California loses with a politicized attorney fees system

Having a thumb on the scale of justice is a poor way to find the truth. About two months ago, this newspaper ran my column criticizing the system by which courts award attorney fees to politically favored parties. ["Attorney fees system is bad for us all," March 10, 2017]. Unfortunately, a new opinion from the Court of Appeal covering the San Diego area shows that courts will continue to make the system worse.

Traditionally, the "American rule" has been that, absent a contractual provision, each side pays its own legal fees - win or lose. Until 1977, California law followed this rule. The state Supreme Court wasn't in favor of that rule, however, so it created a new fee system: the "private attorney general" fee award - someone successfully suing for the good of the public at a disproportionate personal cost gets their fees paid by the opposing party. Eventually, the California Legislature wrote that into law.

The private attorney general fee award is now one of many asymmetric fee systems. It is, though, probably the worst, because it inherently seeks a political, not a legal, determination as the basis for the award.

The very justifications for the private attorney general system are political. The first justification is that the system serves the public good. However, the "public good" is in the eye of the beholder. The second justification is that it helps the "little guy" litigate. However, more often than not, the party aided is a large organization, such as the Sierra Club or a lawyer's pet group.

The 4th District Court of Appeal, Division 1, recently demonstrated the flaws in this system yet again. The Save Our Heritage Organization (SOHO) sued the city of San Diego to overturn the city's approval of a plan to modify access to Balboa Park, the city's crown jewel. The appellate court rejected SOHO's case in May 2015.

The committee that had sponsored the park plan then sought its attorney fees, as private attorney general, from SOHO. Last month, the Court of Appeal rejected the committee's request in a published opinion. Save Our Heritage Organisation v. City of San Diego, 2017 DJDAR 3995 (April 27, 2017). Case law has long allowed defendants to seek their fees as a private attorney general, so that was not the issue.

To the court, the issue was that SOHO was the good guy. The court held there is an implicit "exception" to the statute for parties, such as SOHO, that were "not the type of party" that could be ordered to pay fees. According to the court, SOHO's lawsuit had not been "detrimental to the public interest" by seeking "to curtail or compromise important public rights."

Nothing in the governing statute supports the court's legal theory. The statute contains no "exception" for the nature of the plaintiff. As the appellate opinion acknowledges, the statute addresses the value of the winner's success, and not "the type of conduct" of the liable party. The local appellate court cited two Supreme Court cases. In one, the Supreme Court allowed a fee award against a business (of course). In the other, it denied fees against a "birth mother" because her action had only concerned her "private rights." This new appellate decision adds quite a few words to the law to get a desired result.

Inventive statutory interpretation is not the principal flaw of the decision, though. Its principal flaw is its politics.

The Court of Appeal could not plausibly deny that SOHO had obstructed and opposed the public good. Two years ago, the same court upheld the city's decision that what SOHO wanted would have left "no reasonable beneficial use" in much of the park. The same court upheld the city's decision that the project SOHO was fighting offered benefits such as "creating a more pedestrian-oriented environment within the park, reducing automobile and pedestrian conflicts, improving public access, [and] increasing free and open parkland." The same court upheld the city's decision that the project SOHO opposed would "open up opportunities for cultural activities, special events and general public enjoyment of the park" and "enhance the cultural and recreational uses" of the park.

My earlier article gave what may have seemed like an unnecessarily maudlin example to highlight the problem, but the example was right on the current state of California law. Suppose Mother Theresa had tried to get affordable homes built in Encinitas. (Granted, given the politics of Encinitas, this would have required a miracle qualifying her for sainthood.) If she had successfully defended the inevitable lawsuit by neighbors, she would not have qualified for a private attorney general fee award because she would have been defending a project in which she had an interest. Conversely, case law holds that the "not in my backyard" neighbors suing to keep the homeless away would be entitled to a fee award.

The basis of this system has become the nature of the party, not the law or the facts of a case. This system, created and now continually expanded by courts, is a blatant effort to reward political allies, and that conflicts with every principle of equal access to the courts. Courts might as well favor Republicans over Democrats, or Dodger fans over Giants fans.

It is yet another reason businesses remain wary of coming to California. Trying to start a business here - not just developing land, but doing almost anything productive - can result in paying two sets of lawyers. The increased cost to businesses then raises the prices everyone pays. Again, it is time to end this system.