Attorney Fees Awards in Public Interest Litigation: Judicial and Legislative Developments in California

The general rule in the United States is that the prevailing party in a lawsuit may not recover his attorney fees from the loser unless a contractual or statutory provision explicitly allows such an award. The Supreme Court's 1975 decision in Alyeska Pipeline Service Co. v. Wilderness Society¹ Scuttled the incipient development of the "private attorney general" doctrine as a rationale for attorney fees awards to successful "public interest" plaintiffs in federal court in the absence of statutory authorization.²

But the issue of attorney fees awards is hardly a dead letter. The Court's ruling in Alyeska was based on the federal court costs statute,³ and the decision therefore does not prohibit state courts from using the private attorney general doctrine as a basis for fees awards. Nor did Alyeska foreclose recovery of attorney fees in either federal or state courts under the other well-recognized "bad faith" and "common benefit" exceptions to the general American rule, although it attempted to circumscribe the instances in which the latter could be applied.⁴ This attempted limitation, along with the statutory prohibition of awards against the federal government itself⁵ and the fact that federal court decrees awarding fees against states may be prohibited by the Eleventh Amendment,⁶ has served to curtail federal judicial awards of fees under these alternative doctrines, however.⁷

At the federal level, the growing number of statutes⁸ allowing attorney fees awards in certain types of litigation arising under them and pending legislation⁹ that would essentially repeal the American rule as to public interest litigation against federal agencies reveals that the attorney fees debate has shifted from the judicial to the legislative forum. On the other hand, two recent court decisions in California indicate that despite this shift in federal focus the attorney fees question is still very much the subject of judicial development at the state level. In addition, a recently enacted statutory provision shows that California is taking innovative legislative action in this area as well.

Serrano

On October 4, 1977, the California Supreme Court affirmed a lower court's award of attorney fees to plaintiffs who had successfully challenged the state's method of financing its public school system as a denial of equal protection. The state supreme court decided in Serrano v. Priest¹⁰ that despite the absence of explicit statutory authorization the trial court acted within the scope of its equitable discretion in awarding fees on the basis of the private attorney general doctrine.

Finding that Alyeska did not govern state practices, the court emphasized that the litigation had vindicated a public policy grounded in the state constitution and thus benefited citizens of the state as a whole. It expressly declined to determine whether such an award would be proper where a statutory rather than a constitutional policy was involved. The court also ruled that to disqualify plaintiffs' attorney's two public interest law firms, from receiving such an award because they receive public and charitable funding would be essentially inconsistent with the purpose of the private attorney general doctrine. Such public interest law firms, the court noted, are often the only attorneys available to vindicate this sort of meritorious constitutional claim.

The court also discussed what it termed the "substantial benefit" theory of fee awards. This doctrine, which is essentially identical to the federal "common benefit" exception, allows recovery of attorney fees where plaintiff, proceeding in a representative capacity, obtains a judicial decision resulting in the conferral of a substantial pecuniary or non-pecuniary benefit upon a large class of persons and the fee award can be spread among the beneficiaries of plaintiff's action.¹¹ The court found that the award in Serrano could not be based on this theory as well as the private attorney general doctrine. Reasoning that concrete "benefits" can accrue to the state and its citizens as a result of the Serrano litigation only insofar as the legislature, in designing a new school financing system, [8 ELR 10026] chooses to bestow them, the court ruled that the litigation thus did not directly confer a benefit upon the particular members of this class.

The Serrano decision was a shot in the arm for prospective public interest litigants in California. Such litigants were effectively notified that at least as to suits in state court based on alleged violations of state constitutional principles by state officials or agencies, they might, if successful, recover their attorney fees from the defendants under the private attorney general doctrine. Serrano thus dissipated to some extent the pall cast over public interest litigation by the Alyeska decision. A more recent ruling by a state court of appeal which awarded fees under the common benefit rationale is of more direct interest to environmental litigants, however.

Woodland Hills

On November 14, 1977, the California Court of Appeal for the Second District, in Woodland Hills Residents Ass'n v. City Council of Los Angeles,¹² reversed a trial court's denial of a request for attorney fees by landowners who successfully challenged the Los Angeles City Council's approval of a tract map for a proposed nearby subdivision.¹³ The City Council's approval had been held invalid by the lower court because it did not include the required finding that the subdivision was consistent with the city's general plan.

The appellate court held that the plaintiffs were entitled to an award of attorney fees in the absence of explicit statutory authorization under the substantial benefit exception to the general rule against such awards. The court quoted the statement in Serrano to the effect that under this exception a judge may allow an award:

where the litigation has conferred a substantial benefit on the members of an ascertainable class, and where the court's jurisdiction over the subject matter of the suit makes possible an award that will operate to spread the costs proportionately among them.¹⁴

The court also pointed out that the benefit conferred can be non-pecuniary but emphasized that it must be "concrete."

Plaintiffs had conceded that they benefited from the litigation since they live and own property near the proposed subdivision site but asserted that an ascertainable class, i.e., the citizens of Los Angeles, have also received a substantial and concrete benefit from the litigation in the form of increased environmental protection. The court agreed, viewing plaintiffs' victory in Woodland Hills as a vindication of the principle that all future housing subdivisions must be developed in accordance with the city's general plan, thus tending to assure more meaningful land use regulation within the city. The court considered this increase in environmental protection through better enforcement of the city's development requirements to be similar in stature to the benefits bestowed by the plaintiffs' efforts in Mills v. Electric Auto-Lite¹⁵ and Hall v. Cole.¹⁶

The court recognized, however, that it would be unfair to assess the full cost of plaintiffs' attorney fees against the city in this case because the litigation benefited plaintiffs as residents of the subdivision vicinity to a greater extent than it did the other citizens of the city. Under these circumstances, the court held, plaintiffs must bear the greater portion of the reasonable cost of the services rendered by their attorneys.

The court also noted that an award under the private attorney general rationale requires that the litigation effectuate a strong state policy rather than confer a substantial and concrete benefit on an ascertainable class under the court's jurisdiction. The court, however, declined to determine whether an award in Woodland Hills was justified under that doctrine as well as the common benefit theory, viewing the resolution of this issue as unnecessary and therefore inappropriate.

From the point of view of prospective environmental litigants, two aspects of the Woodland Hills decision stand out. The first is the court's conclusion that, for the purpose of applying the common benefit theory to allow a fee award, increased environmental protection through public enforcement of existing laws is cognizable as a "substantial benefit" and that the populace of a large city may constitute the ascertainable class upon which this benefit is conferred and from whom the attorney fees may be recovered.¹⁷ The second is the court's limitation of the award to only partial reimbursement of plaintiffs' actual legal expenses because of the special benefit they have derived from the litigation. This limitation answers the perennial objection that "public interest" litigants are often primarily concerned with their own economic or aesthetic interests and only secondarily with protecting the general public. But award limitations in cases such as Woodland Hills may simply serve to deter the fullest possible advocacy of the public interest, and to that extent contravene the basic policy consideration underlying the practice of awarding attorney fees.

New California Statute

The court in Woodland Hills referred to a recently enacted amendment to the California statutory provision¹⁸ embodying the American rule but did not consider the measure in reaching its decision because the amendment was not to become effective until January 1, 1978. The Amendment, which goes beyond Serrano and [8 ELR 10027] Woodland Hills, adds the following new section to the Code of Civil Procedure:

Upon motion, a court may award attorney's 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 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. With respect to actions involving public entities, this section applies to allowances against, but not in favor of, public entities, and no claim shall be required to be filed therefor.¹⁹

This measure synthesizes the common benefit and private attorney general doctrines and is the first such general legislative authorization for judicial awards of attorney fees in public interest lawsuits to be enacted anywhere in the nation. Although it has not yet been judicially interpreted, the new statute almost certainly encompasses environmental litigation. Woodland Hills stands for the proposition that lawsuits resulting in increased environmental protection confer a significant non-pecuniary benefit upon the general public. Moreover, the tenuous financial circumstances of most environmental advocates, along with the usually small monetary stake they have in the outcome, would appear to meet the equitable requirements of parts (b) and (c) of the statutory provision.

One possible roadblock might be a restrictive judicial interpretation of what constitutes an "important right affecting the public interest" which limits that term to constitutional as opposed to statutory or common law rights. A cramped reading of the statute that excludes environmental protection from this category seems unlikely, however, given the solicitous attitude the California courts have generally displayed toward environmental rights.²⁰ Moreover, the amendment itself provides no basis for a distinction between constitutional and statutory or common law rights.

A further point to note in light of the Woodland Hills ruling is that the statute makes no provision for partial fees awards where the prevailing public interest advocate has a special interest in the litigation. Authority to limit awards to partial reimbursement in such cases might be implied from the requirement that the financial burden of private enforcement be such as to make the award "appropriate," however, as well as from the notions of equity inherent in subsection (c) of the statute.

Conclusion

By adding § 1021.5 to its Code of Civil Procedure, California has outdistanced both its sister states and the federal government in the area of attorney fees awards in public interest litigation. The statute applies to prevailing defendants as well as successful plaintiffs, and requires that elements of both the common benefit and private attorney general theories be satisfied in order to justify an award. A bill²¹ to allow judicial awards of attorney fees to indigent litigants who vindicate "important public rights" in suits against federal agencies under the Administrative Procedure Act²² is bottled up in the Senate Judiciary Committee despite an indication by President Carter in his Environmental Message that he supports such legislation.²³ California's example in enacting § 1021.5 may provide an impetus to Congress to move on this bill.

Regardless of the new California statute, Serrano remains a noteworthy reminder that Alyeska did not preclude equitable state court awards of attorney fees under the private attorney general doctrine. The Woodland Hills decision will also have continuing relevance as authority that increased environmental protection conferred on the general public by successful environmental litigation is a significant benefit under the statute.

With these two judicial decisions and the enactment of § 1021.5, California may be on the threshold of a new era in public interest law. The exact character of the change remains to be determined by future judicial interpretation and application of these authorities, but it seems a safe bet that fee awards to environmental plaintiffs will become more frequent and that greater public enforcement of environmental requirements will thus be encouraged. What cannot now be determined is whether other states or the Congress will follow California's lead in this area.

1. 421 U.S.C. 240, 5 ELR 20286 (1975).

2. For a discussion of this development, see Comment, The Discretionary Award of Attorney's Fees by the Federal Courts: Selective Deviation from the No-fee Rule and the Regrettably Brief Life of the Private Attorney General Doctrine, 36 OHIO L.J. 588 (1975).

3. 28 U.S.C. §§ 1920, 1923(a).

4. 421 U.S. 240, 264 n. 39, 5 ELR 20286, 20292 n. 39.

5. 28 U.S.C. § 2412.

6. See Edelman v. Jordan, 415 U.S. 651 (1974), and compare Jordan v. Gilligan, 500 F.2d 701 (6th Cir. 1974), cert. denied, 421 U.S. 991 (1975) with Fitzpatrick v. Bitzer, 519 F.2d 559 (2d Cir. 1975), aff'd in part, 427 U.S. 445 (1976). See also Comment, Attorneys' Fees and the Eleventh Amendment, 88 HARV. L. REV. 1875 (1975); Comment, Awarding Attorneys' Fees Against a State: The Eleventh Amendment After Edelman v. Jordan, 44 GEO. WASH. L. REV. 112 (1975); Comment, Federal Powers and the Eleventh Amendment: Attorneys' Fees in Private Suits Against the State, 63 CALIF. L. REV. 1167 (1975).

7. See, e.g., Trinity Episcopal Schools Corp. v. Hills, 422 F. Supp. 179, 7 ELR 20189 (S.D.N.Y. 1976).

8. A list current as of 1975 is contained in footnote 33 of the Alyeska opinion.421 U.S. at 260, 5 ELR at 20291. Recent additions in the environmental area include the Toxic Substances Control Act, 15 U.S.C. §§ 2601, 2618, ELR STAT. & REG. 41335, 41348, and the Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. §§ 1201, 1270, ELR STAT. & REG. 42401, 42421. NEPA remains the most important environmental statute under which fee awards are not expressly authorized.

9. S. 270, 95th Cong., 2d Sess. (1978).

10. 20 Cal. 3d 25, 7 ELR 20795 (Cal. Sup. Ct. Oct. 4, 1977).

11. Hall v. Cole, 412 U.S. 1, 3 ELR 20552 (1973); Mills v. Electric Auto-Lite, 396 U.S. 375 (1970).

12. __ Cal. App. 3d __, 8 ELR 20046 (Cal. Ct. App. Dec. 20, 1977).

13. The proposed development entailed substantial environmental impacts. It was to be located in a hillside area of 38 acres and involved cutting 90 feet from the top of a ridge and filling the adjacent valleys with 750,000 cubic years of earth.

14. 20 Cal. 3d 25, 40 n. 10. The courts in both Serrano and Woodland Hills looked to two earlier California decisions, Mandel v. Hodges, 54 Cal. App. 3d 596 (1976) and D'Amico v. Board of Medical Examiners, 11 Cal. 3d 1 (1974), to determine the applicable standards for attorney fees awards under the substantial benefit theory.

15. 396 U.S. 375 (1970) (resulted in better informed corporate suffrage).

16. 412 U.S. 1, 3 ELR 20552 (1973) (enhanced union free speech rights).

17. But see Trinity Episcopal Schools Corp. v. Hills, 422 F. Supp. 179, 7 ELR 20189 (S.D.N.Y. 1976) in which the court held plaintiffs had failed to offer "convincing proof" that a NEPA suit concerning the construction of a public housing project in Manhattan had conferred a substantial benefit on an ascertainable class of area residents or that the cost of a fee award could be spread among the alleged beneficiaries.

18. CAL. CIV. PROC. CODE § 1021.

19. CAL. CIV. PROC. CODE § 1021.5, Statutes of 1977, ch. 1197. For a discussion of the origins of this measure, see Comment, After Alyeska: Will Public Interest Litigation Survive?, 16 SANTA CLARA L. REV. 267 (1976).

20. See, e.g., Friends of Mammoth v. Board of Supervisors, 8 Cal. 3d 247, 502 P.2d 1049, 2 ELR 20673 (1972).

21. S. 270, 95th Cong., 2d Sess. (1978).

22. 5 U.S.C. §§ 701-706, ELR STAT. & REG. 41005.

23. The Environment — The President's Message to Congress, 7 ELR 50057, 50068 (May 23, 1977).