APPEAL from an order of the Superior Court of San Diego County, Richard E. L. Strauss, Judge. Affirmed. (Super. Ct. No. GIC849883).
The opinion of the court was delivered by: Huffman, J.
CERTIFIED FOR PUBLICATION
Code of Civil Procedure section 1021.5, the private attorney general fees statute, is construed to permit a trial court, in its discretion, to award such fees to a successful party in any appropriate action against "only an opposing party." (Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1176-1181 (Connerly) (all statutory references are to the Code of Civil Procedure unless noted; § 1021.5 applies to actions resulting in the enforcement of an important right affecting the public interest.) This statute includes not only three enumerated criteria for the court to consider, but also certain introductory language, as follows: "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 . . . 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 " (§ 1021.5; italics added.)
The attorney fees matter before us requires interpretation of the introductory terms in section 1021.5, "opposing" and "any action," as well as the enumerated criteria, in the context of postjudgment proceedings, including an appeal, arising from the settlement of one of several pension litigation cases about the funding problems of the retirement system for the defendant and respondent City of San Diego (the City; City Employees' Retirement System, or SDCERS).
In the underlying case, appellant William J. McGuigan, a retired City employee acting as a representative plaintiff (Appellant), sued the City, contending that certain City funding agreements seriously underfunded the retirement plans. After a year of litigation, that action was settled in a written agreement that required Appellant to act as a class representative in further proceedings on class action certification. After the settlement was signed, extensive trial court proceedings were conducted, in which certain objectors to the class action proceedings (San Diego Police Officers Association (SDPOA) or the Objectors) raised numerous challenges to the settlement, to attack both the procedures used to certify the class for settlement purposes and the monetary adequacy of the settlement. Ultimately, the trial court found all these objections had been adequately addressed, and the court approved the settlement and issued judgment accordingly in December of 2006.
The settlement agreement included an attorney fees clause specifically referencing an entitlement to an award of section 1021.5 fees to the class counsel, who continues to represent Appellant in this case. After judgment confirming the settlement was entered in December 2006, mediation took place on Appellant's original motion for attorney fees. In February 2007, the City was ordered to pay Appellant a fixed amount of attorney fees ($1.6 million) in connection with the settlement. (This appeal concerns the second such motion.)
Also in February 2007, the Objectors appealed the judgment that had finalized the settlement. Extensive briefing was submitted to this court by all parties, including the City's and the current Appellant's (then a respondent) briefs that defended the settlement. In a prior unpublished opinion by this court, we upheld the judgment approving the settlement.*fn1
After our prior opinion was issued in September 2008, Appellant brought the subject motion in the trial court, seeking a further award of attorney fees from the City under section 1021.5, on the ground that his counsel's efforts to defend the class settlement on appeal justified such an award under statutory, contractual and equitable theories. The trial court denied the motion, stating that the statute only allowed fees to be awarded against an opposing party, and under the court's reading of the statute, the City was not an "opposing" party to Appellant at the appellate level, where they were both defending the same settlement against the Objectors.
This appeal challenges the trial court's order denying Appellant's motion for such attorney fees incurred during the prior appeal of the settlement judgment. In this unique procedural context, the question is whether the City, as one of two settling parties defending the settlement in an appeal that was pursued by third party objectors, can be assessed attorney fees under section 1021.5 in favor of the other settling party. Such an award would require a characterization of the City as an "opposing party" in the prior appeal, with relation to the other settling party (Appellant), within the meaning of that statute.
We do not revisit the merits of the settlement or the appeal, and for our purposes here, may take it as established that a few of the basic statutory elements for a further award of fees were met (e.g., the action resulted in "enforcement of an important right affecting the public interest"; Appellant was one of the successful parties; significant benefits were conferred on numerous citizens). (§ 1021.5, subd. (a).)*fn2 However, other essential statutory predicates for an award of statutory fees relating to the prior appeal of the settlement judgment are missing--the City, a settling party and fellow respondent in the third party's appeal challenging the class action settlement, was simply not an "opposing party" to the current Appellant when these fees were incurred; rather, these parties were allied in interest in defending the settlement, for which they had sought and obtained court approval (albeit over the objections of third parties). Further, under section 1021.5, subdivision (b), "the necessity and financial burden of private enforcement" are not demonstrated on this record to have made any such award "appropriate."
For purposes of statutory interpretation and in light of the applicable public policies that are implicated by this record, we conclude the settlement fundamentally changed the original positions of Appellant and the City, from adversity to one another, into allies against a common opponent, and after the time of the settlement and judgment, nothing required Appellant to pursue further arguments (thereby incurring further fees) in the underlying appeal by the Objectors. We need not differentiate between the "action" giving rise to this settlement and the separate phase of appeal by the third parties in the same "action," in order to reach that conclusion. Instead, we agree with the trial court that in view of all of the relevant circumstances, all of the statutory criteria were not met for such an award and the court therefore lacked discretion to make a further award of fees.
We further decline to accept Appellant's arguments that this record justifies such an award under either contractual or equitable principles, exclusive of a statutory basis. (Serrano v. Unruh (1982) 20 Cal.3d 25, 34, 45-46 (Serrano III).) We affirm the order denying private attorney general fees.
FACTUAL AND PROCEDURAL BACKGROUND
A. Background of Pension Litigation
The background facts are outlined as briefly as possible, since the purpose of this opinion is only to clarify the respective positions of all the parties as of the time of settlement and during the subsequent appellate challenge to it, in light of the criteria for applying the private attorney general statutory scheme to this record. We adapt the factual and procedural summary from our prior opinion.
In 1996 and 2002, the City implemented certain proposals (MP I and MP II) to provide certain budgeted amounts of employer contributions to City pension plans for the years 1996-2006. It later became evident that these City funding agreements seriously underfunded the plans, by failing to contribute the actuarially-determined amounts of employer contributions that were due to the retirement system during that period.
In June 2005, Appellant filed this complaint on a representative basis for retired City employees, alleging specific violations of the City charter, ordinances, and other theories regarding underfunding, including requests for damages. As amended, the complaint sought a judicial declaration that the City's prior annual employer contributions had resulted in underfunding of the pension plans, and a writ of mandate to direct the City to repay the amount of the shortfall to SDCERS, as the trustee of all class members, with interest.*fn3
This was not the only action challenging those City funding agreements. The Objectors were separately pursuing their own lawsuits in state and federal courts (civil rights and labor law claims). Also, in July 2004, the City had settled a previous state class action lawsuit, based on similar pension underfunding claims brought by retired city employees, by making other appropriate employer contributions. (Gleason v. San Diego (Super. Ct. San Diego County, 2003, No. GIC 803779).)
After extensive discovery was conducted in this action by Appellant and the City, and numerous discovery motions and motions for summary judgment and/or summary adjudication were filed, the case settled, with the assistance of a retired federal judge acting as a mediator. On June 8, 2006, the parties signed a "term sheet," in which City officials agreed to contribute the value of $173 million to the pension funds, relating to the years 1996 to 2006. Plaintiff agreed to act as class representative for purposes of seeking approval and enforcement of a formalized settlement agreement to that effect. (§ 382.) The parties agreed that the complaint would be amended to state a class action, for about 18,000 potential class members. They knew it would not be easy and might in fact "create a monster," as Appellant now admits, although he credits (blames) the City for that requirement.
Between August and December 2006, SDPOA and its approximately 1,600 individually named police department employees (the Objectors), among the potential class members, appeared at numerous status hearings in superior court, protesting the settlement. They strenuously argued that a clause in the settlement agreement releasing certain claims was overbroad and might jeopardize their ability to continue to litigate their separate federal actions. For example, they filed a "notice of divestiture" stating that they did not consider this plaintiff to be their representative in the pension litigation matters, and they otherwise raised what Appellant now characterizes as a hurricane of objections.
B. Written Settlement Agreement; Settlement Attorney Fees Awarded
Meanwhile, negotiations between Appellant and the City continued, and on September 6, 2006, the settlement agreement was formalized and signed by the mayor, releasing the settled claims (i.e., Charter and Municipal Code violations that had created an actuarially unsound fund). On the same date, an amended class action complaint was filed and an ex parte order was issued to certify the proposed class for settlement purposes. It would consist of 18,006 potential class members, who were given notice and an opportunity to object. This class was of the non- opt out class settlement variety authorized by Federal Rules of Civil Procedure, rule 23(b)(2). Extensive hearings continued until December 2006, on whether the settlement should be converted into a judgment.
On December 12, 2006, the trial court approved the settlement, stating in part: "Based upon the evidence before the Court, the Court finds that the value of the Pension Underfunding Claims is between $140 million and $158.9 million. The consideration the City has agreed to pay to SDCERS on behalf of the class--$173 million--is more than fair, adequate, and reasonable." Also, the court deemed the settlement, taken as a whole, to be "fair, adequate and reasonable to the plaintiff, the plaintiff class, and the City." The court noted that the percentage of objectors was low (approximately 10 percent). Judgment was entered accordingly to issue a peremptory writ of mandate requiring the City to comply with the settlement and to provide security. The court retained jurisdiction over the parties to enforce the terms of the judgment and settlement agreement.*fn4
The issue of attorney fees originally due under the settlement was sent to arbitration before a federal magistrate in February 2007. The settlement agreement contained the following attorney fees clause: "[Plaintiff's counsel] are entitled to recover attorney fees and costs from the City under . . . Section 1021.5. If the parties cannot agree on the amount of attorney fees and costs, the amount will be decided by a duly-noticed motion filed by Plaintiff's counsel within 120 days of the entry of judgment. All parties reserve their rights with respect to such fee motion, and agree that the Court will decide all issues related to attorneys' fees and costs not otherwise set forth herein. The City reserves the right to contest the amount of fees and costs that should be awarded to [Appellant's] Counsel. . . . The City will and does dispute that [Appellant's] Counsel is entitled to any 'multiplier' of fees. All parties agree that [Appellant's] Counsel is not entitled to request or receive any 'multiplier' for any period after the parties sign this Agreement."*fn5
Ultimately, after mediation, the amount of attorney fees was set and the judgment confirming the settlement was amended in 2007, reflecting that the City would pay $1.6 million private attorney general fees to class counsel (for this Appellant).
Throughout 2007-2008, Objectors were pursuing their appeal of the judgment confirming the settlement. Both the current Appellant and the City filed extensive briefing and motions on appeal, inter alia, defending the judgment as containing an appropriate and adequate settlement.
Our 62-page prior opinion affirming the judgment that approved the settlement noted, in conclusion, that "the issues presented are complex in nature and have required substantial analysis for resolution at all levels of the process." We evaluated the procedure utilized by the trial court in conducting the class fairness hearings in connection with the settlement, and determined no due process violations had occurred. We decided the trial court's certification of the settlement class did not represent an abuse of discretion. Further, we affirmed the judgment on the basis that the trial court's interpretation of the release language in the settlement agreement was correct as a matter of law. The remittitur was issued November 25, 2008.
In January 2009, after the matter was returned to the trial court, Appellant brought the current motion for an award under section 1021.5, seeking approximately $301,000 attorney fees incurred on appeal, in defense of the judgment. These fees were sought against the City, not the Objectors. *fn6 The City responded that no further fees were due, arguing that on appeal, the City had no longer been an opposing party with respect to appellant. Extensive reply papers and lodged documents were presented.
The trial court heard oral argument and on April 24, 2009, issued an order denying the motion for private attorney general fees incurred on appeal. In pertinent part, the court ruled that under section 1021.5, the City was not an opposing party in the appeal by the Objectors, but had been aligned with the representative plaintiff (Appellant). At oral argument, the court addressed both the statutory and contractual grounds argued by Appellant, and stated that even though class counsel had done ...