Opinion
G057780
01-13-2021
JOHN DOE, Plaintiff and Respondent, v. JOHN ROE et al., Defendants and Appellants.
Munger, Tolles & Olson, Hailyn J. Chen and John B. Major for Defendants and Appellants. Hathaway Parker, Mark M. Hathaway and Jenna E. Parker 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 30-2018-00968408) OPINION Appeal from a postjudgment order of the Superior Court of Orange County, Glenn R. Salter, Judge. Reversed and remanded. Munger, Tolles & Olson, Hailyn J. Chen and John B. Major for Defendants and Appellants. Hathaway Parker, Mark M. Hathaway and Jenna E. Parker for Plaintiff and Respondent.
* * *
John Roe and Jane Roe, researchers at the University of California, Irvine (UCI), appeal from the trial court's order denying their request for attorney fees after the court granted their special motion to strike John Doe's complaint under the anti-SLAPP statute. (Code Civ. Proc., § 425.16.) The court at the fee hearing and in its order made thoughtful observations about the significance of a third party's payment of attorney fees for the Roes here. Those considerations included the potential risk of an appearance of biasing the Roes in favor of the third party—UCI—if UCI subsequently reinitiated disciplinary proceedings against Doe, a student there.
All further undesignated statutory references are to this code. "SLAPP is an acronym for 'strategic lawsuit against public participation.'" (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 732, fn. 1.) --------
Nevertheless, Doe cites no authority prohibiting an attorney fee arrangement in which payment is made by a third party. Doe does not establish—and nothing in the record suggests—that UCI's payment of attorney fees on behalf of the Roes was illegal or otherwise improper or prohibited. Under these circumstances, we must conclude the general rule applies in which anti-SLAPP defendants are entitled to attorney fees for a successful motion to strike, even "if the fees were paid by a third party." (Macias v. Hartwell (1997) 55 Cal.App.4th 669, 675 (Macias).) We therefore reverse the order denying fees altogether, and remand for the trial court to consider granting the Roes an attorney fees and cost award in an amount which is within the court's sound discretion.
FACTUAL AND PROCEDURAL BACKGROUND
Doe, who according to his complaint "was, at all [relevant] times . . . , a successful Ph.D. graduate student" in an unspecified field at UCI, filed the underlying lawsuit against the Roes after Doe established by a writ of administrative mandate that disciplinary proceedings UCI initiated against him were procedurally flawed. UCI had found Doe in the underlying disciplinary proceedings "responsible for violating the University of California Policies Applying to Campus Activities, Organizations and Students ('PACAOS')."
UCI agreed in confessing judgment in the mandate proceedings that "John Doe's Petition for Writ of Mandamus should be granted in that a peremptory writ of administrative mandate should issue commanding the University to reconsider its action." UCI stipulated that, "[o]n remand, [it] shall reconsider its action and take any further action specially enjoined on it by law; but nothing in this Confession of Judgment . . . shall limit or control in any way the discretion legally vested in the University." The trial court issued the writ of mandate consistent with these terms in January 2018.
That same month, Doe filed this action against the Roes. The Roes are not related; instead, according to the complaint, John Roe "was at all [relevant] times . . . an assistant professor at [UCI] . . . responsible for a research laboratory where Jane Roe conducted research, and was the supervisor of graduate student defendant Jane Roe." According to Doe, the Roes caused UCI to initiate the underlying, unfounded disciplinary proceedings against him by "fil[ing] fraudulent claims against Plaintiff with the [UCI] police department and the University Title IX office, knowing that such claims were made without probable cause and were false and completely absurd." The claims included "that Plaintiff had a romantic interest in Defendant Jane Roe; that Plaintiff had been stalking Jane Roe for the previous four years, including hacking her computer and social media accounts; and more recently that Plaintiff had sabotaged Jane Roe's lab work."
According to Doe, the Roes made these false claims to campus police and UCI's gender discrimination watchdog in order to bolster "a fraudulent insurance claim, seeking to recover $25,376.74" in damage to Jane Roe's lab work for John Roe. It appears the Roes may have blamed Doe for the damage, while he counters that any damage was caused by Jane Roe or someone else.
In any event, Doe's complaint against the Roes asserted causes of action for malicious prosecution and abuse of process for causing UCI to begin the disciplinary proceedings against him. The Roes, through their counsel, filed a demurrer and a special motion to strike the complaint under the anti-SLAPP law. The trial court granted the anti-SLAPP motion, finding that the Roes' statements to campus police and to UCI administrators charged with investigating student misconduct fell within petitioning activity protected by the anti-SLAPP statute. The court denied the demurrer as moot.
The Roes then filed a motion for attorney fees and costs generated in pursuing their successful anti-SLAPP motion and the demurrer. Billing a total of $120,378.60, which included approximately $400 in costs, the Roes' lawyers documented almost $40,000 in fees for initially "drafting and filing of the demurrer and anti-SLAPP Motion."
The fee claim later increased by $80,000; the increase included just over $21,000 to review Doe's opposition to the fee motion and draft a reply; more than $10,000 to prepare for and appear at an initial hearing on the motion; roughly $25,000 for "reviewing and opposing post-hearing filings," "preparing for and attending [a] second hearing on the anti-SLAPP Motion," "drafting supplemental briefing following the second hearing on the Motion"; and approximately another $21,000 for further "preparation to date of fees motion."
Two attorneys sought compensation for spending approximately 170 hours on the demurrer and the anti-SLAPP motion, one at $850 an hour and the other, $695. The attorneys provided documentation supporting compensation at those rates in the Los Angeles legal market for "'the most experienced business litigation firms such as Munger Tolles.'" The firm's rates in this matter arose from "maintain[ing] an extensive higher-education-law practice for many years," with "substantial experience litigating cases relating to University misconduct proceedings." The partner's declaration supporting the fee request also alluded to "an alternative fee arrangement" under which the firm had performed the "work on this matter." The trial court and the parties explored this fee arrangement at the hearing on the fee motion.
There, the Roes' attorney explained that "the university has paid the[ir] fees. [It] paid a flat fee arrangement of about $105,000, which is very closely in line with the amount of fees we requested." The attorney argued that the amount "really reinforces the reasonableness of our fee request because when that flat fee was set, it was set long before we knew that we would have two hearings [on the anti-SLAPP motion], that we would have supplemental briefing and so on."
Observing that the anti-SLAPP "statute talks about [recovery of] his or her fees," the court noted that "[o]ne way of reading that is that they must have actually either . . . paid or incurred those costs." The court nonetheless acknowledged precedent that even "if a third party pays for it, that may well be sufficient to satisfy the language of the statute."
The court indicated its concern extended beyond the fact that a third party paid the fees, questioning, "[B]ut is there a difference though between who this third party is?" The court queried, "[I]f they have some sort of interest in the proceedings, are they in the same position as a regular third party? [Are they really like a] relative who says, 'Here, I want to give you some additional money.'"
The court also noted the possibility that, with the prospect of further disciplinary action against Doe following remand in the writ proceeding, a disinterested person "standing on the sidelines" might question UCI's neutrality in an administrative hearing after paying the Roes' fees. The court did not adopt that position, but added, "At least this would be the argument: 'I [i.e., UCI might] want to keep them [the Roes] happy because . . . [w]e already found in their favor once. Now we have to go through all this again.'"
Counsel for Doe suggested vaguely that UCI had an ulterior interest in siding with the Roes by paying their fees—perhaps to conceal UCI's allegedly poor investigation of the allegations against Doe, which counsel hinted could expose UCI to further litigation or liability. Counsel for Doe argued that in paying the Roes' fees, "the university has an interest in preventing plaintiff from bringing [an] action against the university."
The court observed that, "as far as [it] kn[e]w there's nothing illegal about [UCI] entering into an agreement to pay for this." Based on the record developed at the hearing, it appeared to the court that "[t]he university could—for whatever reason, as far as we know—enter into such an alternative fee arrangement. There's nothing illegal about that. . . ." The court also observed that any concern about future administrative proceedings might be "something [a] court looks at" if or when they "come at some point in time?"
The court ultimately noted that the issue appeared to be this: "[I]f the third party has some sort of vested interest—vested interest probably isn't the right term—but some sort of interest in the litigation, [then] perhaps it might not be reasonable [to award] that fee or the fee may have to be adjusted based on that individual factor." The court then invited further briefing on the issue; counsel for Doe proposed "fil[ing] first and then defendant[s] . . . can have the last word." But neither party filed any additional briefing.
In a minute order, the court denied the Roes' fee request. The court found no evidence "the University had an expectation it would be repaid th[e] funds" it paid under the alternative fee arrangement. The court concluded that to the extent the gift by a third party was "to protect the interests of the donee," it was "likely reimbursable," but not if made for the donor's interests. The court found that the record did not show whose interests the advanced funds protected, which would require additional evidence that had not been presented. The court denied a fee award on that basis. The Roes now appeal.
DISCUSSION
We review de novo the legal authority for granting or denying an award of attorney fees, including under section 425.16. (Richmond Compassionate Care Collective v. 7 Stars Holistic Foundation (2019) 33 Cal.App.5th 38, 45.)
Section 425.16, subdivision (c)(1), provides that the "prevailing defendant" on an anti-SLAPP motion "shall be entitled to recover his or her attorney's fees and costs." As the Supreme Court has described it, "[A]ny SLAPP defendant who brings a successful motion to strike is entitled to mandatory attorney fees." (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131 (Ketchum).) In contrast, a fee award for the plaintiff is permitted only if the anti-SLAPP motion was frivolous or was intended to cause unnecessary delay. (§ 425.16, subd. (c)(1).)
This disparity is explained by the statute's purpose. Section 425.16 was "intended to discourage . . . strategic lawsuits against public participation by imposing the litigation costs on the party seeking to 'chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.' [Citation.] The fee-shifting provision also encourages private representation in SLAPP cases, including situations when a SLAPP defendant is unable to afford fees or the lack of potential monetary damages precludes a standard contingency fee arrangement." (Ketchum, supra, 24 Cal.4th at p. 1131.)
During oral argument, respondent's counsel repeatedly asserted that, since appellants had not actually "incurred" any attorney fees (since the fees had been paid by a third party), they were not entitled to a fee award. But unlike in other contexts, a defendant prevailing on an anti-SLAPP motion need not "incur" fees to require the plaintiff to pay for his or her legal services. (See, e.g., Trope v. Katz (1995) 11 Cal.4th 274 (Trope).) Trope involved a fee request under Civil Code section 1717. Trope observed that "[Civil Code] section 1717 applies only to contracts specifically providing that attorney fees 'which are incurred to enforce that contract' shall be awarded to one of the parties or to the prevailing party," and "[t]o 'incur' a fee[ ]" means to "'become liable' for it [citation], i.e., to become obligated to pay it." (Trope, supra, 11 Cal.4th at p. 280.) The court concluded "an attorney litigating in propria persona cannot be said to 'incur' compensation for his time and his lost business opportunities." (Ibid.)
Trope's definition of the word "incur" to require a personal obligation to pay attorney fees does not apply outside Civil Code section 1717. As our division has recognized, "the rule enunciated in Trope is limited to its facts." (Do v. Superior Court (2003) 109 Cal.App.4th 1210, 1216.) Seven years after Trope, the Supreme Court readdressed the issue: "In practice, it has been generally agreed that a party may 'incur' attorney fees even if the party is not personally obligated to pay such fees." (Lolley v. Campbell (2002) 28 Cal.4th 367, 373.) Thus, "in cases involving a variety of statutory fee-shifting provisions, California courts have routinely awarded fees to compensate for legal work performed on behalf of a party pursuant to an attorney-client relationship, although the party did not have a personal obligation to pay for such services out of his or her own assets." (Ibid., fn. omitted.)
Examples include Ketchum, where an indigent defendant who had been represented pro bono on a successful anti-SLAPP motion was entitled to recover fees, though he paid none. (Ketchum, supra, 24 Cal.4th at pp. 1127, 1131; Rosenaur v. Scherer (2001) 88 Cal.App.4th 260, 287 [same].) "Modern jurisprudence does not require a litigant seeking an attorney fee award to have actually incurred the fees." (Moran v. Oso Valley Greenbelt Assn. (2004) 117 Cal.App.4th 1029, 1036.) Thus, as one court has explained, "Appellant cites no authority and we have found none, that a defendant who successfully brings an anti-SLAPP motion is barred from recovering fees if the fees were paid by a third party. Based on her construction of the law, respondent would not be entitled to attorney's fees if the defense costs were paid by his homeowner's insurance carrier, the union's insurance carrier [as was the case there], or a relative. No court has so held." (Macias, supra, 55 Cal.App.4th at pp. 675-676.) Doe points to no authority to undermine this settled rule.
Rather than focusing on who has paid the fees, courts have been more keen on ensuring there was an attorney-client relationship on which to base fees. Thus, "the term 'attorney fees' implies the existence of an attorney-client relationship, i.e., a party receiving professional services from a lawyer." (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1092.) In the anti-SLAPP context, "a prevailing defendant is entitled to recover attorney fees if represented by counsel." (Ramona Unified School Dist. v. Tsiknas (2005) 135 Cal.App.4th 510, 524.) Conversely, the absence of an attorney-client relationship requires denying an attorney fee award under section 425.16 to a self-represented law firm. (Witte v. Kaufman (2006) 141 Cal.App.4th 1201, 1211.)
The necessity of an attorney-client relationship provides a safeguard against the concerns the trial court thoughtfully raised here. Those concerns included the possibility that a third party providing funding might attempt to litigate its own interests, rather than or in addition to the client's, and then gain reimbursement through the anti-SLAPP fee mechanism. An attorney's ethical obligation to zealously represent solely his or her client should forestall such meddling or misappropriation of a defense. California's Rules of Professional Conduct for lawyers preclude conflicts of interest (rule 1.7) and permit payment by a third party for services rendered for a client only where "there is no interference with the lawyer's independent professional judgment or with the lawyer-client relationship." (Rules Prof. Conduct, rule 1.8.6(a).)
We also observe that the law no longer disdains champerty. Blackstone defined champerty as the "officious intermeddling in a suit that no way belongs to one, by maintaining or assisting either party, with money or otherwise," in return for a portion of case proceeds. (4 W. Blackstone, Commentaries *134; see In re Primus (1978) 436 U.S. 412, 424, fn.15.) That former antipathy has waned, in part because courts "have long abandoned the view that litigation is suspect." (Saladini v. Righellis (Mass. 1997) 687 N.E.2d 1224, 1226.)
"Under the early English common law the doctrines of champerty and maintenance prohibited an assignment of a chose in action. [Citation.] In California this common law doctrine has been superseded by statute. [Civ. Code, §§ 953, 954]." (Bush v. Superior Court (1992) 10 Cal.App.4th 1374, 1380.) "'[A]ssignability of things [in action] is now the rule; nonassignability, the exception; and this exception is confined to wrongs done to the person, the reputation, or the feelings of the injured party. . . .'" (Webb v. Pillsbury (1943) 23 Cal.2d 324, 327.)
Perhaps more importantly, there is no dispute that the Roes faced significant potential personal liability from Doe's lawsuit against them. Doe sought general, special, and punitive damages in his prayer for relief on his malicious prosecution and abuse of process causes of action against them. The anti-SLAPP law favors private representation—paid for by the plaintiff—where such claims run afoul of the statute, chilling the defendants' petitioning rights. (Ketchum, supra, 24 Cal.4th at p. 1131.) Doe does not appeal the trial court's ruling finding his causes of action triggered the anti-SLAPP statute's protection.
In any event, case law governing fee awards provides a further barrier against potential or attempted misuse of the anti-SLAPP process by a third party attorney fee payor. To obtain a fee award, the represented party must achieve a "practical benefit" from bringing the motion, a determination that lies within the "broad discretion" of the trial court. (Mann v. Quality Old Time Service, Inc. (2006) 139 Cal.App.4th 328, 340.) Only those fees and costs incurred in connection with the portion of the anti-SLAPP motion that is granted may be recovered. (Jackson v. Yarbray (2009) 179 Cal.App.4th 75, 82.)
Thus, if a third party funder somehow succeeded, despite the attorney's ethical firewall, in having extraneous issues of concern only to itself litigated in an anti-SLAPP motion, the trial court is free to deny attorney fees or costs related to those misplaced efforts. Doe does not identify any such instances in the detailed billing records provided by the Roes' attorneys, but may attempt to do so on remand.
Finally, as the trial court anticipated, any concerns that an appearance of bias may arise from UCI paying the Roes' legal fees, arguably tainting UCI's position as a neutral decision maker in future administrative proceedings against Doe, can be addressed in those proceedings—if they occur.
As relevant here, the Roes point to a statutory requirement that "a public entity shall provide for the defense of any civil action" (Gov. Code, § 995) arising from actions of public employees in their official capacity. Nothing indicates this provision does not apply where the Roes reported damage to UCI authorities at the lab where they were employed. Moreover, as the trial court observed, nothing in the record suggests UCI's payment of the Roes' legal fees was in any way illegal or improper.
In our view, whether UCI has a subrogation or similar agreement requiring repayment of the fee advances, as an insurer might, appears to be of no consequence to Doe. The anti-SLAPP law requires him to pay attorney fees when, as here, the defendants prevailing on an anti-SLAPP motion to strike are represented by counsel. There is no exception when a third party has borne the fees. The trial court therefore could not properly deny fees altogether.
DISPOSITION
The order denying attorney fees and costs for the Roes' successful anti-SLAPP motion is reversed. Appellants are awarded their costs on appeal. The matter is remanded for the trial court to consider an award of fees and costs in an amount to be determined in its sound discretion.
GOETHALS, J. WE CONCUR: ARONSON, ACTING P. J. IKOLA, J.