Children etc. Com. of Fresno County v. Brown

Filed 7/22/14

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

CHILDREN AND FAMILIES COMMISSION

OF FRESNO COUNTY, et al., F066233

Plaintiffs and Appellants, (Super. Ct. No. 11CECG01077)

v.

OPINION

EDMUND G. BROWN, JR., as Governor, etc.,

et al.,

Defendants and Respondents.

APPEAL from an order of the Superior Court of Fresno County. Debra J.

Kazanjian, Judge.

Law Offices of Richard M. Pearl and Richard M. Pearl; Baker Manock & Jensen,

Kenneth J. Price, Robert D. Wilkinson, and Amanda M. Neal, for Plaintiffs and

Appellants.

Kamala D. Harris, Attorney General, Douglas J. Woods, Senior Assistant Attorney

General, Mark R. Beckington and Seth E. Goldstein, Deputy Attorneys General, for

Defendants and Respondents.

-ooOoo-

Plaintiffs Children and Families Commission of Fresno County (Fresno

Commission), Madera County Children and Families Commission (Madera

Commission), First 5 Merced County (Merced Commission), First 5 Solano Children and

Families Commission (Solano Commission) and Kendra Rogers (collectively the

Commissions), appeal from a postjudgment order denying their motion for attorney fees

sought under the private attorney general doctrine. (Code Civ. Proc., § 1021.5)1 We

conclude section 1021.5 does not apply because, as the trial court correctly determined,

the financial burden of this litigation was not out of proportion to the Commissions’

pecuniary stakes in the proceedings. We therefore affirm the order denying attorney fees.

FACTUAL AND PROCEDURAL BACKGROUND

In November 1998, California voters adopted Proposition 10, the California

Children and Families First Act of 1998. (Prop. 10, § 5, adopted Nov. 3, 1998; Health &

Saf. Code, § 130100, subd. (c); hereafter Prop 10 or the Act.) Prop 10 created a program

to promote, support and improve “the early development of children from the prenatal

stage to five years of age[,]” “through the establishment, institution, and coordination of

appropriate standards, resources, and integrated and comprehensive programs

emphasizing community awareness, education, nurturing, child care, social services,

health care, and research.” (Health & Saf. Code, § 130100.)

To pay for these programs, Prop 10 imposes a surtax on cigarettes and tobacco

products, which is deposited into the California Children and Families Trust Fund (the

Trust Fund) in the State Treasury. (Health & Saf. Code, § 130105, subd. (a); Rev. & Tax.

Code, §§ 30131, 30131.2.) Prop 10 also established a new state commission, known as

the California Children and Families Commission (the state commission), and authorized

each county to establish a county children and families commission. (Health & Saf.

Code, §§ 130110, 130140, subd. (a)(1)(A).) The state and county commissions

administer the programs authorized by the Act. (Health & Saf. Code, § 130100, subd.

(b).)

1 Undesignated statutory references are to the Code of Civil Procedure.

2.

The Trust Fund moneys are allocated and appropriated as follows: (1) 20 percent

to separate accounts of the state commission; and (2) 80 percent to county commissions,

which are deposited into local trust funds administered by each county commission.

(Health & Saf. Code, § 130105, subd. (d).) Moneys in the local trust funds are to be

“expended only for the purposes authorized by this [A]ct and in accordance with the

county strategic plan approved by each county commission.” (Health & Saf. Code,

§ 130105, subd. (d)(2)(A).)

Prop 10 provides that moneys raised pursuant to the cigarette and tobacco taxes

“shall be appropriated and expended only for the purposes expressed in [the Act], and

shall be used only to supplement existing levels of service and not to fund existing levels

of service. No moneys in the [] Trust Fund shall be used to supplant state or local

General Fund money for any purpose.” (Rev. & Tax. Code, § 30131.4.) The Act

authorizes the Legislature to amend its provisions by a two-thirds vote of both houses and

provides that all amendments “shall be to further the [A]ct and must be consistent with its

purposes.” (Stats. 1998, Proposition 10, § 8.)

In March 2011, Assembly Bill No. 99 (AB 99) was approved by more than two-

thirds of each house of the Legislature and signed by the Governor. AB 99 was enacted

because of California’s “severe fiscal crisis, which has resulted in funding shortfalls for

many services at the state and local levels. Health and human services programs that

serve children are among the most seriously affected by this lack of funding.” (Stats.

2011, ch. 4 (AB 99), § 1(a).) The Legislature found that funding shortfalls had forced

counties to eliminate essential health and human services to children that had been paid

for with state funds, and while many county commissions maintained substantial balances

in their Prop 10 trust funds, they were unable to use the money to make up the shortfall

3.

due to the Act’s prohibition against supplanting existing service levels. (Stats. 2011, ch.

4 (AB 99), § 1(d).)2

To solve this problem, AB 99 authorized the transfer of a specified amount of

funding from the state and county trust funds. AB 99 added three Health and Safety

Code sections: (1) section 130156, which established the Children and Families Health

and Human Services Fund (Human Services Fund) in the State Treasury which was to be

used “upon appropriation by the Legislature, to provide health and human services,

including, but not limited to, direct health care services, to children from birth through

five years of age”; (2) section 130157, which directed that $50 million be transferred

from the state commission’s accounts to the Human Services Fund; and (3) section

130158, which directed that $950 million from the combined balances of all the county

commissions’ trust funds be transferred to the Human Services Fund. The Legislature

asserted this transfer did not supplant existing levels of service because the services were

no longer being funded and that requiring Prop 10 funds to be used in this manner would

help counties achieve the Act’s “overall objective of promoting, supporting, and

optimizing early childhood development.” (Stats. 2011, ch. 4 (AB 99), § 1(g).)

Each non-exempt county commission was supposed to remit 50 percent of its

county commission funding for deposit into the Human Services Fund by June 30, 2012.

(Health & Saf. Code, § 130158, subd. (c)(2).)3 These remissions were not to cause any

county commission’s fund balance to fall below the amount the county commission

received from the Trust Fund in the 2009-10 fiscal year. (Health & Saf. Code, § 130158,

subd. (c)(3).) To the extent the total remitted by all county commissions exceeded

2According to the Governor’s Budget Summary for fiscal year 2011-12, which

the Commissions submitted as an exhibit in support of their petition, as of June 30, 2009,

county commissions held more than $2 billion in reserves.

3County commissions that received less than $600,000 in Trust Fund revenues in

the 2009-10 fiscal year were exempt from this requirement. (§ 130158, subd. (c)(1).)

4.

$950 million, the excess was to have been proportionally returned to all contributing

county commissions. (Health & Saf. Code, § 130158, subd. (c)(5).)

On April 5, 2011, the Fresno, Madera and Merced Commissions, as well as

taxpayer Kendra Rogers, filed a petition for writ of mandate in Fresno County Superior

Court, naming Governor Edmund G. Brown, Jr., California State Controller John Chiang,

and California Director of Finance Ana J. Matosantos as defendants (collectively the state

officials). The Commissions alleged the Legislature exceeded its authority in enacting

AB 99, asserting the measure interfered with local control of commission funds, violated

Prop 10’s prohibition on using those funds to supplant existing services, and threatened to

allow expenditures for services to all age groups, rather than children to age five and their

families. The Commissions sought a writ of mandate prohibiting the state officials from

implementing or complying with AB 99; they also asked for declaratory and injunctive

relief, as well as attorney fees pursuant to section 1021.5.

Pursuant to a stipulation, the Solano Commission joined the initial three

commissions in prosecuting the action. Six other county commissions filed similar suits

throughout the state. All of these cases eventually were consolidated in Fresno County.

Governor Brown’s initial budget proposal in January 2011 called for using

$1 billion of the more than $2 billion held in the state and county commissions trust funds

to fund Medi-Cal services for children through age five to allow continued funding of

core programs providing early childhood health services, subject to voter approval. This

approach changed in the May Revision to the 2011-12 budget which increased funding to

the Health and Human Service Agency by $1 billion in light of the legal challenges

brought against the state’s use of Prop 10 funding for the Medi-Cal program. While the

May Revision noted the state would continue to defend the legal challenges, the

Administration elected to take a conservative approach and restore the General Fund

costs. The 2011-12 budget the Governor signed on June 30, 2011 did not include the

transfer of the Prop 10 funds for use by the Health and Human Services Agency.

5.

On November 21, 2011, after briefing by the parties and argument, the trial court

issued its order on the petition. The issue before the court was whether AB 99 was a

valid amendment to Prop 10, which turned on whether AB 99 furthered Prop 10’s

purposes. The court rejected the state officials’ assertion that the undisputed purpose of

Prop 10 was funding programs for preschool children, finding instead that Prop 10 was

intended to “‘emphasize local decision-making’ and ‘provide for greater local flexibility

in designing delivery systems.’” The court determined the purposes of the two laws were

conflicting: while Prop 10 “clearly requires” local experts and community

representatives to decide how the 80% funds are to be spent, AB 99 “clearly divests” the

county commissions of that authority and vests it in the Legislature. As the court

explained, “[t]o claim that transferring decision-making from local communities to the

state legislature is ‘consistent with’ Prop 10 is like asking the court to find that black

means white.”

The court also found that AB 99 violated Prop 10’s prohibition against using Trust

Fund money to supplant or replace funding for existing levels of services for young

children, noting that AB 99 “essentially states that its intent is to transfer the funds out of

the local commissions to get around that prohibition by allowing the state legislature to

do what Prop 10 prevents the commissions from doing.” As the court explained, “by

claiming that the [L]egislature has prioritized ensuring that the target population

‘continue to receive basic health care services,’ they are essentially acknowledging that

the legislative intent is to use these funds to ‘fund existing levels of service.’”

The court concluded that, based on the evidence before it, neither Health and

Safety Code section 130157 nor section 13158 furthered Prop 10 or were consistent with

its purposes, and therefore the amendments could be validly enacted only be a vote of the

electorate. The court also found that Health and Safety Code section 130156 could not be

severed from the rest of AB 99. Therefore, the court held that the entire bill was invalid

and the Commissions were entitled to judgment on the peremptory writ.

6.

Following the ruling, the Commissions dismissed their remaining causes of action,

with the exception of their attorney fees claim. The court entered final judgment on

January 11, 2012. The state officials elected not to appeal the judgment.

The Commissions subsequently filed a motion for attorney fees under section

1021.5, which provides, in relevant part, “Upon motion, a court may award attorneys’

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: (1) 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, 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.”

The motion sought $382,382.50 in attorney fees incurred during the litigation.4

The Commissions argued their lawsuit enforced important rights affecting the public

interest and conferred a significant benefit on two classes of persons: (1) children from

the prenatal stage to age five and their families, and (2) California voters. They asserted

the lawsuit benefitted more than just their own constituents, as it enforced the rights of all

California voters and young children and families throughout the state. The

Commissions claimed their interest in the litigation was not financial, as they sought to

protect the funds entrusted to them and ensure the Trust Fund would be allocated to

programs through local decision-making and not used to supplant funding for existing

services for young children. While the Commissions acknowledged they would retain a

substantial amount of money by virtue of the lawsuit, they argued this was not an

4 The six other county commissions whose actions were consolidated with the

Fresno action filed separate motions for attorney fees, in which they sought to recover a

total of $314,176.05 in fees. Thus, all plaintiffs sought to recover a combined total of

nearly $700,000 in fees.

7.

economic benefit to them but instead constituted money held in trust for the benefit of

their constituents.

In their opposition to the motion, the state officials argued that the Commissions

had not shown that the lawsuit conferred a substantial benefit on the general public or a

large class of persons, as neither young children nor the California electorate received

any meaningful benefit from the trial court’s determination that AB 99 exceeded the

Legislature’s power to amend Prop 10. The state officials further argued the

Commissions had not established that the financial burden of enforcement made an

attorney fee award appropriate, as they had a sufficient financial interest to bring the

lawsuit without the prospect of an attorney fee award and their litigation costs of

$382,382.50 were not disproportionate to their expected financial gain, i.e. the retention

of more than $30 million in trust money that was subject to transfer had AB 99 been

enforced.

The trial court denied the motion for attorney fees. In its written order, it

explained its decision as follows: “Here . . . the petitioner commissions are public

entities with identified constituencies, appointed to hold and distribute the funds they

receive in trust for their constituents. In this case, the Commissions obtained a significant

pecuniary benefit for their constituencies from this litigation, and as argued in the

opposition, it was in no way ‘disproportionate’ to the $700,000 in fees they claim to have

incurred, since the funds they preserved for their constituents were in the hundreds of

millions.

“The Commissions did not need the prospect of attorney’s fees as an incentive to

bring this litigation, and the issue they brought to the court was basically whose judgment

was to decide the best way to help young California children; it was that of the local

commissions set up by Prop 10 o[r] the state [L]egislature. While the court found, as it

had to, that the [L]egislature was not authorized to make that determination based on the

8.

plain language of Prop 10, that doesn’t necessarily mean that there was a net ‘substantial

benefit’ to the families who receive Prop 10 services.

“While respondents concede that important rights were protected (including the

right of the electorate to control the scope of legislative authority to amend statutes

passed by initiative and the right of young children to the benefits of locally determined

programs funded with taxpayer dollars), there is a question as to the extent of the

‘substantial benefit’ obtained in that the inability of the state to use the one billion of

tobacco tax revenue to fund existing health related programs necessarily meant that there

were less funds available to fund those programs.

“With regard to benefit to the electorate, it does seem, as respondents have argued,

that the issue here wasn’t whether the people have the right to set limits on the power of

the [L]egislature to make amendments, but whether in this case AB 99 furthered the Act

and was ‘consistent with its purpose,’ since the voters specifically authorized amendment

on a 2/3 vote of the [L]egislature where those conditions were met.

“Additionally, to qualify for an award under CCP § 1021.5, the court must find

that it would not be ‘in the interest of justice’ to pay the fees out of the plaintiff’s

recovery, ‘if any.’ Here, the Commissions were able to hold on to millions of dollars in

funds they would otherwise have lost, out of which the $700,000 could be paid. On the

other hand, the State lost access to the $1 billion it wanted to use to pay for critically

needed health care services. If it now has to also pay $700,000 to the Commissions, that

is even less available to fund health services. [¶] While petitioners have argued that

denying the motion would result in a deprivation of services to young children, an

equivalent deprivation may be suffered if the state w[ere] required to pay.”

Only the Fresno, Madera, Merced and Solano commissions, along with Kendra

Rogers, appealed the fee denial.

9.

DISCUSSION

Section 1021.5

Section 1021.5 codifies the private attorney general doctrine enunciated in

Serrano v. Priest (1977) 20 Cal.3d 25, which “‘“rests upon the recognition that privately

initiated lawsuits are often essential to the effectuation of fundamental public poli[c]ies

embodied in constitutional or statutory provisions, and that, without some mechanism

authorizing the award of attorney fees, private actions to enforce such important public

policies will as a practical matter frequently be infeasible.”’” (Healdsburg Citizens for

Sustainable Solutions v. City of Healdsburg (2012) 206 Cal.App.4th 988, 992.) The

doctrine’s purpose “is to encourage suits enforcing important public policies by providing

substantial attorney fees to successful litigants in such cases.” (Robinson v. City of

Chowchilla (2011) 202 Cal.App.4th 382, 390 (Robinson).)

As pertinent here, an award under section 1021.5 requires a showing that (1) the

litigation enforced an important right affecting the public interest; (2) it conferred a

significant benefit on the general public or a large class of persons; and (3) the necessity

and financial burden of private enforcement, or enforcement by one public entity against

another, were such as to make the award appropriate. (Conservatorship of Whitley

(2010) 50 Cal.4th 1206, 1214 (Whitley).) Since the statute states the criteria in the

conjunctive, each element must be satisfied to justify a fee award. (City of Maywood v.

Los Angeles Unified School Dist. (2012) 208 Cal.App.4th 362, 429 (Maywood).)

Accordingly, we may uphold the trial court’s order denying the attorney fees motion if

we determine any one of these elements is missing.

The third element, the necessity and financial burden requirement, involves two

issues: “‘“whether private enforcement was necessary and whether the financial burden

of private enforcement warrants subsidizing the successful party’s attorneys.”’” (Whitley,

supra, 50 Cal.4th at pp. 1214-1215.) It is the second prong which is at issue here. Our

Supreme Court has explained this prong as follows: “In determining the financial burden

10.

on litigants, courts have quite logically focused not only on the costs of the litigation but

also any offsetting financial benefits that the litigation yields or reasonably could have

been expected to yield. ‘“An award on the ‘private attorney general’ theory is appropriate

when the cost of the claimant’s legal victory transcends his personal interest, that is,

when the necessity for pursuing the lawsuit placed a burden on the plaintiff ‘out of

proportion to his individual stake in the matter.’” [Citation.] ‘This requirement focuses

on the financial burdens and incentives involved in bringing the lawsuit.’” (Whitley,

supra, 50 Cal.4th at p. 1215.) A party seeking fees under section 1021.5 has the burden

of establishing its litigation costs transcend its personal interests. (Save Open Space

Santa Monica Mountains v. Superior Court (2000) 84 Cal.App.4th 235, 246-247; Beach

Colony II v. California Coastal Com. (1985) 166 Cal.App.3d 106, 113.)

In Whitley, our Supreme Court clarified the proper method of evaluating the

“financial burden” element of section 1021.5, i.e. when the cost of the legal victory

transcends the successful party’s personal interest. (See Maywood, supra, 208

Cal.App.4th at pp. 429-430.) As explained in Maywood, before Whitley, “appellate

courts were divided as to whether it was proper to consider a claimant’s nonpecuniary

‘personal interests’ when applying the financial burden element. [Citations.] Whitley

resolved the dispute, holding that ‘a litigant’s personal nonpecuniary motives may not be

used to disqualify [that] litigant from obtaining fees under section 1021.5.’” (Maywood,

supra, 208 Cal.App.4th at p. 430.)

The plaintiff in Whitley, the conservator of her developmentally disabled brother,

brought litigation resulting in a published appellate opinion that extended certain

procedural protections to disabled persons challenging a community placement.

(Whitley, supra, 50 Cal.4th at pp. 1211-1212.) The trial court denied her subsequent

request for attorney fees under section 1021.5, in part, on the ground the financial burden

imposed by the case was not out of proportion to her personal interest in her brother’s

well-being. (Whitley, supra, 50 Cal.4th p. 1213.) The Court of Appeal affirmed the fee

11.

denial, holding that a strong nonpecuniary personal interest in the litigation could

disqualify a litigant from obtaining attorney fees under section 1021.5. (Whitley, supra,

50 Cal.4th at p. 1213.)

Our Supreme Court reversed, holding that “a litigant’s personal nonpecuniary

motives may not be used to disqualify that litigant from obtaining fees” under section

1021.5. (Whitley, supra, 50 Cal.4th at p. 1211.) The Court explained that the appellate

court’s contrary interpretation has no basis in the language, legislative history, or evident

purpose of section 1021.5, which is “not to compensate with attorney fees only those

litigants who have altruistic or lofty motives, but rather all litigants and attorneys who

step forward to engage in public interest litigation when there are insufficient financial

incentives to justify the litigation in economic terms.” (Whitley, supra, 50 Cal.4th at

p. 1211.)

In so holding, the Court cited, with approval, the method for weighing costs and

benefits of litigation illustrated in Los Angeles Police Protective League v. City of Los

Angeles (1986) 188 Cal.App.3d 1 (LAPPL). (Whitley, supra, 50 Cal.4th at p. 1215.)

First, the trial court fixes or estimates “‘. . . the monetary value of the benefits obtained

by the successful litigants themselves[,]’” discounted by “‘some estimate of the

probability of success at the time the vital litigation decisions were made which

eventually produced the successful outcome.’” (Whitley, supra, 50 Cal.4th at p. 1215.)

Next, the trial court turns to the costs of the litigation which may have been required to

bring the case to fruition. (Id. at pp. 1215-1216.) Finally, the trial court “‘place[s] the

estimated value of the case beside the actual cost and make[s] the value judgment

whether it is desirable to offer the bounty of a court-awarded fee in order to encourage

litigation of the sort involved in this case. . . . [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.’” (Id. at p. 1216, citing LAPPL, supra, 188 Cal.App.3d

at pp. 9-10.)

12.

Although Whitley was a private enforcement action, one appellate court has

concluded that its holding applies to public enforcement cases where a public entity

pursues attorney fees against another public entity. (City of Maywood, supra,

208 Cal.App.4th at p. 432.) The court in City of Maywood noted that, “when applying

section 1021.5’s ‘financial burden’ criterion to political subdivisions, the trial court

should consider whether the burden of the litigation transcended the interests of both the

political entity and the collective interests of the individuals that entity represents.” (City

of Maywood, supra, 208 Cal.App.4th at p. 435.) But, “when assessing this factor in the

context of a public entity’s legal victory, the trial court may only consider the public

entity’s pecuniary interests and the pecuniary interests of its constituents.” (Ibid.)5

Standard of Review

Here, the trial court effectively determined that the Commissions failed to satisfy

the financial burden element of section 1021.5 because the cost of the litigation was not

out of proportion to the value of the case to the Commissions’ constituents. Generally, a

trial court’s ruling on a request for attorney fees under section 1021.5 is reviewed for

abuse of discretion. (Vasquez v. State of California (2008) 45 Cal.4th 243, 251.) De

novo review is appropriate when the trial court’s determination of whether the statutory

criteria were met presents an issue of statutory construction or a question of law.

(Whitley, supra, 50 Cal.4th at p. 1213; Serrano v. Stefan Merli Plastering Co., Inc. (2011)

52 Cal.4th 1018, 1025-1026.)

The financial burden element of section 1021.5 requires a determination of the

cost of the litigation relative to its value to the Commissions. This is not a question of

5 As noted in City of Maywood: “‘Section 1021.5 originally precluded public

entities from receiving fees under the statute. [Citation.] In 1993, however, the

Legislature amended the statute to its present form, which allows a public entity to

recover attorney fees from another public entity.’” (City of Maywood, supra, 208

Cal.App.4th at p. 432, fn. 35.)

13.

law. The trial court, being more familiar with the dynamics of the litigation, is in a better

position to assess the financial burden of the lawsuit in relation to its value to the

Commissions. We review the trial court’s order for abuse of discretion. (See LAPPL,

supra, 188 Cal.App.3d at p. 11 [trial court’s assessment of financial burden element

merits deference from appellate court, though appellate court “need not shirk” from

correcting errors in methodology or calculation].)

In reviewing the ruling, “‘we must pay “‘particular attention to the trial court’s

stated reasons in denying or awarding fees and [see] whether it applied the proper

standards of law in reaching its decision.’”” [Citation.] ‘The pertinent question is

whether the grounds given by the court . . . are consistent with the substantive law of

section 1021.5 and, if so, whether their application to the facts of this case is within the

range of discretion conferred upon the trial courts under section 1021.5, read in light of

the purposes and policy of the statute.’” (County of Colusa v. California Wildlife

Conservation Bd. (2006) 145 Cal.App.4th 637, 648.) “The trial court’s determination

may not be disturbed on appeal absent a showing that there is no reasonable basis in the

record for the award.” (Ibid.)

Analysis

The trial court determined the Commissions brought this litigation to preserve

their trust funds, which were to be used to pay for programs for their constituents. It

denied the Commissions’ section 1021.5 fee request because the trust fund money they

preserved far exceeded the fees incurred and therefore the bounty of a fee award was not

required to encourage the litigation.

The trial court did not abuse its discretion in so finding. The evidence before the

court showed that the Commissions faced losing more than $31 million combined had the

14.

transfers provided for by AB 99 gone into effect.6 The amount saved was more than 80

times the amount of attorney fees expended – $382,382.50. The Commissions did not

need a bounty of court-awarded fees to encourage the litigation and the financial burden

of the litigation was not out of proportion to the Commissions’ stake in the matter.

The Commissions contend the trial court applied the incorrect standard when

assessing whether the financial burden of enforcement by one public entity against the

other makes a fee award appropriate. Arguing that a different standard applies to public

enforcement actions, they assert the pertinent question in such cases is whether the public

entity deserves a reward for pursuing litigation that was in the interest of more than its

own constituents, citing People ex rel. Brown v. Tehama County Bd. Of Supervisors

(2007) 149 Cal.App.4th 422 (Tehama County).

In Tehama County, the Court of Appeal held that the People of the State of

California, acting through the Attorney General, were not entitled to recover attorney fees

under section 1021.5. The court concluded this was because the financial burden

criterion cannot apply to the Attorney General, as it is the Attorney General’s job to

pursue litigation that is in the general interest of the state’s population and therefore the

Attorney General needs no encouragement to pursue such litigation. (Tehama County,

supra, 149 Cal.App.4th at pp. 454-456.) In so holding, the appellate court explained that

historically, the traditional financial burden criterion of section 1021.5 “served to limit

fee awards under the statute to persons who pursue public interest litigation at a cost to

themselves that is out of proportion to any personal interests they might have in the

outcome of the matter[,]” and “has always served ‘as a “bounty” for pursuing public

interest litigation, not a reward for litigants motivated by their own interests who

6The Commissions estimated transfers were as follows: (1) $16,659,721 from

Fresno; (2) $3,237,435 from Madera; (3) $3,136,168 from Merced; and (4) $8,819,307

from Solano.

15.

coincidentally serve the public.” (Tehama County, supra, 149 Cal.App.4th at pp. 453,

454.) The court concluded the traditional financial burden criterion “can easily be

applied to public entities that are political subdivisions of the state – that is, something

less than the state as a whole,” as “in such a case, the pertinent question is whether the

public entity deserves a reward for pursuing litigation that was in the interest of a greater

spectrum of the public than its own constituents.” (Tehama County, supra,

149 Cal.App.4th at p. 456.)

Tehama County does not support the Commissions’ assertion that a different

standard applies to public entities seeking to recover attorney fees under section 1021.5.

Instead, Tehama County shows that the historical financial burden criterion applies to

public entities, i.e. that fee awards to public entities are limited to public entities who

pursue public interest litigation at a cost to themselves that is out of proportion to any

personal interest they might have in the outcome of the matter. (Tehama County, supra,

149 Cal.App.4th at p. 453.) As the Court of Appeal explained in City of Maywood, it is

clear that after our Supreme Court’s decision in Whitley, this inquiry requires

consideration of only the pecuniary interests of the public entity and its constituents, and

whether the burden of litigation transcends those interests. (City of Maywood, supra, 208

Cal.App.4th at p. 435.)

The trial court here determined the burden of the litigation did not transcend the

pecuniary interests of the Commissions and their constituents, as their pecuniary interests

far outweighed the burden the litigation placed upon them. While this litigation also

conferred pecuniary benefits on other county commissions and their constituents

throughout the state, the Commissions and their constituents obtained a substantial

pecuniary benefit for themselves. In bringing suit, the Commissions were protecting their

sole source of funding without which they would not exist. The trial court reasonably

could conclude that, in a situation where the Commissions stood to preserve for their

constituents funds that greatly exceeded the attorney fees expended, they did not deserve

16.

a reward for pursuing litigation that coincidentally conferred statewide benefits. While

the Commissions urge us to look simply at the number of children who benefitted

statewide in determining whether they satisfied the financial burden prong, they ignore

that it is the pecuniary interests of the parties that is at issue, not simply the number of

people who benefitted. (City of Maywood, supra, 208 Cal.App.4th at p. 435.)

The Commissions next argue they did not have a quantifiable pecuniary interest

that can be compared to the costs of litigation because they did not seek, and were not

awarded, monetary relief. We are not persuaded. Although the Commissions were

seeking equitable relief rather than money damages, the goal of the equitable relief was to

retain their trust fund moneys so they could provide programs for their constituents. The

benefit to be obtained from this litigation was pecuniary, namely the preservation of

money, even if that pecuniary benefit did not come in the form of money damages. The

Commissions assert that the state officials conceded below that the Commissions did not

recover a net monetary judgment. The state officials made this statement when arguing

that the Commissions were not prevailing parties for the purpose of recovering costs

against the Controller. Such a statement does not amount to a concession that no

pecuniary benefit was bestowed on the Commissions for purposes of determining an

award of attorney fees under section 1021.5.

The case upon which the Commissions rely, Samantha C. v. State Dept. of

Developmental Services (2012) 207 Cal.App.4th 71 (Samantha C.), does not compel a

different result. There the plaintiff successfully sued the State Department of

Developmental Services (DSS) and a regional center for declaratory relief and a petition

for writ of mandate to overturn determinations that she did not have a developmental

disability and therefore was not entitled to services under the Lanterman Developmental

Disabilities Services Act (Lanterman Act). (Samantha C., supra, 207 Cal.App.4th at pp.

73-74.) Her suit resulted in a published appellate opinion in which the Court of Appeal

concluded she was eligible for services because she had a disabling condition within the

17.

meaning of the Lanterman Act. (Samantha C., supra, 207 Cal.App.4th at pp. 73-74.)

The trial court subsequently denied her request for $243,817.50 in attorney fees under

section 1021.5. (Samantha C., supra, 207 Cal.App.4th at 77.) The Court of Appeal

reversed, concluding that its prior opinion resulted in the enforcement of an important

right affecting the public interest and conferred a significant benefit on the general public.

(Samantha C., supra, 207 Cal.App.4th at pp. 77-78.) The appellate court also found the

necessity and burden of private enforcement made the award appropriate, as the necessity

of pursuing the lawsuit placed a burden on Samantha out of proportion to her individual

stake in the matter, and the attorney fees should not in the interest of justice be paid out

of the recovery, which was nonexistent. (Id. at p. 81.)

Unlike Samantha C., where the nearly $250,000 in attorney fees the plaintiff

incurred was out of proportion to her individual stake in the litigation, i.e. the provision

of regional center services, the burden of this lawsuit in the form of nearly $383,000 in

attorney fees was not out of proportion to the Commissions’ stake in this matter, namely

the preservation of over $31 million in Prop 10 funds.

The Commissions argue the trial court improperly focused on their “initial

subjective motivation” behind the lawsuit, citing Whitley, supra, 50 Cal.4th at p. 1219.

We disagree. As we have explained, in Whitley, the Court held that a litigant’s personal,

nonpecuniary motives did not preclude an award of fees on the theory that having such a

stake in the litigation offset the costs under the “financial burden” prong of section

1021.5. (Whitley, supra, 50 Cal.4th at p. 1211.) In this context, the Court rejected an

argument that the litigant’s reasons for bringing suit were controlling: “[T]he Legislature

that enacted section 1021.5 was not so much concerned with what brought a litigant with

a potential public interest case into an attorney’s office, but rather with allowing that

litigation to move forward from there by offering at least the prospect that the financial

burden of the litigation could be shifted to the opposing party if the litigant prevailed.”

(Whitley, supra, 50 Cal.4th at p. 1220.)

18.

We do not construe the trial court’s order as showing an improper focus on the

Commissions’ reasons for bringing the lawsuit. The trial court essentially found that the

Commissions filed suit to protect the pecuniary interests of their constituents and did not

need the prospect of attorney fees as an incentive to bring the litigation. This is not

tantamount to a finding that the Commissions’ subjective motivation for bringing suit

itself warranted a denial of fees – rather, the court was rejecting the Commissions’ claim

that they lacked a pecuniary interest in the litigation.

The trial court’s observation that the benefits retained far exceeded the

Commissions’ attorney fees shows that it was properly focused on the third element of

section 1021.5 – whether the financial burden of the litigation was objectively

disproportionate to the Commissions’ stake in the case. “[A] court may speak of the

litigant’s motivation ‘as a shorthand reference to the court’s conclusion that the objective

financial incentives for prosecuting the lawsuit were not disproportionate to the financial

burden.’ Motivation language is particularly useful because in assessing the financial

burdens and benefits in the context of section 1021.5, we are evaluating incentives rather

than outcomes.” (Whitley, supra, 50 Cal.4th at p. 1220.)

The Commissions contend that, regardless of the dollar value of the services

preserved, a fee award is appropriate because “they are non-profit government entities

whose purpose was simply to be able to keep providing the services to their constituents

that the electorate had funded them to provide.” In so arguing, they compare this case to

Feminist Women’s Health Center v. Blythe (1995) 32 Cal.App.4th 1641 (Blythe), and

Planned Parenthood v. Aakhus (1993) 14 Cal.App.4th 162 (Aakhus), in which attorney

fees were awarded under section 1021.5 to health clinics that successfully obtained

injunctions against anti-abortion protestors who blocked access to women in need of the

clinics’ services. The cases are distinguishable. In both, the fact that the clinics were

advocating on behalf of the constitutional right to privacy was a key factor in the attorney

fees analysis. (Aakhus, supra, 14 Cal.App.4th at pp. 172-173; Blythe, supra, 32

19.

Cal.App.4th at p. 1668.) More importantly, neither clinic received a monetary recovery

or sought to recover lost revenues; instead, they sued to allow women to have access to

their clinics. (Aakhus, supra, 14 Cal.App.4th at p. 173; Blythe, supra, 32 Cal.App.4th at

p. 1668.) In contrast here, the Commissions did not sue on behalf of their clients’

constitutional rights and retained a substantial sum of money in their lawsuit. (See

California Redevelopment Assn. v. Matosantos (2013) 212 Cal.App.4th 1457, 1480

[noting that “the clinic in Blythe did not receive any monetary recovery in the action,

whereas [plaintiff] obtained a judgment providing for the retention of $350 million by its

members.”].)

Finally, the Commissions argue the trial court should have disregarded their

financial interest in bringing the action because the benefit their lawsuit conferred on the

public was significant. As the Court of Appeal explained in LAPPL, a fee award may be

appropriate even where the expected value of the litigant’s monetary award exceeds the

actual litigation costs by a substantial margin:

“All these factors under section 1021.5 are interrelated, however. Where the

benefits achieved for others are very high it will be more important to encourage

litigation which achieves those results. Accordingly, it will be more important to offer

the bounty of a court-awarded fee than where the public benefits are less significant.

Thus, the courts should be willing to authorize fees on a lesser showing of need than they

might where the public benefits are less dramatic. This means the court sometimes

should award fees even in situations where the litigant’s own expected benefits exceed its

actual costs by a substantial margin.

“In contrast, where the public benefits are modest the courts should award fees

only where the litigant’s own expected benefits do not exceed its costs by very much (or

possibly are even less than the costs of the litigation). To put it another way, when the

ratio between public benefits and the litigant’s expected benefits is high the court should

award fees even though the ratio between expected litigant benefits and litigant costs is

20.

high. On the other hand, where the ratio between public benefits and expected litigant

benefits is relatively low so must be the ratio between the expected litigant benefits and

litigant costs in order to justify a fee award.” (LAPPL, supra, 188 Cal.App.3d at p. 10.)

The Commissions contend it is an “indisputable fact” that the public benefits of

this lawsuit were “‘very high,’” as they preserved $1 billion to fund services for young

children throughout the state, as well as local control over those services, and enforced

the voters’ constitutional right to determine the proper use of the taxes imposed by Prop

10. But while the ratio of the public benefits – the $1 billion in county commission trust

fund money saved – to the Commissions’ benefits of approximately $31 million is high,

the ratio of the Commissions’ benefits to their litigation costs is significantly higher.

Given that the benefit to the Commissions greatly exceeded the benefit to the other

county commissions throughout the state, the trial court did not abuse its discretion in

making the value judgment that a bounty of a court-awarded fee was not necessary to

encourage litigation of this type.7

Because we conclude the trial court did not abuse its discretion in determining that

the Commissions failed to meet the “financial burden” element of section 1021.5, we

need not consider whether it satisfied the other criteria upon which the court denied the

motion, i.e., whether it conferred a significant benefit on the general public or a large

class of persons and whether attorney fees should not be paid out of the recovery in the

interests of justice.

7 For the first time in their reply brief, the Commissions argue that the trial court’s

interpretation of the term “appropriate” in section 1021.5 is belied by the construction

given that term in federal fee-shifting statutes such as the Endangered Species Act (16

U.S.C. § 1540(g)(4) and Clean Water Act (33 U.S.C. § 1365(d)). They assert that the

term should be given a broad meaning and, if it were, there was nothing inappropriate

about awarding fees to them for serving the interests of the state at large. We summarily

reject this contention because we will not address arguments raised for the first time in

the reply brief. (Provost v. Regents of University of California (2011) 201 Cal.App.4th

1289, 1295.)

21.

DISPOSITION

The order denying an award of attorney fees under section 1021.5 is affirmed.

Respondents shall recover their costs on appeal.

_____________________

Gomes, Acting P.J.

WE CONCUR:

_____________________

Kane, J.

_____________________

Peña, J.

22.