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Challenge huge attorneys’ fees: Courts now have discretion to limit awards in some cases

by on
in Employment Law,Human Resources

One of the biggest shocks employers get when an employee or former employee wins a lawsuit against them is the attorneys’ fee award. Employers typically have to pay the employee’s legal fees and expenses when the employee wins even a modest victory.

Those fees can be far greater than the actual lost wages and other damages. That’s especially true in cases that have been appealed or were litigated in more than one court.

Essentially, the basic rule is that an employee who wins will ordinarily recover attorneys’ fees unless doing so would be unjust. A different rule applies to employers that win—the losing side has to reimburse the employer’s legal fees only if the employee’s case was “frivolous, unreasonable, without foundation or brought in bad faith.”

Fortunately, the California Supreme Court has stepped in, recently concluding that trial judges have wide discretion to reduce jury awards when the employee’s damages are small but the legal expenses are large in comparison.

Recent case: Robert Chavez worked as a police officer for the city of Los Angeles. In 1996, he was accused of stealing payroll checks. After a lengthy investigation, the LAPD concluded Chavez was innocent and another police officer was responsible.

After Chavez was transferred to another division, he told his new supervisor that he believed he was under constant surveillance. The supervisor thought Chavez was paranoid and ordered him to see the police department’s behavioral sciences services unit. He attended 10 sessions.

Chavez returned to work, but continued to complain that he was being harassed. He even claimed that police department helicopters hovered above his house to keep tabs on him. Then Chavez’s superiors criticized how he handled a call for police help, and he took several months of “stress” leave. When he returned, he was suspended for three days for neglecting his duties during the help call in question.

He sued over the short suspension—and also alleged retaliation, defamation, invasion of privacy and intentional infliction of emotional distress.

Most of the claims were dismissed, but Chavez did prevail on the suspension. Chavez was awarded damages of $11,500. His attorneys then asked for a whopping $870,935 in attorneys’ fees.

The trial court rejected the request as unreasonable and the case worked its way up to the California Supreme Court. It concluded the trial court had the discretion to decide whether Chavez should get the attorneys’ fees award. It upheld the lower court’s decision to deny the request. (Chavez v. City of Los Angeles, No. S162313, Supreme Court of California, 2010)

Final note: This case may deter employees (and their attorneys) from bringing cases with little merit. Attorneys will no longer expect a huge paycheck for modest results.

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