Friday, March 25, 2011

First District Contemplates Impact of Pleading a Case as a Class Action On Bilateral Fee Shifting: Turner v. Ass'n of Am. Med. Colleges

Can pleading a case as a class action impair a defendant's ability to recover fees under a bilateral fee shifting statute? According to the First District (Division Five), it may. On March 24, 2011, the Court issued an opinion in Turner v. Ass'n of Am. Med. Colleges, __ Cal.App.4th __ (2011), considering whether “a trial court [is] required to award attorney fees to a prevailing defendant under the bilateral, ‘prevailing party’ statutory fee-shifting provision in [Civil Code] section 55 for attorney hours that were inextricably intertwined with the hours incurred in defending claims under sections 52 and 54.3[.]” Slip Opinion, at 2. According to the Court it was not, due in part to the fact that doing so would undermine the policy underpinning the Legislatures’ enactment of the unilateral-fee shifting provision. See id., at 24.

However, the Court also noted another ground, specific to class actions. At footnote 17 of the Opinion, the Court explores an issue of a “conflict” that is unique to class cases, essentially stating that the named plaintiff cannot intentionally avoid pleading a claim to avoid a bilateral fee shifting provision without breaching his/her obligation to the class, who are not subject to any obligations regarding fees:
Although the above analysis is sufficient to support our conclusion that sections 52 and 54.3 should prevail as a matter of public policy, an additional case-specific consideration applies here. This case was pled as a class action, which complicated the risk-benefit calculus alluded to in Molski, supra, 164 Cal.App.4th at pages 790-791. "A class action is a representative action in which the class representatives assume a fiduciary responsibility to prosecute the action on behalf of the absent parties. [Citation.]" (Earley, supra, 79 Cal.App.4th at p. 1434.) It was in the interest of the prospective class that relief be sought under all potentially applicable statutes, particularly where section 55 has lower standing requirements. Moreover, unnamed class members are not liable for statutory fees awarded to a prevailing defendant. (Earley, at pp. 1435-1436.) Accordingly, to conclude that section 55 should prevail in cases such as the present one would create a conflict of interests between class representatives and unnamed class members: from the perspective of the unnamed class members, there would be no reason [*49] not to seek an injunction under section 55, but seeking such relief would involve great risk for the class representatives. And it is no answer that plaintiffs could have avoided such a dilemma by declining to seek certification of a class, because that solution—effectively, encouraging individual actions—would undermine judicial efficiency and "the effectiveness of the group remedy provided by the class action." (Earley, at p. 1435; see also Vasquez v. Superior Court (1971) 4 Cal.3d 800, 807 ["If each is left to assert his rights alone if and when he can, there will at best be a random and fragmentary enforcement, if there is any at all. This result is not only unfortunate in the particular case, but it will operate seriously to impair the deterrent effect of the sanctions which underlie much contemporary law. The problem of fashioning an effective and inclusive group remedy is thus a major one.' [Citation.]"].)
Slip Opinion, at 24.

While the Court’s analysis was limited to the procedural circumstances of this case, the logic of the Court’s reasoning is interesting, and conceivably could be applied in other areas, such as wage actions implicating both Labor Code section 218.5 (bilateral) and Section 1194 (unilateral) fee shifting.

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