Court Opinion

ID: 3175967
Source: CourtListenerOpinion
Date Created: 2016-02-09 19:12:26.639228+00
Date Added: 2024-06-11T07:38:52.576273
License: Public Domain

Filed 2/9/16
                            CERTIFIED FOR PUBLICATION

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                      DIVISION ONE

                                STATE OF CALIFORNIA

SAN DIEGO MUNICIPAL EMPLOYEES                      D066886
ASSOCIATION, et al.,

        Plaintiffs and Appellants,
                                                   (Super. Ct. No. 37-2010-0091207-
        v.                                         CU-WM-CTL )

CITY OF SAN DIEGO, et al.,

        Defendants and Respondents.

        Appeal from an order of the Superior Court of San Diego County, Joseph

Zimmerman, Judge. (Retired judge of the Imperial Sup. Ct., assigned by the Chief

Justice pursuant to art. VI, §6 of the Cal. Const.) Affirmed.

        Glaser Weil Fink Howard Avchen & Shapiro and Joel N. Klevens, for Plaintiff

and Appellant San Diego City Firefighters, Local 145, IAFF, AFL-CIO.

        Smith, Steiner, Vanderpool & Wax and Ann M. Smith, for Plaintiff and Appellant

San Diego Municipal Employees Association.

        Law Office of Michael A. Conger and Michael A. Conger for Plaintiff and

Appellant San Diego Police Officers Association.

        Rothner, Segall & Greenstone and Ellen Greenstone, for Plaintiff and Appellant

AFSCME, Local 127, AFL-CIO.
       Jan I. Goldsmith, City Attorney, and Walter C. Chung, Deputy City Attorney, for

Defendants and Respondents.

       In this action, the City of San Diego (City) sought to compel the San Diego City

Employees Retirement System (SDCERS) to increase City employees' contributions to

their retirement fund to share in covering an $800 million investment loss suffered by the

fund. Four public employee labor unions (Unions)1 ultimately intervened in the action

on the employees' behalf, asserting the same or similar arguments as SDCERS to rebut

the City's claims. After the case settled, the Unions moved to recover $1,785,147 in

attorney fees under Code of Civil Procedure section 1021.5.2 (All further statutory

references are to the Code of Civil Procedure.) The court denied the motion, finding the

Unions were not entitled to fees as their involvement in the lawsuit was unnecessary to

the result that was achieved.

       The Unions challenge the court's ruling, contending (1) they are entitled to recover

their fees even if their attorneys' services were unnecessary to the result; and (2) the court

abused its discretion in concluding those services were not necessary. We reject these

contentions and affirm the court's order.

1     The four Unions were: Municipal Employees' Association (MEA); American
Federation of State, County, and Municipal Employees; San Diego City Firefighters
Local 145; and the San Diego Police Officers Association.

2       Section 1021.5 sets forth California's private attorney general doctrine, as an
exception to the general rule that each party to litigation must bear its own attorney fees.
(Indio Police Command Unit Assn. v. City of Indio (2015) 230 Cal.App.4th 521, 544.) It
authorizes an award of attorney fees to a successful party in an 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 . . ." (§ 1021.5.)
                                               2
                   FACTUAL AND PROCEDURAL BACKGROUND

       SDCERS is a public employee retirement agency established under the City's

charter (Charter), article IX, §§ 141 et. seq.; its board manages and administers the City's

retirement system. (Lexin v. Superior Court (2010) 47 Cal.4th 1050, 1063.) The board's

responsibilities include "ensuring that benefits are adequately funded through the sound

investment of City- and employee-provided contributions," and ensuring "fully funded

retirement benefits are available and delivered to those [employees] it deems eligible."

(Id. at p. 1092)

       Three sources fund the SDCERS retirement system: employee contributions, City

contributions, and investment income from retirement system assets. In 2009, the system

suffered an actuarial investment loss of more than $800 million. Consistent with its past

practice, SDCERS allocated this shortfall solely to the City, not to the employees. In

April 2010, the City requested that SDCERS apportion one-half of the losses to its

employees under Charter section 143, which provides that contributions of the City and

employees to the retirement fund are to be "substantially equal." SDCERS rejected the

City's request and adopted a rule that specifically assigned all financial losses to the City.

       The City responded by filing a petition for writ of mandate to compel SDCERS to

equalize employee contributions to match those of the City. In August 2010, SDCERS

demurred to the petition on various grounds, including that City employees or their union

representatives were necessary parties to the case and that the City's failure to join them

warranted dismissal of the writ. The trial court overruled SDCERS's demurrer,

concluding: "At the pleading stage, it appears to the Court that the employees, if joined,

would make the same arguments as being raised by SDCERS and would seek the same

                                              3
objective from this litigation as SDCERS. The Court therefore rejects the argument that

City employees are necessary and indispensable parties."3

        Following the court's decision, the Unions sought to intervene in the action on

behalf of more than 7,700 City employees who worked in various job classifications that

were subject to longstanding collective bargaining relationships with the City. The

Unions reiterated SDCERS's claims that the City had always been responsible for

unfunded liabilities arising from investment losses even after the addition of Charter

section 143 and therefore the employees' vested contractual pension rights required the

City to bear the system's unfunded actuarial accrued liability. They also argued that

intervention was necessary to protect the employees' fundamental interests. The court

allowed the Unions to intervene, finding their members "ha[d] a direct and immediate

interest in the litigation; [and] the intervention [would] not enlarge the issues in the

case. . . ."4

        In October 2012 the City moved for judgment on the pleadings on the ground that

Charter section 143 required SDCERS to allocate the unfunded liability equally to the

employees and the City. Both the SDCERS and the Unions submitted briefs in

opposition. In December 2012 the court denied the City's motion.

3      The court relied on City of San Diego v. San Diego City Employees' Retirement
System (2010) 186 Cal.App.4th 69, 83-84, in which this court held city employees were
not necessary or indispensable parties in the City's challenge to SDCERS's funding
practices involving pension service credits. (Id. at pp. 78-82.)

4     In February 2011 the trial court granted SDCERS's motion to change venue and
ordered the case transferred to Los Angeles. On the City's challenge to the change of
venue decision, this court granted relief and ordered assignment of a judge from a neutral
county to preside over the matter in San Diego County.
                                              4
       The next month, the City moved for summary judgment on similar grounds. After

SDCERS and the Unions filed separate oppositions, each of which contained extensive

factual submissions and legal argument, the City withdrew its motion, stating it wanted to

focus all of its resources on the impending trial.

       The parties thereafter reached a settlement, pursuant to which the City agreed not

to require the employees to share in past unfunded accrued actuarial liabilities (UAAL),

but reserving the prospective right to claim that employees should contribute to shortfalls

caused by "all experience gains or losses." The parties agreed that if the City sought

future extra employee contributions, it would first meet and confer with the Unions under

the Meyers-Milias-Brown Act. (Gov. Code, §§3500 et seq.) The agreement also recited

that the City and the Unions had agreed to a five year freeze on so-called pensionable

pay, which would result in substantial reductions to the City's future annual contributions

to the pension plan5

5       Both sides claimed victory. The Unions pointed out that the City surrendered its
claim which could have required the employees to make up a $400 million deficit and
required compliance with the Meyers-Milias-Brown Act before changing the pertinent
ordinance to increase employee contributions for future unfunded accrued actuarial
liability.
        The City claimed that the Unions were not the prevailing party because left
unresolved was the issue of whether employees could be forced to increase future UAAL
contributions to the retirement fund to make up for fund investment losses. The City also
contended that the Unions did not achieve their goal of obtaining final judicial approval
of their interpretation of Charter section 143 regarding City and employee UAAL
contributions. It also pointed out that during the pendency of the action, the employees
agreed to freeze pensionable pay for five years, thus substantially reducing the City's
contribution to the retirement fund. Further the City noted that the Unions agreed that it
was entitled to reduce its contributions to the retirement fund based on stock market
gains.
                                               5
       In December 2013 the City filed a motion for good faith settlement

determination.6 In February 2014 the court granted the motion, and entered judgment on

the settlement.

       After the court entered judgment based on the settlement, the Unions filed a

collective motion to recover their attorney fees of $1,785,147 under section 1021.5. The

City opposed the motion on numerous grounds, including that the Unions were not

successful parties, the Union members' personal financial stake in the litigation precluded

recovery and the Unions' separate participation in the litigation with SDCERS was not

necessary to facilitate the outcome of the case. On the latter point, the City presented

evidence that it had already paid SDCERS more than $4,000,000 in attorney fees.

       After extensive argument and supplemental briefing, the court denied the Unions'

attorney fee motion. Although the court found that the Unions were successful parties,

the settlement conferred a significant benefit on a large class of persons, and the Unions'

financial stake was outweighed by the litigation's financial burden, it denied the motion,

stating: "[The Unions] contend they provided a material contribution[,] which was non-

duplicative and beyond the services rendered by SDCERS. However, the court is not

persuaded [that the Unions'] involvement was necessary to the final outcome or that

enforcement of this action was necessary. As such, [the Unions] have not met their

burden on this element." The Unions appeal the resulting order.

6      We note that this motion for good faith settlement determination is not authorized
by section 877.6, which bars future lawsuits for equitable contribution or indemnity
against a settling joint tortfeasor or co-obligor. Where, as here, there is no named joint
tortfeasor or co-obligor who would be bound by the court's good faith determination,
section 877.6 is inapplicable. (See Hartford Accident & Indemnity Co. v. Superior Court
(1995) 37 Cal.App.4th 1174, 1178-1179 [recognizing that where an action involves only
one tortfeasor or obligor, § 877.6 "do not come into play"].)
                                               6
                                         DISCUSSION

          The Unions contend the court erred in concluding they were not entitled to section

1021.5 attorney fees because they did not show their attorneys' services were necessary to

the outcome of the case. Specifically, they aver that they were not required to establish

necessity, and alternatively that they adequately established this element. For the reasons

explained below, we reject these arguments. Based on this conclusion, we do not reach

the issue whether the court's findings on the other elements were correct.7

                       I. Necessity was a Required Element in this Case

          To obtain section 1021.5 attorney fees, a private party must establish that the

necessity and financial burden of its private enforcement efforts were of such a nature "as

to make the award appropriate." (§ 1021.5, subd. (b); see City of Santa Monica v.

Stewart (2005) 126 Cal.App.4th 43, 85 (Stewart).) This prong of section 1021.5 focuses

on "whether there is a need for a private attorney general for enforcement purposes."

(Stewart, supra, at p. 85.) Where there is no governmental agency available to challenge

an official action, the necessity of private enforcement is "obvious" and "readily met."

(Ibid.)

          However, when, as here, a private party has litigated a case on the same side as a

non-volunteer public entity, significant questions arise as to whether its private

participation was needed given the public entity's parallel advocacy. Under such

7      We accept, without deciding, the Unions have a financial stake in the outcome of
the case. We note, however, that the Unions are generally recognized to have the same
financial stake as their members because their "very existence depends upon the
economic vitality of [their] members and any benefit or burden derived by [the Unions]
from this lawsuit ultimately redounds to the membership…." (California Licensed
Foresters Assn. v. State Bd. of Forestry (1994) 30 Cal.App.4th 562, 570.)

                                                7
circumstances, the private party requesting attorney fees must make a significant showing

that its participation was material to the result, i.e., that it proffered significant factual and

legal theories, and produced substantial, material evidence, that were not merely

duplicative of or cumulative to what was advanced by the governmental agency.

(Committee to Defend Reproductive Rights v. A Free Pregnancy Center (1991) 229

Cal.App.3d 633, 642 (Committee to Defend Reproductive Rights).)8

       In asserting they were not required to establish necessity to obtain section 1021.5

attorney fees, the Unions rely exclusively on the decision in State Water, supra, 161

Cal.App.4th 304, which they maintain stands for the proposition that a private party is not

required to make a "necessity" showing when the private party colitigates a case with a

public entity "unless the public entity functioned like an attorney general." (Italics

added.)

       In State Water, certain private environmental groups and several public local water

agencies, each acting voluntarily in the public interest, sought mandamus relief against

the State Water Resources Control Board (a state agency that was represented by the

Attorney General) to require implementation of a water flow plan designed to protect

salmon. (State Water, supra, 161 Cal.App.4th at pp. 309-310.) Upon prevailing, two of

the local water agencies obtained attorney fees under section 1021.5 and the private

8      This stands in contrast with the situation where the colitigants are all private
parties. (Stewart, supra, 126 Cal.App.4th at p.86.) "If two private parties prosecute
important public interest litigation together and obtain the same success, neither party's
services can be deemed unnecessary simply because the other party would have
succeeded without them." (State Water Resources Bd. Cases (2008) 161 Cal.App.4th
304, 315 (State Water).) Although the relative contributions of "multiple private
attorneys general" cannot be a basis for denying entitlement to attorney fees under section
1021.5, a court may consider these contributions in determining the amount of the award.
(Stewart, supra, at p. 88.)
                                               8
environmental groups also sought to recover their fees. (State Water, supra, at p. 311.)

The trial court declined to award the private environmental groups attorney fees because

they had not shown that the same result would not have been obtained based solely on the

local water agencies' efforts. (Id. at p. 311.)

       The appellate court reversed, concluding that section 1021.5's "necessity"

requirement did not apply because, on the facts involved, the local public agencies served

functionally as private attorneys general. (State Water, supra, 161 Cal.App.4th at p.

317,) Recognizing that "the purpose of section 1021.5 is to encourage parties—whether

public or private—who do not necessarily have adequate financial resources to do so[,] to

pursue important public interest litigation . . ." (State Water, supra, at p. 316), the court

concluded that legislative amendments to the statute allowing one public agency to

recover attorney fees under section 1021.5 from another public agency were intended to

apply in favor of public entities that pursued public interest litigation against other public

entities where there was no public attorney general available to act in the case. (State

Water, supra, at pp. 314, 316.)

       Given these policies, State Water held that when a public entity's participation in a

lawsuit reflects its required public function, " 'there is no utility in inducing a private

attorney general to duplicate the function' . . . and the efforts of the colitigating private

party should be evaluated under the rule in Committee to Defend Reproductive Rights,

looking to see whether the private party rendered services that were necessary and

significant to the success that was achieved. If, on the other hand, there is no public

attorney general available to act, then the "bounty" that section 1021.5 provides must be

available to any party, public or private, who takes on the responsibility of pursuing

                                                  9
important public interest litigation beyond its own interests." (State Water, supra, 163

Cal.App.4th at p. 317.)

       Applying these principles to the facts before it, the State Water court held that

because the Attorney General was representing the State Water Resources Control Board,

there was no public attorney general available to pursue the litigation to protect the

public's interests regarding the implementation of the regional water use plan and thus it

fell to the volunteer parties—the local water agencies and the private environmental

groups—to do so. (State Water, supra, 163 Cal.App.4th at p. 317.) The State Water

court emphasized that the local water agencies were not required to litigate the important

public issues at stake, and instead they—like the private environmental agencies—had

essentially acted as volunteers in pursuing the litigation and thus were properly rewarded

for their efforts under section 1021.5, even though they were public entities.

       The Unions contend the facts of this case are indistinguishable from State Water

and therefore they were not required to establish necessity of private enforcement to

show entitlement to section 1021.5 attorney fees. We disagree. Unlike the public water

agencies in State Water, SDCERS was the public agency whose job and function it was

to ensure the soundness of the city retirement system and thus it was not acting as a

volunteer in responding to this litigation brought by the City. (Lexin v. Superior Court,

supra, 47 Cal.4th at p. 1063.) Because SDCERS was carrying out its required public

function, the Unions must show their intervention was material to the ultimate result to

recover public interest attorney fees. (Committee to Defend Reproductive Rights, supra,

229 Cal.App.3d at pp. 642-644 [recognizing that absent a necessity requirement, section

1021.5 could be unreasonably transmuted "into an unwarranted cornucopia of attorney

                                             10
fees for those who intervene in, or initiate litigation . . . while actually performing

duplicative, unnecessary, and valueless services"].)9

         II. Court Did Not Abuse Discretion in Determining Unions' Services Were Not

                                          Necessary

       The Unions alternatively argue that even if necessity is a required element of their

attorney fee claim, the court erred in concluding that their work in this case was not

necessary to the outcome achieved.

       Whether a plaintiff established entitlement to a section 1021.5 award of attorney

fees is a question best decided by the trial court. (Planned Parenthood v. Aakhus (1993)

14 Cal.App.4th 162, 170.) "The 'experienced trial judge is the best judge of the value of

professional services ordered in his court, and while his judgment is of course subject to

review, it will not be disturbed [on appeal] unless the appellate court is convinced that it

is clearly wrong"—meaning that it abused its discretion. (Serrano v. Priest (1977) 20

Cal.3d 25, 49.) Great deference should be given to the trial court because of its superior

understanding of the litigation. (Taylor v. Nabors Drilling, USA, LP (2014) 222

Cal.App.4th 1228, 1249.)

       Where, as here, private parties have voluntarily joined in cases that government

entities are required to prosecute or defend, the trial court must exercise its discretion to

determine "the necessity, significance, and value of private counsel's services" and is not

9      We likewise reject the Unions' additional argument that the City's allegations that
the SDCERS's role is not to advocate on the employees' behalf estop the City from
challenging their entitlement to section 1021.5. In this regard, the Unions have not
shown either that the City (a) is now taking a position that is inconsistent with the
allegations or (b) was successful in its previous assertion of these allegations, as
necessary to trigger the application of judicial estoppel principles. (Jackson v. County of
Los Angeles (1997) 60 Cal.App.4th 171, 183-184.)
                                              11
bound by the characterizations or tactical decisions of private counsel. (Committee to

Defend Reproductive Rights, supra, 229 Cal.App.3d at p. 644.) In exercising this

discretion, the court must consider whether the private party (1) raised significant factual

or legal theories that were not advanced by the governmental entity and (2) produced

substantial and nonduplicative evidence that significantly contributed to the court's

judgment. (Id. at pp. 642-643.)    In this case the court was highly familiar with the

litigation and therefore was in the best position to determine whether the Unions' work

was necessary to the outcome of the case. The trial judge presided over this case for over

two and one-half years, during which time he decided a variety of motions, including a

motion to compel, a motion for judgment on the pleadings, a motion to tax costs, a good

faith settlement motion and the motion for attorney fees. The extensive briefing,

supplemental briefing, and supporting documentation for the attorney fees motion

encompassed approximately 700 pages of clerk's transcript and included lengthy oral

argument. The trial judge had ample opportunity to observe the performance of the

Unions' counsel as well as SDCERS's counsel throughout the litigation10 and to

determine whether the Unions' counsel's work was necessary to the outcome of the case.

       In moving for section 1021.5 attorney fees, the Unions presented minimal

evidence of necessity. Although Union counsel Ann M. Smith described her specific

efforts in the case, including filing a change of venue motion that the court never ruled on

and a discovery motion challenging the City's authentication of its discovery responses,

10      An impromptu statement by the judge—who was from outside San Diego
County—indicated that he had spent a great deal of time on the case and was very
familiar with counsel. Before ruling on the attorney fees motion, the judge remarked, "I
feel like I would know you all on the street by now."
                                             12
there is no indication that these motions had any significant impact on the litigation or its

outcome.

       The Unions' primary appellate argument focuses on their counsel's efforts in

opposing the City's summary judgment motion, pointing out that they took the lead in

deposing key City witnesses during discovery and prepared a separate statement with

many undisputed statements of fact covering a broad range of topics in opposition to the

City's motion for summary judgment. However, the mere fact that witnesses or evidence

available to the public agency were examined or introduced by counsel for a private party

does not suffice to establish that their efforts were necessary for purposes of section

1021.5. (Committee to Defend Reproductive Rights, supra, 229 Cal.App.3d at p. 643, fn.

11.) Further, SDCERS itself submitted points and authorities and a separate statement of

disputed material facts in opposition to the City's motion for summary judgment.

       More importantly, the summary judgment motion was based on the same legal

theory as the City's earlier unsuccessful motion for judgment on the pleadings, i.e., that

section 143 of the Charter required SDCERS to equalize the employee retirement fund

contributions to the City's contributions, and the City withdrew the summary judgment

motion before the court ruled on it. Thus, the Unions' submissions in opposition to the

City's summary judgment motion do not appear to have been in any way material to, or a

necessary component of, the outcome of the action.

       Under these circumstances, the court had ample reasonable basis for concluding

that the Unions failed to establish that they provided a substantial benefit or contributed

to the successful outcome of the case so as to be entitled to recover their attorney fees

                                             13
under section 1021.5. (Committee to Defend Reproductive Rights, supra, 229 Cal.App.3d

at p. 644.)11

                                      CONCLUSION

       The court correctly concluded that the Unions were required to show that their

efforts were necessary to the outcome of the case as a condition of being awarded private

attorney general fees. In addition, given its extensive familiarity with the case, the

paucity of evidence to establish the necessity and significance of those efforts and the

broad discretion afforded it in ruling on the attorney fees motion, we cannot say the trial

court abused its discretion in denying the Unions' request to recover their attorney fees

under section 1021.5.

                                      DISPOSITION

       The order is affirmed. Respondent to recover costs on appeal.

                                                                               PRAGER, J.*

WE CONCUR:

         O'ROURKE, Acting P. J.

                         IRION, J.

11      We deny the City's motion for judicial notice of a status conference statement filed
in an unrelated proceeding. The records sought to be noticed were not presented to the
trial court and in any event are not relevant except as to the truth of the matters asserted,
which are not properly noticeable.

*       Judge of the San Diego Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
                                              14