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California Supreme Court Clarifies When Prevailing FEHA Defendants Can Recover Costs

On Behalf of | Jun 3, 2015 | in Employment Updates

The California Fair Employment and Housing Act (“FEHA”) prohibits harassment and discrimination in employment because of race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, mental and physical disability, medical condition, age, pregnancy, denial of medical and family care leave, or pregnancy disability leave (Government Code sections 12940,12945, 12945.2) and/or retaliation for protesting illegal discrimination related to one of these categories, or for reporting patient abuse in tax supported institutions. You may file a private lawsuit under the FEHA, usually with the assistance of an attorney. For employment discrimination issues, you are required to exhaust your administrative remedies with the Department by securing your Notice of Right to Sue.

Sometimes a defendant employer wins. Williams v. Chino Valley Independent Fire District examined who gets costs in these situations.  Under section 1032(b) of the California Code of Civil Procedure, “a prevailing party is entitled as a matter of right to recover costs in any action or proceeding” unless some statute expressly says otherwise. It has been California’s rule for over a decade that this provision allowed victorious defendants in cases under the FEHA to recover their costs of suit as a matter of right.

However, on May 4, 2015, the California Supreme Court issued its decision in Williams v. Chino Valley Independent Fire District, holding that the default rule of section 1032(b) is preempted by Government Code section 12965(b), a subsection of the FEHA that places the decision to award costs within the discretion of the trial court.

In applying section 12965(b), the courts have borrowed a standard from the U.S. Supreme Court’s decision in Christiansburg Garment Co. v. EEOC to hold that a prevailing defendant can only recover its fees and costs by showing that the plaintiff’s claim was “frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became or that the plaintiff continued to litigate after it clearly became so. Moreover, if a plaintiff is found to have brought or continued such a claim in bad faith, there will be an even stronger basis for charging him with the attorney’s fees incurred by the defense.”  As a result of this change, California courts will now apply the same standard to the recovery of costs that it previously only applied to attorneys’ fees. This change is meant to ensure that plaintiffs are not discouraged from filing suit by the risk of a costs award by monster defense firms should they lose.

Williams creates is a small inconsistency between California and federal law. The 9th Circuit applies the stricter Christiansburg standard to claims under the Americans with Disabilities Act, but not to those under Title VII. This means that in cases alleging discrimination on any basis other than disability, defendants will be able to recover costs as a matter of right under federal law, but not under state law.  Rule of thumb? Stay in state Court if you are a Plaintiff bringing a claim.

There are a few additional issues created by the Williams decision. It is unclear post-Williams what procedure one should follow in order to recover those costs. The traditional method has been a memorandum of costs, which places the burden on the plaintiff to show the costs should not be awarded. However, a FEHA defendant seeking attorneys’ fees has the burden to show the claim was “frivolous, unreasonable, or groundless,” which requires a noticed motion. It is also unclear how courts should handle cost awards in cases involving both FEHA and non-FEHA claims, which remain awardable as a matter of right. The Williams court did not explain how these issues should be resolved but clearly these issues will be pursued if and when Defendants prevail on clearly frivolous claims.

For employees, stay in California state court. For employers, update your employee handbooks and remain vigilant in compliance efforts.

If you are reading this and you have more than one (1) employee, employers are strongly urged to review and update their handbooks, policies, and procedures in anticipation of the new laws. Some of the policies Quintilone & Associates can assist you with writing include:

  • Out-of-state employers should assess whether any of their workforce may be subject to the California sick leave requirements and make preparations for providing such benefits;
  • In-state employers should review current vacation/PTO and sick leave policies and make tweaks, as necessary, to comply with the new law;
  • Ensure part-time employees are afforded sick time;
  • Ensure carry-over provisions are sufficient;
  • Ensure any sick time provided under the Act (i.e., at least 24 hours or three days) may be used to care for the expanded scope of family members;
  • Emergency duty policies should be revised to address the new definition of “emergency rescue personnel”;
  • Employers may want to consider making mention of unpaid interns and volunteers in their EEO policies;
  • Anti-harassment training should be updated to cover abusive behavior;
  • New laws should be reviewed with human resources and supervisory personnel to ensure compliance; and,
  • Safety walk-throughs can be conducted [by qualified personnel] to ensure Cal-OSHA compliance.

Please contact our office if you require any assistance with these issues.

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