Friday, March 30, 2012

Recovering Attorneys’ Fees as a California Whistleblower

In representing a public employee whistleblower who suffered retaliation and was terminated from her job, Bryan Schwartz Law won an important victory this week, with the Superior Court ruling that she will be eligible to recover attorneys’ fees if she wins at trial, under California Code of Civil Procedure §1021.5. The defendant employer (a county) had argued that the whistleblower under California Labor Code §1102.5 was not eligible for fee-shifting because the primary effect of the action (if successful) would be to vindicate plaintiff’s personal economic interests – that is, to help her get her job back, with back pay and emotional distress damages. However, the Court embraced the plaintiff’s argument that the county was applying the wrong equation.

Under §1021.5, there are three elements to a fee award: “(1) the enforcement of an important right affecting the public interest; (2) the conferring of a significant benefit on the general public or a large class of individuals; and (3) the necessity and financial burden of private enforcement renders the award appropriate.” (internal quotations omitted) Jaramillo v. County of Orange (2011) 200 Cal.App.4th 811, 829. Plaintiff argued – and the Court agreed – that protecting whistleblowers from retaliation is a strong public interest. Doing so confers a significant benefit on the general public – namely, empowering people to step forward to expose fraud, corruption, and other wrongdoing. See, e.g., Green v. Ralee Engineering Co. (1998) 19 Cal. 4th 66, 77.

As an example, in Jaramillo, 200 Cal.App.4th at 829, the plaintiff recovered attorneys’ fees under §1021.5, stemming in part from whistleblower a retaliation claim under §1102.5 of the California Labor Code. The Court of Appeal found a public benefit where the outcome would “inure to the benefit of the citizens and taxpayers of [the] County by lessening the probabilities of abuse and corruption in the sheriff's office [where the plaintiff worked]….[The case established that] any person occupying the office of the county sheriff will not be able to assume, as this record shows [the wrongdoer] did, that he or she may ignore warnings of wrongdoing (or even mere mismanagement) from high level sheriffs and then be able to cover up the fact of those warnings with an in-the-corner ‘at will’ termination.”

The principle is clear: litigation resulting in the vindication of whistleblowers who step forward to protect the public fisc does confer a significant benefit on the public, and may warrant fee-shifting. This is because fee-shifting for a prevailing whistleblower encourages others to blow the whistle and expose public corruption, without fear of reprisal, and puts public employers on notice that they cannot act with impunity against whistleblower employees.

Since a public employee whistleblower exposing corruption likely meets the public benefit prong, the question remains whether the necessity and financial burden of private enforcement renders a fee award appropriate. Under the recent California Supreme Court case of Conservatorship of Whitley (2010) 50 Cal. 4th 1206, a fee award is appropriate when there is a public benefit to the litigation, if the expected recovery (i.e., accounting for litigation risk) is not significantly greater than cost of litigation. In other words, in public interest litigation, if a plaintiff is 50% likely to recover $100,000, then the fees/costs incurred will have to be significantly less than $50,000 for the losing employer to avoid §1021.5 fee-shifting. See Whitley, 50 Cal.4th at 1215-1216 (citing with approval Los Angeles Police Protective League v. City of Los Angeles (1986) 188 Cal.App.3d 1).

The Whitley precedent is very important for whistleblowers – especially public employees – and their advocates, since public employees cannot recover punitive damages, and since their wage loss in middle-income positions typically does not reach the million-plus dollars that litigation through trial will cost: “[A] bounty will be appropriate except where the expected value of the litigant's own monetary award exceeds by a substantial margin the actual litigation costs.” Whitley, 50 Cal.4th at 1216.

Though the whistleblower protection law, Cal. Lab. §1102.5, does not have its own fee-shifting provision, like the Fair Employment and Housing Act does, under Cal. Code of Civ. Pro. §1021.5 a whistleblower can hope to recover attorneys’ fees if he/she is successful in litigation.

DISCLAIMER: This article is for general interest and nothing in this article is intended to form an attorney-client relationship or provide fact-specific guidance in anyone's case. To seek to obtain legal advice about your whistleblower case, contact Bryan Schwartz Law and request an initial consultation:

1 comment:

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