Humboldt County Super. Ct. Nos. CV990445 & CV990452). Superior Court of Humboldt County, No. CV990445, John J. Golden, Judge.
The opinion of the court was delivered by: Simons, J.
CERTIFIED FOR PARTIAL PUBLICATION*fn1
Retired judge of the Lake Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution
In Environmental Protection Information Center v. California Dept. of Forestry & Fire Protection (2008) 44 Cal.4th 459 (EPIC II), the California Supreme Court resolved the merits of a long-running legal dispute surrounding the logging of 211,000 acres of timberland owned by Pacific Lumber Company (Pacific Lumber) in Humboldt County. (Id. at pp. 470, 472.) Respondents Environmental Protection Information Center and Sierra Club (hereafter, collectively, EPIC) and the United Steelworkers of America (the Steelworkers) had challenged various administrative approvals issued to Pacific Lumber by California's Department of Forestry and Fire Protection (CDF) and the Department of Fish and Game (DFG).*fn2 EPIC and the Steelworkers prevailed in the trial court; and, in September 2004, the trial court awarded them attorney fees under Code of Civil Procedure section 1021.5 (section 1021.5).
The Agencies and Pacific Lumber appealed the trial court's judgment and the attorney fee awards to this court; and, in late 2005, we issued an opinion that substantially reversed the trial court's judgment on the merits. EPIC and the Steelworkers successfully sought review in the California Supreme Court, and we stayed briefing in the appeal from the attorney fee awards pending the Supreme Court's decision. In light of that decision resolving the merits of the underlying cases, we address the Agencies' appeals from the fee awards.
The Agencies argue that, in view of the outcome of the appeals in the underlying litigation, respondents are no longer entitled to attorney fees. The Agencies further argue that even if respondents are entitled to fees, the amounts awarded must be reduced to account for respondents' ultimate lack of success on the merits. Finally, the Agencies contend the trial court made a number of errors in determining the amount of the fees it awarded.
We agree with the Agencies that the fee awards must be reevaluated in light of the final outcome of the underlying litigation. We reverse the attorney fee orders and remand the matter to the trial court for redetermination of respondents' entitlement to fees and the appropriate amount of any fee award. To narrow the scope of the issues to be decided on remand and for the guidance of the trial court in the further proceedings, we resolve many of the issues raised by the parties in these appeals.
FACTUAL AND PROCEDURAL BACKGROUND
The factual and procedural history of the underlying litigation is set forth in detail in the California Supreme Court's opinion in the merits appeals. (See EPIC II, supra, 44 Cal.4th at pp. 470-478.) Part of our recitation of the facts is drawn from that opinion, but we discuss only those matters relevant to the appeals from the fee awards.
The Headwaters Agreement and the Administrative Proceedings
The underlying litigation arose from an agreement (the "Headwaters Agreement") among Pacific Lumber, the State of California, and the United States. (EPIC II, supra, 44 Cal.4th at p. 470.) The Headwaters Agreement "was intended to settle matters of litigation and public controversy surrounding the intensive logging of old growth redwoods and other trees on Pacific Lumber's property in Humboldt County." (Ibid.) Under the Headwaters Agreement, the state and federal governments purchased a small portion of the property, and Pacific Lumber was permitted to log the remainder, provided it obtained certain regulatory approvals from state and federal agencies. (Ibid.) These approvals are "supported by a document or documents that are to some degree interrelated with the others." (Id. at p. 471.)
Pacific Lumber submitted for approval: (1) a Sustained Yield Plan (SYP) under Public Resources Code section 4551.3; (2) a state Incidental Take Permit under the California Endangered Species Act (CESA) (Fish & G. Code, § 2050 et seq.); and (3) an application for a Streambed Alteration Agreement under Fish and Game Code former section 1603, and (4) as required by federal law, a Habitat Conservation Plan (HCP). (EPIC II, supra, 44 Cal.4th at pp. 471-472.) As part of the approval process, the federal and state agencies decided to prepare for the state SYP and the federal HCP a joint environmental impact report (EIR) under the California Environmental Quality Act (CEQA) (Pub. Resources Code, § 21000 et seq.) and an environmental impact statement (EIS) under the National Environmental Policy Act of 1969 (42 U.S.C. § 4321 et seq.). (EPIC II, at p. 472.) Congress required Pacific Lumber to obtain these approvals by March 1, 1999. (Appropriations Act of Nov. 14, 1997, Pub.L. No. 105-83, § 501(b), 111 Stat. 1543, 1611 (hereafter, Appropriations Act).) "The approvals were timely obtained, in some cases right at the March 1 deadline." (EPIC II, at p. 470.)
Respondents' Actions for Administrative Mandamus
On March 31, 1999, EPIC filed an action for administrative mandamus seeking to set aside four agency decisions: (1) CDF's approval of the SYP, (2) DFG's issuance of the Incidental Take Permit, (3) DFG's approval of the Streambed Alteration Agreement, and (4) CDF's and DFG's findings and certification of the EIS/EIR prepared for the SYP, the Incidental Take Permit, and the Streambed Alteration Agreement. It also prayed for an injunction prohibiting the Agencies and Pacific Lumber from authorizing or engaging in any timber operations pursuant to any Timber Harvest Plan (THP) that relied on the SYP or the Streambed Alteration Agreement. Finally, EPIC requested reasonable attorney fees under section 1021.5 On that same date, the Steelworkers filed a petition for administrative mandamus challenging only the SYP on grounds similar to those EPIC raised. Like EPIC, the Steelworkers requested an award of attorney fees. Both EPIC and the Steelworkers later filed amended petitions that are the operative pleadings in this case.
On July 22, 2003, the trial court issued separate statements of decision ruling on the two petitions. It found both EPIC and the Steelworkers entitled to issuance of writs of mandate. The trial court rejected respondents' arguments that the Agencies' decisions were unsupported by substantial evidence, but ruled in respondents' favor on virtually every other issue raised. It concluded "that the SYP was deficient on a number of grounds, and that the Incidental Take Permit, Streambed Alteration Agreement and CEQA findings were all inadequate and represented a failure to comply with the law" on the Agencies' part. (EPIC II, supra, 44 Cal.4th at pp. 477-478.) The trial court later issued supplemental statements of decision enjoining "timber operations conducted pursuant to any post-July 22[, 2003] THP which relied upon the SYP, [Incidental Take Permit] or Streambed Alteration Agreement."
After issuance of the statements of decision, EPIC and the Steelworkers moved for awards of attorney fees under section 1021.5. The Agencies opposed both motions. On September 24, 2004, the trial court issued similar orders in both cases, awarding attorney fees to EPIC ($4,279,915.74) and the Steelworkers ($1,787,806.21).
In its orders, the trial court found that EPIC and the Steelworkers had satisfied all of section 1021.5's conditions for entitlement to an award of fees.*fn3 Specifically, it found respondents were successful parties and determined their actions had vindicated important rights affecting the public interest. It further found their actions had conferred a significant benefit on the general public and that private enforcement of the rights vindicated in the actions was necessary.
In calculating the amount of the awards, the trial court allowed respondents to recover fees for some of the time their counsel had spent in the administrative proceedings prior to the commencement of the litigation. In addition, in setting the lodestar amount, the court chose to use the prevailing hourly rates for attorneys in San Francisco, where respondents' counsel were located, rather than the rates prevailing in Humboldt County. After considering a number of factors, the court enhanced the fee award by applying a lodestar multiplier of 2.0.
The Appeals on the Merits
The trial court entered judgments and issued peremptory writs of mandate on October 31, 2003. The Agencies timely appealed to this court from both the underlying judgments and the related attorney fee orders. We consolidated the appeals for briefing, argument, and decision.
On December 12, 2005, we issued our opinion in Environmental Protection Information Center v. California Dept. of Forestry & Fire Protection (A104828, A104830, A105388, A105391) (EPIC I), reversing the trial court's judgments on the merits and remanding the matter for further proceedings. Our opinion "reversed the trial court on almost every point and upheld each of the regulatory approvals at issue." (EPIC II, supra, 44 Cal.4th at p. 470.) The Supreme Court granted review on March 29, 2006; and, on April 12, we stayed the appeals from the orders awarding attorney fees. On February 14, 2007, the case in the Supreme Court was stayed because Pacific Lumber filed for chapter 11 bankruptcy. The stay was lifted on August 1, 2007.*fn4
On July 17, 2008, the Supreme Court issued its decision, affirming our opinion in most respects, but reversing on certain issues. (See EPIC II, supra, 44 Cal.4th at pp. 470-471, 526-527.) It set aside CDF's approval of the SYP, holding that the agency had failed to produce a single, identifiable document, and it agreed with EPIC that the SYP was required to include individual watershed planning analyses. (Id. at pp. 491-497, 500-504.) It rejected all other challenges respondents made to the SYP. (Id. at pp. 482-491, 497-499, 504-506.) Addressing a question of first impression, our state's high court held the "no surprises clauses" included in the state Incidental Take Permit inconsistent with Fish and Game Code section 2081, subdivision (b)(2).*fn5 (EPIC II, at pp. 506-514.) It left to the trial court on remand to decide whether the clauses could be severed and the rest of the Incidental Take Permit reinstated. (Id. at p. 526.) The Supreme Court rejected the remainder of EPIC's challenges to the permit. (Id. at pp. 515-517.) It also disagreed with all of EPIC's contentions regarding the validity of the Streambed Alteration Agreement and upheld that document. (Id. at pp. 518-521.) Finally, the court upheld the EIS/EIR against all of the challenges EPIC raised against it. (Id. at pp. 521-526.)
After the Supreme Court issued its decision in EPIC II, we lifted the stay in these appeals and the parties completed briefing.*fn6
The Agencies attack the orders awarding attorney fees on a number of grounds. They first assert the fee awards are improper because respondents have failed to satisfy two of the conditions set forth in section 1021.5. Specifically, the Agencies claim EPIC and the Steelworkers cannot demonstrate that their litigation conferred a "significant benefit . . . on the general public or a large class of persons" or that "the necessity . . . of private enforcement . . . [is] such as to make the award appropriate . . . ." (§ 1021.5, subds. (a), (b).) These arguments attack respondents' entitlement to a fee award.
In the alternative, the Agencies argue that even if respondents are entitled to an award, the amount of the fees granted is excessive. Principally, they contend the fee awards must be reduced to reflect the limited success respondents achieved after the appeals on the merits. The Agencies further contend the amounts awarded should be reduced because EPIC and the Steelworkers duplicated each other's efforts. Finally, appellants assert the trial court abused its discretion by: (1) awarding fees for counsel's work in the administrative proceedings, (2) compensating counsel using San Francisco rates rather than Humboldt County rates, (3) enhancing the fee award with a multiplier, (4) awarding improper litigation expenses, and (5) excluding an expert declaration.
Although the parties seek to avoid a remand and the expense of further fee litigation, we conclude a reviewing court should not decide in the first instance all of the issues presented. We resolve those issues properly within our purview, and, in the interests of judicial economy and for the guidance of the trial court on remand, we address certain other issues. (See Californians for Responsible Toxics Management v. Kizer (1989) 211 Cal.App.3d 961, 970 (CRTM).)
I. The Fee Award Must Be Reconsidered in Light of the Appellate Proceedings*fn7
Before turning to the specific challenges to the attorney fee award, we resolve a threshold question: Must the fee award be reconsidered in light of the outcome of the appellate proceedings in this case? The Agencies argue that the trial court's award was based on a judgment that granted a sweeping victory to EPIC and the Steelworkers. Since the appellate proceedings have circumscribed that victory by vindicating the Agencies on a number of issues, the Agencies argue we must reconsider whether EPIC and the Steelworkers are entitled to a fee award at all. Respondents contend the Supreme Court's opinion has only strengthened the basis for the fee award by reinstating the superior court's judgment and setting a binding precedent on a number of legal issues. They argue we may affirm the superior court's fee award on the record before us and assert that we need not take additional evidence on appeal or remand the matter for further proceedings in light of the final results of the litigation.
We agree with the Agencies. Where a successful party has been awarded attorney fees under section 1021.5, and a reviewing court later reverses the judgment on which the fee award was based, the reviewing court must also reverse the fee order. (National Parks & Conservation Assn. v. County of Riverside (2000) 81 Cal.App.4th 234, 238 (National Parks) [reversal of judgment ordering issuance of peremptory writ of mandate].) "An order awarding such fees 'falls with a reversal of the judgment on which it is based.' [Citation.]" (California Grocers Assn. v. Bank of America (1994) 22 Cal.App.4th 205, 220.) When a judgment is affirmed in part and reversed in part, reconsideration of the issue of significant benefit and of the amount of the fee award also may be appropriate. (Ventas Finance I, LLC v. Franchise Tax Bd. (2008) 165 Cal.App.4th 1207, 1233-1234.) The reason for this is that "we cannot say with certainty that the court would exercise its discretion in the same way" had the successful party been granted something less than the relief it obtained below prior to appellate modification of the judgment. (Id. at p. 1233.) Put another way, after the appellate proceedings in this case, "the factual predicate for the trial court's award . . . is no longer valid." (Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th 1, 17.)
Reconsideration is particularly appropriate in determining whether the litigation has conferred a significant benefit on the general public or a large class of persons. The significant benefit determination must be based on "a realistic assessment, in light of all the pertinent circumstances, of the gains which have resulted in a particular case." (Woodland Hills Residents Assn. v. City Council (1979) 23 Cal.3d 917, 939-940 (Woodland Hills).) Because EPIC and the Steelworkers now base their significant benefit arguments largely on the success they obtained in the California Supreme Court, we must reassess the gains resulting from this case by examining the outcome of the appellate proceedings.*fn8 (See Neecke v. City of Mill Valley (1995) 39 Cal.App.4th 946, 965 [after partial reversal by Court of Appeal, "the issue of whether [the plaintiff] should receive attorney fees has been significantly altered"].)
In sum, the attorney fee awards must be reversed and remanded to permit the trial court to take into account the ultimate results of this litigation. As we explain below, we will exercise our discretion to make the significant benefit determination ourselves. We remand two issues to the trial court: the necessity of private enforcement and the amount of any attorney fee award.
II. Issues of Entitlement - Significant Benefit and Necessity
A. Requirements for Attorney Fee Awards Under Section 1021.5*fn9
A party seeking attorney fees under section 1021.5 must satisfy five statutory conditions before an award will be authorized. (See Vasquez v. State of California (2008) 45 Cal.4th 243, 250 (Vasquez).) "[A] court may award fees only to 'a successful party' and only if the action has 'resulted in the enforcement of an important right affecting the public interest . . . .' [Citation.] Three additional conditions must also exist: '(a) a significant benefit, whether pecuniary or non-pecuniary, 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.' [Citation.]" (Id. at pp. 250-251.)
In this appeal, the first two conditions are not at issue. The Agencies do not dispute respondents' status as successful parties, nor do they dispute that the action has resulted in the enforcement of an important right affecting the public interest. The Agencies do contend there can be no award of fees in this case because respondents cannot satisfy the third and fourth prongs of the statute--the "significant benefit" and "necessity" criteria.*fn10
Before addressing the parties' contentions about whether the litigation conferred a significant benefit within the meaning of section 1021.5, we resolve two preliminary questions. First, should we make the initial determination of significant benefit, or should we leave the matter to the trial court on remand? Second, does the analysis of significant benefit require that we "balance" the benefits conferred on the public by each side in the ...