Monday, January 30, 2023

Travis v. Brand (Cal. Supreme Ct. - Jan. 30, 2022)

Ordinarily, I could easily see why appellants prosecuted this petition for review in the California Supreme Court. They lost, after all, in the Court of Appeal. Moreover, they not only persuaded the Cal Supremes to grant review, but also won on the merits.

I nonetheless think that it was probably the wrong strategic decision. A pyrrhic win.

Two citizens file a lawsuit under the Political Reform Act regarding a particular initiative in Redondo Beach. After a five day bench trial, they lose. The trial court awards defendants their costs and attorney's fees, finding that the lawsuit "was frivolous, unreasonable and groundless." The trial court also finds that the two citizen plaintiffs were mere "shills" for a variety of (rich) nonparties, and holds those nonparties liable for the attorney fee award as well.

Plaintiffs and the nonparties appeal. The Court of Appeal finds in favor of the nonparties, holding that they can't be found liable for the award since they weren't parties. Due process and all. That's final at this point; no one appeals.

As for the actual two plaintiffs, however, the Court of Appeal affirms the fee award. There were two statutory bases for the trial court's fee award: Government Code 91003 and CCP 1021.5. The Court of Appeal holds that it doesn't have to decide anything about the latter because the former is sufficient to affirm. Plaintiffs argued that fee-shifting under the Political Reform Act should be asymmetrical, with awards (as here) to the defendants only if the lawsuit was frivolous, but the Court of Appeal held that it wasn't, and that whomever was the prevailing party -- here, defendants -- could be awarded fees.

Plaintiffs petitioned for review, the California Supreme Court granted it, and in today's opinion, agrees with the plaintiffs that the Court of Appeal applied the wrong legal standard since (on the merits) 91003 is indeed asymmetric, and on that basis reversed and remanded.

So Plaintiffs win. 

Seemingly, anyway.

The thing is, though, I don't think they really do. First of all, they're almost certain to lose on remand. The trial court found that the lawsuit was "frivolous, unreasonable and groundless." My bet is that the Court of Appeal, on remand, will affirm. Which means that even under the Supreme Court's new legal standard, Plaintiffs will still be liable for fees.

And even if that's not true, there's still the alternative basis of the trial court's holding: 1021.5. Plaintiffs might well still be liable under that theory as well.

So Plaintiffs had to spend the time, effort and money to (1) file a (quite uncertain) petition for review, (2) once it was granted, file briefs on the merits, and argue the case, and (3) now, on remand, have to pay further costs and fees to argue the thing again in the Court of Appeal. Plus whatever ancillary proceedings (another petition for review?!) anyone might want to file.

That's a lot of scratch. Likely for nothing, since the outcome will likely not change.

Now, look, it's a big fee award: nearly $900,000. So, normally, one might perhaps make the call that even a low probability of reversing a $900,00 award is worth it. (Though if you're fees on appeal are something like $250,000, or if you bear the risk of adding another $200,000 to the fee award for the defendants' costs and fees on appeal, that might well change your calculus, no?)

But the two plaintiffs here are just two everyday Redondo Beach residents. Plaintiffs are Arnette Travis and Chris Voisey. Do you really think defendants are going to get any actual money out of these people at the end of the day? Much less $900,000?

I don't. They'll go bankrupt, or just avoid paying. Spending an actual $200,000 fees -- or whatever -- to try to get out of a practically nonenforceable judgment for $900,000 generally seems irrational to me. Not a particularly good use of resources.

Now, I get it: the two citizens here are (allegedly) mere shills for larger (much richer) people -- the nonparties who were originally held jointly liable for the fees. But the rich nonparties are already off the hook after the Court of Appeal's holding. And, sure, you might feel sort of bad leaving your two (alleged) shills holding the bag after you got 'em spanked for a $900,000 fee award.

Still. Dumping $200,000+ down the drain to likely get the exact same fee award (or more!) on remand likely seems unworth it. Just tell the two people that you'll help 'em go BK and/or pay whatever blood the defendants successfully get from the plaintiffs' respective stones. If anything. That might be a more practically effective solution.

But whatever. I get it. Rich people have money. They can spend it on whatever they like. And if they choose to spend it on lawyers, all the better for us, right?

That just might not be the economically rational call.

Or even close to one.