One of the many pending bills seeking to curb the ability of employees to bring class actions to enforce their legal rights against employers is SB 1202 (Harman). SB 1202 would amend section 1021.5 of the Code of Civil Procedure to allow judges to withhold part of the plaintiff's attorney's fees in class action lawsuits until class members have been contacted and have received their portion of the settlement funds.
Existing law allows a court, upon motion, to award attorney's fees to a successful party against one or more opposing parties in any action that has resulted in the enforcement of an important right affecting the public interest, if certain conditions are met. This bill would authorize the judge in a class action to order a part of the attorney's fees awarded pursuant to this provision to be withheld until all class members have received their portion of the settlement funds.
The actual amendment looks like this:
Section 1021.5 of the Code of Civil Procedure is
amended to read:
1021.5. (a) Upon motion, a court may award
attorneys'attorney' s fees
to a successful party against one or more opposing parties in any
whichthat has resulted in the
enforcement of an important right affecting the public interest if
: (a) aall of the following are met:
(1) A significant benefit,
whether pecuniary or nonpecuniary, has been conferred on the general
public or a large class of persons
, (b) .
(2) 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
, and (c) such.
(3) Those fees should not ,
in the interest of justice , be paid out of the
recovery, if any.
(b) 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, unless one or more successful parties
and one or more opposing parties are public entities, in which case
no claim shall be required to be filed therefor under Part 3
(commencing with Section 900) of Division 3.6 of Title 1 of the
(c) Attorney's fees awarded to a
public entity pursuant to this section shall not be increased or
decreased by a multiplier based upon extrinsic circumstances, as
discussed in Serrano v. Priest
Cal. 3dCal.3d 25, 49.
(d) In an action based on Section 382, the judge may order a part
of the attorney's fees awarded pursuant to this section to be
withheld until the class members have received their portion of the
Section (d) is the major deal point. Frankly, we're not so sure why everyone is excited about this. We've never even tried to structure a class action settlement in such a way that we would get our money before the class members get their money. We did once present a settlement agreement for preliminary approval which was worded in such a way that the judge thought it ambiguous enough to possibly mean that the attorney's fees, which were being deducted from the gross settlement proceeds, would be the first thing paid, and the judge withheld preliminary approval until we cleared that up for him. Those fees were not based upon section 1021.5, but if there is a significant difference that, under current law, allows the lawyers to get their fees under section 1021.5 before class member shares get distributed, we've never heard of it.
Supposedly, Tom Harman advanced this bill to prevent abuses like one which occurred in a Kentucky case in which the judge and the class counsel cheated the class by letting millions of dollars get funneled into a charity that the judge oversaw. But the bill wouldn't prevent that sort of abuse at all, because it merely provides that the judge "may" order a part of the fees to be paid later. If your judge was crooked, he or she probably wasn't going to exercise a lot of discretion to protect the class in the first place. It sounds like yet another legislative "fix" offered by Senator Harman for a problem that is merely theoretical.
The bill was voted down in committee, 3-2, on March 25, but a motion for reconsideration passed 5-0 that same day. If someone can explain that process to us, by all means, leave a comment.