Catalyst Theory for Recovery of Attorneys’ Fees Against Employers is Alive and Well in California

At the request of the federal court of appeals for the Ninth Circuit, the California Supreme Court has rendered a decision clarifying some aspects of the law governing the recovery of attorneys’ fees in employment discrimination cases arising under state law.  The case, Tipton-Whittingham v. City of Los Angeles, which was decided on December 2, 2004, holds that California continues to recognize the “catalyst” theory under which plaintiffs in employment discrimination cases can recover attorneys’ fees when it is shown that the plaintiff’s lawsuit served as a “catalyst” for the employer to modify its behavior in a manner that resolved at least some aspect of the case. While Tipton-Whittingham involved a public entity employer, it has potential application for all employers who voluntarily effect changes in the workplace to address issues raised in a discrimination lawsuit.

The Court held that in order to recover under the catalyst theory, the plaintiff must establish three things: 1) the lawsuit motivated the defendants to provide the primary relief sought in the lawsuit; 2) the lawsuit had merit and achieved its catalytic effect by threat of victory; and 3) the plaintiffs reasonably attempted to settle the litigation prior to filing the lawsuit. In addition, the Court held that, where public entities are concerned, plaintiffs cannot recover attorneys’ fees “by merely causing the acceleration of the issuance of government regulations or remedial measures, when the process of issuing those regulations or undertaking those measures was ongoing at the time the litigation was filed. When a government agency is given discretion as to the timing of performing some action, the fact that a lawsuit may accelerate that performance does not by itself establish eligibility for attorney fees.”

The Court applied its holding to the California Fair Employment and Housing Act, which provides for the award of attorneys’ fees to a prevailing party under that statute, as well as Government Code section 1021.5, which provides for similar awards when the prevailing plaintiff establishes that the outcome of the case conferred a substantial legal benefit on the public at large and not just the plaintiff.

Although Tipton-Whittingham does not break any new ground under California law, the decision puts to rest a question raised by a prior US Supreme Court decision in Buckhannon Board v. West Virginia, 532 US 598 (2001), which rejected the catalyst theory as a legal basis for the recovery of prevailing party attorneys’ fees under certain federal civil rights statutes.

One unfortunate consequence of the Court’s decision is that it could operate as a disincentive for employers involved in pending litigation to voluntarily implement changes to correct for perceived unlawful workplace practices or policies for fear that plaintiffs would claim credit for such changes in order to seek attorneys’ fees.

Persons wishing further information or who have questions or comments about either this case or any of the cases that have appeared on this website can contact any of the attorneys at Epstein, Turner & Song.