On July 18, 2012, the Second District Court of Appeal certified its ruling for partial publication in City of Maywood v. Los Angeles Unified School District (2012) __Cal.App.4th__ (Case No. B233739). In this case, the City of Maywood sought to overturn the Los Angeles Unified School District’s (LAUSD) certification of an FEIR analyzing the environmental consequences of constructing a high school. The trial court rejected most of the city’s claims, but found the FEIR deficient in four ways, including inadequate analysis of pedestrian safety. The trial court entered a peremptory writ and awarded attorneys’ fees to Maywood. The LAUSD appealed. The appellate court rejected most claims against the FEIR, but agreed, in an unpublished section, that further analysis of pedestrian safety impacts was required. In the only published section of its decision, the Second District clarified the proper test for determining whether the prevailing party was entitled to attorneys’ fees.

The trial court awarded Maywood approximately $670,000 in attorney’s fees pursuant to Code of Civil Procedure § 1021.5. On appeal, LAUSD argued that Maywood could not recover fees because the “primary purpose” of the lawsuit was to benefit Maywood “whether for financial or other reasons.” To obtain attorneys’ fees under § 1021.5, the party seeking the fees must show that the litigation (1) served to vindicate an important public right; (2) conferred a significant benefit on the general public or a large class of persons; and (3) was necessary and imposed a financial burden on plaintiffs which was out of proportion to their individual stake in the matter. Each of these elements must be satisfied for an award to issue.

The appellate court relied on the California Supreme Court’s decision in Conservatorship of Whitley (2010) 50 Cal.4th 1214 to clarify the method for evaluating the necessity and financial burden element of § 1021.5. The Supreme Court determined “the necessity and financial burden of private enforcement” requirement is actually comprised of two distinct elements: a necessity prong and a financial burden prong. The court held “a strong nonfinancial motivation does not change or alleviate the ‘financial burden’ that a litigant bears. Only offsetting pecuniary gains can do that.” Further, the Supreme Court noted that the legislative history for §1021.5 did not focus on the litigants’ initial subjective motivation, but rather, was intended to alleviate the financial burdens associated with public interest litigation. Lastly, the Supreme Court explained that determining whether a particular non-pecuniary interest was sufficient to preclude recovery of attorneys’ fees would require speculative inquiry lacking in objective criteria.

While the holding in Whitley focused on private enforcement actions, the Second District Court of Appeal determined that all of the factors the Supreme Court discussed in Whitley apply equally to public entity litigants. The legislative history for § 1021.5 indicated that the Legislature intended the same requirements to apply to private and public litigants. The appellate court also rejected a substantial portion of LAUSD’s argument for relying on cases preceding Whitley. Whitley has made it clear that a litigant’s non-pecuniary interests are not relevant in evaluating § 1021.5’s financial burden criterion.

The appellate court indicated that, due to reversing significant portions of the trial court’s order, it also had to reverse the order granting attorneys’ fees because any grant or denial of attorneys’ fees under § 1021.5 must follow remand and be based on the results obtained in the new judgment. The trial court was directed to reassess whether fees were appropriate after the outcome of the appeal, and if so, the appropriate amount of any such fees, applying the standards in Whitley. (By John Wheat)