Opinion
C080183
11-27-2018
PARATRANSIT, INC., Plaintiff and Respondent, v. UNEMPLOYMENT INSURANCE APPEALS BOARD, Respondent; CRAIG MEDEIROS, Real Party in Interest and Appellant.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published,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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 34200980000249CUWMGDS)
This appeal about private attorney general fees (Code Civ. Proc., § 1021.5) arises from an employer-employee dispute that resulted in a California Supreme Court opinion holding that the employee's refusal to sign acknowledgement of receipt of a disciplinary notice was not misconduct disqualifying the terminated employee from receiving unemployment compensation. (Paratransit, Inc. v. Unemployment Ins. Appeals Bd. [UIAB] (2014) 59 Cal.4th 551 (Paratransit).) The Supreme Court, in finding at most a good faith error in judgment by the employee rather than misconduct, reversed our opinion in the same case, Paratransit, Inc. v. UIAB (May 31, 2012, C063863) [nonpub. ppn.] 142 Cal.Rptr.3d 351, which had been published at 206 Cal.App.4th 1319 (review granted).
In the present appeal, the former employee, real party in interest Craig Medeiros, appeals from a trial court order denying his motion to recover attorney fees from Paratransit under the private attorney general statute, Code of Civil Procedure section 1021.5 (hereafter, § 1021.5). The trial court denied fees under In re Adoption of Joshua S. (2008) 42 Cal.4th 945 (Joshua), which held that, even if the statutory elements are met, "section 1021.5 does not authorize an award of attorney fees against an individual who has done nothing to adversely affect the rights of the public or a substantial class of people other than raise an issue in the course of private litigation that could establish legal precedent adverse to a portion of the public . . . ." (Id. at p. 949.)
Medeiros argues Paratransit did do something to adversely affect a substantial class, i.e., "unemployed workers," mainly by requesting that we publish our opinion, which we had originally filed as an unpublished opinion.
We disagree with Medeiros and affirm the trial court's order denying attorney fees.
FACTS AND PROCEEDINGS
The underlying facts are stated in Paratransit, supra, 59 Cal.4th at pages 555-557, as follows:
Paratransit employed Medeiros as a driver for about six years. In February 2008, a passenger alleged he harassed her. Paratransit investigated, found merit in the complaint, and decided to impose discipline including a two-day suspension without pay. Paratransit gave Medeiros a written notice of discipline and told him to sign it above the words, "Employee Signature as to Receipt." Medeiros refused to sign, stating he believed it might constitute an admission of guilt, and he wanted a union representative to be present. Paratransit told him his signature would only acknowledge receipt, and he was not entitled to a union representative at this meeting. (Paratransit, supra, 59 Cal.4th at p. 557, citing NLRB v. J. Weingarten, Inc. (1975) 420 U.S. 251 (Weingarten) [employee's right to union representation is limited to situations where purpose of meeting is investigatory and employee reasonably believes it will result in discipline].)
Medeiros nevertheless refused to sign. Paratransit told him his refusal to sign would be viewed as insubordination and grounds for termination of employment. Medeiros refused to sign. Paratransit fired him.
Medeiros applied for unemployment benefits. The Employment Development Department (EDD) denied his application because he was discharged for misconduct. Medeiros filed an administrative appeal. At the hearing before the administrative law judge (ALJ), Medeiros testified he was tired and confused during the meeting, because he had just finished his work shift, and the employer mentioned a closed case from six years earlier when Medeiros was disciplined for lying to get the job. (Paratransit, supra, 59 Cal.4th at p. 556; Paratransit, Inc. v. UIAB, supra, 142 Cal.Rptr.3d at p. 358 (review granted).) Medeiros thought he had a right to a union representative at the meeting. The ALJ concluded Medeiros was fired for misconduct and affirmed EDD's decision denying unemployment benefits. (Paratransit, at p. 557.)
Medeiros appealed to the California Unemployment Insurance Appeals Board (the Board or CUIAB). The Board, by a split vote, reversed the ALJ's decision, finding Medeiros, at most, made a mistake or good faith error in judgment that did not constitute misconduct and therefore did not disqualify him from receiving unemployment benefits. (Paratransit, supra, 59 Cal.4th at p. 557.) The Board offered its view that the meeting actually might have triggered Weingarten rights when the meeting carried a threat of termination. (Id. at p. 563.)
Paratransit filed in the trial court a petition for writ of administrative mandamus to overturn the Board's decision and thereby prevent an "erroneous charge" against its unemployment insurance reserve account. This private dispute, like all litigation, implicated issues of law. Unemployment Insurance Code section 1256 (UIC § 1256) renders an individual ineligible for unemployment compensation benefits upon a finding that he has been discharged for "misconduct" connected with his work. When an employee has been discharged for misconduct, the employer's reserve account may be relieved of charges for unemployment insurance benefits. (Id. at §§ 1030, 1032.) But "misconduct" does not include a mere good-faith error in judgment, which is judged by both subjective and objective standards under the totality of the circumstances. (Paratransit, supra, 59 Cal.4th at pp. 558-560, citing Cal. Code Reg., tit. 22, §§ 1256-1230.) Labor Code section 2856 requires an employee to substantially comply with his employer's directions, except where obedience is impossible or unlawful or would impose new and unreasonable burdens on the employee.
The trial court granted Paratransit's writ petition, finding the totality of circumstances showed Medeiros deliberately disobeyed a lawful and reasonable instruction from his employer, and his refusal to sign was misconduct, not a good faith error in judgment. Medeiros had no right to union representation at the meeting, because its purpose was not investigatory inasmuch as Paratransit had already investigated and decided to impose discipline. (Paratransit, supra, 59 Cal.4th at p. 557, citing Weingarten.) The trial court disbelieved that the union president told Medeiros not to sign anything but, even if the president did so, Medeiros could not in good faith have relied on such misinformation given all the circumstances, including that the president gave Medeiros a card explaining his Weingarten rights. (Paratransit, supra, 59 Cal.4th at p. 557.)
Medeiros appealed to this court, Third District Court of Appeal case No. C063863. After oral arguments, we issued an unpublished opinion affirming the trial court. We concluded substantial evidence supported the trial court's factual determinations, including credibility determinations, that Medeiros's refusal to sign the disciplinary notice was misconduct and not a good faith error in judgment. (Paratransit, Inc. v. Unemployment Ins. Appeals Bd., supra, 142 Cal.Rptr.3d 351 (review granted).) The threat of termination if he did not sign the disciplinary notice did not change the nature of the meeting into an investigatory meeting triggering Weingarten rights to presence of a union representative. (Id. at p. 361 [if he had assaulted employer representatives during the meeting, he would not be able to avoid discipline by claiming he did not have a union representative present] (review granted).) Because the record supported the trial court's conclusion that Medeiros would not have signed the document regardless of its language, we viewed as a "red herring" his argument that Paratransit's directive to sign the disciplinary memo was unlawful because it violated his union's collective bargaining agreement (CBA) by failing to state expressly that the employee's signature was not an admission of fault and was solely acknowledgement of receipt of the document. (Id. at pp. 356, 358-359 (review granted).) Acting Presiding Justice Blease dissented, noting the CBA requirement for an employee signature was meant to benefit the employee, and the refusal to sign the ambiguous document did not harm the employer's interests.
On June 8, 2012, Paratransit's attorney (Laura McHugh of Rediger, McHugh & Owensby, LLP) submitted to us a letter requesting that we publish our opinion on the grounds that the opinion met the standards set forth for publication by California Rules of Court, rule 8.1105, in that the opinion "applies an existing rule of law to a set of facts significantly different from those stated in published opinion, and/or explains an existing rule of law with reasons given." The letter specified four reasons for publication, as follows:
1. Part II of the opinion (The Disciplinary Memorandum) addressed misconduct under Labor Code section 2856, for which there was a paucity of published opinions. The opinion clarified that a refusal to sign a lawful disciplinary memorandum may constitute insubordination for Labor Code section 2856 purposes, and thus publication was significant to the extent the opinion applied an existing rule to a set of facts different from those stated in published opinions.
2. Part III of the opinion (Good Faith Error in Judgment) addressed when insubordination under Labor Code section 2856 constituted misconduct under UIC section 1256, or good faith error in judgment. Published case law provided little guidance to this question as it related to insubordination, or more specifically, a subordinate's refusal to sign a disciplinary memorandum to acknowledge receipt. Thus, the opinion was significant in that it applied an existing rule to facts different from those stated in published opinions.
3. Part III of the opinion also explained an existing rule of law concerning an employee's rights under Weingarten, supra, 420 U.S. 251. The opinion provided guidance on the distinction between a disciplinary meeting where an employee is not entitled to union representation, and an "investigatory interview" where an employee is entitled to union representation. The opinion clarified that the threat of further discipline for failure to sign a memorandum memorializing predetermined discipline does not transform the meeting into an investigatory meeting entitling the employee to union representation.
4. Part III of the opinion explained an existing rule of law relating to insubordination which constitutes a good faith error in judgment under UIC section 1256. This court's noteworthy reasoning was that if an employee's refusal to sign an already determined disciplinary memorandum, after being told he would be terminated if he did not sign, constituted a good faith error in judgment, "no employee would ever have to obey an employer's directive."
We granted the request for publication on June 14, 2012, and the case was published as Paratransit, Inc. v. Unemployment Ins. Appeals Bd., supra, 206 Cal.App.4th 1319 (review granted).
Medeiros petitioned for review, and the California Supreme Court granted review in September 2012. The Supreme Court allowed amicus curiae briefs in support of Medeiros by: (1) United Steel Workers, (2) California Conference Board of Amalgamated Transit Union, ALF-CIO, and (3) The Asian Americans Advancing Justice - Asian Law Caucus, Inc., Asian Americans Advancing Justice - Los Angeles, Bet Tzedek, Katherine and George Alexander Community Law Center, Legal Aid Foundation of Los Angeles, Legal Aid Society - Employment Law Center, National Employment Law Project, Neighborhood Legal Services of Los Angeles County, SEIU - United Service Workers West, Women's Employment Rights Clinic at Golden Gate University School of Law, and Worksafe, Inc.
In July 2014, the California Supreme Court issued its decision reversing our decision. (Paratransit, supra, 59 Cal.4th 551.) The Supreme Court did not need to decide whether the language on the disciplinary document complied with CBA or whether employer's order to sign it was reasonable and lawful despite any inconsistency with CBA, because if undisputed facts showed the employee acted reasonably and in good faith in refusing the order, he has not committed misconduct under UIC section 1256. (Paratransit, supra, 59 Cal.4th at p. 563.)
The Supreme Court concluded, "Based on the undisputed facts in the administrative record, we [the Supreme Court] conclude the employee's refusal to sign the disciplinary notice was not misconduct but was, at most, a good faith error in judgment that does not disqualify him from unemployment benefits." (Paratransit, supra, 59 Cal.4th at p. 555.) A single act of insubordination in refusing to follow an employer's lawful and reasonable instruction, by itself, generally is not misconduct. (Id. at p. 566.) "[E]ven when an employee's conduct is harmful to the employer's interests and justifies the employee's discharge, such conduct will warrant ' "disqualification for unemployment insurance benefits only if it is willful, wanton or equally culpable." ' [Citation.]." (Id. at p. 559, italics omitted.) To establish misconduct, there must be substantial evidence of deliberate, willful, and intentional disobedience by the employee, judged under both a subjective and objective standard based on the totality of the circumstances. (Ibid.) Regulations promulgated by the EDD are in accord. (Id. at p. 560.) An employer's right to discharge an employee for an act of disobedience does not necessarily mean the act amounted to misconduct for purposes of unemployment insurance. (Id. at p. 561.)
The Supreme Court assumed for purposes of argument that the trial court correctly determined that Medeiros was not wrongfully denied Weingarten rights to union representation at the meeting. (Paratransit, supra, 59 Cal.4th at p. 563.) Nonetheless, Medeiros formed his belief to the contrary "on the spot, after Employer started discussing discipline and mentioned Claimant's lying, which had occurred six years previously. As the record reflects, this was confusing to Claimant, who testified without contradiction that he was called into the meeting at the end of his work shift when he was tired and 'not functioning right.' " (Ibid.) There was no evidence that Medeiros refused to sign the disciplinary notice simply to frustrate the employer's objectives or to be difficult. (Ibid.) The signature line was above the words, "Employee Signature as to Receipt." (Ibid.) Although the Supreme Court said it did not need to decide whether the language complied with the CBA, it was not so clear that the employee's refusal to sign was wrongful or evil, and the employee was not required to accept the employer's verbal assurance that signing was not an admission of fault. (Ibid.)
The Supreme Court summarized, "the undisputed facts point to only one reasonable conclusion: Claimant acted out of a genuine belief that signing the notice would be an admission of allegations he disputed, and that belief was not so unreasonable under the circumstances as to constitute misconduct within the meaning of [UIC] section 1256." (Paratransit, supra, 59 Cal.4th at p. 565.) Though no California case addressed misconduct in this context, out-of-state cases have reached similar conclusions. (Ibid.)
The Supreme Court concluded: "Even assuming Employer's order to sign the disciplinary notice was reasonable and lawful, and even assuming Claimant's refusal to do so may have justified his termination from employment, the dispositive issue here is whether the probative facts, which are undisputed, establish that Claimant committed misconduct within the meaning of [UIC] section 1256. We conclude the answer is no. Taking into account ' "the humanitarian purpose of the unemployment compensation statutes," ' and ' "judging the reasonableness of [Claimant's] act from his standpoint in the light of the circumstances facing him and the knowledge possessed by him at the time," ' . . . Claimant's refusal to sign at the moment was not misconduct but, at most, a good faith error in judgment that did not disqualify him from unemployment benefits. [Citations.]" (Paratransit, supra, 59 Cal.4th at pp. 566-567, italics omitted.)
Upon remand from the Supreme Court, we affirmed the Board's decision and directed the trial court to enter judgment denying Paratransit's writ petition.
Medeiros filed in the trial court a motion to recover its attorney fees from Paratransit under the private attorney general statute, section 1021.5. Medeiros argued Paratransit "act[ed] to curtail a public right or interest by seeking publication of the ruling in the Court of Appeal and by strenuously arguing on appeal, both at the Court of Appeal and the Supreme Court, for legal standards reflected therein that would benefit its institutional interest as an employer of unionized employees, and that would harm workers by diluting existing labor and unemployment compensation protections that benefit both the public and unemployed workers . . . ."
The trial court tentatively ruled that Paratransit had to pay Medeiros's attorney fees pursuant to section 1021.5 and Joshua, but only for the fees incurred after Paratransit's successful request for publication of our Court of Appeal opinion. According to the tentative ruling, Paratransit initially merely sought to protect its reserve account but the act of requesting publication was detrimental to the public interest because it sought to establish a precedent harmful to unemployed persons.
Paratransit requested a hearing and, after oral argument, the trial court instead concluded that, while Medeiros met the three statutory requirements for an award of fees, Paratransit falls within the exception identified in Joshua, supra, 42 Cal.4th 945, that fees should not be awarded against a party "who has only engaged in litigation to adjudicate private rights from which important appellate precedent happens to emerge, but has otherwise done nothing to compromise the rights of the public or a significant class of people." (Id. at p. 954.)
The trial court accordingly denied Medeiros's motion for attorney fees. (We disregard Paratransit's argument on appeal that Medeiros, by failing to request a hearing from the portion of the tentative ruling unfavorable to him, forfeited any right to fees preceding the request for publication.)
DISCUSSION
I
Standard of Review
On appeal from an award of attorney fees under section 1021.5, the normal standard of review is abuse of discretion, but de novo review is warranted if the determination turns on statutory construction and a question of law. (Serrano v. Stefan Merli Plastering Co., Inc. (2011) 52 Cal.4th 1018, 1025-1026 (Serrano v. Stefan Merli); Azure Ltd. v. I-Flow Corp. (2012) 207 Cal.App.4th 60, 66 (Azure II).) Medeiros claims de novo review is appropriate. Paratransit claims we should review for abuse of discretion. We conclude Medeiros's appeal fails under either standard. (Pasadena Police Officers Association v. City of Pasadena (2018) 22 Cal.App.5th 147, 160 (Pasadena) [no need to resolve which standard applies in § 1021.5 review because same result under either standard].)
II
Section 1021.5
Section 1021.5 provides in 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, or of 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. . . ."
Section 1021.5 attorney fees may be awarded even where, as here, the attorney represented the party pro bono. (Building a Better Redondo, Inc. v. City of Redondo Beach (2012) 203 Cal.App.4th 852, 873.)
The California Supreme Court in Joshua, supra, 42 Cal.4th 945, identified an additional restriction on section 1021.5 fees: Even when the three statutory requirements are met, there is also "an implicit requirement that the party on whom attorney fees are imposed be responsible for adversely affecting the public interest. . . ." (Id. at p. 955.) The Supreme Court held that "section 1021.5 does not authorize an award of attorney fees against an individual who has done nothing to adversely affect the rights of the public or a substantial class of people other than raise an issue in the course of private litigation that could establish legal precedent adverse to a portion of the public. . . ." (Id. at p. 949.)
The underlying situation in Joshua, supra, 42 Cal.4th 945, arose from an agreement for the same-sex partner of a birth mother to adopt the mother's child, while the mother remained a coparent. After the couple split, the adoptive mother sought a judicial order of adoption. The birth mother sought to withdraw her consent to the adoption. The Supreme Court issued the underlying opinion validating the "second parent adoption." (Sharon S. v. Superior Court (2003) 31 Cal.4th 417.) The adoptive mother (Annette) then sought section 1021.5 fees, which the trial court granted, but the Court of Appeal reversed. The California Supreme Court then filed its opinion in Joshua, supra, 42 Cal.4th 945, affirming the Court of Appeal and concluding that Sharon was not the type of party who should be required to pay private attorney general fees.
Joshua considered both statutory text and legislative purpose. The statutory language "implies that those on whom attorney fees are imposed have acted, or failed to act, in such a way as to violate or compromise [an important right affecting the public interest], thereby requiring its enforcement through litigation. [Section 1021.5] does not appear to encompass the award of attorney fees against an individual who has done nothing to curtail a public right other than raise an issue in the context of private litigation that results in important legal precedent." (Joshua, supra, 42 Cal.4th at p. 956.) The party against whom such fees are awarded must have done or failed to do something, "in good faith or not," that compromised public rights. (Id. at p. 958.)
"[S]ection 1021.5 is an exception to the general rule in California, commonly referred to as the American rule and codified in [Code of Civil Procedure] section 1021, that each party to a lawsuit must ordinarily pay his or her own attorney fees. [Citation.] In support of the American rule is the argument 'that since litigation is at best uncertain one should not be penalized for merely defending or prosecuting a lawsuit, and that the poor might be unjustly discouraged from instituting actions to vindicate their rights if the penalty for losing included the fees of their opponents' counsel.' [Citation.]" (Joshua, supra, 42 Cal.4th at p. 954.)
"Although not explicit in either the statute or case law, it may be supposed that one unspoken justification for departing from the American rule in the case of section 1021.5 private attorney general fees is that it is equitable to impose public interest attorney fees on parties that have done something to adversely affect the public interest. . . ." (Joshua, supra, 42 Cal.4th at p. 954.) In enacting section 1021.5, "the Legislature was focused on public interest litigation in the conventional sense: litigation designed to promote the public interest by enforcing laws that a governmental or private entity was violating, rather than private litigation that happened to establish an important precedent." (Id. at p. 956.)
The Supreme Court later applied Joshua under different facts and found it inapplicable in Serrano v. Stefan Merli, supra, 52 Cal.4th 1018. There, the plaintiffs objected to paying an extra fee to a deposition reporter (Coast) for an expedited transcript of a deposition noticed by a defendant. (Id. 52 Cal.4th at pp. 1020-1022.) The defendant who requested the expedited transcript paid the extra fee. Coast asked the plaintiffs' counsel whether he also wanted an expedited copy, which he did. Coast charged the plaintiffs' counsel the extra fee. The plaintiffs' counsel asked the trial court to require Coast to provide the transcript without payment of the extra fee. Coast and the plaintiffs' counsel agreed the court's ruling would determine the validity and reasonableness of Coast's fee, and would govern the fees for other expedited transcripts in the action. (Id. at p. 1021.)
The trial court, while finding Coast's practice unconscionable, concluded it had no authority over how much a deposition reporter charged. (Serrano v. Stefan Merli, supra, 52 Cal.4th at p. 1021.)
The Court of Appeal held that trial courts have the authority to determine reasonableness of fees charged by deposition reporters to nonnoticing parties. (Serrano v. Stefan Merli, supra, 52 Cal.4th at p. 1022, citing Serrano v. Stefan Merli Plastering Co., Inc. (2008) 162 Cal.App.4th 1014 (Stefan I).) On remand, the trial court found the fee for the expedited transcript was unreasonable but denied section 1021.5 attorney fees, noting that under Joshua, section 1021.5 does not authorize an award of attorney fees against an individual who has done nothing to adversely affect the rights of the public or a substantial class of people other than raise an issue in the course of private litigation that could establish legal precedent adverse to a portion of the public. (Serrano v. Stefan Merli, supra, 52 Cal.4th at pp. 1024-1025.) The Court of Appeal affirmed. (Ibid.) The Supreme Court granted review in order to clarify the scope of Joshua and reversed the denial of section 1021.5 attorney fees. (Serrano v. Stefan Merli, at p. 1021.)
In concluding that Coast was responsible for section 1021.5 attorney fees, the Supreme Court in Serrano v. Stefan Merli, supra, 52 Cal.4th at pages 1021, 1027, held: "Deposition reporters are officers of the court, regulated by statute, who perform a public service of considerable importance to litigants and members of the public. The reporting service here did not merely seek to vindicate its private rights. It defended its institutional interest in controlling the fees it charges, and sought to shield itself from judicial review of its conduct as a ministerial officer of the court. Moreover, it was found to have charged plaintiffs an unreasonable fee. The courts below erred by concluding that the service did nothing adverse to the public interest, and that plaintiffs' appeal did not involve an important right affecting the public interest." (Id. at p. 1021.) The case was not merely a private business dispute, as there was no business relationship between plaintiffs and Coast, which was retained as the deposition reporter by the defendant. (Id. at p. 1027.) Coast was a ministerial officer of the court, and its obligations to the plaintiffs were determined by statute, not by contract. "While the proceedings in the trial court regarding transcript charges might be deemed a minor dispute limited to the circumstances of this litigation, on appeal Coast strenuously defended its institutional interest in controlling the fees charged to a nonnoticing party without judicial oversight. And the trial court determined, on remand after Stefan I, that Coast had indeed violated plaintiffs' right to receive a transcript for a reasonable charge. Accordingly, this is not a case in which a 'private litigant with no institutional interest in the litigation' pursued 'only [its] private rights.' [Citation.] Rather, we are presented with the usual circumstances where private attorney general fees are sought from a party 'at least partly responsible for the policy or practice that gave rise to the litigation.' [Citations.]" (Id. at pp. 1027-1028.)
The Supreme Court said in a footnote: "Coast's status as a ministerial officer of the court, and the absence of an arm's-length business relationship between Coast and plaintiffs' counsel, are central to our conclusion that this case does not fit the Joshua S. scenario, where a party seeks to vindicate only private rights and does nothing to affect the public interest other than litigating a case that results in an important appellate precedent. We do not suggest, however, that the existence of a private business relationship necessarily places a party within the scope of the Joshua S. exception. While most private attorney general cases involve public or quasi-public agencies whose actions have impaired the public interest [citation], private business practices that damage important public rights may also justify a fee award under section 1021.5 [citations]." (Serrano v. Stefan Merli, supra, 52 Cal.4th at p. 1028, fn. 11.)
The Fourth District Court of Appeal later distinguished Serrano v. Stefan Merli in Azure II, supra, 207 Cal.App.4th 60. There a shareholder brought an action against a corporation for breach of fiduciary duty in its alleged transfer of the shareholder's stock to the State, as escheated property, without notice to the shareholder. This was a private dispute between two corporate parties over hundreds of thousands of dollars in economic losses. (Azure II, at pp. 63-64.) Because resolution of the case happened to turn in part on the interpretation of the Unclaimed Property Law (UPL), Azure's tenacious pursuit of its interests resulted in a Supreme Court opinion -- Azure Limited v. I-Flow Corp. (2009) 46 Cal.4th 1323 (Azure I) -- bearing on the rights of all property owners whose property has been wrongfully transferred to the state by another private party. (Azure II, at p. 63.) But the Fourth District held "merely advancing the state of the law does not transform a private dispute over substantial economic losses into a section 1021.5 case in which fees may be awarded to attorneys for serving the public interest as private attorneys general. Defendant I-Flow Corporation (I-Flow) 'has done nothing to curtail a public right other than raise an issue [involving a public right] in the context of private litigation that results in important legal precedent.' [Citation.]" (Id. at p. 63, orig. brackets, citing Joshua, supra, 42 Cal.4th at p. 956.)
In denying a fee award, Azure II distinguished the court reporter case (Serrano v. Stefan Merli), because "I-Flow did not have an institutional interest in establishing the right to immunity under the UPL; it merely sought to avoid paying significant damages (hundreds of thousands of dollars) in this particular case. Conversely, the court reporter in Serrano doggedly fought not for the hundreds of dollars at issue, but rather for its institutional interest -- the right to charge fees to deposition participants without court review of the reasonableness of such fees. Moreover, I-Flow was not an officer of the court or a quasi-public agent in any sense. Instead, it appears that I-Flow did not comply with the UPL with regard to Azure's rights. But a single statutory violation by a private party vis-à-vis a single victim (and ensuing litigation over substantial economic damages arguably arising from that single violation) does not adversely affect the public interest, even if the defense of the case could potentially result in a published opinion adverse to the interests of a substantial class of people." (Azure II, supra, 207 Cal.App.4th at p. 69.)
The Fourth District added that I-Flow "should not be held to account for uncertainty in the state of the law before Azure I." (Azure II, supra, 207 Cal.App.4th at p. 69.)
In another Court of Appeal opinion, which came after Joshua but before Serrano v. Stefan Merli, the Second Appellate District held in Wilson v. San Luis Obispo County Democratic Central Committee (2011) 192 Cal.App.4th 918, that a county Democratic Party central committee was not entitled to section 1021.5 attorney fees for its defense of a former member's challenge to her removal from office and demand for reinstatement, because she was not the type of party on whom private attorney general fees were intended to be imposed. (Id. at p. 924.) However, the committee was entitled to attorney fees for its successful defense to the former member's challenge to the composition of the committee, and the former member was the type of party on whom private attorney general fees were intended to be imposed as to her challenge to the composition of the committee. The former member's contentions -- that bylaws unlawfully expanded committee membership to include 22 persons not statutorily authorized to become members, and that these persons must be removed from office -- went beyond her private rights and were intended to affect broader practices of the committee in selecting members. (Id. at p. 925.) The former member purported to represent the public rather than her private interest, arguing she was seeking to protect the voters' right of association that was violated by a certain group of committee members packing the committee with non-elected members, and the state has a legitimate weighty interest in protecting the integrity of the election process by ensuring that only duly elected or appointed persons become committee members. (Ibid.)
Most recently, after briefing was completed in this appeal, the Second Appellate District held a newspaper publisher that sought disclosure of a report of an officer-involved shooting of an unarmed teenager was entitled to recover section 1021.5 attorney fees from two police officers and their law enforcement union that unsuccessfully sought to enjoin disclosure of the report. (Pasadena, supra, 22 Cal.App.5th 147.) Although the individual officers sought to protect their privacy rights, the power exercised by police officers and their public visibility naturally subjects them to public scrutiny and can render them public officials. (Id. at p. 164.) The union and the two officers argued not only that the report was a confidential personnel record statutorily exempt from disclosure, but they also sought to expand the statutes' reach to encompass records, like the entire report, which contained information that "theoretically" could be used for personnel purposes. (Ibid.) And the union expressly stated it was representing the interests of all its members, not just the two officers, and its goal was to ensure confidentiality for all peace officers. (Id. at p. 165.) The appellate court reversed the trial court's denial of attorney fees but did not mandate an award against both the two officers and the union. Rather, the appellate court remanded to the trial court with directions to award the newspaper fees "against the officers and/or the PPOA [the union] . . . ." (Id. at p. 166.)
Here, Medeiros argues the foregoing cases, particularly Serrano v. Stefan Merli and Wilson, support a fee award in this case, because Paratransit's "institutional interests" were at stake beyond the mere $4,647 in dispute, its "vigorous defense" of a legal position detrimental to the public interest made it at least partly responsible for the policy or practice that gave rise to the litigation, and it harmed the public interest by requesting publication of this court's opinion and arguing for harmful standards to be imposed on future unemployed persons. Despite focusing in the trial court on Paratransit's request for publication of our opinion as the act that adversely affected the public interest, Medeiros on appeal argues that the request for publication was just the "most striking evidence of Paratransit's institutional interest -- the proverbial 'smoking gun' . . . ."
We conclude Paratransit has the more persuasive argument that the foregoing cases support a conclusion that Paratransit in this litigation is not the type of party against whom private attorney general fees should be imposed and is not even partly responsible for a policy or practice that gave rise to the litigation. This is a case where a party litigating a private dispute "does nothing to affect the public interest other than litigating a case that results in an important appellate precedent." (Serrano v. Stefan Merli, supra, 52 Cal.4th at pp. 1027 & 1028, fn. 11; Joshua, supra, 42 Cal.4th at p. 956.)
This was a fact-based dispute, where the trial court made factual determinations, including credibility determinations, and on appeal we found substantial evidence supporting these factual determinations. (Paratransit, supra, 142 Cal.Rptr.3d 351 (review granted).) Paratransit was not even partly responsible for a policy or practice that gave rise to the litigation, since it was EDD which decided to deny benefits initially, which was upheld by the ALJ. It was the Board's contrary decision that led to Paratransit's writ petition. Paratransit cannot be faulted for defending its private rights as construed by the ALJ. Engaging in litigation may justify a fee award where the litigation itself is detrimental to the public interest, but generally the party must have done something more than merely prosecute or defend a private lawsuit. (Joshua, supra, 42 Cal.4th at p. 954.)
That Paratransit, after having litigated this private dispute, sought publication of our opinion because it would give guidance in the event of future disputes between Paratransit and its employees, did not make Paratransit even partly responsible for anything adversely affecting the public interest. That our published opinion would also give guidance to other employers and employees does not make Paratransit's request for publication an act adversely affecting the public interest for which Paratransit should have to pay its employee's attorney fees. Paratransit "has done nothing to curtail a public right other than raise an issue in the context of private litigation that results in important legal precedent." (Joshua, supra, 42 Cal.4th at p. 956.) The party against whom such fees are awarded must have done or failed to do something, "in good faith or not," that compromised public rights. (Id. at p. 958.) Publication of a Court of Appeal opinion, even if later overruled, does not compromise public rights. And requesting publication is not detrimental to the public interest and does not make the party requesting publication responsible for the policy reflected in the decision.
Paratransit did not defend any "institutional interest" similar to the court reporter in Serrano v. Stefan Merli, i.e., that it had a right to do or not do something that was ultimately adjudged to be harmful to the public interest. Nor did Paratransit seek a judicial determination similar to Wilson, ordering removal of 22 individuals from office and invalidating the bylaws that authorized their appointment. Instead, like Azure, Paratransit only litigated a case to resolve its private rights, i.e., the validity of charges assessed to its unemployment insurance benefit reserve account.
Moreover, Paratransit did not adjudicate changes in the law relating to unemployment insurance but merely held, strictly on the facts of that case, that Medeiros had not been guilty of misconduct within the meaning of UIC section 1256.
That the litigation involved interpretation of statutes governing labor relations and unemployment insurance does not mean Paratransit had an institutional interest that would justify imposing liability against it for its opponent's attorney fees. Any employer, in dealing with a particular private dispute with a particular employee, will necessarily have to construe and apply statutes governing employer-employee relations. That Paratransit argued in court the broader impact the Board's adverse decision would have on labor relations did not make Paratransit an institutional actor. Otherwise, every employer would have to pay every employee's attorney fees in every case. While some statutes do govern attorney fees in employer-employee disputes (e.g., Lab. Code, § 1197.5), no such statute applies here.
Medeiros argues there is not a level playing field between individual employees and their employers. He cites no evidence about the size of Paratransit and does not dispute the fact stated in our opinion, Paratransit, supra, 142 Cal.Rptr.3d at page 352 (review granted), the Paratransit is a private, nonprofit corporation engaged in the business of providing transportation services for the elderly and disabled. Nevertheless, we accept for purposes of appeal that Paratransit's resources are greater than those of Medeiros. He cites Jones v. Tracy School District (1980) 27 Cal.3d 99, 111, for its statement that most employers in employment discrimination cases can more readily afford protracted litigation than can their employees. However, that case involved a different statute (Lab. Code, § 1197.5) mandating an attorney fee award in discrimination cases. Jones has no bearing at all on this appeal.
Medeiros also cites a practice guide, authored by one of his attorneys, which says employers can be the type of party against whom section 1021.5 fees may be imposed. However, this unremarkable proposition adds nothing to the appeal, and Medeiros, who bears the burden as appellant, fails to discuss any of the cases cited in the practice guide (some of which predate Joshua and its progeny) to show why they should control this case.
Medeiros argues Paratransit's "larger institutional issues" are apparent because it would not make sense from an economic standpoint for Paratransit to pay lawyers to pursue the administrative appeal and court proceedings that must have exceeded the $4,647 in unemployment benefits for Medeiros. However, as indicated, Paratransit did not initiate all proceedings but merely defended itself in some proceedings initiated by Medeiros, after Paratransit's position was supported by the ALJ and the trial court and this court. In any event, Paratransit's decision to litigate its private rights does not make it responsible for Medeiros's attorney fees. Additionally, this point about economics undermines the claim that Paratransit acted to adversely affect the public interest by requesting publication of our opinion. From an economic standpoint, it was in Paratransit's own, private economic interest for our opinion to be published, so that Paratransit would have guidance for handling any future disputes with its employees, without having to incur attorney fees to litigate the same issue in the future. While good faith will not prevent liability for section 1021.5 fees where it is otherwise justified, the party must still have done or failed to do something, in good faith or not, that compromised public rights. (Joshua, supra, 42 Cal.4th at pp. 956, 958.)
Medeiros claims the trial court improperly failed to consider Serrano v. Stefan Merli, since the judge's ruling did not discuss the case. However, we affirm denial of fees even under de novo review. Plus, the parties cited the case to the trial court; the court discussed Azure, which discussed Serrano v. Stefan Merli; a court is not required to discuss every case in its ruling; and we presume official duty has been regularly performed. (Evid. Code, § 664.) Moreover, the reporter's transcript of the hearing shows Paratransit's counsel's oral argument wherein counsel discussed each cited case, and the trial court repeating that it had read the cases and was aware of them.
We conclude Medeiros fails to show grounds for reversal of the trial court order denying attorney fees. We need not address Paratransit's other arguments that Medeiros failed to meet section 1021.5's three statutory criteria or that Medeiros forfeited section 1021.5 fees by failing to plead an intent to seek them at the outset of the litigation.
DISPOSITION
The trial court order denying attorney fees is affirmed. Paratransit shall recover its costs on appeal. (Cal. Rules of Court, rule 8.278(a).)
HULL, Acting P. J. We concur: MURRAY, J. HOCH, J.