Arno v. Club Med Boutique Inc., 96-16435

• Decision Date: 29 January 1998
• Docket Number: No. 96-16435,96-16435
• Parties: 72 Empl. Prac. Dec. P 45,213, 98 Cal. Daily Op. Serv. 778, 98 Daily Journal D.A.R. 1060 Carolyn ARNO, Plaintiff-Appellant, v. CLUB MED BOUTIQUE INC.; Club Med Inc.; Club Med Sales Inc.; Club Mediterranee S.A.; Club Med Management Services Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1424

134 F.3d 1424

72 Empl. Prac. Dec. P 45,213, 98 Cal. Daily

Op. Serv. 778,

98 Daily Journal D.A.R. 1060

Carolyn ARNO, Plaintiff-Appellant, v. CLUB MED BOUTIQUE INC.; Club Med Inc.; Club Med Sales Inc.; Club Mediterranee S.A.; Club Med Management Services Inc., Defendants-Appellees.

No. 96-16435.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 6, 1997.

Decided Jan. 29, 1998.

James C. Sturdevant, Kim E. Card, The Sturdevant Law Firm, San Francisco, CA, Barbara A. Lawless, Therese M. Lawless, Lawless, Horowitz & Lawless, San Francisco, CA, for Plaintiff-Appellant.

Bettina B. Plevan, Proskauer, Rose, Goetz & Mendelsohn, New York, NY, Robert B. Mison, Steefel, Levitt & Weiss, San Francisco, CA, for Defendants-Appellees.

Appeal from the United States District Court for the Northern District of California; D. Lowell Jensen, District Judge, Presiding. D.C. No. CV-95-03321-DLJ.

Before: SCHROEDER, BEEZER and BRUNETTI, Circuit Judges.

SCHROEDER, Circuit Judge:

This appeal raises an unusual conflict of law issue. Appellant Carolyn Arno's supervisor sexually assaulted her while she was working at a Club Med resort in Guadeloupe, which is governed by French law. In Arno's first appeal, we decided that French law, as the law of the place where the tort occurred, rather than the law of California, the forum state and residence of the plaintiff, governed the substance of her tort action. Arno v. Club Med, Inc., 22 F.3d 1464, 1468 (9th Cir.1994). The parties subsequently settled the substantive issues of the case, reserving the question of fees. The issue before us is whether California or French law applies to the fee issue. Applying California's substantive choice of law analysis, the district court determined that California law governed because neither jurisdiction had an interest in applying its law, and therefore the law of the forum applied. It denied Arno's application for fees. We affirm on somewhat different grounds.

It is undisputed that the law of California and the law of France differ as to the availability of attorneys' fees. California applies the "American Rule," under which each party must bear its own fee expenses. France grants a trial judge discretion to shift the burden of attorneys' fees, in full or in part, to the losing party. N.C.P.C., Article 700. We, as federal courts sitting in diversity, must look to the law of the forum state in making a choice of law determination. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941).

A substantive choice of law analysis is required, however, only if the availability of attorneys' fees is considered to be a substantive rather than a procedural issue under California law. Grant v. McAuliffe, 41 Cal.2d 859, 264 P.2d 944, 946 (1953); World Wide Imports, Inc. v. Bartel, 145 Cal.App.3d 1006, 193 Cal.Rptr. 830, 833 (1983); Restatement (Second) Conflict of Laws § 122 cmt. a (1971). We have articulated two reasons underlying this rule. "First, it would be a burden on the forum state's court to apply another forum's rules of judicial administration. Second, parties are unlikely to have relied on the rules of judicial administration in shaping their conduct." Equitable Life Assurance Soc'y v. McKay, 861 F.2d 221, 222 (9th Cir.1988).

We entertain some doubt as to whether the Supreme Court of California would treat the issue of fees as substantive. The only cases cited are isolated Court of Appeal decisions that are not directly on point. See, e.g., Robert McMullan & Son, Inc. v. United States Fidelity & Guar. Co., 103 Cal.App.3d 198, 162 Cal.Rptr. 720 (1980) (conducting substantive choice of law analysis on fees issue without discussing whether it was substantive or procedural); Beech Aircraft Corp. v. Superior Court, 61 Cal.App.3d 501, 132 Cal.Rptr. 541, 550 (1976) (calling for independent choice of law inquiry on "each issue" but in a case that presented no fee issue).

Moreover, several California decisions in related contexts have suggested that the availability of attorneys' fees is a procedural issue. For example, one court has held that municipal courts in California have the power to award fees in an amount greater than the jurisdictional limit for municipal court awards. Stokus v. Marsh, 217 Cal.App.3d 647, 266 Cal.Rptr. 90, 92 (1990). It reasoned that a claim for attorneys' fees is not akin to a substantive claim that cannot exceed the maximum monetary amount over which the municipal court has jurisdiction. Rather, a fee award is merely incidental to the administration of justice, and is not limited by the jurisdictional cap on municipal court judgments. Id.

California courts have also characterized attorneys' fees as procedural for the purposes of retroactivity. Applying a vested rights analysis, the California Court of Appeal has held that fee statutes can be applied retroactively because they are inherently procedural in nature. Parker v. City of Los Angeles, 44 Cal.App.3d 556, 118 Cal.Rptr. 687, 694 n. 4 (1974); Olson v. Hickman, 25 Cal.App.3d 920, 102 Cal.Rptr. 248, 249 (1972); see also In re Estate of Johnston, 47 Cal.2d 265, 303 P.2d 1, 6 (1956) (probate fees procedural for retroactivity purposes). However, this result has apparently not been followed uniformly in the probate context. See Estate of Hilton, 44 Cal.App.4th 890, 52 Cal.Rptr.2d 491, 503 (1996) (refusing to decide whether fees were substantive or procedural).

We need not decide whether the issue of attorneys' fees is substantive or procedural under California law. Under either analysis the California rule on attorneys' fees would apply. If the issue of attorneys' fees is procedural then the California rule would apply as the law of the forum. See World Wide Imports, Inc. v. Bartel, 145 Cal.App.3d 1006, 193 Cal.Rptr. 830, 833 (1983). If the issue is substantive, then the California courts would apply the interest analysis articulated in Reich v. Purcell, 67 Cal.2d 551, 63 Cal.Rptr. 31, 33, 432 P.2d 727, 729 (1967), to determine whether the French or the California rule would apply. Such an analysis yields the conclusion that the California rule on attorneys' fees would apply.

Appellant is a California resident who is engaged in litigation in California. That...