The opinion of the court was delivered by: BARBARA A. CAULFIELD
Plaintiffs in these actions prevailed at trial on their age discrimination claims under two alternative theories of liability: the federal Age Discrimination in Employment Act ("ADEA") and the California Fair Employment and Housing Act ("FEHA"). Based on the jury's findings, plaintiffs now seek attorneys' fees and costs under state law as provided in Cal. Gov't Code § 12965(b) and under the private attorney general theory provided for in Cal. Code Civ. P § 1021.5. Judgment is ENTERED IN FAVOR OF PLAINTIFFS; plaintiffs' motion for attorneys' fees is GRANTED in part.
A. State Law Determines Entitlement to Attorney's Fees
Under the doctrine of pendant jurisdiction, this court retained and decided plaintiffs' state law claims of discrimination under the FEHA along with a federal claim of discrimination. See United Mine Workers v. Gibbs, 383 U.S. 715, 725-27, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966). Pendant jurisdiction exists when there are sufficiently substantial federal claims to confer jurisdiction on the court in the first instance, and federal claims share a "common nucleus of operative facts." Id. at 725, Bouman v. Block, 940, F.2d 1211, 1230 (9th Cir. 1991).
When a federal court has pendant jurisdiction over the plaintiff's state law discrimination claim, state substantive law governs the merits of that claim. See Gibbs, 383 U.S. at 726; Ackerman v. Western Elec. Co., Inc., 643 F. Supp. 836, 857 (N.D. Cal. 1986), aff'd, 860 F.2d 1514, 1520 (9th Cir. 1988); 3A J. Moore & J. Lucas, Moore's Federal Practice, P 18.04 at 18-63 (2d ed. 1986); 13B C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure, § 3561.1 at 145 (2d ed 1984). Whether a plaintiff is entitled to an award of attorneys' fees is a question of substantive law and therefore is governed by state law. Kabatoff v. Safeco Ins. Co., 627 F.2d 207, 210 (9th Cir. 1980); Schulz v. Lamb, 591 F.2d 1268, 1272 (9th Cir. 1978); Michael-Regan Co., Inc. v. Lindell, 527 F.2d 653, 656 (9th Cir. 1975); Gibbs, 383 U.S. at 726; and Maternally Yours, Inc. v. Your Maternity Shop, Inc., 234 F.2d 538, 540 n.1 (2d Cir. 1956).
In an effort to persuade the court to apply federal law in awarding attorneys' fees, defendant advances the novel argument that plaintiffs only prevailed on their federal claims and thus only availed themselves of federal remedies. In general terms, defendant suggests that the jury instructions were based on the mixed-motive test, which is necessarily federal law and therefore inconsistent with an award of attorneys' fees under state law.
Defendant's argument misstates disparate treatment theory under California law. "California courts have relied on federal law to interpret the [FEHA]." Harris v. Hughes Aircraft, 19 Cal. App. 4th 129, 23 Cal. Rptr. 2d 343, 349 (1993), citing Mixon v. Fair Employment & Housing Commission, 192 Cal. App. 3d 1306, 1316-17, 237 Cal. Rptr. 884 (1987). Under California law, a plaintiff must prove intentional discrimination to prevail under disparate treatment theory. Id. Plaintiff may prove discriminatory intent in one of two ways. A plaintiff can establish through direct evidence that the unlawful discrimination was a motivating factor in the adverse employment decision (the so-called "mixed-motive" test under Price Waterhouse v. Hopkins, 490 U.S. 228, 104 L. Ed. 2d 268, 109 S. Ct. 1775 (1989)). Alternatively, when direct evidence is not available, the plaintiff can use the McDonnell Douglas model, which allows a plaintiff to proceed in his or her case with a prima facie showing of discrimination. See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 36 L. Ed. 2d 668, 93 S. Ct. 1817 (1973)). Mixon, 192 Cal. App. 3d at 890. The Price-Waterhouse test is not a lower standard for proving discriminatory intent nor is it an exclusively federal test. Plaintiffs prevailed at trial on their state law discrimination claims and state law governs the decision of whether to award attorneys' fees.
The court now turns to the question of whether plaintiffs in the instant action are entitled to attorneys' fees under California law. Plaintiffs invoke two provisions under California law that allow prevailing plaintiffs to recover attorneys' fees. First, plaintiffs request an award of attorneys' fees under Cal. C. Civ. P. § 1021.5, which provides in pertinent part that "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 . . . ." This provision, also known as the private attorney general theory, is designed to encourage the presentation of meritorious claims affecting large numbers of people by compensating successful litigants with attorneys' fees incurred in public interest litigation. Serrano v. Priest, 20 Cal. 3d 25, 44-48, 141 Cal. Rptr. 315, 569 P.2d 1303 (1977) (Serrano III). To determine whether an award is appropriate, the trial court must evaluate the following factors: (1) whether a right of societal importance was involved, (2) whether a sizable class has been benefitted by the litigation, (3) whether the necessity and financial burden of private enforcement are such as to make the award appropriate, and (4) whether in the interest of justice, such fees should not be paid out of the recovery. See Cal. Code Civ. Proc. § 1021.5; Los Angeles Police Protective League v. City of Los Angeles, 188 Cal. App. 3d 1, 232 Cal. Rptr. 697 (1986); see also Marini v. Municipal Court, 99 Cal. App. 3d 829, 160 Cal. Rptr. 465(1979).
Plaintiffs are entitled to an award of attorneys' fees under these standards. By prevailing in their age discrimination suit against the Public Utilities Commission ("PUC"), plaintiffs vindicated an important right -- the right to be free from invidious discrimination. The litigation necessarily conferred a significant benefit on society as a whole as well as on the direct victims of age discrimination,
and will deter the PUC and other governmental agencies from undertaking similar discriminatory activities in the future. Moreover, the financial burden on plaintiffs caused by their private enforcement of their rights makes the award appropriate.
Accordingly, the court finds that plaintiffs are entitled to an award of attorneys' fees under Cal. C. Civ. P. § 1021.5.
Alternatively, plaintiffs are entitled to an award of attorneys' fees under Cal. Gov't Code § 12965(b). Cal. Gov't Code § 12965(b) states that "in actions brought under this section, the court, in its discretion may award to the prevailing party reasonable attorney fees and costs . . . ." For the reasons stated above, the court finds that plaintiffs are also entitled to attorneys' fees under Cal. Gov't Code § 12965(b).
B. Law Governing Award Calculation
The next question in this analysis is whether state or federal law applies to the computation of fees to which the plaintiffs are entitled. "The awarding of attorneys' fees by a federal court in the exercise of pendent jurisdiction raises an Erie issue: is the method of computing fees substantive, so that state law applies, or procedural so that federal law applies?" Ackerman v. Western Elec. Co., Inc., 643 F. Supp. 836, 858 (N.D. Cal. 1986) aff'd, 860 F.2d 1514, 1520 (9th Cir. 1988), citing Erie Railroad Co. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938). The Ninth Circuit has not explicitly resolved this issue, Ackerman, 643 F. Supp. at 858, but has consistently upheld the application of state law. See Hancock Laboratories, Inc. v. Admiral Insurance Co., 777 F.2d 520, 525-26 (9th Cir. 1985) (Reed, J., sitting by designation); Diamond v. John Martin Co., 753 F.2d 1465, 1466-68 (9th Cir. 1985).
Ackerman is the only case that explicitly frames the question. The court did not reach a definitive answer about whether the calculation of attorneys' fees is governed by state or federal law because at the time "there [was] no significant difference between state and federal law governing the determination computation [sic] of fees in [that] case" and the "federal statute authorizing awards [was] closely analogous to the California [FEHA provisions]." 643 F. Supp. at 861.
Since Ackerman was decided, however, the availability of a contingency enhancement under federal law has changed. In City of Burlington v. Dague, the United States Supreme Court concluded that under the typical federal fee shifting statute, contingency enhancements are no longer available. 120 L. Ed. 2d 449, 112 S. Ct. 2638 (1992). On the other hand, under California state law contingency enhancements are still available. See Serrano III, 20 Cal. 3d at 49. Consequently, there is now a significant difference between state and federal law governing fees computation.
Given the current discrepancy between state and federal law on the issue of fee computation, the need for an explicit answer to the question of which law governs fee computation is manifest.
The conclusion of the court in Ackerman equates the question of which law governs the decision to hold an evidentiary hearing to establish the factual basis for attorneys' fees, with the question of which law governs the substantive evaluation of the facts established at the hearing. These are distinct questions.
This court interprets Shakey's to hold that federal law governs the decision to hold an evidentiary hearing on the issue of attorneys' fees and state law governs the award of attorneys' fees in diversity actions.