Patterson v. Superior Court of L. A. Cnty.

70 Cal.App.5th 473

285 Cal.Rptr.3d 420

Michael PATTERSON, Petitioner,

v.The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent;

Charter Communications, Inc. et al., Real Parties in Interest.

B312411

Court of Appeal, Second District, Division 7, California.

Filed October 18, 2021

Kyle Todd, P.C., Kyle Todd, Los Angeles, Samantha Johnson and Alfredo Nava.

No appearance for Respondent.

Hill, Farrer & Burrill, James Bowles and Casey Morris, Los Angeles, for Real Parties in Interest Charter Communications, Inc. and Nicholas Lopez.

PERLUSS, P. J.

Several well-established rules govern imposition of fees and costs incurred in actions under the California Fair Employment and Housing Act (FEHA) ( Gov. Code, § 12900 et seq. ). First, a successful plaintiff is entitled to recover his or her reasonable attorney fees. A prevailing defendant, however, may not be awarded attorney fees or costs "unless the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so." ( Gov. Code, § 12965, subd. (b) ( § 12965(b) ).) Second, FEHA claims may be included in a predispute arbitration agreement, but an employer that seeks to compel arbitration of FEHA claims may not limit statutorily imposed remedies or "require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court." ( Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 103, 110-111, 99 Cal.Rptr.2d 745, 6 P.3d 669 ( Armendariz ).)

Given these fundamental principles, may an employer's arbitration agreement authorize the recovery of attorney fees for a successful motion to compel arbitration of a FEHA lawsuit even if the plaintiff's opposition to arbitration was not frivolous, unreasonable or groundless? Because a fee-shifting clause directed to a motion to compel arbitration, like a general prevailing party fee provision, risks chilling an employee's access to court in a FEHA case absent section 12965(b) ’s asymmetric standard for an award of fees, a prevailing defendant may recover fees in this situation only if it demonstrates the plaintiff's opposition was groundless.

No such finding was made by the superior court in the underlying action before awarding real party in interest Charter Communications, Inc. its attorney fees after granting Charter's motion to compel Michael Patterson to arbitrate his FEHA claims. Accordingly, we grant Patterson's petition for writ of mandate and direct respondent Los Angeles Superior Court to vacate its March 16, 2021 order awarding attorney fees to Charter and to conduct a new hearing to reconsider Charter's motion for attorney fees.

FACTUAL AND PROCEDURAL BACKGROUND

1. Patterson's FEHA Lawsuit

Patterson, a Charter employee from March 2017 through January 2020, sued Charter in April 2020 for unlawful sexual harassment/hostile work environment ( Gov. Code, § 12040, subd. (j) ), unlawful retaliation (§ 12940, subd. (h)) and failure to prevent harassment and retaliation in violation of FEHA ( § 12040, subd. (k) ). Patterson also named in the sexual harassment cause of action Nicholas Lopez, who had been Patterson's supervisor at Charter's Irwindale office during a two-year period. In his complaint Patterson alleged, in brief, that Lopez had repeatedly engaged in unwanted and inappropriate touching; Patterson had complained to Charter's human resources department about Lopez's conduct; and Charter responded, after conducting inadequate investigations, by terminating Patterson's employment.

2. Charter's Motion To Compel Arbitration

Charter moved on June 29, 2020 to compel arbitration of Patterson's FEHA claims pursuant to the parties’ written agreement to arbitrate all employment-related disputes. In its motion and supporting declaration and exhibits, Charter explained its active employees had been notified by email on October 6, 2017 that Charter had implemented an arbitration program and, unless they opted out within 30 days, they would be bound by the mutual arbitration agreement that could be viewed online via an intranet link to a Solution Channel website. Patterson did not opt out.

In his opposition to the motion Patterson argued he never saw, much less consented to, the arbitration agreement Charter was seeking to enforce. (He did not deny the email had been sent to his work in-box, but he declared he did not see it.) Patterson also argued the agreement was procedurally and substantively unconscionable, specifically challenging as one-sided and inconsistent with the policies underlying access to the courts in FEHA cases the separate attorney fee provision in the agreement authorizing attorney fees for a party who successfully compelled arbitration.

The court granted Charter's motion on October 20, 2020, ruling, "The court does not find the agreement to be procedurally unconscionable and that there was sufficient notice to plaintiff by Charter as more fully detailed in the notes of the court reporter." We summarily denied Patterson's petition for writ of mandate seeking review of the order compelling arbitration. (Patterson v. Superior Court (Dec. 23, 2020, B309452).)

3. Charter's Motion for Attorney Fees

Charter moved on October 29, 2020 for an award of attorney fees incurred in moving to compel arbitration "on the ground that Charter was the prevailing party on Charter's motion to enforce the Arbitration Agreement entered into by the parties, which had an attorneys’ fees provision specifically providing such relief to the prevailing party on a motion to enforce said agreement." Specifically, Charter quoted paragraph K of the agreement:

"K. Arbitration Costs . Charter will pay the AAA administrative fees and the arbitrator's fees and expenses. All other costs, fees and expenses associated with the arbitration, including without limitation each party's attorneys’ fees, will be borne by the party incurring the costs, fees and expenses. The parties agree and acknowledge, however, that the failure or refusal of either party to submit to arbitration as required by this Agreement will constitute a material breach of this Agreement. If any judicial action or proceeding is commenced in order to compel arbitration, and if arbitration is in fact compelled, or the party resisting arbitration submits to arbitration following the commencement of the action or proceeding, the party that resisted arbitration will be required to pay the other party all costs, fees and expenses that they incur in compelling arbitration, including, without limitation, reasonable attorneys’ fees."

Citing this court's decision in Acosta v. Kerrigan (2007) 150 Cal.App.4th 1124, 1132, 58 Cal.Rptr.3d 865 ( Acosta ), which involved a lease dispute between a landlord and tenant, Charter argued, "Under California law, where a fee provision in an arbitration agreement provides for attorneys’ fees to the prevailing party compelling arbitration, that party ‘has an immediate right to make a claim for the attorney fees he incurred in getting the trial court to move the controversy to arbitration.’ " Charter sought $10,583 as reasonable attorney fees.

Following further briefing and oral argument, the superior court on March 16, 2021 granted Charter's motion in substantial part, reducing the request for excessive hours and awarding Charter $6,912 as reasonable attorney fees. The court ruled attorney fees incurred in connection with a petition to compel arbitration may be awarded before the merits of the dispute have been determined "where a party prevailed in a discrete proceeding on the contract." The court also ruled the asymmetric standard for attorney fees in FEHA cases applied only after adjudication of the case on the merits.

4. Patterson's Writ Petition

On May 14, 2021 Patterson filed a petition for writ of mandate, prohibition or other appropriate relief in this court, arguing the superior court had erred in awarding Charter attorney fees because it had not "commenced" a "judicial action or proceeding" to compel arbitration, as required by the terms of the arbitration agreement; FEHA does not permit an employer to shift attorney fees to a plaintiff employee unless the employee's actions were objectively frivolous; and the fee-shifting provision at issue is unconscionable and should not be enforced. After receiving an informal opposition from Charter, on June 16, 2021 we ordered respondent superior court to show cause why it should not be compelled to vacate its order granting the motion for attorney fees and to issue a new order denying the motion.

DISCUSSION

1. The Charter Fee-shifting Clause Applies to a Motion To Compel Arbitration in a Pending Lawsuit

Traditional rules of contract interpretation apply to determining the scope of an agreement for the payment of attorney fees. ( Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 752, 220 Cal.Rptr.3d 650, 398 P.3d 556 ( Mountain Air ); see Santisas v. Goodin (1998) 17 Cal.4th 599, 608, 71 Cal.Rptr.2d 830, 951 P.2d 399.) "Accordingly, we first consider the mutual intention of the parties at the time the contract providing for attorney fees was formed. [Citation.] Our initial inquiry is confined to the writing alone. [Citations.] ‘ "The ‘clear and explicit’ meaning of these provisions, interpreted in their ‘ordinary and popular sense,’ unless ‘used by the parties in a technical sense or a special meaning is given to them by usage’ [citation], controls judicial interpretation. [Citation.] Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning. [Citations.]" ’ [Citations.] At the same time, we also recognize the ‘interpretational principle that a contract must be understood with reference to the circumstances under which it was made and the matter to which it relates." ( Mountain Air , at p. 752, 220 Cal.Rptr.3d 650, 398 P.3d 556.)

The fee-shifting clause in Charter's arbitration...