbaniak v. Newton (1993) 19 Cal.App.4th 1837, 1843, fn. 4, 24 Cal.Rptr.2d 333; see also Maria P., supra, 43 Cal.3d at pp. 1291-1292, 240 Cal.Rptr. 872, 743 P.2d 932 [using the two words interchangeably].) We also agree that in the context of section 1021.5, the term party refers to a party to litigation, and therefore precludes an award of attorney fees when no lawsuit has been filed. (See Black's Law Dict. (4th rev. ed.1968) at p. 1278 [Party is a technical term having a precise meaning in legal parlance; it refers to those by or against whom and lawsuit is brought ..., the party plaintiff or defendant ....]; see also Flannery v. Prentice (2001) 26 Cal.4th 572, 578, 110 Cal.Rptr.2d 809, 28 P.3d 860 [the word party as part of a prevailing party fee statute refers to litigant or litigant's attorney].) But we are aware of no judicial construction or legislative usage in California that limits the terms prevailing party or successful party to the meaning found in the most recent edition of Black's Law Dictionary to the exclusion of other meanings, as DaimlerChrysler, following the Buckhannon majority, argues. (Cf. Sullivan v. Delta Air Lines, Inc. (1997) 15 Cal.4th 288, 302, 63 Cal.Rptr.2d 74, 935 P.2d 781 [the Legislature uses the phrase `action or proceeding' ... virtually as a term of art whenever it wishes to refer comprehensively to all the judicial remedies available under our law].) [4] We therefore turn to the usual and ordinary meaning of the statutory language in order to discern legislative intent. ( Lennane v. Franchise Tax Bd. (1994) 9 Cal.4th 263, 268, 36 Cal.Rptr.2d 563, 885 P.2d 976.) The term successful party, as ordinarily understood, means the party to litigation that achieves its objectives. We agree with the dissenting opinion in Buckhannon: In everyday use, `prevail' means `gain victory by virtue of strength or superiority: win mastery: triumph.' Webster's Third New International Dictionary 1797 (1976). There are undoubtedly situations in which an individual's goal is to obtain approval of a judge, and in those situations, one cannot `prevail' short of a judge's formal declaration. In a piano competition or a figure skating contest, for example, the person who prevails is the person declared winner by the judges. However, where the ultimate goal is not an arbiter's approval, but a favorable alteration of actual circumstances, a formal declaration is not essential.... [¶] A lawsuit's ultimate purpose is to achieve actual relief from an opponent. Favorable judgment may be instrumental in gaining that relief. Generally, however, `the judicial decree is not the end but the means. At the end of the rainbow lies not a judgment, but some action (or cessation of action) by the defendant....' [Citation.] On this common understanding, if a party reaches the `sought-after destination,' then the party `prevails' regardless of the `route taken.' [Citation.] ( Buckhannon, supra, 532 U.S. at pp. 633-634, 121 S.Ct. 1835 (dis. opn. of Ginsburg, J.).) This practical definition of prevailing or successful party is consistent with our construction of the meaning of prevailing party within the context of Civil Code section 1717, which provides that when a contract specifically provides for attorney fees for one party, fees are to go to the prevailing party whether he or she is the party specified in the contract or not. In Santisas v. Goodin (1998) 17 Cal.4th 599, 71 Cal.Rptr.2d 830, 951 P.2d 399, we held that although a defendant who has received the benefit of a voluntary dismissal of an action against it is not necessarily a prevailing party, it may be under some circumstances. In discussing the meaning of the term prevailing party when it is undefined by contract, we stated that a court may base its attorney fees decision on a pragmatic definition of the extent to which each party has realized its litigation objectives, whether by judgment, settlement, or otherwise.  ( Id. at p. 622, 71 Cal.Rptr.2d 830, 951 P.2d 399, italics added.) If, as is clearly the case, a defendant can be a prevailing or successful party after a plaintiff has voluntarily dismissed the case against it, it is difficult to fathom why a plaintiff cannot be considered a prevailing or successful party when it achieves its litigation objectives by means of defendant's voluntary change in conduct in response to the litigation. When a creditor sues a debtor to collect a debt, and the debtor pays the debt before a judgment is entered against it, the creditor has been a successful party by any conventional understanding of that term. DaimlerChrysler also contends that the catalyst theory must be rejected because section 1021.5 requires that the party achieve success in an action which has resulted in the enforcement of an important right. It points to Black's Law Dictionary's definition of enforcement as [t]he act or process of compelling compliance with a law, mandate, or command (Black's Law Dict., 7th ed., supra, p. 549), and also Merriam-Webster's Collegiate Dictionary (10th ed.1998) at page 383, which defines enforce as to constrain, compel, or to carry out effectively. But neither definition requires the compulsion or constraint inherent in the term enforcement to entail a judicial decision. For example, in Belth v. Garamendi (1991) 232 Cal.App.3d 896, 283 Cal.Rptr. 829, the government initially refused the plaintiff's California Public Record Act request and complied only after the plaintiff filed a writ of mandate. The Court of Appeal held that attorney fees should be awarded under Government Code section 6259, subdivision (d), which mandates an award to plaintiffs who prevail in litigation under the Public Records Act. ( Belth, supra, 232 Cal.App.3d at p. 902, 283 Cal.Rptr. 829.) It appears plain that the plaintiff in that case had enforced its right of access to public records, compelling the public agency to do what it would not do short of litigation. It would be perverse, and contrary to the basic public interest objectives of section 1021.5, to hold that a plaintiff who obtains a final judgment has enforced a right, but not a plaintiff whose litigation position is so strong that it achieves the same result by compelling the defendant to change its conduct rather than face a probable judgment against it. [5] DaimlerChrysler also makes a number of policy arguments. Like the Buckhannon majority, it argues that [a] request for attorney's fees should not result in a second major litigation ( Buckhannon, supra, 532 U.S. at p. 609, 121 S.Ct. 1835), and that the catalyst theory would require a complex causal determination. Among other things, a `catalyst theory' hearing would require analysis of the defendant's subjective motivations in changing its conduct, an analysis that `will likely depend on a highly factbound inquiry and may turn on reasonable inferences from the nature and timing of the defendant's change in conduct.' We find persuasive the argument of the Buckhannon dissent that although some time may be expended in fact finding under the catalyst theory, it is at least as likely as not that that the catalyst rule `saves judicial resources,' [citation] by encouraging `plaintiffs to discontinue litigation after receiving through the defendant's acquiescence the remedy initially sought.' ( Buckhannon, supra, 532 U.S. at p. 640, 121 S.Ct. 1835 (dis opn. of Ginsburg, J.).) Nor are we persuaded that cases decided under a catalyst theory will inevitably give rise to complex and time-consuming litigation over the issue of causality. Case law, as well as our own judicial experience, suggests that catalyst theory cases may be resolved by relatively economical, straightforward inquiries by trial court judges close to and familiar with the litigation. (See, e.g., Southwest Center for Biological Diversity, et al. v. Carroll, supra, 182 F.Supp.2d at pp. 951-952 (opn. of Moreno, J.).) Moreover, the defendant in such cases knows better than anyone why it made the decision that granted the plaintiff the relief sought, and the defendant is in the best position to either concede that the plaintiff was a catalyst or to document why the plaintiff was not. We are unpersuaded that DaimlerChrysler's inability or unwillingness to do either in the present case, thereby prolonging the litigation, is necessarily attributable to the inherent difficulty of catalyst theory cases. DaimlerChrysler further argues that overall, the benefits that the catalyst rule is supposed to possess are dwarfed by the harms the rule will engender. It contends the evil to which the catalyst rule is addressed  that meritorious plaintiffs and plaintiffs' attorneys will be deprived of attorney fees by a favorable settlement  will be a relatively rare occurrence. It quotes the Buckhannon majority that `[I]t is well settled that a defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice' unless it is `absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.' ( Buckhannon, supra, 532 U.S. at p. 609, 121 S.Ct. 1835.) On the other hand, DaimlerChrylser argues the catalyst rule could encourage nuisance suits by unscrupulous attorneys hoping to obtain fees without having the merits of their suit adjudicated. It quotes with approval from Justice Scalia's concurrence in Buckhannon, joined by Justice Thomas: If the [catalyst theory] sometimes rewards the plaintiff with a phony claim (there is no way of knowing), [its absence] sometimes denies fees to the plaintiff with a solid case whose adversary slinks away on the eve of judgment. But it seems to me the evil of the former far outweighs the evil of the latter. There is all the difference in the world between a rule that denies the extraordinary boon of attorney's fees to some plaintiffs who are no less `deserving' of them than others who receive them, and a rule that causes the law to be the very instrument of wrong  exacting the payment of attorney's fees to the extortionist. ( Buckhannon, supra, 532 U.S. at p. 618, 121 S.Ct. 1835 (con. opn. of Scalia, J.).) We, of course, have no way of quantifying the magnitude of the potential and actual abuses by plaintiffs under a catalyst rule or by defendants under its absence. DaimlerChrysler and the Buckhannon majority's prediction  that defendants' change of behavior depriving worthy plaintiffs of attorney fees will be relatively rare  is one we cannot verify. But as plaintiffs argue, what is objectionable about elimination of the catalyst theory is not only that in a given case an attorney will be unjustly deprived of fees, but that attorneys will be deterred from accepting public interest litigation if there is the prospect they will be deprived of such fees after successful litigation. (See Chemerinsky, Closing the Courthouse Doors to Civil Rights Litigants (2003) 5 U.Pa. J. Const.L. 537, 547.) As matters stand now, public interest attorneys often take a considerable risk that they will not be paid at all because they will not prevail in the litigation or because they will be deemed ineligible for fees under section 1021.5, as when the suit is adjudged not to be sufficiently in the public interest. Abolition of the catalyst theory will increase an already considerable risk. As plaintiffs' attorney succinctly states: [I]t defies common sense to think attorneys who take meritorious public interest cases with the expectation that they will be compensated if they obtained favorable results for their clients will not be deterred from doing so if the defendant can litigate tenaciously, then avoid paying their fees by voluntarily providing relief before a court order is entered. [6] Nor do we believe that avoiding this increased risk of public interest litigation must inevitably come at the expense of rewarding a significant number of extortionate lawsuits. We can adopt sensible limitations on the catalyst theory that discourage the latter without putting a damper on lawsuits that genuinely provide a public benefit. Our starting point in this endeavor is the observation that the Legislature has assigned responsibility for awarding fees under section 1021.5 not to automatons unable to recognize extortionists, but to judges expected and instructed to exercise `discretion.' ( Buckhannon, supra, 532 U.S. at 640, 121 S.Ct. 1835 (dis. opn. of Ginsburg, J.).) These judges are in a good position to make the determination, as one court has expressed it, that the lawsuit have achieved their result `by threat of victory,' not `by dint of nuisance and threat of expense.' ( Buckhannon, supra, 532 U.S. at p. 628, 121 S.Ct. 1835 (dis. opn of Ginsburg, J.), quoting Marbley v. Bane (2d Cir.1995) 57 F.3d 224, 234-235.) In order to make this determination, the court is to inquire not into a defendant's subjective belief about the suit but rather to gauge, objectively speaking, whether the lawsuit had merit. (See Tyler v. Corner Const. Corp., Inc. (8th Cir.1999) 167 F.3d 1202, 1206.) A number of circuits of the United States Court of Appeals, prior to Buckhannon, adopted a version of the catalyst theory that required not only a causal connection between the lawsuit and the relief obtained but also a determination that defendant's conduct was required by law. ( Nadeau v. Helgemoe (1st Cir.1978) 581 F.2d 275 ( Nadeau ); see also Powder River Basin Resource Council v. Babbitt (10th Cir.1995) 54 F.3d 1477, 1486; Zinn v. Shalala, supra, 35 F.3d 273, 274; Sablan v. Dept. of Finance for the Commonwealth of the Northern Mariana Islands (9th Cir.1988) 856 F.2d 1317 ( Sablan ); Premachandra v. Mitts (8th Cir. 1984) 727 F.2d 717, 721-722.) Generally speaking, the required by law prong was tantamount to a finding that the lawsuit was not frivolous, unreasonable, or groundless. ( Stivers v. Pierce (9th Cir. 1995) 71 F.3d 732, 752, fn. 9.) This court has not explicitly adopted the above two-pronged test. (See Wallace v. Consumers Cooperative of Berkeley, Inc. (1985) 170 Cal.App.3d 836, 843-844, 216 Cal.Rptr. 649 [noting that some federal circuits focus only on the causal prong and that this court had not considered the Nadeau test].) We now do so. The trial court must determine that the lawsuit is not frivolous, unreasonable or groundless ( Stivers v. Pierce, supra, 71 F.3d at p. 752, fn. 9), in other words that its result was achieved by threat of victory, not by dint of nuisance and threat of expense. ( Marbley v. Bane, supra, 57 F.3d at pp. 234-235.) The determination the trial court must make is not unlike the determination it makes when asked to issue a preliminary injunction, i.e., not a final decision on the merits but a determination at a minimum that `the questions of law or fact are grave and difficult.' ( Wilms v. Hand (1951) 101 Cal. App.2d 811, 815, 226 P.2d 728; 6 Witkin Cal. Procedure (4th ed. 1997) Provisional Remedies, § 357, p. 288.) Although the catalyst rule is sometimes formulated to permit an award of attorney fees as long as a lawsuit can survive a motion to dismiss or for judgment on the pleadings (see Buckhannon, supra, 532 U.S. at p. 605, 121 S.Ct. 1835), we see no reason to limit a trial court's inquiry regarding the merits of the case to an examination of whether the pleadings state a cause of action. When a lawsuit has been mooted by a defendant's change in conduct, some development of the factual record is required in order to prevail on a catalyst theory. At the very least, a plaintiff must establish the precise factual/legal condition that [it] sought to change or affect as a prerequisite for establishing the catalytic effect of its lawsuit. ( Folsom, supra, 32 Cal.3d at p. 685, 186 Cal.Rptr. 589, 652 P.2d 437.) Sometimes this factual background will have been developed in the course of litigation. (See, e.g., DeGidio v. Pung, supra, 920 F.2d 525; Pembroke v. Wood County, Texas, supra, 981 F.2d 225.) When the suit is mooted early in its prosecution (as occurred in the present case), it may generally be established during the attorney fee proceeding by declarations, or, at the discretion of the trial court, by an abbreviated evidentiary hearing. (See Sablan, supra, 856 F.2d at pp. 1322-1323; Pearl, Cal. Attorney Fee Awards (Cont. Ed. Bar, 2d ed.1998 & 2003 supp.) § 14.39, pp. 444-445.) The trial court may review this factual background not only to determine the lawsuit's catalytic effect but also its merits. Attorney fees should not be awarded for a lawsuit that lacks merit, even if its pleadings would survive a demurrer. We believe that trial courts will be able to conduct an abbreviated but meaningful review of the merits of the litigation designed to screen out nuisance suits without significantly increasing attorney fee litigation costs. [7] On the other hand, the abolition of the catalyst theory, thereby giving plaintiffs the incentive to prolong the litigation until a judicial determination is made, is not necessarily a recipe for judicial efficiency. In addition to some scrutiny of the merits, we conclude that another limitation on the catalyst rule proposed by the Attorney General, appearing as amicus curiae, should be adopted by this court. The Attorney General proposes that a plaintiff seeking attorney fees under a catalyst theory must first reasonably attempt to settle the matter short of litigation. (See Grimsley v. Board of Supervisors (1985) 169 Cal.App.3d 960, 966-967, 213 Cal.Rptr. 108.) We believe this requirement is fully consistent with the basic objectives behind section 1021.5 and with one of its explicit requirements  the necessity ... of private enforcement of the public interest. Awarding attorney fees for litigation when those rights could have been vindicated by reasonable efforts short of litigation does not advance that objective and encourages lawsuits that are more opportunistic than authentically for the public good. Lengthy prelitigation negotiations are not required, nor is it necessary that the settlement demand be made by counsel, but a plaintiff must at least notify the defendant of its grievances and proposed remedies and give the defendant the opportunity to meet its demands within a reasonable time. (See, e.g., S.D. v. Faulkner, supra, 705 F.Supp. at p. 1363 [letter notifying defendants of plaintiffs' grievances, plus discussions over two-month period]; see also Garrison v. Board of Directors (1995) 36 Cal.App.4th 1670, 1676, 43 Cal.Rptr.2d 214 [Pub. Resources Code, § 21177, subd. (b) requires California Environmental Quality Act litigation to give agency of objections before litigation to give agency opportunity to respond].) What constitutes a reasonable time will depend on the context. Applying the catalyst rule, as discussed above, to the present case, the trial court applied the first prong of the rule to conclude that the lawsuit was in fact a substantial causal factor in DaimlerChrysler's change in policy with respect to its willingness to repurchase or replace the Dakota R/T or to offer consumers substantial discounts. DaimlerChrysler does not contend that the trial court's ruling on that point is unsupported by substantial evidence. But it is unclear whether the trial court considered the merits of the suit, and the trial court did not consider whether plaintiffs attempted to reasonably settle the matter short of litigation. We therefore remand the matter for a determination of whether plaintiffs are eligible for attorney fees under the catalyst rule as articulated above. [8]