Court Opinion

ID: 2682924
Source: CourtListenerOpinion
Date Created: 2014-07-11 21:01:07.60493+00
Date Added: 2024-06-11T09:13:59.727139
License: Public Domain

Filed 7/11/14 Roman Catholic Bishop of Monterey, CA v. Mansfield CA6
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      SIXTH APPELLATE DISTRICT

ROMAN CATHOLIC BISHOP OF                                             H038222
MONTEREY, CALIFORNIA,                                               (Santa Cruz County
                                                                     Super. Ct. No. CV156454)
         Plaintiff,

         v.

RYAN L. MANSFIELD et al.,

         Defendants and Respondents,

SHANNON MCLEOD,

         Intervenor and Appellant.

         Intervenor Shannon McLeod (McLeod) was injured in a car accident while
working for the Roman Catholic Bishop of Monterey, California (Bishop). Bishop sued
the driver and the owner of the other vehicle, and McLeod intervened. Bishop assigned
his workers’ compensation lien to defendants as part of a pre-trial settlement. McLeod,
who proceeded to trial against defendants without Bishop, obtained a jury verdict in an
amount less than the lien. McLeod sought the full amount of the judgment to satisfy her
litigation expenses and attorneys’ fees under Labor Code section 3856, subdivision (b).1
The trial court found subdivision (b) inapplicable, ruled that the lien took priority under
section 3852, and denied McLeod’s motion.

         1
         Unspecified statutory references are to the Labor Code. Unspecified subdivision
references are to Labor Code section 3856.
       We agree with the trial court that McLeod’s fee motion is not controlled by
subdivision (b). Instead, the motion is controlled by subdivision (c). McLeod cannot
recover her attorneys’ fees or litigation expenses under that subdivision because she
failed to obtain a judgment greater than the workers’ compensation lien. (Draper v.
Aceto (2001) 26 Cal.4th 1086, 1092-1093 (Draper) [approving holding in Eldridge v.
Truck Insurance Exchange (1967) 253 Cal.App.2d 365, 367-368 that plaintiff receives no
benefit and thus cannot recover under subdivision (c) when employer’s lien exceeds
judgment].) Accordingly, we will affirm the trial court’s order.
                           I. TRIAL COURT PROCEEDINGS
       McLeod was injured in an automobile collision in April 2005 in the course and
scope of her employment with Bishop. In February 2007, Bishop sued the driver of the
other car, Ryan Mansfield, seeking to recover workers’ compensation benefits paid to
McLeod. Bishop also sued the driver’s father, Michael Mansfield, who owned the car
driven by his then minor son.2 Service of process on Ryan proved difficult because in
2007 he was serving in the United States Air Force. With persistence, Bishop succeeded
in serving him in October 2010.
       McLeod joined in the litigation four years after its inception, filing a complaint-in-
intervention in April 2011. Bishop noticed and attended the deposition of Ryan
Mansfield, and he attended McLeod’s deposition. Bishop filed an amended complaint in
December 2011 alleging negligent supervision against Mansfield, Sr. He disclosed
expert witnesses and noticed both defendants to appear at trial set for January 9, 2012.
All parties attended a mediation in January 2012 at which time Bishop settled with
Mansfield. In exchange for $12,500, Bishop assigned Mansfield his claim for workers’
compensation expenses, exceeding $24,000, on any settlement or judgment in favor of
McLeod.

       2
           We refer to defendants collectively as Mansfield.
       McLeod proceeded to trial against Mansfield alone. She sought an award in
excess of $350,000, but the jury found Mansfield liable for far less-$1,094 in medical
expenses and $15,000 in damages.
       McLeod moved post-trial for attorneys’ fees and litigation expenses under section
3856, subdivision (b), arguing that the full amount of the judgment should be applied to
her $17,309 fee bill. McLeod relied on Kindt v. Otis Elevator Co. (1995) 32 Cal.App.4th
452 (Kindt) and Hartwig v. Zacky Farms (1992) 2 Cal.App.4th 1550 (Hartwig), both of
which upheld employees’ fee awards under subdivision (b) based on insufficient
evidence of “ ‘active participation’ ” in the lawsuit by the employer. McLeod also relied
on Crampton v. Takegoshi (1993) 17 Cal.App.4th 308 (Crampton), upholding an
employee’s fee award under subdivision (b) where the employer’s lien exceeded the
judgment. Crampton concluded that the employee was entitled to fees under subdivision
(b) because, even though the employee did not realize a net recovery from the judgment,
the satisfaction of the compensation lien was a benefit conferred on a passive beneficiary.
(Crampton, at pp. 318-319.)
       Mansfield opposed McLeod’s motion, relying principally on Draper, in which the
Supreme Court approved the holding in Eldridge v. Truck Ins. Exchange (1967) 253
Cal.App.2d at p. 367, that an employee is entitled to recover fees under subdivision (c)
only when the judgment is greater than the employer’s lien. (Draper, supra, 26 Cal.4th
1086, 1092-1093.) This is because the statute requires that the employee realize a benefit
from the judgment. (Id. at p. 1093.) Because McLeod’s judgment was less than Bishop’s
lien, Mansfield asserted that McLeod is not entitled to recover attorney fees or litigation
expenses.
       The trial court denied McLeod’s motion, concluding that Bishop was not merely a
passive participant in the litigation, that McLeod’s costs and fees did not trump the lien
under section 3856, and that the lien offset the entire judgment under section 3852.
                             II. STATUTORY FRAMEWORK
       An employee who is injured on the job is entitled to workers’ compensation
benefits from her employer. (§ 3600.) Although compensation benefits are an
employee’s exclusive remedy against the employer (§ 3602, subd. (a)), the employee may
recover a judgment from a negligent third party who caused the injury. (§ 3852.) The
employer also is entitled to recover from a negligent third party compensation paid to the
injured worker. (Ibid.) The employer may recover directly from the third-party
tortfeasor, or may claim a portion of any judgment obtained independently by the injured
employee. (Ibid., § 3856, subd. (b).)
       The workers’ compensation laws provide a mechanism for allocating a third-party
judgment between the employer, the employee, and their respective counsel. Amended
to its current form in 1959, section 3856 responds to three scenarios: When the action is
“prosecuted by the employer alone” (subdivision (a)), when the action is “prosecuted by
the employee alone” (subdivision (b)), and when the action is “prosecuted by both the
employer and the employee” (subdivision (c)).3 While each subdivision gives attorneys’

       3
           Section 3856 reads: “In the event of suit against such third party:

(a) If the action is prosecuted by the employer alone, the court shall first order paid from
any judgment for damages recovered the reasonable litigation expenses incurred in
preparation and prosecution of such action, together with a reasonable attorney’s fee
which shall be based solely upon the services rendered by the employer’s attorney in
effecting recovery both for the benefit of the employer and the employee. After the
payment of such expenses and attorney’s fees, the court shall apply out of the amount of
such judgment an amount sufficient to reimburse the employer for the amount of his
expenditure for compensation together with any amounts to which he may be entitled as
special damages under Section 3852 and shall order any excess paid to the injured
employee or other person entitled thereto.

(b) If the action is prosecuted by the employee alone, the court shall first order paid from
any judgment for damages recovered the reasonable litigation expenses incurred in
preparation and prosecution of such action, together with a reasonable attorney’s fee
which shall be based solely upon the services rendered by the employee’s attorney in
effecting recovery both for the benefit of the employee and the employer. After the
fees first priority to the judgment, as we address more fully below, the California
Supreme Court has construed subdivisions (a) and (b) to require attorney fee
apportionment between the employer and the employee. (Quinn v. State of California
(1975) 15 Cal.3d 162, 170, 176, fn. 19 (Quinn).) Subdivision (c), in contrast,
contemplates participation by both the employer and the employee in the third-party
lawsuit and, accordingly, does not provide for fee apportionment.
       This appeal requires us to determine whether the underlying action was
“prosecuted by the employee alone,” triggering the application of subdivision (b).
Counsel for intervenor McLeod urges this outcome because it is the only way he will be
paid. Under subdivision (b), which contemplates that the employee’s attorney is entirely

payment of such expenses and attorney’s fee the court shall, on application of the
employer, allow as a first lien against the amount of such judgment for damages, the
amount of the employer’s expenditure for compensation together with any amounts to
which he may be entitled as special damages under Section 3852.

(c) If the action is prosecuted both by the employee and the employer, in a single action
or in consolidated actions, and they are represented by the same agreed attorney or by
separate attorneys, the court shall first order paid from any judgment for damages
recovered, the reasonable litigation expenses incurred in preparation and prosecution of
such action or actions, together with reasonable attorneys’ fees based solely on the
services rendered for the benefit of both parties where they are represented by the same
attorney, and where they are represented by separate attorneys, based solely upon the
service rendered in each instance by the attorney in effecting recovery for the benefit of
the party represented. After the payment of such expenses and attorneys’ fees the court
shall apply out of the amount of such judgment for damages an amount sufficient to
reimburse the employer for the amount of his expenditures for compensation together
with any other amounts to which he may be entitled as special damages under Section
3852.

(d) The amount of reasonable litigation expenses and the amount of attorneys’ fees under
subdivisions (a), (b), and (c) of this section shall be fixed by the court. Where the
employer and employee are represented by separate attorneys they may propose to the
court, for its consideration and determination, the amount and division of such expenses
and fees.”
responsible for obtaining the third-party recovery, priority is given to the employee’s
attorneys’ fees and costs over both the employer’s lien and the employee’s remaining net
damages award. Even if an employee recovers less than the lien, counsel can still recover
attorneys’ fees under subdivision (b) because of the benefit conferred on the employer at
the employee’s expense. (Crampton, supra, 17 Cal.App.4th at p. 318.) Subdivision (c)
also prioritizes attorneys’ fees over both the employer’s compensation setoff and the
employee’s damages award. That subdivision contemplates involvement of both the
employer and the employee in securing the recovery against the third-party. As the
Supreme Court has recognized, fees under subdivision (c) are measured by the benefit
realized by each respective party. (Draper, supra, 26 Cal.4th at p. 1093.) McLeod’s
attorney would recover nothing under subdivision (c) because, by obtaining a judgment
less than the lien, McLeod received no benefit from the judgment.
                                    III. DISCUSSION
       Arguing that the judgment should be allocated under subdivision (b), McLeod
frames her issue as whether the trial court record establishes that Bishop was “an active
participant in producing the verdict.” While at first blush McLeod appears to present a
challenge to the sufficiency of the evidence, the appeal actually requires us to address
whether participation in trial through to the production of a verdict is the correct legal
standard to determine when a judgment is allocated under subdivision (a), (b), or (c).
Reviewing de novo this question of law, we conclude that it is not. (Kavanaugh v. City of
Sunnyvale (1991) 233 Cal.App.3d 903, 915 (Kavanaugh) [application of correct standard
under section 3856, subdivision (b) is a question of law].) Both the language of section
3856 as well as the equitable apportionment principles expressed in Quinn require an
inquiry into whether the employer was active in the litigation process ultimately securing
the third-party recovery, not necessarily participating in the trial or the final procurement
of a verdict.
A.     THE MEANING OF “PROSECUTED”
       For a judgment to be prioritized and apportioned under subdivision (b), “the action
[must be] prosecuted by the employee alone.” Similar language is found in subdivisions
(a) and (c). Subdivision (a) applies when “the action is prosecuted by the employer
alone,” and subdivision (c) applies when “the action is prosecuted by both the employee
and the employer.” According to the Oxford English Dictionary, prosecute means “to
institute (an action, claim) in a court of law; to initiate or carry on (civil or criminal
proceedings);” “[t]o institute legal proceedings against (a person, organization, etc.);” and
“[t]o institute, conduct, or pursue legal proceedings against someone; to be prosecutor in
some legal action.” (Oxford English Dict. Online (2014)  [as of
July 8, 2014].) Prosecute is also defined as “to bring legal action against for redress or
punishment of a crime or violation of law,” “to institute legal proceedings with reference
to ,” and “to institute and carry on a legal suit or prosecution.”
(Merriam-Webster's Online Dict. (2014) 
[as of July 8, 2014].) To the extent McLeod’s view of subdivision (b) restricts the
meaning of “prosecute” to trial participation through to a verdict, this would be at odds
with the broad definition of prosecute, which encompasses both the pre-trial initiation
and pursuit of legal proceedings.
       Section 3856 directs the allocation of judgments in third-party actions involving
on-the-job injury. But the fact that the recovery of a judgment is a necessary precondition
to the subdivision (a), (b), or (c) inquiry does not compel a conclusion that “prosecute”
means trying a case to judgment. Had the Legislature intended that trying a case to
judgment drive the inquiry into the applicable subdivision, it could have simply required
that the action be “tried to judgment” instead of “prosecuted.” But the Legislature did not
use such restrictive language. Instead, it provided that section 3856 applies in the more
general “event of suit against [a] third party.”
       This court also has understood “prosecute” as used in subdivision (b) to
encompass the full litigation process. In Kavanaugh, the employer filed a complaint in
intervention in the employee’s negligence action against a third-party tortfeasor, seeking
reimbursement of workers’ compensation benefits. Although the employer was active in
discovery, settlement efforts, and trial preparation, the employee was awarded attorney
fees under subdivision (b) based on the employer’s minimal trial participation.
(Kavanaugh, supra, 233 Cal.App.3d at p. 906.)
       Reversing the trial court, Kavanaugh considered the employer’s participation
throughout the litigation. Observing “[t]he wide range of ways in which an attorney
could be considered active in prosecuting the litigation or in contributing to the creation
of a fund,” Kavanaugh understood an action to be prosecuted by the employee or
employer alone when the employer is completely passive. (Kavanaugh, supra, at pp.
914-915.) Kavanaugh described counsel’s participation in discovery as occurring
“[d]uring the prosecution of the lawsuit,” and concluded that the employer was not a
passive beneficiary in the litigation. (Id. at pp. 906, 915-916.) Kavanaugh rejected a
weighing process, explaining that “the action is not prosecuted by either party alone”
when “attorneys for both the employer and the employee participate in the litigation.” (Id.
at p. 914.) According to Kavanaugh, “[w]here both parties employ attorneys, and both
attorneys participate in the prosecution of the litigation,” attorneys’ fees are allocated
under subdivision (c) rather than subdivision (b). (Id. at p. 915.)
B.     Quinn v State of California
       Quinn v. State of California (1975) 15 Cal.3d 162 involved an employee’s appeal
from the denial of a post-trial motion to apportion fees between the employee and the
employer’s insurance carrier, where the employer’s insurance carrier, aside from filing a
lien against any judgment realized by the employee, did not participate in the litigation.
(Id. at p. 166.) That the employee in Quinn “prosecuted [the action] alone” was not
disputed, and the applicability of subdivision (b) was not at issue as it is here. Rather, the
Supreme Court addressed whether the statutorily mandated apportionment of attorneys’
fees between the employer and the employee survived the 1959 legislative revisions to
the apportionment statute. The pre-1959 statute did not contemplate priority rights
between the employee’s attorneys’ fees and the employer’s compensation costs in the
event the judgment failed to satisfy both interests, and, as Quinn explained, the
Legislature enacted current section 3856 to remedy that void. (Quinn, at p. 169.)
       Quinn is notable for the thorough discussion of the “common fund” or “equitable
apportionment” doctrine embedded in former section 3856. 4 Attorneys’ fees were
apportioned “among those who are the beneficiaries of funds created by the activities of
similarly situated litigants.” (Quinn, supra, 15 Cal.3d at pp. 167, 169.) Created to avoid
unjust enrichment, the common fund doctrine protects “one who expends attorneys’ fees
in winning a suit which creates a fund from which others derive benefits, . . . [by]
requir[ing] those passive beneficiaries to bear a fair share in the litigation costs.” (Id. at
p. 167.) Quinn noted the doctrine’s suitability to workers’ compensation cases, even
without reference to section 3856, when the employer does nothing more than assert his
subrogation rights: “An active litigant has, by bringing and winning this lawsuit, created
a fund upon which a nonparticipant in the litigation can draw in order to relieve himself
of a legal obligation he would otherwise bear; the passive beneficiary thus necessarily
benefits from plaintiff’s efforts in bringing suit.” (Id. at pp. 168-169, fn. omitted.)

       4
          The pre-1959 version of sections 3856 read, in relevant part: “[W]here the
employer has failed to join in said action [against the negligent third party] and to be
represented therein by his own attorney, or where the employer has not made
arrangements with the employee’s attorney to represent him in said action, the court shall
fix a reasonable attorney’s fee, which shall be fixed as a share of the amount actually
received by the employer, to be paid to the employee’s attorney on account of the service
rendered by him in effecting recovery for the benefit of the employer, which said fee
shall be deducted from any amounts due to the employer.” (Stats. 1949, ch. 120, § 2, pp.
355-356.) Under that version of section 3856, McLeod would not have been entitled to
apportioned attorneys’ fees because Bishop had not “failed to join said action and to be
represented therein by his own attorney.”
       In contrast to the earlier version of section 3856, providing for recovery of
employee attorneys’ fees for efforts benefitting the employer’s recovery “from any
amounts due to the employer,” new subdivision (b) provides that an employee’s
“reasonable attorney’s fee” be based on that attorney’s services “in effecting recovery
both for the benefit of the employee and the employer.” Notwithstanding the differing
language between the former and current versions of section 3856, the Supreme Court
construed current subdivision (b) as requiring apportionment of the employee’s attorneys’
fees between the employee and the employer consistent with the earlier version of the
statute. (Quinn, supra, 15 Cal.3d at p. 173.) Quinn viewed the amendments as
essentially technical. (Ibid.) Rejecting the employer’s argument that the new language
precluded apportionment, Quinn explained: “Such language, far from forbidding the
application of the equitable principle of reasonable apportionment, requires it. [Citation.]
Both the directive to assess a reasonable fee and the mandate to consider the benefit to
both active and passive beneficiaries of the recovery call for apportionment.” (Id. at p.
170, italics omitted.)
       Quinn also noted that continued apportionment was consistent with the legislative
intent of the Workers’ Compensation Act, including the policy announced in section
3751 prohibiting an employer from requiring an employee to contribute “ ‘directly or
indirectly’ ” to the cost of compensation benefits. (Quinn, supra, 15 Cal.3d at p. 170.)
Quinn explained that recovering compensation benefits from a third party is a
compensation benefit cost to be borne by the employer; accordingly, section 3856 could
not be construed so that the employee would bear that cost. (Id. at p. 171.)
       Finally, while Quinn focused on whether equitable apportionment of an
employee’s attorneys’ fees between the employee and the employer survived section
3856’s 1959 revision, it noted that apportionment was equally applicable under
subdivision (a), where “the employer’s attorney bears the entire litigative burden,” and
that subdivision (c) would apply “when each party separately employs his own attorney.”
(Quinn, supra, 15 Cal.3d at p. 176 & fn. 19, italics omitted.) Quinn further clarified that
the opinion’s reference to attorneys’ fees encompassed “reasonable litigation expenses,”
which were included in the 1959 revision as an additional element to be deducted from a
recovery, noting “no good reason appears for distinguishing the other costs of litigation.”
(Id. at p. 165, fn. 3.)
       The equitable apportionment principles set forth in Quinn underscore our
conclusion that to “prosecute an action” encompasses pre-trial activities. We understand
the underpinnings of that doctrine to require those who do not in any way participate in
the recovery of the common fund to reimburse those who expended effort in realizing the
fund. But Quinn does not view apportionment under the common fund doctrine in such a
way as to disregard the employer’s pre-trial efforts. Discovery laden pre-trial activity can
constitute a substantial investment in the realization of a third-party recovery. We will
not interpret section 3856 to ignore such participation.
C.     BISHOP WAS AN ACTIVE PARTICIPANT IN THE LITIGATION
       In Walsh v. Woods (1986) 187 Cal.App.3d 1273, the trial court denied plaintiff’s
motion for an award of apportioned attorneys’ fees under subdivision (b) because the
employer’s counsel, “ ‘actively participated’ in the lawsuit, albeit minimally.” (Id. at p.
1275.) Rejecting the employee’s argument on appeal that it was “unjust” to deny him
apportioned attorneys’ fees when his counsel “contributed substantially more than [the
employee’s] attorney and was the ‘sole’ cause of the ultimate recovery” (id. at p. 1276),
Walsh explained that weighing counsel’s relative contribution is inconsistent with “the
common fund doctrine reward[ing] only [] litigant[s] whose efforts benefit a passive
beneficiary.” (Id. at p. 1279; see also Kavanaugh, supra, 233 Cal.App.3d at pp. 913-914
[rejecting weighing attorneys’ participation in litigation].) The record in Walsh reflected
that the employer’s counsel “attend[ed] some depositions, consulted with plaintiff’s
experts before trial, presented evidence relating to compensation benefits, participated in
cross-examination and delivered a closing argument.” (Walsh, at p. 1278, fn. 3.) Noting
the “issue of active participation by separate counsel is a question of fact for the trial
court alone,” Walsh upheld the order denying fees. (Id. at pp. 1279-1280.)
       Here, the trial court concluded that Bishop actively participated in the litigation,
and its finding is supported by substantial evidence. (Eidsmore v. RBB, Inc. (1994) 25
Cal.App.4th 189, 195 [appellate court applies substantial evidence standard of review to
questions of fact].) Represented by separate counsel, Bishop initiated the lawsuit four
years before McLeod intervened, persisted in effectuating service of defendant Ryan
Mansfield, noticed and participated in key depositions, amended the complaint to
advance a negligent entrustment action against Mansfield, Sr., and disclosed expert
witnesses. The record establishes that Bishop was not a passive beneficiary to the lawsuit
or to the trial court’s judgment.
       Because the lawsuit was prosecuted not only by McLeod but also by Bishop,
allocation of McLeod’s judgment falls under subdivision (c). As we have explained,
McLeod recovers nothing under subdivision (c) because she realized no benefit by
obtaining a judgment less than the workers’ compensation lien.
D.     CRAMPTON, KINDT, AND HARTWIG
       As she did below, McLeod relies on Crampton, Kindt, and Hartwig to support her
argument that Bishop was a passive beneficiary of her recovery. However none of those
cases compels us to reverse the trial court’s denial of McLeod’s attorney fee request.
       Crampton involved a third-party tortfeasor who obtained the employer’s lien in a
pre-trial settlement after the employee rejected an arbitration award. The employee, who
proceeded to a trial de novo and failed to obtain a recovery in excess of the employer’s
lien, sought fees under subdivision (b). (Crampton, supra, 17 Cal.App.4th at p. 315.)
The appellate court concluded the motion was governed by subdivision (b) because the
employer dismissed his complaint after settling with the negligent third party, leaving the
employee to prosecute the trial de novo alone. (Id. at p. 316.) The defendant lienholder
in Crampton argued that the employee’s judgment did not create a common fund for a
passive beneficiary because the worker did not obtain an actual recovery. (Id. p. 318.)
The court of appeal disagreed, concluding that the employer was a passive beneficiary:
“Had that fund [a $59,000 judgment] not been generated by plaintiff’s legal efforts alone,
the employer (or its assignee) would not have had any fund from which to recoup (or
offset) the amount of workers’ compensation benefits paid to plaintiffs. The employer
had a lien for $75,000 and plaintiff’s efforts enabled it (or in this case, its assignee) to
satisfy a good portion of that claim.” (Id. at pp. 318-819.)
       We agree with Crampton’s observation that the fund created by plaintiff’s
judgment benefited the employer or its assignee. It follows that the employer’s
obligation to pay for the recovery of its share of that judgment must run with the
assignment of that interest. (See Quinn, supra, 15 Cal.3d at pp. 170-171; see also Hone
v. Climatrol Industries, Inc. (1976) 59 Cal.App.3d 513, 523 [recognizing that the
assignment of a worker’s compensation lien does not “deprive any other party of rights
independently held by that other party.”].) But we disagree with Crampton to the extent
it suggests the employee’s fee award is governed by subdivision (b) whenever an
employer settles before trial. The proper inquiry is whether the employer participated in
the litigation that results in the recovery of a common fund. As we have explained, this
inquiry does not require a finding that the employer participated in the trial.
       In Hartwig and Kindt, the employee also recovered a judgment at trial after the
employer settled with the negligent third party. Hartwig affirmed a trial court order
authorizing attorneys’ fees for an employee under subdivision (b) based on insufficient
evidence of the employer’s active participation in “the lawsuit which resulted in the
judgment.” (Hartwig, supra, 2 Cal.App.4th at p. 1553.) The trial court noted that the
employer was active in obtaining its settlement, but not active in obtaining the jury
verdict. (Id. at p. 1554.) Hartwig concluded that the declaration of the employer’s
attorney was “unspecific and ambiguous,” and failed to “affirmatively demonstrate[] the
active participation required to defeat apportionment,” even though the declaration stated
that the employer had prosecuted the case until shortly before trial, when settlement
occurred. (Id. at p. 1556.) Hartwig noted that the declaration’s “generality” made it
impossible to determine whether counsel made a “conscientious attempt to represent the
[employer’s] interest by addressing matters pertinent to the substantive issues involved in
the case against [the employee] or, instead, a perfunctory, nominal attempt to place a
‘warm body’ whenever and wherever the opportunity arose.”5 (Id. at pp. 1555-1556.)
Hartwig disagreed with Walsh to the extent that case held that “minimal” participation is
sufficient to constitute active participation. (Id. at p. 1557.) According to Hartwig, a
lienholder must do more than advance “conclusory assertions that do not demonstrate it
did anything more than ‘tag along’ with the plaintiff.” (Ibid.)
       Following Hartwig, Kindt reversed a trial court order which denied the employee
attorneys’ fees under subdivision (b) based on an insufficient showing of her counsel’s
efforts in obtaining a judgment. (Kindt, supra, 32 Cal.App.4th at p. 460.)
       This case is distinguishable from both Hartwig and Kindt because the record
demonstrates that Bishop did more than “tag along” with McLeod. Bishop initiated the
lawsuit, persisted in achieving service of Ryan Mansfield, noticed and participated in key
depositions, pursued a negligent entrustment action against Mansfield, Sr., and disclosed
expert witnesses. If anything, the record demonstrates that McLeod tagged along with
Bishop until Bishop made the strategic decision to settle his interest in the lawsuit.

E.     MCLEOD’S LITIGATION EXPENSES
       Quinn determined that litigation expenses are handled in the same manner as
attorneys’ fees under section 3856. (Quinn, supra, 15 Cal.3d at p. 165, fn. 3.) For the

       5
         The declaration stated that counsel’s “firm had a representative attend and
participate in the deposition of plaintiff, attend settlement conferences, prepare opposition
to defendant’s Motion for Summary Judgment, attend hearing on Motion for Summary
Judgment, prepare Demand to Exchange List of Expert Witnesses, attend trial
confirmation conferences, and attend the deposition of [employee].” (Hartwig, supra, 2
Cal.App.4th at pp. 1555-1556.)
same reasons we affirm the trial court’s ruling on McLeod’s attorneys’ fees, we affirm
the denial of McLeod’s request for litigation expenses.
                                      IV. DISPOSITION
      The order is affirmed.

                                         ____________________________________
                                         Grover, J.

I CONCUR:

____________________________
Premo, Acting P.J.
Mihara, J., Dissenting.

        The trial court denied appellant Shannon McLeod’s request for recovery of her
litigation expenses and attorney’s fees under Labor Code section 3856, subdivision
(b).1 McLeod had obtained a judgment against a third party tortfeasor, and she
contended that under subdivision (b), she was entitled to recover her expenses and fees
“first” before the application of a worker’s compensation lien that her employer had
sold to the third party tortfeasor. Since the amount of the lien exceeded the amount of
the judgment, McLeod recovered nothing and was left to bear her own expenses and
fees.
        The critical issue in this case is which of two subdivisions of section 3856
applies here. Section 3856 is a special statute governing the recovery of reasonable
litigation expenses and reasonable attorney’s fees in actions against third party
tortfeasors where there is a worker’s compensation lien on any recovery. Subdivision
(b), which applies where “the action is prosecuted by the employee alone,” requires
the court to order that the employee’s reasonable litigation expenses be paid “first”
from the judgment. It also provides that the court shall order paid “first” from the
judgment “a reasonable attorney’s fee which shall be based solely upon services
rendered by the employee’s attorney in effecting recovery both for the benefit of the
employee and the employer.” Subdivision (c), which applies where “the action is
prosecuted both by the employee and the employer,” requires the court to order that
the employee’s and the employer’s reasonable litigation expenses be paid “first” from
the judgment. It also provides that the court shall order paid “first” from the judgment
“reasonable attorneys’ fees . . . , where [the employee and the employer] are

1
      Subsequent statutory references are to the Labor Code, and subsequent
subdivision references are to section 3856 unless otherwise specified.
                                             1
represented by separate attorneys, based solely upon the service rendered in each
instance by the attorney in effecting recovery for the benefit of the party represented.”
       McLeod claims that subdivision (b) applies here. My colleagues conclude that
subdivision (c) applies here since the employer was originally a party to the action
even though the employer was no longer a party at trial and at the time of the
judgment. I disagree with my colleagues. I would hold that subdivision (b) applies
here and that McLeod was entitled to recover her reasonable litigation expenses and
her reasonable attorney’s fees. I would also hold that even if subdivision (c) applied,
McLeod would still be entitled to recover her reasonable litigation expenses.
Accordingly, I would reverse the trial court’s order and remand for a determination of
the amount of reasonable litigation expenses and reasonable attorney’s fees to which
McLeod is entitled.

                                     I. Background
       McLeod was employed by Roman Catholic Bishop of Monterey (RCB). She
was injured in 2005 when a vehicle driven by respondent Ryan Mansfield and owned
by respondent Michael Mansfield collided with her vehicle. RCB provided worker’s
compensation benefits to McLeod and filed an action against the Mansfields in 2007 to
recover the cost of these benefits. Because Ryan Mansfield was serving in the military
overseas, he was not served until October 2010. Ryan Mansfield filed an answer in
November 2010. In April 2011, McLeod filed a complaint in intervention joining
RCB in its action against the Mansfields and alleging a single cause of action for
negligence.
       In December 2011, RCB amended the complaint to add a cause of action for
negligent entrustment against Michael Mansfield and obtained an extension of time to
depose Michael Mansfield, as the trial was then scheduled for January 2012. In
January 2012, the parties stipulated to a judicial mediation, with the trial then

                                             2
scheduled for February 2012. In January 2012, RCB settled with the Mansfields by
assigning to the Mansfields RCB’s worker’s compensation lien, which at that point
exceeded $24,000, in exchange for $12,500.
       McLeod proceeded to trial against the Mansfields, and the jury returned a
verdict in her favor for $16,093.72. McLeod’s attorney had represented her under a
contingency fee agreement pursuant to which he was to receive 40 percent of the
“gross . . . judgment,” and she was to pay “all costs and disbursements.” After trial,
McLeod’s attorney claimed that under section 3856 he was entitled to recover
$6,437.49 in attorney’s fees and $10,872.15 in litigation expenses out of the judgment.
Most of the litigation expenses were incurred for expert witness expenses.
       The Mansfields opposed this request on the ground that McLeod had obtained
no “benefit” from the judgment after application of their lien. They asserted that
McLeod was not entitled to fees under either subdivision (b) or subdivision (c). The
Mansfields also contended that most of the litigation expenses sought by McLeod were
not properly recoverable. They claimed that if McLeod was entitled to recover any
litigation expenses, those expenses should be limited to $2,413.39.
       The court ruled that the lien “takes priority over [McLeod’s] attorneys’ fees and
litigation expenses.” Thus, McLeod recovered nothing. McLeod timely filed a notice
of appeal.

                                    II. Discussion
                                A. Litigation Expenses
       The trial court denied McLeod’s request for litigation expenses on the ground
that RCB was an “active” participant in the litigation. This was error. Regardless of
whether subdivision (b) or subdivision (c) applies here, McLeod was entitled to
recover her reasonable litigation expenses. “If the action is prosecuted by the
employee alone, the court shall first order paid from any judgment for damages

                                            3
recovered the reasonable litigation expenses incurred in preparation and prosecution of
such action, together with a reasonable attorney’s fee . . . .” (§ 3856, subd. (b), italics
added.) “If the action is prosecuted both by the employee and the employer, . . . the
court shall first order paid from any judgment for damages recovered, the reasonable
litigation expenses incurred in preparation and prosecution of such action, together
with reasonable attorneys’ fees . . . .” (§ 3856, subd. (c), italics added.) Both
subdivisions go on to spell out additional specifications applicable solely to attorney’s
fees.
        The majority opinion claims that the California Supreme Court “determined” in
Quinn v. State of California (1975) 15 Cal.3d 162 (Quinn) that section 3856 treats
expenses and fees identically. It asserts: “Quinn determined that litigation expenses
are handled in the same manner as attorneys’ fees under section 3856. (Quinn, supra,
15 Cal.3d at p. 165, fn. 3.)” (Maj. opn., ante, at p. 14; see also maj. opn., ante, at p.
11, citing same fn.) The California Supreme Court made no such “determin[ation]” in
Quinn. The referenced footnote reads, in its entirety: “Section 3856 refers to
‘reasonable litigation expenses’ as an additional element to be deducted from the
recovery. In briefs and argument parties have stressed the issue of attorneys’ fees,
probably because of their usually more substantial size, but no good reason appears for
distinguishing the other costs of litigation; by reference to attorney’s fees, therefore,
we shall henceforth in this opinion include as well the other litigation expenses
mentioned in section 3856.” (Quinn, at p. 165, fn. 3.) This footnote does not say that
section 3856 treats fees and expenses the same but that in its opinion, the court would
not be distinguishing between them because there was “no good reason” for doing
otherwise in the case before the court. Since Quinn was a case in which only the
employee was a party to the action, only subdivision (b) was at issue, and the
employee was plainly entitled to both expenses and fees, the court’s decision not to
address litigation expenses separately did not constitute a holding that section 3856

                                             4
treats fees and expenses in the same fashion. The statutory language explicitly treats
expenses and fees differently with no restrictions on entitlement to reasonable
litigation expenses.
       Still, the question of whether McLeod was entitled to recover all of her claimed
expenses remains unresolved. The trial court did not resolve the dispute between the
parties concerning whether the amounts sought by McLeod were recoverable
“reasonable litigation expenses” under section 3856. In my view, the trial court should
have resolved that issue and ordered that McLeod’s “reasonable litigation expenses”
be paid first from the judgment.

                                   B. Attorney’s Fees
                            1. Which Subdivision Applies?
       Section 3856 distinguishes between the situation where the action is
“prosecuted by” the employee alone (subdivision (b)) and the situation where the
action is “prosecuted by” both the employer and the employee (subdivision (c)). The
question is: What does section 3856 mean by “prosecuted by”? Both the employee
and the employer were unquestionably parties to the action prior to the employer’s
settlement with the Mansfields, but the employer clearly did not “prosecute[]” the
action to “judgment,” which is the focus of section 3856-fees to be paid “first” out of a
judgment. Nor did the employer play any role in the case at trial, as it had settled in
advance of trial. I believe that the structure and language of section 3856, and the
statutory scheme of which it is part, necessarily assume that subdivision (b), not
subdivision (c), will apply where the employer is no longer a party to the action when
the judgment is obtained.
       Section 3856 provides for the recovery of “reasonable litigation expenses” and
“reasonable attorney’s fees” from a “judgment.” A companion statute, section 3860,
provides for the recovery of “reasonable expenses” and “reasonable attorney’s fees”

                                            5
from a “settlement.” Section 3860 distinguishes between settlements “effected . . .
through the efforts” of one party (subdivisions (c) [by employee] and (d) [by
employer]) and those effected through the efforts of both parties (subdivision (e) [by
both]). Where the settlement is the result of efforts by both parties, “reasonable
expenses” incurred by both parties shall be deducted from the settlement amount
“together with reasonable attorney’s fees . . . based upon the respective services
rendered in securing and effecting settlement for the benefit of the party represented.”
(§ 3860, subd. (e).)
       “Statutory language is not considered in isolation. Rather, we ‘instead interpret
the statute as a whole, so as to make sense of the entire statutory scheme.’ ” (Bonnell
v. Medical Board (2003) 31 Cal.4th 1255, 1261.) The fact that the application of the
appropriate subdivision of section 3860 depends on whether one or both parties
“effected” the settlement is a strong indication that the “prosecuted by” language
governing application of the appropriate parallel subdivision of section 3856 depends
on whether one or both parties “prosecuted” the action to judgment rather than merely
participated in some earlier stage of the action. This is the only way to construe
section 3856 that makes sense of the entire statutory scheme. “[T]he Legislature has
evinced its intention that settlement and judgment situations be treated alike . . . .”
(Quinn, supra, 15 Cal.3d at p. 176, fn. 20.) Section 3860, which is clearly intended to
parallel section 3856, does not focus on whether the employee or the employer or both
made a claim against the third party but on whether one or both of them procured the
settlement. To construe the parallel provisions of section 3856 differently would be
inconsistent with the Legislature’s intent to create a coherent statutory scheme.
Therefore, the key to determining which subdivision of section 3856 applies is not
whether the employee or the employer or both were involved in the action at some
earlier stage but whether one or both prosecuted the action to judgment.

                                             6
       The language of section 3856 itself also supports this construction of the
“prosecuted by” language. Where the employer has settled prior to trial and the
employee has prosecuted the action to judgment, it is impossible to apply the language
of subdivision (c). Subdivision (c) provides that, where both the employee and the
employer “prosecuted” the action, the employer may recover its attorney’s fees from
the judgment for “service rendered . . . in effecting recovery for the benefit of the party
represented.” An employer’s attorney who settles the action prior to trial does not
provide the services that resulted in the judgment and therefore does not “effect[]
recovery” for the employer from the judgment. The inapplicability of this language to
this situation indicates that the Legislature did not intend for subdivision (c) to apply
where the employer did not prosecute the action to judgment.
       The case authority on this issue also supports this construction of the statute.
Very few of the cases concerning the availability of attorney’s fees under sections
3856 and 3860 address the issue of which subdivision applies in this situation. Most
of the case law involves joint prosecution to judgment or joint settlement. In Draper
v. Aceto (2001) 26 Cal.4th 1086 (Draper), which concerned section 3860, the
employee and the employer jointly agreed to a settlement with the third party
tortfeasor that was less than the amount of the employer’s lien.2 (Draper, at p. 1089.)
The California Supreme Court held that section 3860, subdivision (e) precluded the
employee from recovering attorney’s fees because the employee did not benefit from
the settlement. (Draper, at pp. 1094-1095.) Gapusan v. Jay (1998) 66 Cal.App.4th
734 (Gapusan), Summers v. Newman (1999) 20 Cal.4th 1021 (Summers), and

2
       The majority opinion’s reliance on Draper to support its construction of section
3856 is misplaced. (Maj. opn., at pp. 2, 3, 6.) Draper involved section 3860, not
section 3856, and the settlement in Draper was a joint one, not a judgment obtained
solely by the employee.

                                             7
Steinberg v. Allstate Ins. Co. (1990) 226 Cal.App.3d 216 (Steinberg) were also joint
settlement cases. (Gapusan, at p. 739; Summers, at p. 1025; Steinberg, at p. 219.)
       Eldridge v. Truck Ins. Exchange (1967) 253 Cal.App.2d 365 (Eldridge) was a
case concerning section 3856 in which all parties agreed to a stipulated judgment
against the third party tortfeasor that was less than the amount of the employer’s lien.
(Eldridge, at p. 366.) The Court of Appeal held that under section 3856, subdivision
(c), the employee was not entitled to recover attorney’s fees because he had obtained
“no benefit” from the judgment. (Eldridge, at p. 367.) Walsh v. Woods (1986) 187
Cal.App.3d 1273 (Walsh) and Witt v. Jackson (1961) 57 Cal.2d 57 (Witt) were also
joint prosecutions to judgment. (Walsh, at p. 1275; Witt, at p. 62.) Kavanaugh v. City
of Sunnyvale (1991) 233 Cal.App.3d 903 (Kavanaugh) involved both a joint settlement
and a joint prosecution through trial to judgment. (Kavanaugh, at p. 907.)
       While the California Supreme Court has never addressed the question of which
subdivision applies where the employer drops out of the action prior to trial (see
Phelps v. Stostad (1997) 16 Cal.4th 23, 30, fn. 4 (Phelps) [noting that the parties had
assumed that subdivision (b) applies in this situation but not addressing or resolving
the issue]), the Courts of Appeal have almost universally concluded that subdivision
(b) applies in this situation.
       In Manthey v. San Luis Rey Downs Enterprises, Inc. (1993) 16 Cal.App.4th 782
(Manthey), both the employee and the worker’s compensation carrier were originally
parties to the action against the third party tortfeasor. However, the carrier then sold
its lien to the third party. The employee proceeded to trial against the third party and
recovered a large judgment. The employee then sought to recover her attorney’s fees
under section 3856 on the ground that she had created a common fund from which the
lien would be satisfied. (Manthey, at pp. 785-786.) The trial court denied this request
on the ground that the carrier’s attorney had been an active participant in the creation
of the fund. (Manthey, at p. 786.) The Court of Appeal held that section 3856,

                                            8
subdivision (b), not subdivision (c), applied due to the carrier’s exit from the action
before trial. (Manthey, at p. 788.)
       In Hone v. Climatrol Industries, Inc. (1976) 59 Cal.App.3d 513 (Hone), the
action was originally a joint action by the employee and the worker’s compensation
insurer, but the insurer settled with the third party during trial and dismissed its action
but retained its lien on any recovery. (Hone, at pp. 518-519.) The employee
recovered a judgment against the third party, and the trial court refused to award
attorney’s fees to the employee out of the judgment before satisfaction of the lien.
(Hone, at pp. 521-522.) The Court of Appeal held that after the insurer’s dismissal of
its action, the case reverted to an action by the employee alone, and subdivision (b)
applied. (Hone, at pp. 523-524, 530-531.)
       In Crampton v. Takegoshi (1993) 17 Cal.App.4th 308 (Crampton), disapproved
on another point in Phelps, the employee and the employer were parties to the action
against the third party tortfeasor. (Crampton, at pp. 313-314.) The employer sold its
lien to the third party, and the employee proceeded to trial against the third party.
(Crampton, at pp. 314-315.) The trial court denied the employee’s request for his
attorney’s fees and costs. (Crampton, at p. 316.) The Court of Appeal stated, without
analysis, that “[t]his case is governed by subdivision (b) of [section 3856] because the
trial de novo [after a judicial arbitration] was prosecuted by the injured employee
alone, the employer’s complaint in intervention having been dismissed.” (Crampton,
at p. 316.) It held that the employee was entitled to recover his attorney’s fees under
section 3856, subdivision (b) despite the fact that the lien exceeded the judgment.
(Crampton, at p. 319.) “Defendant [the third party tortfeasor] simply stands in the
shoes of the employer and the lien rights he obtained by assignment from the employer
must be treated the same way. To the extent that defendant is asserting his assigned
lien rights to offset the judgment against him, he is asserting them as the employer and
not in his capacity as a party defendant. And those lien rights of the employer are

                                             9
allowable against the judgment only ‘[a]fter the payment of such [litigation] expenses
and attorney’s fee . . .’ (Lab. Code, § 3856, subd. (b).) Consequently, plaintiff is
entitled to an award of attorney fees under this statute for securing a verdict benefitting
the lienholder.” (Crampton, at p. 319.)
       Hartwig v. Zacky Farms (1992) 2 Cal.App.4th 1550 (Hartwig) had a similar
posture but did not actually address which subdivision should apply. In Hartwig, the
worker’s compensation carrier was originally a party to the employee’s action against
the tortfeasor, but the carrier dismissed its action and assigned its lien to the tortfeasor
before trial. The trial court awarded the employee his attorney’s fees out of the
judgment before application of the lien. (Hartwig, at pp. 1553-1554.) On appeal, the
tortfeasor claimed that the carrier’s active participation in the action before dismissal
precluded the award of attorney’s fees. (Hartwig, at p. 1555.) The Court of Appeal
rejected this claim on the ground that the carrier’s participation had been “nominal”
and therefore did not qualify as “active.” It never addressed the question of which
subdivision applied. (Hartwig, at pp. 1556-1557.)
       In Kindt v. Otis Elevator Co. (1995) 32 Cal.App.4th 452 (Kindt), the procedural
posture was the same as that in Crampton. (Kindt, at p. 454.) The employee sought
attorney’s fees from the judgment, and the third party claimed that the carrier had been
an active participant in the action up until the pretrial dismissal. (Ibid.) The trial court
denied the fees request. (Kindt, at p. 455.) The Court of Appeal cited Crampton for
the proposition that section 3856, subdivision (b) applied. (Kindt, at p. 456.)
However, the court then proceeded to apply the analysis in Walsh and Kavanaugh
(which were subdivision (c) cases) and Hartwig (which never resolved which
subdivision applied) and concluded that the employee was entitled to fees because the
carrier’s participation was not active. (Kindt, at pp. 456-460.)
       Although Hartwig and Kindt erroneously applied the “active” participant
analysis required by subdivision (c), neither of them actually held that subdivision (c)

                                             10
was the applicable subdivision, and Kindt explicitly stated that subdivision (b) applied.
My analysis of the statutory scheme is consistent with the holdings in Manthey, Hone,
and Crampton. Like those courts, I would hold that where the employer dismisses its
action before trial and does not prosecute the action to judgment, the entitlement to
attorney’s fees of the employee who does prosecute the action to judgment is
determined under subdivision (b), not subdivision (c).
       The majority opinion concludes that subdivision (b) is inapplicable if the
employer was ever a party to the action, even though the employer did not prosecute
the case to judgment. Its analysis relies heavily on the dictionary definition of
“prosecute.” (Maj. opn., ante, at p. 7) “ ‘[T]o seek the meaning of a statute is not
simply to look up dictionary definitions and then stitch together the results. Rather, it
is to discern the sense of the statute, and therefore its words, in the legal and broader
culture. Obviously, a statute has no meaning apart from its words. Similarly, its
words have no meaning apart from the world in which they are spoken.’ [Citation.]
We do not interpret the meaning or intended application of a legislative enactment in a
vacuum.” (Hodges v. Superior Court (1999) 21 Cal.4th 109, 114.)
       The majority opinion errs in looking at the meaning of “prosecute” in “a
vacuum.” Statutory construction requires us to examine the statutory language in the
context of the entire statute and the entire statutory scheme in order to determine the
role that the Legislature intended for this language to play. Simply looking at the
dictionary definition of the word “prosecute” tells us little about the Legislature’s
intent in devising a consistent scheme for allocating attorney’s fees where there is a
worker’s compensation lien. As my analysis demonstrates, the entire statute and the
statutory scheme reflect that subdivision (b) was intended to apply where only the
employee prosecuted the action to judgment.
       The majority opinion’s attempt to find support for its position in Kavanaugh is
also unsuccessful. (Maj. opn., ante, at p. 8.) Kavanaugh was a case where there was a

                                            11
joint settlement and a joint prosecution to judgment by both the employee and the
employer. Under those circumstances, it was plain that subdivision (c), not
subdivision (b), applied. (Kavanaugh, supra, 233 Cal.App.3d at p. 909.) This court
did not consider in Kavanaugh the issue before us in this case: whether subdivision
(b) applies where the employer was originally a party to the action but did not
prosecute the action to judgment. The only reference in Kavanaugh to the issue before
us occurred in the course of a discussion of whether subdivision (c) required the court
to “weigh the contributions of the part[ies’] attorneys.” (Kavanaugh, at p. 914.)
“[S]ection 3856 refers to situations where the ‘action is prosecuted by [either the
employee or employer] alone . . . .’ A literal interpretation of this language indicates
that where attorneys for both the employer and the employee participate in the
litigation, then the action is not prosecuted by either party alone. If the Legislature had
intended to include a weighing process, it could have so stated.” (Ibid.) Although this
broad language suggested that subdivision (b) might not apply if attorneys for both the
employer and the employee “participate[d] in the litigation,” that issue was not before
this court in Kavanaugh, and this court did not consider or resolve whether
participation in the litigation that did not include prosecuting the action to judgment
would preclude application of subdivision (b). Kavanaugh does not support the
majority opinion’s conclusion that subdivision (c) applies here.
       The majority opinion also relies on the California Supreme Court’s decision in
Quinn to support its conclusion that subdivision (c) applies here. (Maj. opn., ante, at
pp. 8-11.) Quinn was a case in which the employee alone prosecuted the action to
judgment. Hence, subdivision (b) indisputably applied, and the California Supreme
Court did not consider in Quinn which subdivision should apply where both the
employee and the employer were initially parties to the action but only the employee
prosecuted the action to judgment. The broad references in Quinn to the “entire
litigative burden” (Quinn, supra, 15 Cal.3d at p. 176, fn. 19) being borne by one party

                                            12
were not made in reference to a determination of which subdivision applied.
“Language used in any opinion is of course to be understood in the light of the facts
and the issue then before the court, and an opinion is not authority for a proposition
not therein considered.” (Ginns v. Savage (1964) 61 Cal.2d 520, 524, fn. 2.) Quinn
has no bearing here.
                           2. Application of Subdivision (b)
       The remaining question is whether McLeod was entitled to recover her
reasonable attorney’s fees under subdivision (b). Subdivision (b) requires the trial
court to award to the employee “first” from the judgment her “reasonable attorney’s
fee which shall be based solely upon the services rendered by the employee’s attorney
in effecting recovery both for the benefit of the employee and the employer.” (§ 3856,
subd. (b).) While the statute refers to the “benefit of . . . the employer,” it has long
been held that a third party who purchases the employer’s lien “stands in the shoes” of
the employer with respect to the employee’s recovery of attorney’s fees from the
liened portion of the judgment. (Crampton, supra, 17 Cal.App.4th at p. 319.) “The
employee’s attorney can recover attorney fees from the liened portion of the judgment
even where the lien has been assigned to the third party.” (Quinn v. Warnes (1983)
144 Cal.App.3d 309, 319; accord Manriquez v. Adams (2003) 108 Cal.App.4th 340,
347; Crampton, supra, 17 Cal.App.4th at p. 319; Raisola v. Flower St. (1988) 205
Cal.App.3d 1004, 1009; Hone, supra, 59 Cal.App.3d at pp. 530-531.)
       The trial court was required to determine a reasonable attorney’s fee for the
services rendered by McLeod’s attorney for the benefit of both McLeod and the
lienholder. Due to the disparity between the amount of the lien and the amount of the
judgment, McLeod’s attorney’s services did not provide any benefit to McLeod other
than to entitle her to recompense for her reasonable litigation expenses. But his
services did benefit the lienholder, who stands in the shoes of the employer, because
those services created a fund from which the lien could be at least partially satisfied. It

                                             13
follows that the trial court should not have concluded that McLeod was not entitled to
recover any attorney’s fees but instead should have determined the amount of a
reasonable attorney’s fee based on the services McLeod’s attorney provided that
benefitted the lienholder. Although it may be difficult to conceptualize the benefit to
the lienholder where the third party tortfeasor is also the lienholder, it is necessary. A
useful way to assess the lienholder’s benefit is to look at what the benefit would have
been to the employer had it not sold its lien. Here, if RCB had retained its lien, it
would have benefitted from McLeod’s attorney’s services because it would have
recovered a portion of the worker’s compensation benefits it had expended. McLeod
was entitled to recover a reasonable attorney’s fee for the services that benefitted the
lienholder “first” from the judgment.

                                    III. Conclusion
       The trial court erred in refusing to award McLeod reasonable litigation
expenses and reasonable attorney’s fees “first” from the judgment as required by
section 3856, subdivision (b). Since the determination of the amount of “reasonable”
expenses and fees requires a discretionary decision as to what is reasonable, I would
reverse the trial court’s order and remand the matter to the trial court with directions to
award McLeod reasonable litigation expenses and reasonable attorney’s fees as
mandated by section 3856, subdivision (b).

                                                  _______________________________
                                                  Mihara, J.

                                            14