Opinion
A162702
03-01-2023
DIRECT ACTION EVERYWHERE SF BAY AREA, Plaintiff, Cross-Defendant, and Appellant, v. DIESTEL TURKEY RANCH, Defendant, Cross- Complainant, and Respondent. WAYNE HANSEN HSIUNG, Cross-Plaintiff and Appellant,
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. RG17847475
RICHMAN, J.
This is the second appeal in this case, which began when Appellant Direct Action Everywhere SF Bay Area (Direct Action), an activist organization, sued respondent Diestel Turkey Ranch (Diestel), alleging it violated California's False Advertising Law and Unfair Competition Law. Diestel cross-complained against Direct Action and three individuals, including Wayne Hsiung, one of its founders, alleging trespass, conversion, and unlawful competition. An eight-day court trial was held before Alameda County Superior Court Judge Michael Markman, who, before he was able to prepare a statement of decision, left on indefinite medical leave. The case was reassigned to the Honorable Julia Spain, who offered the parties a choice of a mistrial or having her decide the case based on the transcripts, the evidence, and the trial briefs. They chose the latter alternative and signed a stipulation agreeing to that. Judge Spain thereafter issued a 29-page, singlespaced statement of decision finding in favor of Diestel on both the complaint and cross-complaint.
Direct Action appealed that decision, contending that Judge Spain erred in: (1) holding Direct Action lacked standing for its false advertising claims and (2) deciding the cross-complaint. In an opinion filed on February 27, 2023, we rejected the appeal. (Direct Action Everywhere SF Bay Area v. Diestel Turkey Ranch (Feb. 27, 2023, A162017) [nonpub. opn.].)
This second appeal arises from Judge Spain's four rulings on cost memoranda and motions for attorney fees. Both sides filed a memorandum of costs and Judge Spain ruled for Diestel on both memoranda, with one exception, taxing $4,950 from its memorandum. Both sides sought attorney fees, Diestel under Code of Civil Procedure sections 1033.5 and 1021.9 and Direct Action under section 1021.5. Judge Spain ruled for Diestel on the attorney fees issues, granting its claim for attorney fees and denying that of Direct Action.
All undesignated statutory references are to the Code of Civil Procedure.
Direct Action and Hsiung appeal the orders, and have filed separate briefs. Direct Action's brief makes essentially three arguments, that: (1) Diestel was not entitled to fees on the cross-complaint; (2) it, not Diestel, was the prevailing party on the cross-complaint; and (3) it was entitled to attorney fees under section 1021.5 under the catalyst theory. Hsiung's brief essentially adopts Direct Action's arguments. We reject the arguments and affirm the orders.
BACKGROUND
The Parties
Direct Action is an unincorporated association of animal activists, whose stated goal is to end all animal agriculture and meat consumption and the exploitation and killing of animals. It is the San Francisco chapter, one of many chapters funded through Friends of Direct Action Everywhere, a 501(c)(3) nonprofit corporation. Direct Action has no bank accounts, no assets, and no paid staff. All of its expenditures are paid by Friends of Direct Action Everywhere or by direct in-kind donations from volunteers. Hsiung is one of its founders.
Diestel is a California corporation in the business of commercial turkey production.
The Proceedings Below: The Lawsuit and the Decision
On January 30, 2017, Direct Action filed a complaint against Diestel alleging two causes of action, styled as follows: "Violation of California Unfair Competition Law-Cal. Bus. &Prof. Code, § 17200, et seq." and "Violation of California False Advertising Law-Cal. Bus. &Prof. Code, § 17500, et seq."
Following multiple demurrers, the case came at issue on the third amended complaint filed on May 21, 2018, which maintained two causes of action: (1) for false advertising, in violation of False Advertising Law and Business and Professions Code section 17500, and (2) for breach of Business and Professions Code section 17200, based on alleged fraud and unfair and unlawful conduct by such false advertising and by violating three criminal animal cruelty statutes (Penal Code sections 597, subdivision (b), 597.1, subdivision (a)(1), and former section 597f, subdivision (a)).
Meanwhile, on December 8, 2017, Diestel filed a cross-complaint, naming as cross-defendants Direct Action and three individuals, Hsiung, Leslie Goldberg, and Michael Goldberg (when referred to collectively, crossdefendants). The cross-complaint alleged claims for trespass, conversion, and unlawful competition. It also sought an injunction to prohibit the unlawful business practice of promoting trespass (a violation of Penal Code section 484) and conversion or burglary in open rescues from Diestel's farms and ranches (a violation of Penal Code section 484 and/or 459). The crosscomplaint sought general damages, punitive damages, restitution, and attorney fees.
In September and November 2018, Direct Action made section 998 offers (998 offers) to Diestel on the cross-complaint.
On December 28, 2018, the case was reassigned to Judge Markman, who on January 22, 2019, entered a trial setting order bifurcating the complaint from the cross-complaint and setting an October 2019 trial date for the complaint and a January 2020 trial date for the cross-complaint.
On October 11, a bench trial commenced before Judge Markman. It proceeded for eight days, ending on December 11, during which some 150 exhibits were introduced. Despite the bifurcation order, the trial apparently included evidence relevant to Diestel's cross-complaint. The parties filed written closing arguments, and on February 24, 2020, Judge Markman ordered the matter submitted.
At some point not apparent in the record, Judge Markman went on medical leave.
On March 16, the presiding judge of the Alameda Superior Court issued a notice of reassignment to Judge Spain. On April 3, Judge Spain ordered that a case management statement be filed no later than June 10, which order stated that "Any delay in trial, caused by non-compliance with any order contained herein, shall be the subject of sanctions pursuant to [section] 177.5."
Then, on May 5, Judge Spain emailed the parties to inform them that it was probable that she would need to declare a mistrial unless the parties were able to stipulate to some other resolution. The email reads in pertinent part as follows:
"Dear Counsel, . . .
"On March 16, this case was reassigned to me because Judge Markman in on an extended medical leave of absence. From review of the file, it appears you had a [three to four] day court trial in December and the matter was taken under submission for issuance of a decision on February 24. Due to his illness, Judge Markman was unable to render his decision. It also appears that witnesses were called at the trial and briefs were submitted. Since I did not hear the trial nor have the opportunity to hear and observe the witnesses, it is probable I will have to declare a mistrial in this case. Before I do so in light of the time, effort and expense that has already gone into this matter, I wanted to touch base with you to see if there were any stipulations you could agree upon which might obviate the need for a mistrial. For example, it appears the matter was recorded by a Certified Shorthand Reporter. Perhaps you could stipulate that I could read the record and all the briefs and render a decision based on that...."
On May 13, counsel for all parties signed a "Stipulation Re Submission of Plaintiff's Unfair Competition and False Advertising Claims on Record" (the Stipulation). Following numerous recitals, the Stipulation concludes as follows: "WHEREAS, this matter was reassigned to Judge Julia Spain on March 16, 2020; and, "WHEREAS, the Parties have met and conferred and agreed that, in order to avoid the declaration of a mistrial, the written record of this matter, including the docket, Court's Orders, pre-trial filings, trial transcript, evidence admitted at trial and post-trial briefing shall be submitted to Judge Spain for issuance of a decision on Plaintiff's TAC.
"THEREFORE, the Parties stipulate that Judge Julia Spain may, after review of the written record, including the pretrial briefs, complete trial transcripts, the evidence admitted by Judge Markman during the trial proceedings, post-trial briefs, and the docket in this action, issue a decision on Plaintiff's claims alleged in its TAC.
"IT IS SO STIPULATED."
On September 28, Judge Spain filed a 30-page, single-spaced proposed statement of decision and judgment that found for Diestel on both the complaint and the cross-complaint. The last two pages of the proposed statement of decision addressed the "cross-complaint," and began with these two paragraphs:
"Diestel's cross[-]complaint alleges cross-defendants [Direct Action] and Wayne Hsiung committed multiple acts of trespass onto its property between September and October 2015 and converted or stole two turkeys, which also is alleged to have constituted trespass to personal property. At trial, plaintiff's activists and Hsiung admitted visiting defendant's property at least nine times, illegally entering its barns six times and stealing six turkeys as part of what they deemed an 'open rescue.' As described in the plaintiff's Organizers Handbook, investigators such as Hsiung in this case, admit their actions and publish their full identities as acts of civil disobedience. As the leaders of civil disobedience over the decades have demonstrated, no one who practices civil disobedience can presume to avoid the consequences.
"The facts of Diestel's cross-complaint being undisputed, accordingly the court finds in favor of cross-complainant Diestel Turkey Ranch and against cross-defendants Direct Action Everywhere SF Bay Area and Wayne Hsiung as to the allegations of trespass and conversion of two turkeys. The court has found no record that the trial on the liability and damages of the cross-complaint was bifurcated and Diestel failed to present any evidence of damages at trial. Accordingly, the court awards nominal damages of $1 per 6 occasions of trespass and $1 per converted turkey for a total of $8 awarded to cross-complainant and against cross-defendants jointly and severally. Likewise no evidence or argument was presented on Diestel's claim for punitive damages and the court has found no record that it was bifurcated. It appears to have been abandoned." (Italics added.)
Judge Spain's proposed statement of decision stated at the top of the first page: "NOTICE: . . . Within 15 days after service of the proposed Statement of Decision, any party may serve and file objections."
On October 14, "Plaintiff Direct Action" filed objections to Judge Spain's proposed statement of decision. No objections were filed by any crossdefendant. And as significant to an issue in the earlier appeal, Direct Action did not respond to the italicized language in the proposed statement of decision, did not object that the decision on the cross-complaint was erroneous or void-in short, did not in any way object to the proposed statement of decision to the extent it disposed of the cross-complaint.
On November 23, Judge Spain filed her "Statement of Decision and Final Judgment," which, as noted, found for Diestel all the way. Direct Action appealed and, also as noted, we affirmed.
The Cost Memoranda and Motions to Tax
Following Judge Spain's decision, on December 8, Diestel filed a memorandum of costs seeking a total of $68,734.37, based on the contention it was the prevailing party on both the complaint and cross-complaint.
That same day, December 8, cross-defendants and Hsiung filed a memorandum of costs claiming they were the prevailing parties on the crosscomplaint, seeking a total of $4,694.01 in "post-offer costs." Their argument was as follows: "Cross-Defendants Direct Action Everywhere SF Bay Area and Wayne Hsiung served [section] 998 offers on [Diestel] on September 18, 2018 and November 16, 2018 that were not accepted. Consistent with [section] 998[, subdivision] (c)(1), Cross-Defendants are entitled to their postoffer costs. Cross-Defendants are seeking only the costs that can be fairly attributable to the cross-claims that were addressed in the [section] 998 offer."
On December 23, cross-defendants filed a motion to strike or tax Diestel's costs. It was accompanied by a memorandum of points and authorities filed on behalf of "Plaintiff and Cross-Defendant Direct Action . . . and Cross-Defendant Wayne Hsiung." The motion did not argue that the judgment on the cross-complaint was erroneous or void. Rather, the motion sought to tax seven specific items: (1) deposition costs of $32,940.66; (2) $150 of costs for service on Hsiung; (3) $80 in witness fees for witnesses deposed in September 2019; (4) $3,888.23 in costs incurred for photocopying trial exhibits; (5) $20,583.72 in court reporter fees and transcript costs; (6) $9,326.76 in "other" costs; and (7) $4,950 in mediation costs.
A flurry of oppositions and replies ensued, which culminated on February 2, when cross-defendants filed their opposition to Diestel's motion to strike their cost bill, once again arguing they were the prevailing parties.
On February 4, Judge Spain entered an order that granted in part and denied in part Direct Action's motion to strike or tax, taxing $4,950 from Diestel's memorandum. And on February 17, she entered an order striking cross-defendants memorandum in its entirety.
Meanwhile, while the briefing on the costs memoranda was proceeding, both parties moved for attorney fees.
The Motions for Attorney Fees
On December 28, 2020, Diestel filed a motion for attorney fees based on sections 1033.5, subdivision (a)(10), and 1021.9, on the ground it prevailed on its cross-complaint for trespass. The motion sought a total of $72,848.25.
On January 22, 2021, Direct Action filed a motion for attorney fees under section 1021.5 and the catalyst theory. Direct Action argued that it was entitled to $1,541,006 in fees because its lawsuit was the catalyst through which it obtained its litigation objective for "Diestel to stop its false advertising."
Both parties filed oppositions to the others' motions, and both sides filed replies. The motions were set for hearing on February 17, prior to which Judge Spain had published tentative rulings. They were not contested, and by orders filed that same day Judge Spain granted Diestel's motion for attorney fees and denied that of Direct Action, giving comprehensive explanations supporting each ruling.
On February 18, Diestel served notices of entries of the orders. And on April 16, Direct Action and Hsiung filed a notice of appeal, checking that they were appealing an order after judgment, which notice attached copies of Judge Spain's four orders.
DISCUSSION
Introduction
There are two appellant's opening briefs filed here. The first was on May 20, 2022 on behalf of Direct Action, represented by two attorneys, one of whom (Gretchen Elsner) represented it below. The second was on May 31, filed by Hsiung, representing himself.
Based on a prior representation to this court (see opposition to motion to consolidate, pp. 4-5), on April 16, 2021 attorney Elsner, along with her cocounsel, substituted out as counsel for Hsiung.
Direct Action's brief begins with an "introduction" and "facts statement," following which it turns to its first argument, that "the trespass cross-complaint that was never heard or tried does not support a fees or costs award." To the extent this argument attempts to reassert the argument rejected in appeal No. A162017, it necessarily fails, and nothing more need to be said about it.
Hsiung's brief asserts that he "adopts Direct Action's opening brief." And its argument consists of two pages essentially arguing that Judge Spain's judgment on the cross-complaint was void. As indicated above, this issue was decided in appeal No. A162017, and will not be addressed here.
As to the substance of Direct Action's brief, following its claimed standard of review, the brief makes essentially three arguments: (1) "Diestel is not entitled to $72,848 in attorneys' fees because Judge Spain awarded only nominal damages"; (2) "Diestel rejected the more favorable [section] 998 offer; therefore Diestel is not entitled to any costs and instead must pay Direct Action's costs"; and (3) the lawsuit catalyzed Diestel to change its false advertising, benefitting the public, and thus "Direct Action satisfied the catalyst theory factors" and "satisfied the [section] 1021.5 standard."
The Attorney Fee Award For Diestel is Supported by the Law
Following Diestel's success on the cross-complaint, Diestel moved for attorney fees based on sections 1021.9 and 1033.5, subdivision (a)(10), the former of which provides as follows: "In any action to recover damages to personal or real property resulting from trespassing on lands either under cultivation or intended or used for the raising of livestock, the prevailing party shall be entitled to reasonable attorney's fees in addition to other costs, and in addition to any liability for damages imposed by law."
Section 1033.5, a cost statute, provides that among the items allowable as costs are: "(10) Attorney's fees, when authorized by any of the following: [¶] . . . [¶] (B) Statute. [¶] (C) Law."
The motion sought $72,848.25, and Judge Spain awarded it. Doing so, she found that Diestel had prevailed on its cross-complaint for trespass because it "proved by a preponderance of the evidence that cross-defendants . . . trespassed multiple times upon its property and committed theft," which she held "had resulted in actual damage to [Diestel's] personal property, to-wit: the loss of 6 turkeys." And, she concluded, cross-defendants' reliance on Belle Terre Ranch, Inc. v. Wilson (2015) 232 Cal.App.4th 1468 (Belle Terre)- the case they rely on here-did not apply.
Citing only that case and several treatises, Direct Action asserts the award cannot stand, arguing as follows: "Numerous treatises agree: 'Fees cannot be recovered unless there has been actual compensable injury supported by an award of actual and not merely nominal damages.' (Miller and Starr California Real Estate § 40:67.) An 'award of nominal damages to vineyard owner, without proof of injury to property caused by trespass of adjoining landowner, did not support award of attorney' fees.' (Witkin, Cal. Proc. 5th Judgment § 230, Actions Involving Real Property or Environmental Issues (2020).) '[A]ttorney's fees on a trespass claim requires proof of a tangible harm done to real or personal property as a result of the trespass. An award of nominal damages cannot support the fee award.' (Cal. Judges Benchbook Civ. Proc. Before Trial § 14.32, Procedure for Issuance.) An 'award of nominal damages cannot support fee award.' (Cal. Judges Benchbook Civ. Proc. Trial § 16.96, Specific Statutes Authorizing Fees.)" We are not persuaded.
To begin with, section 1021.9 does not delineate between the type of damages awarded in a trespass action, but rather states that a party "shall be" entitled to its fees and costs when it prevails in an action for damages to its personal or real property resulting from trespass. Here, Diestel prevailed on its trespass claim and was awarded nominal damages as compensation for the actual damage it suffered to its personal property, i.e., the theft of turkeys cross-defendants admitted to removing without permission.
As noted, cross-defendants relied below, and rely here, on Belle Terre, supra, 232 Cal.App.4th 1468. It is unavailing. Belle Terre did not hold that attorney fees under section 1021.9 are never available in connection with an award of nominal damages. Rather, the court found that the parties were "primarily litigating a boundary dispute," and that the nominal damages awarded to the plaintiff were "intended to redress intangible harm to the 'dignitary of interests' of the landowner personally, and not injury to the land or to his personal property." (Belle Terre, supra, 232 Cal.App.4th at pp. 1476-1477, italics added.) In short, the court held there was "no evidence of any actual damage to Belle Terre's property that would trigger the provisions of section 1021.9." (Id. at p. 1477.) As Judge Spain held, the situation here is different: "[t]respass in order to steal turkeys is an injury to personal property, not an intangible harm to 'dignitary interests.' "
Judge Spain awarded nominal damages for the theft of the turkeys because she had no evidence from which to assess their monetary value, stating that if she had such evidence, she would have awarded their monetary value. In other words, Judge Spain found that Diestel had suffered actual damage to its property, but simply had not established the amount of that damage. In short, even in the language of the treatises on which Direct Action relies, Diestel suffered "actual compensable injury," "injury to property caused by trespass," or "proof of a tangible harm done to real or personal property."
Citing Chavez v. City of Los Angeles (2010) 47 Cal.4th 970, 989 (Chavez), cross-defendants claim that Judge Spain should have exercised her discretion to deny Diestel fees because it could have filed its cross-complaint as a limited civil action or in small claims court. Judge Spain did not err- and certainly did not abuse her discretion.
As an initial matter, Chavez analyzes the court's discretion to deny an award of attorney fees as costs under section 1033, subdivision (a) and the Fair Employment and Housing Act, not under section 1021.9. (Chavez, supra, 47 Cal.4th at p. 986.) It is therefore inapplicable.
Moreover, contrary to cross-defendants' contention, Diestel could not have brought its cross-complaint as a limited civil action or in small claims court, for at least two reasons. First, Diestel sought, and obtained, a permanent injunction, something that is not available in a limited jurisdiction or small claims action. (§ 86 [limited civil courts only vested with power to grant temporary restraining orders and preliminary injunctions, not permanent injunction].)
Second, Diestel's claims in the cross-complaint were compulsory counter claims that had to be asserted in Direct Action's action, pursuant to section 426.30, which provides that "if a party . . . fails to allege in a crosscomplaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded." When determining whether actions are related, courts look to whether there was a logical relationship between the underlying facts. Here, Direct Action's complaint and Diestel's cross-complaint arose out of the same events: Diestel's trespass claims centered on cross-defendants' "open rescues" activities, the same open rescues from which Direct Action gathered its purported evidence regarding Diestel's alleged false advertising.
A related cause of action is "a cause of action which arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint." (§ 426.10, subd. (c).)
The Costs Awarded are Supported by the Record
Judge Spain found Diestel to be the prevailing party both as to the complaint and cross-complaint, and thus awarded Diestel its costs (with one exception) and denied Direct Action's request for costs. Direct Action argues this was error, asserting that "Diestel rejected the more favorable [section] 998 offer, therefore Diestel is not entitled to any costs and instead must pay Direct Action's costs." Direct Action is wrong.
Section 998 provides in pertinent part that "If [a section 998] offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant's costs from the time of the offer." (§ 998, subd. (c)(1).) Here, Judge Spain found that Diestel obtained a more favorable judgment than the section 998 offers for two reasons: (1) Diestel's monetary recovery, including costs (alone) and attorney's fees exceeded the $801 offered in the 998 offers, and (2) Diestel obtained a more favorable injunctive relief award that what cross-defendants offered.
We review a determination that a party obtained a more favorable judgment for abuse of discretion. (Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175, 196; Arias v. Katella Townhouse Homeowners Assn., Inc. (2005) 127 Cal.App.4th 847, 854.) As to what such showing of such abuse requires, it has been described in terms of a decision that "exceeds the bounds of reason" (People v. Beames (2007) 40 Cal.4th 907, 920), or one that is arbitrary, capricious, patently absurd, or even whimsical. (See, e.g., People v. Bryant, Smith and Wheeler (2014) 60 Cal.4th 335, 390 ["' "arbitrary, capricious, or patently absurd"' "]; People v. Benavides (2005) 35 Cal.4th 69, 88 [ruling"' "falls 'outside the bounds of reason'"' "]; People v. Linkenauger (1995) 32 Cal.App.4th 1603, 1614 ["arbitrary, whimsical, or capricious"].) In its observation on the subject in a leading case, our Supreme Court said that "A ruling that constitutes an abuse of discretion has been described as one that is 'so irrational or arbitrary that no reasonable person could agree with it.'" (Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 773.) Or, as that court put it in its most recent definition, "arbitrary or irrational." (In re White (2020) 9 Cal.5th 455, 470.)
Those adjectives hardly describe Judge Spain's rulings here.
As to Judge Spain's first reason, section 998 provides that, "[i]n determining whether the plaintiff obtains a more favorable judgment, the court or arbitrator shall exclude the post-offer costs." (§ 998, subd. (c)(2)(A).) "By specifying post-offer costs are excluded for purposes of determining whether plaintiff obtained a more favorable judgment, the statute necessarily implies pre-offer costs are included." (Martinez v. Eatlite One, Inc. (2018) 27 Cal.App.5th 1181, 1184 [emphasis in original].) Moreover, pre-offer costs are factored into plaintiff's total recovery when the section 998 offer specifies that each party is to bear its own costs. (See Stallman v. Bell (1991) 235 Cal.App.3d 740, 749-751 ["Where, as here, a plaintiff's offer includes waiver of costs and the defendant rejects the offer, thereby forcing the matter to a trial, allowing the plaintiff to add costs to the award of damages to determine whether the judgment exceeds the offer is consistent with the statutory purpose"].) Finally, pre-offer costs include recoverable attorney fees when determining which party obtained the more favorable relief for purposes of a section 998 offer. (See Heritage Eng'g Const. v. City of Industry (1998) 65 Cal.App.4th 1435, 1439-1442; § 1033.5, subd. (a)(10).)
Judge Spain found that Diestel incurred a total of $38,865.26, $1,259.51 in in pre-offer costs and $37,605.75 in attorney fees, a recovery that far exceeded the $801 offered by cross-defendants.
And as to the second reason, cross-defendants' 998 offers addressed injunctions that applied to only two of Diestel's properties, had a three-year time limitation, and made no mention of future open rescue tactics. Thus, such offers had to be evaluated in light of the setting where the section 998 offer "includes a nonmonetary component," in which setting "the offer must be evaluated in light of all the terms and conditions attached to that offer and not simply the monetary amount of the offer." (Barella v. Exch. Bank (2000) 84 Cal.App.4th 793, 800.)
As Judge Spain described it, and then decided: "The primary relief which cross-complainants sought was a permanent injunction prohibiting Cross-defendants from any further acts of trespass. This was essential from Cross-complainants['] point of view in order to protect the health and safety of their thousands of turkey flocks from biohazards and contamination as explained by Cross-complainant's expert witness. In their [section] 998 offer, Cross-defendants limited the injunction to three years, applicable to only 2 out of cross-complainant's 8 to 10 locations. In contrast, as the prevailing party at trial, [Diestel] obtained a permanent injunction applicable to all its locations of indefinite duration which can only be modified by the court upon noticed motion. Civil Code [section] 3424[, subdivision] (a). [¶] Accordingly, pursuant to section 1021.9, cross-complainant is entitled to recover fees and costs from cross-defendants as the prevailing party."
Direct Action claims that the permanent injunction issued by the court is "unconstitutionally vague." However, the injunction included in the judgment is not part of this appeal, which is from the fees and costs orders, not the judgment.
Direct Action argues that Diestel was obligated to respond to its 998 offer with a counter-offer identifying all its real property locations. But no authority supports that position. Prince v. Invensure Ins. Brokers, Inc. (2018) 23 Cal.App.5th 614, the only case cited, does not stand for that proposition, but rather discusses the interpretation of an offer that is ambiguous on whether it offers to dispose of the entire action or simply the underlying complaint. (Id. at pp. 622-623.) Direct Action's offers were not ambiguous.
Turning to specific items in Diestel's cost memorandum, Direct Action argues that Judge Spain erred in awarding four items of costs: (1) $32,940 in deposition costs; (2) $20,583 in reporter's fees for transcripts; (3) $3,888 for the preparation of trial exhibits; and (4) an unspecified amount of costs for purported "convenience fees" related to court filings and courtesy copies to departments at the court.
We review Judge Spain's determinations of which costs are reasonably necessary and reasonable in amount for abuse of discretion. (Seever v. Copley Press, Inc. (2006) 141 Cal.App.4th 1550, 1557.) And find none.
Direct Action challenges certain deposition costs it contends were unreasonable, citing to section 1033.5, subdivision (c)(3), which requires that "allowable costs shall be reasonable." But that section also specifically permits the recovery of costs for "[t]aking, video recording, and transcribing necessary depositions, including an original and one copy of those taken by the claimant and one copy of depositions taken by the party against whom costs are allowed." (§ 1033.5, subd. (a)(3)(A).)
"The necessity for a deposition and for the related expenditures is a question for the trial court's discretion. [Citation.] The burden of proof that the deposition was unnecessary . . . is on the party seeking to have that item taxed....[Citation.]" (County of Kern v. Ginn (1983) 146 Cal.App.3d 1107, 1113.) Further, the party challenging an award of deposition costs must support their argument by affidavit or declaration. (Id. at pp. 1113-1114.) Here, Direct Action failed to provide any declaration with its motion to tax, reason alone to affirm award of these costs to Diestel.
Direct Action objected to the extended hour surcharge and the preparation of a draft deposition transcript for the deposition of its expert Sanjay Hukku and the depositions of three witnesses, Joy Ann Mench, Mark Bland, and J. Emelio Esteban. However, Judge Spain found that Diestel's "opposition papers demonstrate that these depositions were reasonable and necessary, even if the witnesses did not ultimately testify at trial, and that the length of the depositions were reasonable under the circumstances."
Again, Direct Action fails to show how this finding amounts to an abuse of discretion. In any event, simply because a deponent is not called to testify at trial, does not mean his or her deposition was unnecessary for trial preparation. (Moss v. Underwriters' Report, Inc. (1938) 12 Cal.2d 266, 275-276 ["the fact that the plaintiff did not offer [depositions] as evidence upon the trial does not necessarily indicate that he could have safely proceeded to trial without them"].)
Moreover, Diestel produced a declaration of its attorney that the deposition costs were reasonable. For instance, Diestel's attorney stated that an expedited rough draft of Hukku's deposition was necessary to prepare motions in limine, and the extended time was necessary for Diestel to fully examine Hukku, which it was entitled to do as a matter of law. (Bonds v. Roy (1999) 20 Cal.4th 140, 146.) Similarly, Diestel's attorney explained that the depositions of some of its witnesses was necessary due to the erratic and extended trial schedule; and another deposition was necessary given Direct Action's refusal to abandon its claims regarding the alleged presence of illegal and improper chemical residue found in Diestel's turkey products.
Direct Action asserts that the $20,583 in court reporter fees and transcript costs were "expressly disallowed costs," citing to section 1033.5 that lists "transcripts of court proceedings not ordered by the court" as an item not allowable. (§ 1033.5, subd. (b)(5).) This argument misconstrues the law and the facts.
To begin with, section 1033.5 subdivision (a)(11), provides that court reporter fees, as opposed to transcript costs, are recoverable. (Chaaban v. Wet Seal, Inc. (2012) 203 Cal.App.4th 49; see also Cal. Rules of Court, rule 2.956(c)(1) [court reporter fees incurred under this section are recoverable as costs].) Moreover, Judge Spain held that these transcripts were necessary for her to decide the case after the parties stipulated that she could issue an opinion based on the transcripts and evidence.
Direct Action argues that Judge Spain erred in granting Diestel costs associated with the preparation of exhibit binders when approximately 50 percent of those exhibits were not offered into evidence. Section 1033.5 specifically permits "[m]odels, the enlargements of exhibits and photocopies of exhibits, and the electronic presentation of exhibits, including costs of rental equipment and electronic formatting" as allowable costs "if they were reasonably helpful to aid the trier of fact." (§ 1033.5, subd. (a)(13).) Here, Judge Spain found those costs were reasonable. Diestel was required to assemble all potential evidence for trial to respond to Direct Action's case. Moreover, rule 3.35(b) of the Alameda County Local Rules required Diestel to prepare an index and provide Direct Action's counsel with a copy of all exhibits prior to trial.
Finally, Direct Action challenges Diestel's costs incurred in hiring service companies to print and deliver courtesy copies to the court as required by Alameda County Local Rule 3.30(c). But in its motion to strike, and its opening brief, Direct Action failed to identify the specific delivery filing fees it challenges, in violation of California Rules of Court, rule 3.1700(b)(2): "[u]nless objection is made to the entire cost memorandum, the motion to strike or tax costs must refer to each item objected to by the same number and appear in the same order as the corresponding cost item claimed on the memorandum of costs and must state why it is objectionable." In any event, these fees were incurred to comply with Alameda County Local Rules regarding courtesy copies to departments.
Judge Spain Properly Denied Attorney Fees to Direct Action
Direct Action's final argument is that its lawsuit catalyzed Diestel to change its false advertising, thus benefitting the public, and catalyst fees are merited. After contending that Judge Spain committed "legal error" and "factual error," its final argument asserts that "Direct Action satisfied the catalyst theory factors" and that it had "satisfied the [section] 1021.5 standard." Hardly.
By way of brief background, on January 22, 2021, Direct action filed a motion for attorneys' fees under section 1021.5 (section 1021.5) and the catalyst theory. Direct Action argued that it was entitled to $1,541,006 in fees because its lawsuit was the catalyst through which it obtained its litigation objective for "Diestel to stop its false advertising."
Judge Spain denied Direct Action's motion, concluding that its catalyst theory contention was "supported by neither the facts nor the law." Among other things, she concluded that Direct Action "was not the 'successful' party under section 1021.5 because the lawsuit was unreasonable and lacked merit and [Direct Action] failed to obtain the primary relief sought." She also made the factual findings that "[a]t trial and in practical effect, [Direct Action] failed to bring about any meaningful change in [Diestel's] marketing practices," noting that at the trial and in its briefs, Direct Action claimed that six elements of Diestel's advertising were false and misleading, and Direct Action had "produced no admissible evidence that [Diestel] is still not using all of these terms."
Judge Spain went on to hold that even if Direct Action had established it was a "successful party," it failed to show its litigation served to vindicate an important public right as required under section 1021.5. As she put it, even if Direct Action were the "successful party . . . the court would not have used its discretion to award [Direct Action] attorney's fees because of its illegal and unscrupulous tactics," noting as follows: "[Direct Action's] criminal actions of trespass and theft cannot be sanctioned by the court as legitimate 'discovery' tactics. [Direct Action's] strategy of releasing a false and misleading video without any disclosure of the much larger context and publishing a false and misleading press release containing unfounded accusations of the use of toxic and even hallucinogenic drugs in [Diestel's] turkeys are tactics which cannot be sanctioned by the court through an award of attorney's fees.... To sue for fraud and then use fraudulent tactics in furtherance of the accusation is not something this court is prepared to regard with a blind eye. If [Direct Action] wishes to anoint itself as the self-righteous crusader for truth in advertising, then it must hold itself to a standard of honesty and integrity in its representations which is above reproach." And so Judge Spain concluded, "[i]n short, [Direct Action] now seeks to be rewarded for having used criminal and falsely misleading tactics in pursuit of its goal of stopping [Diestel's] alleged false advertising for filing a lawsuit which it had no legal right to pursue as to one cause of action and no facts in support of the other." This part of Judge Spain's decision is the focus of the amicus brief filed by Impact Fund, which expresses concern about the holding. This aspect of Judge Spain's decision plays no part in our holding here. And, of course, her decision can have no precedential effect.
That conclusion is supported by the record here.
Section 1021.5 provides in pertinent part: "Upon motion, a court may award attorneys' fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (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 . . . by one public entity against another public entity, 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...."
"A court may award attorney fees under section 1021.5 only if the statute's requirements are satisfied." (Vasquez v. State of California (2008) 45 Cal.4th 243, 250.)
We recently confirmed the law on section 1021.5, in Artus v. Gramercy Towers Condominium Assn. (2022) 76 Cal.App.5th 1043 (Artus), where, like here, the trial court denied attorney fees. We affirmed, in a decision that began with this lengthy exposition of the law:
"In Karuk [Tribe of Northern California v. California Regional Water Quality Control Bd., North Coast Region (2010)] 183 Cal.App.4th 330 [(Karuk)], we discussed at length section 1021.5 and its operation, included within which was this explanation how an award made pursuant to this statute is reviewed: '" 'The Legislature adopted section 1021.5 as a codification of the private attorney general doctrine of attorney fees developed in prior judicial decisions. . . . [T]he private attorney general doctrine "rests upon the recognition that privately initiated lawsuits are often essential to the effectuation of the fundamental public policies embodied in constitutional or statutory provisions, and that, without some mechanism authorizing the award of attorney fees, private actions to enforce such important public policies will as a practical matter frequently be infeasible." Thus, the fundamental objective of the doctrine is to encourage suits enforcing important public policies by providing substantial attorney fees to successful litigants in such cases.' [Citation.]"' (Karuk, supra, 183 Cal.App.4th at p. 362.)
" 'Put another way, courts check to see whether the lawsuit initiated by the plaintiff was "demonstrably influential" in overturning, remedying, or prompting a change in the state of affairs challenged by the lawsuit. (E.g., Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668, 687; RiverWatch v. County of San Diego Dept. of Environmental Health (2009) 175 Cal.App.4th 768, 783; Lyons v. Chinese Hospital Assn. (2006) 136 Cal.App.4th 1331, 1346, fn. 9.)" 'Entitlement to fees under [section] 1021.5 is based on the impact of the case as a whole.'" (Punsly v. Ho (2003) 105 Cal.App.4th 102, 114, quoting what is now Pearl, Cal. Attorney Fee Awards (Cont.Ed.Bar 2d ed. 2008) § 4.11, p. 100.) As for what constitutes a "significant benefit," it "may be conceptual or doctrinal, and need not be actual and concrete, so long as the public is primarily benefited." (Planned Parenthood v. Aakhus (1993) 14 Cal.App.4th 162, 171.)
" 'Thus, a trial court which grants an application for attorney fees under section 1021.5 has made a practical and realistic assessment of the litigation and determined that (1) the applicant was a successful party, (2) in an action that resulted in (a) enforcement of an important right affecting the public interest and (b) a significant benefit to the general public or a large class of persons, and (3) the necessity and financial burden of private enforcement of the important right make an award of fees appropriate. . . .'
"Applying those rules, we went on in Karuk to reverse an award of $138,000 in attorney fees, concluding that three of the statutory requisites to an award under section 1021.5 were absent. (Karuk, supra, 183 Cal.App.4th at p. 364.)" (Artus, supra, 76 Cal.App.5th at pp. 1055-1056.)
Like Artus, and like numerous other cases, Judge Spain denied section 1021.5 attorney fees. We review that decision for abuse of discretion. (Canyon Coast Conservancy v. County of Los Angeles (2020) 46 Cal.App.5th 398, 408-409; see generally PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.) And find no abuse.
Judge Spain's ruling was right for several reasons. Three should suffice.
First, section 1021.5 holds that a court "may award" attorney fees to "a successful party." Direct Action was not successful-it lost. As one Court of Appeal put it, "None of the cases applying the catalyst theory involved situations in which an adverse judgment has already been rendered against the party seeking attorney fees." (Coalition for a Sustainable Future in Yucaipa v. City of Yucaipa (2015) 238 Cal.App.4th 513, 524 (City of Yucaipa).) Or another, which noted the catalyst theory is not available "when a claim lacks legal merit." (Skaff v. Rio Nido Roadhouse (2020) 55 Cal.App.5th 522, 528.) In short, Direct Action not only failed to obtain its requested relief, it had judgment entered against it.
Second, is the case of Tipton-Whittingham v. City of Los Angeles (2004) 34 Cal.4th 604 (Tipton-Whittingham), where our Supreme Court held that California "continues to recognize the catalyst theory," going to hold as follows:
"In order to obtain attorney fees without such a judicially recognized change in the legal relationship between the parties, a plaintiff must establish that (1) the lawsuit was a catalyst motivating the defendants to provide the primary relief sought; (2) that the lawsuit had merit and achieved its catalytic effect by threat of victory, not by dint of nuisance and threat of expense, as elaborated in Graham[v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553]; and (3) that the plaintiffs reasonably attempted to settle the litigation prior to filing the lawsuit." (Tipton-Wittingham, supra, 34 Cal.4th at p. 608.)
Even if the catalyst theory were applicable despite the adverse judgment, Direct Action cannot recover its fees because it did not qualify as a "successful party" under the elements set forth in Tipton-Wittingham. In particular, Direct Action failed to establish that its lawsuit was a catalyst motivating Diestel "to provide the primary relief sought." (Tipton-Wittingham, supra, 34 Cal.4th at p. 608; see Marine Forests Society v. California Coastal Comm. (2008) 160 Cal.App.4th 867, 878, citing Bowman v. City of Berkeley (2005) 131 Cal.App.4th 173, 177-178.) To that end, "a plaintiff must establish the precise factual/legal condition that it sought to change or affect as a prerequisite for establishing the catalytic effect of its lawsuit." (City of Yucaipa, supra, 238 Cal.App.4th at p. 521.)
Here, Direct Action failed to demonstrate it achieved its primary litigation objective. Indeed, by its own admission-and as held by Judge Spain-Direct Action's primary litigation objective was to obtain an injunction that required Diestel to stop using six statements that Direct Action contended were false or misleading. It failed to obtain that injunction. In addition, Judge Spain found Direct Action "failed to bring about any meaningful change in [Diestel's] marketing practices," a finding amply supported by the record, including the declarations of Jason Diestel and Heidi Orrock.
Direct Action argues that the timing of Diestel's purported "change [of] its advertising campaign" on the eve of trial "gives rise to the inference that the litigation was a substantial factor in contributing to Diestel's change." That was not the inference drawn by Judge Spain, who found that Direct Action failed to introduce any admissible evidence that Diestel no longer employed those six statements.
Judge Spain found that the declaration of Almira Tanner submitted by Direct Action in support of its motion contained inadmissible hearsay and was vague and ambiguous. Direct Action fails to show that Judge Spain abused her discretion in finding the declaration inadmissible. Instead, Direct Action simply argues, without any citation to authority, that Judge Spain should have held an "evidentiary hearing in order to clear up the court's confusion." There is no support for any such claim.
Third, is the holding in Graham v. Daimler Chrysler Corp., supra, 34 Cal.4th 553, 560-561, the companion case to Tipton-Wittingham. There, the Court held that "in order to be eligible for attorney fees under section 1021.5, a plaintiff must not only be a catalyst to defendant's changed behavior, but the lawsuit must have some merit . . . and the plaintiff must have engaged in a reasonable attempt to settle its dispute with the defendant prior to litigation." (See also Abouab v. City and County of San Francisco (2006) 141 Cal.App.4th 643, 666.) Direct Action has not demonstrated the requisite "reasonable attempt to settle." The only reference in its brief is to CT 1041-1042, but this is to allegations in its complaint. It is not evidence.
In addition to all the above is the observation by our Supreme Court, that "in determining litigation success, courts should respect substance rather than form, and to this extent should be guided by 'equitable considerations.'" (Hsu v. Abbara (1995) 9 Cal.4th 863, 877.) In short, abuse of discretion it is, along with equity. Direct Action has not shown any inequity in Judge Spain's ruling here. And most fundamentally, it has shown no abuse of discretion.
DISPOSITION
The orders of February 4, 2021 and February 17, 2021 are affirmed. Diestel shall recover its costs on appeal.
We concur: Stewart, P.J., Miller, J.