Opinion
E068433
08-30-2018
FRANK BURGESS, Plaintiff and Respondent, v. FAIR POLITICAL PRACTICES COMMISSION, Defendant and Appellant.
Xavier Becerra, Attorney General, Thomas S. Patterson, Assistant Attorney General, and Mark R. Beckington and Enrique A. Monagas, Deputy Attorneys General, for Defendant and Appellant. Slovak Baron Empey Murphy & Pinkney, John O. Pinkney, Brent S. Clemmer, and Wendy S. Dowse for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. RIC1510656) OPINION APPEAL from the Superior Court of Riverside County. Craig G. Riemer, Judge. Affirmed. Xavier Becerra, Attorney General, Thomas S. Patterson, Assistant Attorney General, and Mark R. Beckington and Enrique A. Monagas, Deputy Attorneys General, for Defendant and Appellant. Slovak Baron Empey Murphy & Pinkney, John O. Pinkney, Brent S. Clemmer, and Wendy S. Dowse for Plaintiff and Respondent.
I. INTRODUCTION
Defendant and appellant, Fair Political Practices Commission (the Commission), brought administrative proceedings against Frank Burgess for allegedly violating section 87100 of the Government Code, part of the Political Reform Act. (§ 81000 et seq.) The Commission ultimately concluded Burgess had violated section 87100 and imposed the maximum $5,000 fine. (§ 83116, subd. (c).) Burgess then filed a petition for writ of administrative mandamus and complaint for declaratory and injunctive relief. The trial court granted the petition and declaratory relief, but denied injunctive relief. The court ordered the Commission to set aside its decision and order and dismiss the administrative proceedings against Burgess.
All further statutory references are to the Government Code unless otherwise indicated.
Burgess filed a postjudgment motion for attorney fees under Code of Civil Procedure section 1021.5, seeking $268,170 in fees for the administrative and mandamus actions. The court granted Burgess's motion, although it reduced his fee award to $221,166.
The Commission appeals from the attorney fees order. It argues the court erred in awarding any fees because Burgess's action did not significantly benefit the general public or a large class of persons. Alternatively, it argues there was no evidentiary support for $54,007 of the fee award, and we should therefore reduce the award by that amount. We disagree with both contentions and affirm.
II. FACTS AND PROCEDURE
A. The Administrative Proceedings
Burgess has resided in Banning, California for over 60 years. He is an entrepreneur and has run several businesses in Banning, including a moving and document storage company called Burgess North American Van Lines. In June 2009, he joined the board of directors for San Gorgonio Memorial Hospital. The underlying administrative action arose from his service on the hospital board and his interest in Burgess North American Van Lines.
Section 87100 is a financial conflict-of-interest provision that binds public officials. It states: "No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest." The Commission concluded the hospital and hospital board were local government agencies for purposes of the Political Reform Act. It arrived at this conclusion by applying a four-factor test set forth in one of its opinions, In re Siegel (1977) 3 FPPC Ops 62. Once the Commission concluded the hospital board was a local government agency, it also concluded Burgess was a public official bound by section 87100. It found Burgess had violated that section when he attempted to influence the hospital board to vote against terminating the hospital's contract with Burgess North American Van Lines. B. The Mandamus Action
In his writ petition and complaint, Burgess contended the hospital was a private nonprofit corporation, not a government agency, and he was not therefore a public official. He further contended the Commission had violated his constitutional due process right to fair notice by relying on the Siegel test.
At the hearing on Burgess's petition, the court ruled in favor of Burgess. The court expressed concern that the Commission was expanding the definition of a local government with the Siegel test. Moreover, Burgess's conduct had occurred before the Commission determined the hospital board constituted a local government entity. The court explained: "I don't believe that [the Commission] has the ability to punish conduct that, at the time it was made, was involving a governmental entity that had not been determined by the Commission to be a local governmental agency."
The court then turned to the appropriate relief. Burgess argued the court should vacate the Commission's decision against him and also order the Commission "not to repeat the same conduct again, not to use the Siegel test to hold people retroactively in violation of the Political Reform Act when they're sitting on non-profit boards." The court noted that it generally only issued injunctive relief when a repetition of wrongful conduct was threatened. But here, the Commission's counsel was unaware of similar instances—that is, other instances in which the Commission had punished conduct based on a later determination that a nongovernmental entity was subject to the Political Reform Act under the Siegel test. There was also no evidence in the administrative record that the Commission had imposed punishment under similar circumstances. The court explained: "So it sounds like Mr. Burgess'[s] situation is sui generis. It's an isolated incident. And generally I don't issue injunctive relief when there is an isolated incident and when there is no evidence to suggest that that incident is going to be repeated."
The court clarified that, while it was not inclined to issue injunctive relief, it was considering whether to issue declaratory relief: "[S]hould I be making a declaration that the retroactive application in any instance, when we're talking about relying on a Siegel determination, I'll call it, in year two to punish conduct that occurred in year one, that that is not consistent with due process?" The court understood that Burgess wanted more than a simple order vacating the Commission's decision against him, "[b]ecause no one spends the kind of attorney's fees that he's incurred" merely to avoid a $5,000 fine; "[h]e not only wanted vindication or relief from that penalty, but he wanted, clearly, to correct what he viewed as being an improper course of action by the Commission." The court held: "I'm not going to be issuing any injunction, but I think it is proper to issue declaratory relief saying that it would be a violation of due process to punish someone for conduct on a non-profit corporation when there had been no preexisting determination by the [Commission] that that non-profit corporation should be deemed to be a local governmental agency."
Burgess's counsel agreed with that relief, stating: "As you correctly stated, this is more—about more than just this case to Mr. Burgess. He has spent four years dealing with this. He's 80 years old. There are few issues that are more important to our Constitution than the concept of due process. This is not a traffic ticket. This is due process that we all swore to uphold. And it means something to my client to prevent this from happening to anybody else."
In the judgment granting the petition and declaratory relief, the court held: "The Commission's reliance upon the In re Siegel guidelines to find that Petitioner Burgess violated the Political Reform Act (the 'Act') deprived Petitioner Burgess of due process. In the Court's mind, the crucial issue in the due process analysis is not whether the In re Siegel guidelines can be used by the Commission to issue Commission Opinions and Advice Letters, which operate prospectively. The issue here is whether those same guidelines can be relied upon to decide that the Act applied in the past, and to punish an act committed prior to that determination that would not constitute a violation of the Act but for that determination. [¶] The Court rejects the Commission's contention that the In re Siegel guidelines may be enforced retroactively. . . . If a corporation or individual board member cannot reliably determine the applicability of the Act from the Siegel guidelines, then those guidelines cannot be used to impose punishment for actions taken prior to the Commission's determination of whether the corporation is, in substance, a governmental agency."
Besides vacating the Commission's decision and order against Burgess, the judgment declared that "[i]t is a violation of due process under the United States and California Constitutions for the Commission to punish or fine Burgess or anyone else for allegedly violating Government Code section 87100 unless either:" (1) the entity at issue constitutes a state or local government agency as defined by the Government Code, or (2) prior to the person's allegedly unlawful conduct, the Commission or some other binding authority has determined that the entity at issue constitutes a state or local government agency for purposes of section 87100. The judgment also declared: "It is a violation of due process under the United States and California Constitutions for the Commission to apply or otherwise rely upon the factors described in In re Siegel (3 FPPC Ops. 62) to punish or fine Burgess or anyone else for allegedly violating Government Code section 87100 unless, prior to the time that the person committed the act or omission that allegedly violates section 87100, the Commission or some other binding authority has determined that the entity of which the person is a member, officer, employee or consultant should be deemed to be a state or local government agency for purposes of the application of section 87100." As discussed, the judgment denied injunctive relief.
Section 82041 defines a local government agency as "a county, city or district of any kind including school district, or any other local or regional political subdivision, or any department, division, bureau, office, board, commission or other agency of the foregoing." Section 82049 defines a state agency as "every state office, department, division, bureau, board and commission, and the Legislature." --------
The Commission did not appeal from the judgment. C. Burgess's Motion for Attorney Fees
Burgess filed a motion for attorney fees under Code of Civil Procedure section 1021.5, "a codification of the 'private attorney general' attorney fee doctrine" developed in case law. (Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 933.) In his declaration in support of the motion, Burgess explained that he felt he had a civic duty to contest the Commission's action against him "so as to protect the public's right to due process as guaranteed by the Constitution and prevent this from ever happening to anyone else," even though he "knew it would be much easier and significantly less costly just to pay the fine to the FPCC." According to Burgess's counsel's declaration, counsel had charged Burgess reduced hourly rates, in light of "the tremendous financial burden of paying all of the attorney's fees and costs out of his own pocket." At first, counsel had reduced his hourly rate and the hourly rate of his partner from $425 to $400, reduced the hourly rates of other senior attorneys to $400, reduced the hourly rates of junior associates to $300, and reduced the paralegal's hourly rate to $180. Approximately six months into the representation, counsel had further reduced the hourly rates of all the attorneys to $250, and had reduced the paralegal and law clerk hourly rate to $130. All firm personnel had spent a total of 735.46 billable hours on the administrative and mandamus actions, amounting to $214,163 in fees under the "significantly reduced rates." The fees "under each attorney's reasonable hourly rate" would amount to $268,170, the amount Burgess was seeking by way of the motion.
The court granted the motion and awarded Burgess $221,166 of the $268,170 he was requesting. The Commission argued the judgment did not confer a significant benefit on a large class of persons, since the court declined to issue injunctive relief. The court concluded the absence of injunctive relief was not determinative. The court noted that the judgment declared it a violation of due process for the Commission to punish Burgess "'or anyone else' if the alleged violation requires a retroactive application of [Siegel]." The court further noted that the "judgment binds the Commission under the doctrines of res judicata and collateral estoppel." Thus, although the Commission could not be held in contempt for violating an injunction, the declaratory relief "clearly benefits all members of the boards of all non-governmental agencies and associations. That is a large class of beneficiaries."
The Commission also argued that there was no explanation of the $54,007 difference between the fees counsel billed to Burgess and the fees requested in the motion. At the hearing, the court rejected the argument that Burgess's counsel had "never addressed that $54,000 hole," saying: "Sure they do, Counsel. What they say is that what we were charging our client is less than the market rate for our services, and therefore—although the bills to our client only totaled this lesser number, the market rate would justify an award of the greater number." In the written ruling, the court confirmed its rejection of this argument.
The court nevertheless reduced Burgess's award to $221,166 by deducting for work on the attorney fee's motion, "for time the purpose of which was not described, and for work by attorneys whose identity and experience was not described in the moving papers."
III. DISCUSSION
A. The Court Did Not Abuse Its Discretion in Awarding Fees
Code of Civil Procedure section 1021.5 permits the court to award attorney fees to a successful party when the action enforces "an important right affecting the public interest" and "(a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement . . . are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any." (Code Civ. Proc., § 1021.5.) We review the court's decision on whether to award fees under Code of Civil Procedure section 1021.5 for abuse of discretion. (Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 578.)
The Commission contends the court abused its discretion because Burgess did not confer a significant benefit "on the general public or a large class of persons." (Code Civ. Proc., § 1021.5.) We disagree.
"[T]he 'significant benefit' that will justify an attorney fee award need not represent a 'tangible' asset or a 'concrete' gain but, in some cases, may be recognized simply from the effectuation of a fundamental constitutional or statutory policy." (Woodland Hills Residents Assn., Inc. v. City Council, supra, 23 Cal.3d at p. 939.) The trial court should "determine the significance of the benefit, as well as the size of the class receiving [the] benefit, from a realistic assessment, in light of all the pertinent circumstances . . . ." (Id. at pp. 939-940.)
But there is no statutory requirement that the class of people benefitted be "'readily ascertainable.'" (Northwest Energetic Services, LLC v. California Franchise Tax Board (2008) 159 Cal.App.4th 841, 876, fn. 19.) "[E]vidence of the size of the population benefited by a private suit is not always required. The substantial benefit may be conceptual or doctrinal, and need not be actual and concrete, so long as the public is primarily benefited. [Citation.] [¶] Although fundamental constitutional rights are by nature individual rights, their enforcement benefits the entire public. [Citations.] 'Indeed, only by protecting each individual's [fundamental rights] will society's general interests in these rights be secured.'" (Planned Parenthood v. Aakhus (1993) 14 Cal.App.4th 162, 171-172.)
Accordingly, numerous courts have concluded that the enforcement of important constitutional rights necessarily conferred a significant benefit on the general public. (E.g., Press v. Lucky Stores, Inc. (1983) 34 Cal.3d 311, 319 [the plaintiffs' enforcement of their rights to freedom of speech and petition, against a business owner who stopped them from gathering signatures in front of the owner's store, benefitted society as a whole]; MBNA America Bank, N.A. v. Gorman (2006) 147 Cal.App.4th Supp. 1, 5, 10 [the denial of a petition to confirm an arbitration award based on the constitutional right to a jury trial conferred a significant benefit on the general public]; Edgerton v. State Personnel Board (2000) 83 Cal.App.4th 1350, 1355, 1362 [a judgment enjoining a state agency from drug testing off-duty employees enforced employee privacy rights and "benefited all employees in the state who might be subject to drug testing," thereby conferring a significant benefit on the public]; Sokolow v. County of San Mateo (1989) 213 Cal.App.3d 231, 246 [the plaintiffs' enforcement of the right to equal protection of the law in a sex discrimination suit "necessarily confer[red] a 'significant benefit' on society as a whole" and deterred other government entities from engaging in similarly discriminatory activities]; Best v. California Apprenticeship Council (1987) 193 Cal.App.3d 1448, 1468 [the plaintiff's enforcement of his "constitutional right to the accommodation of religious beliefs in the employment context" conferred a significant benefit on the general public].)
Here, the judgment effectuates a fundamental constitutional policy—the right to due process of law. Moreover, while the trial court did not issue an injunction, the court declared it a violation of due process for the Commission to punish "anyone else" in the same manner it punished Burgess—namely, by determining that an entity not falling within the plain statutory definition of a government agency (§§ 82041, 82049) was nevertheless a government agency under the Siegel guidelines, only after Burgess's actions allegedly violated the conflict-of-interest provision (§ 87100). This enforcement of a fundamental constitutional right against a public agency confers a significant benefit on the general public. The benefit to the general public flows from the nature of the right at issue and the nature of the court's broad declaration.
Additionally, as the trial court recognized, "the declaratory judgment clearly benefits all members of the boards of all non-governmental agencies and associations," and that constitutes a large class of beneficiaries. We reject the Commission's suggestion that the judgment "only benefits one person" (Burgess), and that Burgess had to more specifically identify current and future beneficiaries of the judgment. The Commission is a public agency with the power to bring an administrative enforcement action against any member of the public it believes has violated the Political Reform Act. (§ 83116.) Similarly situated board members of entities across the state may rely on the trial court's judgment in the future.
The trial court explained one way in which they may do this—such individuals could rely on the doctrine of collateral estoppel. Collateral estoppel precludes a party, or someone in privity with the party, from relitigating issues decided against the party in a prior proceeding, so long as the prior decision was final and on the merits. (Zapata v. Department of Motor Vehicles (1991) 2 Cal.App.4th 108, 112.) The Commission argues collateral estoppel would not be available to similarly situated board members in future writ proceedings. This is so, it contends, because strangers to this litigation cannot assert collateral estoppel offensively. It is generally true that strangers to the prior action may assert collateral estoppel defensively but not offensively—that is, they may not assert it as plaintiffs against a defendant who was a party to the prior action. (McDougall v. Palo Alto Unified School Dist. (1963) 212 Cal.App.2d 422, 430-431.) But the Commission's argument takes a too narrow view of future proceedings. While Burgess is the petitioner in these court proceedings, the Commission initiated this whole dispute by bringing an administrative action against Burgess. In other words, Burgess was the "defendant" in the administrative action. The doctrines of res judicata and collateral estoppel are available in court actions and administrative actions alike. (Hi-Desert Medical Center v. Douglas (2015) 239 Cal.App.4th 717, 724-726, 731 [agreeing with administrative law judges that administrative actions were barred by the res judicata effect of court litigation]; Asimow et al., Cal. Practice Guide: Administrative Law (The Rutter Group 2017) ¶ 10:20, p. 10-2 ["The doctrines of res judicata and collateral estoppel apply in administrative adjudication. As a result, . . . a prior judicial decision may preclude a subsequent administrative action."].) Thus, future parties in Burgess's place may assert collateral estoppel defensively in administrative actions brought by the Commission.
The Commission contends this case is like Baxter v. Salutary Sportsclubs, Inc. (2004) 122 Cal.App.4th 941, where the court described the plaintiff's action as "a textbook example of valueless litigation against a private party 'under the guise of benefiting the public interest.'" (Id. at p. 946.) We are not persuaded that Baxter should guide our disposition. The plaintiff in Baxter sued a health club for violations of the "'health studio contracts law.'" (Id. at p. 943.) The trial court found the club's membership contracts violated the health studio contracts law in limited respects. (Id. at p. 946.) For instance, the contracts failed to place the cancellation address near the signature line and failed to state the three-day cancellation period did not include Sundays and holidays. (Ibid.) The trial court ordered the health club to give members who had signed nonconforming contracts the option of signing conforming contracts, but it declined to award any other relief or damages. (Id. at p. 944.) It found no evidence of damage to anyone because of the nonconforming contract. (Id. at p. 946.) The appellate court affirmed the trial court's decision to deny attorney fees. (Id. at pp. 944-948.) "[I]t strain[ed] candor to characterize the scant relief afforded by" the action "as a 'significant benefit,'" regardless of the number of members in the club. (Id. at p. 946.) Further, there was no evidence of how many members received the offer to sign new conforming contracts, and no evidence that the nonconforming contracts had adversely affected anyone, including the plaintiff. (Ibid.) As such, the litigation over "niggling statutory violations" had not "conferred a significant benefit on anyone, much less a large segment of the public." (Id. at pp. 947-948.)
The declaration of a due process violation in this case is far from the niggling statutory violations in Baxter, and we would not characterize the judgment as affording scant relief. Moreover, as we have discussed, the Commission is a public agency whose actions affect the general public, unlike the private health club in Baxter. In sum, the Commission has failed to show the trial court erred in awarding attorney fees. Ensuring that an agency empowered to enforce the law does so in a manner that comports with due process confers "a significant benefit . . . on the general public or a large class of persons." (Code Civ. Proc., § 1021.5.) B. The Court Did Not Abuse Its Discretion in Calculating the Amount of Fees
The Commission contends that even if Burgess was entitled to attorney fees, no evidence supported $54,007 of the fee award. It argues Burgess offered no explanation for the "gaping discrepancy" between the $214,163 counsel billed to Burgess, and the $268,170 Burgess was seeking. We again disagree. The record was sufficient to support the court's calculation of the fee award.
Like the decision whether to award attorney fees, we review the amount of fees awarded for abuse of discretion. (La Mirada Avenue Neighborhood Assn. of Hollywood v. City of Los Angeles (2018) 22 Cal.App.5th 1149, 1156.) The trial court must "first determine a 'touchstone' or 'lodestar' figure based on a 'careful compilation of the time spent and reasonable hourly compensation for each attorney . . . involved in the presentation of the case.' [Citations.] That figure may then be increased or reduced by the application of a 'multiplier' after the trial court has considered other factors concerning the lawsuit." (Press v. Lucky Stores, Inc., supra, 34 Cal.3d at p. 322.) While the court has discretion to fix the amount of the fee award, the amount must bear some reasonable relationship to the lodestar figure. (Id. at p. 324.)
Here, counsel's declaration in support of the attorney fee motion explained the $54,007 difference between the fees billed and the fees sought—the lower amount was based on the significantly reduced hourly rates, and the higher amount was based on the reasonable hourly rate for the attorneys. It is clear from the court's comments at the hearing that it saw this explanation and did not see any gaping discrepancy. ("What they say is that what we were charging our client is less than the market rate for our services, and therefore—although the bills to our client only totaled this lesser number, the market rate would justify an award of the greater number.") And, there was no abuse of discretion in using the higher rate to award fees. When a firm accepts reduced rates from a client, the court may still award the reasonable market rate for counsel's services. (Center for Biological Diversity v. County of San Bernardino (2010) 188 Cal.App.4th 603, 619.)
The Commission asserts that even if the court accepted counsel's explanation, Burgess and his counsel did not provide an accounting of the higher lodestar figure. But the evidence in support of the motion provided all that was necessary to calculate the lodestar (the number of hours and reasonable hourly rate). The two attorneys who provided declarations stated their normal hourly rate before reductions was $425. The firm also provided its billing statement, which showed the number of hours billed by each person. To the extent the $54,007 difference included the time of other attorneys whose normal hourly rate was not identified, the court already deducted all time for those attorneys because the moving papers did not describe them and their experience. Although the declarations did not identify the normal hourly rate for the paralegal or law clerk, according to counsel's declaration, the higher lodestar amount was based on the attorneys' normal hourly rate, not a higher rate for the nonattorney personnel. In short, the court had all the facts it needed to support the higher lodestar amount. The Commission has not shown an abuse of discretion.
IV. DISPOSITION
The order is affirmed. Burgess shall recover his costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
FIELDS
J. We concur: RAMIREZ
P. J. SLOUGH
J.