Opinion ID: 2543911
Heading Depth: 1
Heading Rank: 7

Heading: Analogous fee-shifting statutes

Text: The statutory scheme governing judicial arbitrations contains a one-sided fee-shifting provision similar to that found in section 98.2(c). (See Code Civ. Proc, § 1141.10 et seq.; see generally Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2002) ch. 13, Judicial Arbitration and Mediation, pp. 13-1 to 13-81.) Like a wage order claimant unsatisfied with a commissioner's award, a party who is dissatisfied with a judicial arbitration award may opt for a trial de novo. (Code Civ. Proc, § 1141.20.) In the de novo proceedings following judicial arbitration, as in a trial de novo following appeal of a commissioner's award, the case is tried as though no arbitration proceedings had occurred. (Cal. Rules of Court, rule 1616(c); Code Civ. Proc, § 1141.25; Weber v. Kessler (1981) 126 Cal.App.3d 1033, 1036-1037, 179 Cal.Rptr. 299.) Under the fee- and cost-shifting provision of the judicial arbitration statute, a party who requests a trial de novo and fails to obtain a judgment more favorable in either the amount of damages awarded or the type of relief granted must pay the opposing party's costs and attorney fees to the extent authorized by contract or statute. (Code Civ. Proc, § 1141.21, subd. (a).) The trial de novo provides the losing party with yet another chance to present its case, but that party also assumes a risk by requesting the trial: if the judgment for the party electing the trial de novo is not more favorable, either in the amount of damages awarded or the type of relief sought, than was the arbitration award, that party must reimburse the county for the compensation paid to the arbitrator, as well as paying the opposing party the costs it has incurred as a result of the trial. ( Weber v. Kessler, supra, 126 Cal.App.3d at p. 1036, 179 Cal.Rptr. 299.) The fee-shifting provision of the judicial arbitration statute is therefore intended to encourage parties to accept reasonable arbitration awards, and to discourage trials de novo ( Phelps v. Stostad (1997) 16 Cal.4th 23, 29, 65 Cal.Rptr.2d 360, 939 P.2d 760), much like the fee and cost-shifting provision of section 98.2(c) is intended to discourage frivolous appeals from the commissioner's awards. The Legislature has clearly enacted a policy of encouraging the parties to accept arbitration awards. The legislative policy promotes judicial economy in a world of limited courtroom space and limited tax dollars. ( Bhullar v. Tayyab (1996) 46 Cal.App.4th 582, 589-590, 54 Cal.Rptr.2d 17.) The legislative scheme governing statutory settlement offers also contains a one-sided fee-shifting provision similar in many respects to that found in section 98.2(c). If a plaintiff does not accept a defendant's statutory settlement offer and then fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant's costs from the time of the offer. (Code Civ. Proc, § 998, subd. (c)(1).) As recognized in numerous California decisions, the clear purpose of [Code of Civil Procedure] section 998 ... is to encourage the settlement of lawsuits prior to trial, and penalize litigants who fail to accept what, in retrospect, is determined to have been a reasonable settlement offer. ( Bodell Construction Co. v. Trustees of Cal. State University (1998) 62 Cal. App.4th 1508, 1518, 73 Cal.Rptr.2d 450; Bank of San Pedro v. Superior Court, supra, 3 Cal.4th at p. 804, 12 Cal.Rptr.2d 696, 838 P.2d 218.) As the Court of Appeal in this case reasoned, the fee- and cost-shifting provisions of Code of Civil Procedure sections 998 and 1141.21 are each intended to discourage unnecessary trials in much the same way that section 98.2(c) is designed to discourage unmeritorious appeals of the commissioner's decisions to the courts. Like section 98.2(c), the judicial arbitration fee and cost-shifting provision affords a party dissatisfied with his or her arbitration award the option of a trial de novo, but if the ensuing judgment is not more favorable than was the arbitration award, the court shall order that party to pay the other side's fees and costs. (Code Civ. Proc, § 1141.21, subd. (a).) Notably, in applying the more favorable judgment standard, even though a party appealing an arbitration award obtains a trial de novo, the court must compare the award to the ultimate judgment to determine the nonappealing party's entitlement to fees and costs. ( Weber v. Kessler, supra, 126 Cal.App.3d at p. 1036, 179 Cal.Rptr. 299.) Similarly, when a plaintiff rejects a defendant's statutory settlement offer and then fails to obtain a more favorable judgment at trial, the plaintiff may not recover postoffer costs and becomes liable for the defendant's costs from the time of the offer. (Code Civ. Proc, § 998, subd. (c)(1).) Smith argued in the Court of Appeal that these three statutes cannot be validly compared because the Legislature failed to use precisely the same language in section 98.2(c) as it did in the Code of Civil Procedure sections. He renews the point in this court. It is true that the Legislature employed different terminology in the judicial arbitration and statutory settlement cost-shifting schemes. Under those statutes, cost shifting is triggered when the de novo trial court judgment is more favorable than the rejected settlement offer or arbitration award (Code Civ. Proc, §§ 998, subds. (c)-(e), 1141.21), whereas under section 98.2(c), cost shifting is mandated when the party rejecting the commissioner's award is unsuccessful in the appeal. Smith urged the Court of Appeal to invoke the `well recognized principle of statutory construction that when the Legislature has carefully employed a term in one place and has excluded it in another, it should not be implied where excluded.' ( Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 725, 257 Cal.Rptr. 708, 771 P.2d 406, quoting Ford Motor Co. v. County of Tulare (1983) 145 Cal.App.3d 688, 691, 193 Cal.Rptr. 511.) But as the court reasoned, that principle is inapplicable here, for it applies only when the Legislature has intentionally changed or excluded a term by design ( Ford Motor Co. v. County of Tulare, supra, 145 Cal.App.3d at p. 691, 193 Cal. Rptr. 511), and it is only when different terms are used in parts of the same statutory scheme that they are presumed to have different meanings. ( Brown v. Kelly Broadcasting Co., supra, 48 Cal.3d at p. 725, 257 Cal.Rptr. 708, 771 P.2d 406 [construing varying terminology in a single statute, Civ.Code, § 47].) We agree. In this instance, it does not appear that the Legislature's failure to use identical language in the judicial arbitration, statutory settlement and Labor Code fee-shifting provisions was either intentional or meaningful. Smith also points to another distinction between section 98.2(c) and the two Code of Civil Procedure fee-shifting provisions described above: section 98.2(c) makes the fee assessment mandatory, whereas Code of Civil Procedure sections 998 and 1141.21 allow for exceptions in the interest of justice. But section 98.2(c)'s stricter mandatory fee-shifting provision is most likely attributable to the Legislature's stronger interest in promoting the finality of the commissioner's awards, given the correspondingly harsher disincentive to appeal them. It is difficult to see how this distinction between the fee-shifting provisions is availing to Smith's cause.