Even When Employees Lose, They Win: Court of Appeal Awards Attorney’s Fees on Losing Claims

Renee Vines, a former employee in the Santa Clarita Valley at the auto parts store of O’Reilly Auto Enterprises, LLC sued his employer after being terminated for violations of the Fair Employment and Housing Act (FEHA) (Gov. Code § 12900 et seq.), alleging race- and age-based discrimination, harassment and retaliation-related claims. After a trial, a jury found for the defense on the discrimination and harassment claims, but found in plaintiff’s favor on his claims for retaliation and failure to prevent retaliation.

Attorney’s fees are compensable by statute for retaliation-related claims, so Vines moved for an award of $809,681.25 in attorney fees, which included all attorney’s fees incurred in the lawsuit, including attorney’s fees incurred in prosecuting the losing claims on discrimination and harassment. The trial court awarded only $129,540.44 in fees, based in part on its determination that the unsuccessful discrimination and harassment claims were not sufficiently related to or factually intertwined with the successful retaliation claims. Vines appealed, contending that the trial court committed legal error in not awarding him all of his attorney’s fees, despite having lost on the other claims.

In an opinion published on January 21, 2022, the Court of Appeal sided with Vines and determined that the Court committed legally reversible error, thus abused its discretion and reversed the postjudgment fee order and remanded (i.e., sent) the matter back to the trial court to recalculate Vines’s fee award.

The Court of Appeal reasoned that even though Vines lost on the harassment and discrimination claims, the jury found that his assertion of those claims is what caused the retaliation-related claims. The Court of Appeal further held that “Vines had to prove his beliefs [that he was discriminated against and/or harassed] were reasonable, which O’Reilly did contest, for his complaints to qualify as protected activity required for a FEHA retaliation claim.”

While there are certain facts that are unique to the circumstances of the case, the Court’s published decision has serious implications for employers in California. Because California law is drafted broadly in favor of employee rights, retaliation claims are low hanging fruit for plaintiff attorneys, where a terminated employee could assert that she was discriminated against and/or harassed in a manner that violates FEHA, and even if the employer successfully shows that was not the case, the employer can nevertheless lose on the retaliation claims and be forced to foot most, if not all, the plaintiff’s attorney’s fees, which can often dwarf the actual compensatory damages awarded to the plaintiff employee. It’s important for employers who are considering terminating employees who are members of a protected class who may have already asserted certain claims of wrongdoing by the employer to seek legal counsel on the best strategy for handling the separation.